Full text of Commercial and Financial Chronicle : January 25, 1951, Vol. 173, No. 4980

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v^2—^

ESTABLISHED 1S39

JAN 2.
ADMINISTRATION

BUSINESS

d

an

11BSAKY

Chronicle

Financial

Reg. TJ. S. Pat. Office

New

Number 4980

173

Volume

EDITORIAL

We See It

Clearer symptoms

of

an

techniques

counsel of moderation

a

Assuming
research

Mr. Valentine is thrown into the discard without

Mr. Vardaman, now a

hesitation.

Sys¬

will decline temporarily during

but

formerly a close associate of the Presi-*
dent, chooses this time to utter an evangelical
tem

defense outlay of $50 billion annually,
predicts high activity in business,

a

early part of

common

not

inordinately high in relation to earnings and yields,

ously at odds with the President's Secretary of
the Treasury. This latter
official in turn has let

subject

yet he expects some intermediate reaction in
It

is

fortunate

uncertain terms that the Ad¬

expects to finance the rearmament
and presumably any war that it may
precipitate, on the old 2 ¥2% basis made famous
program,

infamous when Hitler rather than Stalin was

as

for

broad

me

target of the democracies and when Russia

was

"freedom

a

I

have

are

been

facing critical times.

are

under the

assigned

a

important forces that are oper¬

circumstances,

meanwhile, has turned up with
a
budget carrying a $16.5 billion deficit for
fiscal 1952, which the Chief Executive says he

I

going to ask Congress to balance through new
everybody." Details of the President's
ideas of the new taxes to be imposed are not yet
officially announced. It is, too, for the future to
determine whether

taxation

of
we

were

Congress is prepared to im¬

the people of this country

upon

pose

Harold

they have

never

known

involved in "total war."

B.

I jf

finance.

J

pated

influence

the

business

weight

a

even

keen

a

interest

in these

outlook.

financial

and

My first topic concerns the outlook for business activ¬
ity. Under ordinary circumstances, we would have to

when

And whether'

Continued
even

such

drastic tax program as

a

*An address

Continued

ACTIVE

MARKETS

BERKSHIRE

page

on

page

26

SECURITIES

Boston

and

NOW

Investment

IN

26

but

on

every

most

&

WHITNEY

KEYES FIBRE CO. CI. A & Com.

MFG. &

STATE

AND

A Mutual Fund

ELECTRIC CO.

York

Board

MILK STREET, BOSTON 9, MASS.

Tel. WOrth 2-0115

MUNICIPAL

The
your

were

—

guides to action which were set down by
founders are in keeping with the doctrines of

*

An address by Secretary Snyder before the New York Board of
Trade, New York City, Jan. 18, 1951.

Continued

he obtained
investment dealer or

Prospectus

across

)rom

your

Tele. NY 1-315

The

may

FRANKLIN DISTRIBUTORS,

OF NEW YORK

64 Wall Street,

Inc.

page

30

Bonds

Canada

New York 5

We

Dept. Teletype: NY 1-708

IS etc York

Canadian Superior Oil
Company of California

Underwriters and
Distributors of Municipal
and

Steep Rock Iron Mines

Corporate Securities
Prospectus from authorized dealers

VANC15, SANDERS & CO.

Established

BOSTON'




&

Co.

ESTABLISHED 1891

1899

New York

Cincinnati

Denver
Columbus Toledo
Chicago

Portland, Ore. San Francisco

BONDS & STOCKS

•

OF

THE

CITY OF NEW YORK

Central Vermont
Public Service Co.
COMMON

»

Domjtuoti Securities
(orporatioti
40 Exchange Place,

Dallas
Buffalo

NATIONAL BANK

Los Angeles

MEMBERS NEW YORK STOCK EXCH.

CLEVELAND

Chicago
Angeles

THE CHASE

DEPARTMENT

Goodbody

(Incorporated)

Devonshire Street

New York

CANADIAN

or

OTIS & CO.

Agency: 20 Exchange PI.

CANADIAN

Company

(all Issues)

BOSTON

Canadian Bank
ofGwnmme

markets in

maintain active

Brown

Bond Fund

Bond Department

Head Office: Toronto

Bond

CfJTe

Los

on

State and

600 Branches

Seattle

Ill

a

cer¬

important goals of cooperative
among others — to provide useful
information, to encourage needed legislation, to promote
civic improvements, and to adjust differences and mis¬
understandings on an equitable basis.
These

investors in cor¬
registered with the SEC
Registration" Section, starting on page 39.

THE NATIONAL CITY BANK
Free

Tele. BS 424

BROADWAY, NEW YORK 5, N. Y.

OF

down

Monthly Commercial Letter

Boston Stock Exchs,

Tel. HAncock 6-8200

120

set

of issues now

BONDS

duPont, Homsey & Co.
31

Trade

of

tain

effort.

upon request

&

of

century ago, the founders of the New
John W. Snyder

Municipal

inc.

LOWELL SHOPS

New York

almost

REGISTRATION—Underwriters, dealers and

WEST POINT MFG. CO.

Members

in

making policy decisions.
More
than
three-quarters

the Dinner Meeting of the
Club, Boston, Mass., Jan. 22, 1951.

potential undertakings in our "Securities in

Franklin Custodian Funds,

SALES

MCDONNELL AIRCRAFT
SACO

occasions

part of the country—has been
valuable
to the
Treasury in

DWIGHT MFG. CO.

N. E. GAS &

ip ,Washington,

only

various

ALMY

&

HOLLINGSWORTH
LUDLOW

under

of Federal

area

change of views which we have had
individuals and groups of in¬

FINE SPINNING

DEWEY

measures

such discussions through
memberships.
This ex¬

delivered by Mr. Dorsey at

porate securities are afforded a complete picture
BATES MFG. CO.

on

this would

the

with

vari¬

Business Prospects

give

to

Others of you have partici¬

in

committee

dividuals—not

topics at the present time. Fur¬
thermore, I would like to combat a
tendency on the part of many inves¬
tors to put too much emphasis on
some
single factor to the exclusion
of all of the many other forces that

Dorsey

on

consideration in the

ous

taxes "on

judgment

your

am

have

Washington

i

impelled to adopt this proce¬
dure because we find that our clients

is

to

down

Treasury Department the benefit of

jointed.
The President,

we

of Trade have at various times come

ating today, even though it may seem
to
render my talk
somewhat dis¬

loving" nation.

Defense financing

on

It is especially vital that
take every opportunity to
exchange views on urgent national and international
problems. Many of you members of the New York Board
We

stock prices.

as

more

the

that

decided

of continued 2x/z% long-term rate. Terms
"delusion" principle that fractional changes in interest
rates can be effective in fighting inflation.
Announces
new
"extension" privileges to be offered holders of
maturing "E" bonds. Approves margin and other restric¬
tions at press conference.

"The Business and Financial Out¬
look." That gives me the right to ramble at will over
an extremely wide field, and, with a practical conclusion
in mind, that is what I intend to do.
Rather than subject you to a detailed
discourse on some single aspect of
the financial and business outlook, I
would like to discuss several of the

ministration

or

stocks, and contends prices of stocks

jointly

have

within pattern

Looks for continuation of high demand

credit controls.
for

no

Treasury

and
and

year,

Federal Reserve will get more power over money

plea for Stalinesque controls of everybody and
everything at once, while taking a slap at his
associates in the Federal Reserve System which,
as is well known, has of late months been seri¬

it be known in

Treasury head declares President, Reserve officials and

executive

despite prospect consumer's durable goods and construc¬
tion industries will be at low level. Holds money supply

member of the

Board of Governors of the Federal Reserve

Secretary of the Treasury

President, Argus Research Corporation

are

that of

as

By HON. JOHN W. SNYDER*

By HAROLD B. DORSEY*

being exhibited in Washington day by day. Even
moderate

And the Interest Rate

And Business Outlook

incurable itch to get

back to World War II dictatorial

Copy

a

Financial Mobilization

Investment Policies

As

so

Price 35 Cents

York, N. Y., Thursday, January 25, 1951

IS BROADWAY

105 W.ADAMS ST.

NEW YORK

CHICAGO

New York 5, N.Y.

IRA HAUPT & CO.
York Stock Exchange
Principal Exchanges

Members New

and

other

111 Broadway,
WOrth 4-6000

Teletype NY 1-702-3

WHitehall 4-8161

Boston

N. Y. 6

Teletype NY 1-2708

Telephone:

Enterprise 1820

2

(430)

The Commercial and Financial Chronicle

The

Leading Banks and
Trust Companies

participate and give their

7Cth Consecutive Quarterly

Comparison

'

they to he regarded,

are

New York Hanseatic

WM.

Corporation
Established

G.

H.

I

have read

..

the

series

Best."

Specialists in

of

great interest

articles

"The

Security

I

slight,

casual

what strikes

me as

one

to

Of the out¬

orig¬

an

of explanation, I might
briefly that I am a free-lance

engineer and have, been

growingly concerned with what

Members

i

New

,

*

120

Stock

York

Curb

<

perhaps

with

ment

a

in

chasing

Exchange

involuntary retire¬
could do to
savings and pur¬
in the face of our

own

power

steadily-declining dollar.

BROADWAY, NEW YORK 5

Some time ago, as part

Tel. REctor 2-7815

.of

gram
on

fJifmimmiiiiiiiMiimmiiiiimiimi'

diversified

Alabama-Tennessee
Natural Gas Co.

national

Dan River Mills

tion

Defense

of

labor

Rich., Fred. & Pot. D. 0.

drive

Program—with
high produc¬
drift

industrial

of

farm

centers,

high

i:

Scott, Horner &.
Mason, Inc.
LD 33

«

★

^

N. Y. Telephone WOrth 4-5000

in

years

Wail

States

^

Invest¬

is

se-

by

ryt hin g
n

nation's

on

GENERAL,

pro¬

duction,

man¬

pro¬

had ' for

be

to

account

for

such

unnoticed gem in the midst of
all the study and fuss that is made

an

of the

widely known "big name"
stocks selling at from 8 to 12 or
times

more

ings

their realizable

after

the

of these

earn¬

collector

tax

his deadly

swung
one

But

axe.

has

some

days—when the big

investors, the investment

United

States

Company
.

Street, New York 5
f

NY 1-2643

war.

Secretary Snyder said fur¬
the existing option of

readers

might

me

of your

some

like

to

know

of

bargains like this.

or

a

series

taxes

Securities

bonds

Snyder,

NEW YORK CURB EXCHANGE

Secretary
a

of

many-sided

Teletype NY 1-953

of

owners

these

they mature,
hold

with

them

(2)

or

for

enabling legislation "immediately"
plan
apply to

to put the 10-year extension
in force, which will also

all

series "E" bonds that may
•
■
V
V "

new

be issued.

efforts

for

their

continued

con¬

four

are

why

reasons

interest

for

12

(1)

buy

The

'

their

on

maturity.

period

interest

tion,

the date

to

up

maturity.

of

In explana¬

Secretary Snyder said that

$18.75 bond purchased in May,

an

would

May
if

would be paid
original cost and ac¬

the

on

present bonds
interest for the

The

mature

1, this

the

holders

for

$25

on

if cashed.

year,

prefer to continue

on

the $25 maturity value of their

buyers during World War II.

bonds

Ap-

$23 billion "E"

bonds mature in the next six
years

$11

billion

four
as

more

years,

the

ending

fol¬

1960.

a

10-year matur¬

1951, it became

im-

iperative for Secretary Snyder
arrange either for

to

refunding them

ond

of

bond

not

be

be

needed

to

help

American

finance

rearmament

program.

bond

at
to

announced

promoting

Secretary

that

and

"as

a

Snyder
thrift-

anti-inflationary

be

worth

terest

hold

The holders

to

1

collect
the

on

it

for

period.

will

value of the

the

sec¬

will
their

original

present maturity if they

10-year

first

be

the

Only
paid

second

2.5%

in¬

the

$25

on

bond, if cashed with¬
seven

years

of

the

Assn.

of

Securities

Dealers

Inc.

Tel. HUbbard 2-5500
.

Tele. BS 142

Portland, Me.

Enterprise 2904

Hartford, Conn.

Enterprise 6800

Open End Phone to New York Canal 6-J613

Secretary

Snyder

said

the

plan outlined above for "E"

bonds

that

because

the

"it

majority

continue

their

Nat'l Research Corp.
Mex. Lt. & Pr. Co. Ltd.

a

is

will

our

belief

desire

to

investment

in

them

Goulds

stake

is

investment

com¬

of

all

People don't buy them primarily
return; that consider¬
ranks far below

(2)

31

Milk

Street, Boston 9

Tel. HUbbard 2-6442 Teletype BS 328

the attrac¬

security.

Your

dollars

put into "E"
the savings of
Americans, help to draw

will,

other

Ralph F. Carr & Co., Inc.

investments.

for income

bonds

Bought—Sold—-Quoted

$1,000,000, its foundation

or

ation

Pumps Co.

Kinney Mfg. Co.

attractive.

capital

your

prising the safest and most liquid

excess

with

purchasing

market at
of

Keyes Fibre Co.

more:

makes

$100

off the

power

time when the amount

a

Pennsylvania Railroad
Philadelphia Electric Common
Penna. Power & Light Common

consumer

goods for sale is de¬
creasing. Should inflationary pres¬

Foote Mineral
Central Electric & Gas

prices get out of control,

on

living

costs

anything

could

Central Public

beyond

soar

experienced

ever

American

in

Utility 5V£s

American Marietta

history.

(3) Buying government bonds is
patriotic duty, and that duty is

a

made

pleasant because

terest

offered

a

HenryB.Warner&Co., Inc.

or

were

in¬

no

yield.

Phila. Telephone

on

America

which

successful

a

York

possible

tematic

is

the

a

highest

BUY

living

by

any

U.

S.

people the value

savings

they

BONDS

of sys¬

will

and

get
-

in

first

a

the

In "E"

lien

on

Over-the-Counter

^

•On patriotic grounds as well

personal

considerations,

Secretary
Americans
over

Snyder
not

are

will

I

as

think

find

that

going to hag¬

Quotation Services
for 38 Years

the coupon rate, whether

it's 2%, 2)4% or 2.9%.

icans all benefit
even

SAVINGS

An opportunity

future help millions more.
bonds

Chicago

supremely

achieved

yet

America.

to Ames Emerich,

first

buy "E" bonds has taught mil¬
of

771

the United States of

nation in history.

lions

PH

City Tel.: BOwling Green 9-4818

goingrconcern that has

standards

Eell System Teletype

PEnnypacker 5-2857

Direct wire

you

otock Exchange

123 South Broad St., Phila. 9, Pa.

New

mortgage

to

duty

little

at

(4) Ownership gives

made

be

can

profit to yourself.

a

It would still remain

bonds

it

Members Phila.-Balto.

performed at

gle

10-year period.

Treasury Department adopted the
new

week,

allowed

want

in

vast

another

maturing May

interest

•

second

the

would

10-year period.

a

keeping in mind the possibility of
later

for

they will be paid 2.9%

which

selling additional bonds that

may

bonds

$33.33 each at the end of the

$1,100,000,000 ,of $6.25

over

"E" bonds reach

in

Nat'l

31 Milk Street, Boston 9, Mass.

quality of "E" bonds,
is the ingredient

Whether

But

of which the
public became large

the

that

,

years,

over

-

J. B. Maguire & Co., Inc.

Members

their rental,

sures

10

proximately

Bought—Sold—Quoted

I

glad to hold "E" bonds bearing

tion of

cumulative inter¬

a

ment "E" bonds

Savings Bonds

Manufacturing

ab¬

believe every American should be

another

hold

or

the

on

either

currently
or at
maturity would be retained.
Congress will be asked to pass

to

to

Last
40 EXCHANGE PL., NEW YOKE 5, N.
Y.

plans

problem concerning U. S. Govern¬

MCMICSS

N£W YORK STOCK EXCHANGE

The

semi-annual

1941,

^ or extending their maturity, also

Skaskan k Co.

Treasury

savings securities will be
given three alternatives when the
bonds begin maturing on May 1,
this year, viz.:
(1)
Holders
m'ay cash
their

both

sound purchase at lit¬

W.

ity in May,
'

the

extension

Treasury, faced

lowing

Over-The-Counter

interest

on

"E" bonds

2% interest coupon and should be

offer holders of series "E"

interest

interest return.

no

Inasmuch
;

measure"

at

Freiday

Bates

that

paying

Here
It occurred to

Holders who take advantage of

Col. William

branch offices

Bonds."

steam.

own

the present

and

Primary Markets in

Savings

our

self-winding investor who does
sorption by the public, was a
not blindly follow the crowd but
"powerful weapon in combating
has done his own hunting on his
inflation."

years.

and

NY 1-1557

New Orleans, La. - Birmingham, Ala.

Over 85,000,000 people have held
the -"E" type
bonds during the

compa¬

of fun and solid satisfaction to the

St., New York 4, N. Y.

HAnover 2-0700

Mobile, Ala.

Secretary Snyder said the
nies and pension funds start to
Treasury's ; role in the current
liquidate their over-priced secur¬ crisis was to
help to control in¬
ities and hunt around for the hid¬
flation and that his savings bond
den bargains—it may provide a lot
program,
including promotional

Having these
qualities, our government

John

(Paul Frederick




valuable

a

could

hard

crued

the

.Phone DIgby 4-4950

is

resources.

tle

and WATER

WHitehall 4-1875

capital almost
price—so

market

in

the extension alternative will not,
of course, be permitted to collect

la¬

moral

would be

REVENUE OBLIGATIONS

Pine

It

re¬

sources,

25 Broad

Direct wires to

ther

bear

—

i-

&

Jr., Manager. Statis¬
Department, Steiner, Rouse
Co., New York City. (Page 31)

tical

&

es¬

est-bearing extension, amounting
to 2.9%
compounded at the end
of 10 years, or
(3) holders can
exchange them for current income
savings bonds of series "G" which

intellectua 1

70

the

plant

10 years

the

as

cured

its

AQUEDUCT

ducing

to

rates

Members New York Stock Exchange
Members New York Curb Exchange

B, Jones,

earn¬

free.

as

bor, skills, and

PUERTO RICAN

working
as

interest

tinue

agement,

*

Firm Markets

much

that

bonds

What

physical

Teletype BS 259

:

net

bonds.

the

:

average

•

Steiner, Rouse & Co!

Pfd.)—James

tablish
exemptions from excess
profits tax under the new law—

Government

ier

Request

f
7-0425

the

Airlines, Inc. (Common

Convertible

environs, I am more than
ever of the opinion that all secur¬
ity purchases are semi-speculative
except one
prime investment—

Investment

World's Prem¬

148 State St., Boston 9, Mass.
CA.

FREIDAY

its

America

TeL

times

New

should be government bonds

eve

i

\and

be

Co.,

(Page 2)

American

Bought—Sold—Quoted

J.
York

interest.

ment,

%

of

which

one

Investment

wartime

now

*

prices

'City

Louisiana Securities

Freiday,

Street

Premier

40

United

VERNEY CORP.

*

stocks, and

WILLIAM

World's

and

NICKEL PLATE

on

the

an

Premier
William

—

Bloom-

not

After

versus

Analyses

Well,

was

after

World's

—Colonel

Alabama &

Company

Brehmer,
(Page 2)

Savings
Bonds a plan whereby they
may
keep their bonds for 10 years be¬
yond maturity at the same 2.9%

The

MAINE CENTRAL

*

on.

for

J. Robinson-Duff & Co.,
Members New York Stock Exchange

r~—"v.

*

so

income

the

in

Moiine

H.

'Robinson-Duff

eager to

COLONEL

liiiiiiiiiiiiiiimiiiiiiiHiiiiniiiiiiiiiiif

j

and

broader my studies of

Lynchburg, Va.
,

basis,

for

foodstuffs,

to

farmers,

.

y

investments

government-sustained

83

.

a pro¬

"experimental"

an

attendant

LY

^

of

I bought a few shares of thq Min¬
neapolis Moiine Go. mainly on the
strength of earnings and favorable
trade position in the t event of a

Trading Markets

Tele.

.faced

means,

The

ings which would be used to

a

few years,

his

preserve

Exchange

limited

of

person

ftfC PONNELL & CO.

three

or

as

way

that,

G.

and

Selections

field, N. J.

nor

bought for $20, or
only 2Vz times current earnings—

inal study on my part of the "life

By

rise

still

could

stories" of several hundred stocks.

research

became

most stocks—here

with

say

Since 1917

Like

reference

standing bargains—after

Rights & Scrip

the

under

But I have yet to see more

than

York

I

18-month

with

he,

to

Wm.

the deeper the studies of the ones
which appealed to me—the more

Minneapolis Moiine Co.

Teletype NY 1-583

intended

not

are

Minneapolis

particular security.

a

Thursday, January 25, 1951

...

Week's

Participants

Their

sell the securities discussed.)

to

amazed

heading,

New

for favoring

offer

as an

BREHMER

Bloomfield, N. J.

•,

1920

120 Broadway, New York 5
BArclay 7-5660

reasons

(The articles contained in this forum

request

on

This

Forum

A continuous forum in which, each
week, a different group of experts
in the investment and
advisory field from all sections of the country

of New York

Available

Security I like Best

.

more

as

as

We Amer¬

taxpayers and

citizens, owning

prime investment in

a

strong

Incorporated
Established 1913

na¬

46 Front Street

tional economy.

Continued

National Quotation Bureau

a

CHICAGO

on

page

31

NewYork4,N.Y.
SAN FRANCISCO

Volume 173

Number 4980

i

LETTERS

.

.

The Commercial and Financial Chronicle

.

"

'

-

"

'

**

'

'

•

',"1*

r"

/

(431)

'

THE EDITOR:

TO

I ND E X

"Are We

Falling Into
History's Greatest Trap?"

Another

We present below some more of
the letters received in connection
with Melchior

Palyi's article, "Are
Falling Into History's Greatest
Trap?" which appeared on the
cover page of the "Chronicle" of

We

initial

The

11.

given

were

comments

3 of

on page

issue

our

of Jan. 18.

program.

—Hon. John W.

1

Snycler.—.

—Harold B. Dorsey_

—Cover

CINERAMA, INC.

__1^—_____Cover

The Aircraft Industry in

<

Personal Thoughts

navy

a

Defense Economy—Selig Altschul-

Our Financial Situation—Allan

on

Sproul

Credit Controls and Bank Earnings-r-William A.
Lyon_

air force,

Bought
Sold

4

Quoted

6
7 '

—Ewan

just as Stalin would wish

WALL STREET, NEW YORK

09

Snags Ahead in Wage Contracts Tied to Price Index!

We shall exhaust ourselves in that
manner,

AND COMPANY

Investment Policies and the Business Outlook

and a considerable
but do not try to keep
an
army with
us all the time,
armed against any possible foe.
strong

page

Financial Mobilization and the Interest Rate

group

foreign policy and the concomitant mobilization

llCHTfOSIfin

"

Articles and News

of letters given in this issue relative to
Melchior Palyi's article m which he warned of the dangerous
consequences to the nation of the Administration's current

Jan.

Clague

___

Outlook for Utilities—C. A. O'Neil.-.

______

Telephone: WHitehall 4-6551

9
11

to do.

us

What's Ahead for Stock Prices?—A. Moyer

(3) Commence a program of
rigid economy in expenses and a

Kulp

12

Rising Prices Indicate Reconsideration of LIFO

*

-

After

V

describing Soviet aggres¬ return to the GOLD STANDARD.
—David M. Freudenthal———r
in his article, Dr. Leave business alone and quit
Palyi contended that the United some of the antirtrust actions r>,How Wage and Price Controls Feed Inflation—^Morris Sayre„
States and other free nations have .pending.
Terminate the UN as a
Canada's Prospects for a Free Economy—James Muir
committed a cardinal error in fail¬ false conception and a failure in
Two Russian Fronts—Hugh Baillie_
J
'
execution.
ing to make clear the objectives
for which they are prepared to
(4) Follow the teaching implied
An Unprecedented Steel Expansion Program
''V
H.
W.
Baldwin's
statement
fight. He presented two alterna¬ in
sion

3

patterns

13

Botany Mills

.

15
18

^Canadian
.

Superior Oil

20

.

tives:

(1) either we restrict our
defense-zone to the Western Hem¬

ness

isphere

lization

(2) make

or

laration of

in which

formal dec¬

a

Monroe Doctrine

a new

global commitments
would be clearly set forth. More¬

he cautioned against adop¬

over,
tion

our

now" of

permanent

ground that such

program

a

could

and

was

The letters that

accom¬

in

today's issue follow;
others will appear in subsequent
issues..

..

WILLIAM A. ROBERTSON
New York City, N. Y.

(1) Professor Palyi's article

expresses

views, in

better

can

do

general,
myself.

so

view of it, I think we should
withdraw from our "emergency"
In

talk- and

its

and

quietly

we

as

excitement -as

making,

can,

as

much of a "face-saving" explana¬

tion

possible.

as

Quit the constant talk about the
far

might of Russia.

she

%

In so

Bolsheviks to sign that Treaty of
Brest-Littovsk„
She
has
many
troubles of her own, not

inability

the least

raise enough
She is hard
invade, but weak on active ag¬
gression.
Napoleon found that
to

food for her people.
to

Stalin knows he sits upon an

out.

nent

with either a World
or with a federation of
either Europe or Asia.
We should
pursue an independent line of ac¬

all

who

This

has

been

for

so

half, at least.
of

years

too

discontented.

are

well.

century

a

*

"Are We Falling
*Prospectus

on

Security Trades.

Ernest T. Weir's Views

on

3

5

Foreign Situation._

on

Co. to Sponsor Radio Program.—

8

J.F.Reilly&Co.

10

___.

10

Says Mutual Funds

10

sionally

in

Incorporated

certain

pointing to England's
of

action

after

the

—„

.__

Over Longer-Term_1

—t

—

<

Broadway, New York 6
Teletype NY 1-3370

BO 9-5133

19

Direct Wires

Philadelphia and Los Angeles
22

,

_ _

Objects to SEC Commissioner McEntire's Attitude—

be most effective for peace
good sense!
This is in line
with the closing thought of my
may

and

course

61

Furnishing Goods Leaders Expect Active First Quarter; Un¬

our

article,

Stimulate Investment.

Joseph E. McCully

request

on

-

Prospects for Great Industrial Expansion in Canada Cited by

;

24 ;

Secretary Snyder Commends Truman, Congress and FRB_^__ 31 ;
FIC

Banks PJace

Debentures.—_r—_—__—_———

•'

Na¬

Giant Portland,

44 ;

-v' '**■'

Cement Co.

"X;
"

poleonic

Vienna.

of

Such

useful to the world than

trying to act the part of
adviser and busybody.
'■

i'fi

As We See It (Editorial)——-

our

E.

(America

not

enough in

the

in

•>:

world

must

rich
to attempt to

build

an

.

■

Lear, Inc.

■+*'
»

—

Dealer-Broker Investment

19 ;

.

Haile Mines

Recommendations.

8 *'■;

is

Einzig—"Britain's Borrowed C*old''—-_—17

police the whole world; to estab¬
lish and preserve peace on the
"earth or to conquer the world.
God
alone
possesses
the
only
power to establish peace in the
world. And until He does, we in
America

b*

Copper & Steel

Coming Events in the Investment Field---———— 16

whole

f

31

—._——

'

'

•

Canadian Securities

excepted)

resources

12

Business Man's Bookshelf-—

V"

L. HUGHES

nation

'

J

Cover

—

Bank and Insurance Stocks..

;

Lima, O.
No

-4

Continental

general

a

1

Remington Arms

is far

course

a

'

."■-.-'V-';;/.-Regular Features

and the Congress

Wars

From Washington Ahead of

the News—Carlisle Bargeron—__

Indications of Business Activity——-i—
Mutual

_—1—

Funds

—

inhuman

.

Singer, Bean
& MACKIE, Inc.

6
37 ,'
14 *

_______

NSTA Notes—

HA-2-0270

News About Banks and Bankers.—^—_____ 24

N.Yi 5

40 Exchange PL,

Teletype NY 1-1825 & NY 1-1826

16*

*

^

machine

should

be

our

to

answer

Observations—A.
Our Reporter's

Wilfred

May—_——5

Report——————— 43
MEMBERS

Our Reporter

the bad

Prospective

on

Governments—

Security

17

Offerings—

MIDWEST STOCK EXCHANGE

41 '

Public Utility Securities.

twisted and strained old world.

to wish to start another war.

*

►

Predicts 700,009 Housing Units in 1951—_

influence occa¬
whatever
direction

tion, throwing

boys we have to live with in this

and

a

Bache &

sort,

age, at least, and none
He is not fool enough

is a
paradise for plotters and nihilists

and

Comments

country

Stalin is 71

Russia

for

"

Palyi's Article

on

Oppose New York City Tax

the

r o m

our

consisting of a superior
air force; a sea force
of plane
carriers protected by a formidable
navy and a perfected, improved
atom bomb in good supply. This

throne,

uneasy

f

Comment

Into History's Greatest Trap?"——

in

have

threw her armies and forced the

being

Nations,

*

,■"••

,■

Readers

'

(

withdrawing

is today strong,

we

'i"

More

refrain from making any
further connections' of a perma¬

it is
foolishly made
her: so.
Ten years ago she was
very weak.
In World Word No. 1,
how easily the Germans overas

because

"

\

23

should

more

'

invincible

'■

'"■J

Federation,

v,

my
than I

After

United
be

can

undertaken.

Portsmouth Steel

21

Harrishurg Steel

.

soldier

single American

a

_

.

(5) Korea is not worth the life
of

only lead

to national bankruptcy.

v

and financial and otherwise.

C. Campbell-

Pay-As-You-Go Policy Disastrous—Arthur W. Miller

potential."
Drop Gen.
Marshall and his plans, military

a policy of full and
any
further
effort,
Withdraw
mobilization on the from what never should have been

unnecessary

modated

—Tom

quoted by Professor Palyi: "readi¬
potential, rather than mobi¬

35

1
"

(2) Adopt, in general, the views

.

''

*

*

*

" •'

*

'

Railroad Securities

———

8

—

.
_

of

Hoover

Herbert

as

shown

H.

in

that fine speech of his, a month or
more

men

and

confine such

give to arms and
for example, to aiding
Chiang K;
whom we have
treated badly.
Do not send any

help

as

we

money, as

more

to

men

Whatever
money

is

or

Europe

done,

arms

or

it

let

only.

Asia.
be

by

Have

MUNDAY

Securities Salesman's Comer.—

Dr.

Securities Now in Registration.

Palyi's

views

are

those of Senator Taft.

from

drawal

without

visers

close

leaving

Korea,

The Security I Like

it

military equipment, ad¬
leadership*; proclama¬

Tomorrow's Markets

or

not

be

defended

Continued

a

on

and

Best

Washington

(Walter Whyte Says)^

You—

and

Published

Twice

Weekly

i

and

,

CHRONICLE

I

1

Drapers'

B.

DANA COMPANY, Publishers

25 Park Place, New York 7, N. Y.
•

REctor

2-9570

to

WILLIAM

50 Congress Street, Boston 8
Hubbard 2-8200

HAnover Z-4300

Teletype—NY 1-5
-

,

Chicago




»

: Glens Palls

-

.

Schenectady

-

Worcester

E.

C.,

Eng¬

1951

by William B. Dana
Company

as

Di-Noc

second-class matter Febru¬

25, 1942, at the post office at New
York, N. Y., under the Act of March 8,

WILLIAM

.

.

DANA
D.

SEIBERT,

RIGGS,

Subscription Rates

Publisher"

President

Business

Stromberg-Carlson

1879.

9576

HERBERT D. SEIBERT, Editor &

Albany

Gardens, London,
Edwards & Smith.

ary

WILLIAM

PREFERRED STOCKS

4

c/o

Reentered

Reg. U. S. Patent Office

25 Broad Street, New York'

44

Copyright

FINANCIAL

if embers New York Cutb Exchange

STREET

St. Louis 1,Ho.

34

——

COMMERCIAL

The

Member s New York Stock Exchange

500 OLIVE

5

28

interested in offerings of

Spencer Trask & Co.

—

was

page

High Grade Public Utility and Industrial

'

.

39

2

—

land,
are

_

——

The State of Trade and Industry.

tions of officials that South Korea

could

________

N

■

Stix & Co.

to

Our with¬

.

We

10

Schenectady, N. Y.

Withdraw from aiding

ago.

Asia with

D.

Manager |

Subscriptions

Possessions,

United

Territories

Pan-American

Dominion

in

Union,

States,

and

$45.00

U.

S.

Members

of

per

of

year;

Canada,
$48.00
per
Other Countries, $52.00 per year.

Thursday, January 25, 1951

Virginia Dare Stores

in

year.

Bought——Sold—Quoted

■

Other Publications

Every Thursday (general news and ad*Bank and Quotation Record—Monthly,
vertising issue) .and every .Monday (com¬
$30.00 per year. (Foreign postage extra.)
plete statistical issue — market quotation
Npte—On account of the fluctuations in
records, corporation news, bank clearings,
the rate of exchange, remittances for for¬
state and city news, etc.).
Other Offices: 135 South La Salle St.,
eign Subscriptions and advertisements must

Chicago 3, 111. (Telephone: .STate 2-0613);

<•

be made in

New York

funds.

theodore young & co.
40

Exchange Place, New York 5, n. Y.

WHitehalM.2250

Teletype NY 1-3236

4

The Commercial and Financial Chronicle

(432)
•

*

?

•

The Aircraft
In

'<

' •

•

.

1.

9,000 planes, equivalent to an an¬
110,000 units.

nual rate of almost
A

Defense

Economy

By SELIG ALTSCHUL*

Consultant

Independent Aviation

Mr.

Altschul, pointing to increase in size and complexity of

mechanism of aircraft since World War

5-fold increase in

plane production,

Says 3-fold expansion within

Truman, is fantastic.
possibility

of changes in procurement

a

defense

it

economy

misleading to be swept

figures

by the maze of
companies the

group's

can

away

that

ac¬

To view

the'

industry

perspective, it

duction is slightly under

4 million
weight
a
month. In units, the current total
is
probably somewhere
around
250 per month.

focus

on

cur-

in

trends

t

the

and

much

1

e v a

aircraft

it is

in

ting !
com¬

compared
called

increase

5-fold

for

goal was at the monthly
1,900,000 pounds. A year

of

Selig Altschul

their separate
production levels of the war years
as an example of what can be ac¬
complished
currently.
Present
military aircraft is much heavier,
to refer to

about twice the size, and

for more

to

hours

build

compared to the planes of some
10 years ago.

to

This is the key
man's

goal

in ascertaining
President

is

realistic

how

by

60,-

the rate was

1943,

May,

500,000 pounds monthly.
The

show

units

production

for

figures

aircraft

50,000

of

Tru¬
a

far

more

in

expansion

rapid

output than was attained

during

World War II.

"Within

one

♦An address
before

about

declared

the

year we

that,

will be turn-

by Mr. Altschul delivered
Forum

Midwest

Third

the

of

by

stimulus

the

and

the

of

50,000

Killing 1. ■

readable style

;

formula for

a

number
secret

America's aircraft

production pro¬

had again been tremendous¬

gram

increased.

Congress

on

his

In

the

for

produc¬

tion of 125,000 planes during
of

which

to

be

to

Jan. 6, 1942, President

called

Roosevelt

message

100,000

1943,

scheduled

were

combat types.

Actual

pro¬

during 1943 reached 85,-

military planes of

The production

in early

peak

all types.

expansion reached
1944 when the

production

York

bound

stage

be

to

levels for

"

termittent

craft

of

the

of

the

Jones

industrial

and rail
averages.

BOX

11

Newtonville 60, Mass.




"scares"

aircraft

how

Now,

is

all

this

failing

is

to

common

a

company's

total

backlog

sume

it will be produced in one or

and

arbitrarily

as¬

two years

with computations mer¬
rily rolling along on such pro¬
jected sales. All this does is to
compound a series of errors.

than

more

greater

a

Contracting Business

forgotten that
essentially the aircraft industry is
contracting business.

a

to

ordinary lines of manufactur¬

ing enterprise.

not

fall into precise accounting deter¬
minations in any one given year.

$10.3

of

billion

for

In the 1952

few days ago,

a

amount

for

air¬

intent.

Some

their total

place

Capacity

Level

due

to

companies
and

that

basis.

This
from

most aircraft
operating on one
extended

even

situation

combination

a

of

of

on

stems

circum¬

subcon¬

units

re¬

backlog figures by the
advance

It

was
not
until
early
that the Air Force pro¬

year

log-jam

broken and

was

extensive commitments made.

Of

wishes.
Government

defense

mobilizers

insisting that the automotive
industry actively share production
of key aircraft types and powerare

plants.

The

this

behind

reason

is motivated by a number of
factors.
' •
move

In

the

have
least

first

place, the military

strong desire to provide at

a

two

of

sources

supply

for

each vital aircraft type, dispers¬
ing production sites in geographi¬
cally separated areas. Further, in
this proedss, it takes out a certain

civilian

pf,

its

attendant

undue

isting

concentration

in

aircraft
In

labor

scarce

is

now

Profits and

Even

There

are

when

not

always

pro¬

aircraft output,

would

be

in

forced

the

ex¬

in¬

build

to

tentative

All

military air¬

are

subject

price

ultimate

and

to

new

While

mobilizing the automo¬
tive industry and smaller indus¬

broader

serve

base

to provide a
from
which

volume levels may be attained.
The fact remains that with
DESCRIBES
ket
ior

trends

better ways

and

.'«.««

the

new

also Charts,

TOGETHER WITH
OF

ALL

440

FOR

•

j

♦

Primary

and

43

$1.00—MAIL

Trend

source

ANALY¬

TODAY

RESEARCH

4-A, Mihran Bldg.

of

CO.

supply

another
the

company's
prime aircraft

have less of
GROUPS

Santa Barbara, Calif.

second

stocks

Graphs!

CURRENT

STOCKS

INVESTORS
Dept.

individual

select

profit.

INCLUDES

Indexes,

to judge mar¬

thus

a

limiting

a

under

jurisdiction,
builder

will

volume to produce,

its profit possibili¬

ties.

The

a

number of

companies have followed

before

years

com¬

being made.

now

gotiation

for

panies

by

is

of

the

events

move.

rarely
for¬

are

Military re¬
constantly.

quirements

change

This dictates

changes in procure¬
For example, be¬

ment schedules.

fore

Korea,

visioned

all
no

aircraft

air planners en¬
of war which

our

type

a

is evaluated on its
merits.
The degree of

original

engineering and

design¬

ing, the extent of plant facilities
owned, the measure of subcon¬
tracting used,
relative
produc¬
tivity of labor, management effi¬
ciencies, and

the

Air

war

called

fact

that

all

for

All

backbone

But

Force.

aircraft.

in

the

B-36

the

the

different type of

a

this

accentuates

which

are

including
bound

on

are

in¬

aircraft companies.

always, will re¬
element in accom¬

Management,

as

key

a

a

the individual fortunes

of the separate

main

missiles,
tremendous

guided
exert

to

fluence

plishing successful results.

Joseph Rubin to Be
Partner in Bache Go.
SAN

ANTONIO, Tex. — Joseph
of Bach & Co.'s
office in the Gunter Hotel, will
be admitted to partnership in the
New York Stock Exchange mem¬
Rubin,

manager

ber firm

on

Feb. 1.

With Waddell & Reed
Mo.—Vernon
S.
Reed,
Inc., 408 Olive Street.
LOUIS,

SITUATION

WANTED

ASST. TRUST OFFICER
FOR

JERSEY

NEW

BANK

f
Available

'

i-

'

immediately.

qualifications.
then

.

.

.

Broad

Opportunity—

salary consideration.
Box

on

request.

&

Financial

125,

Resume

Commercial

Chronicle,

Park

25

Place, New York 7, N. Y.

host of other ele¬

a

There are many costs
included in annual re¬

ports but which

HELP WANTED

disallowed in

are

renegotiation.
The

present

excess
profit tax
which imposes a top
ceiling of 62% on combined nor¬

WANTED

measure,

mal and

excess

curtain

to

ply
Net

profits taxes, is no
earnings but sim¬

another hurdle to
profit
margins

from

3

posts,

number

of aircraft
such
can

2 BURROUGHS PNS

surmount.

averaging
4%, after all tax im¬
quite possible for a

to
are

MACHINE OPERATORS

companies.

Call Mr. Bullock

circumstances, the

BO 9-5146

expect new post-war

in both sales and

earnings
1950, dollar sales of

;for 1951. In
the 15 large aircraft units are esti¬
mated at about $2 billion. This
compares with
some $1.5 billion
for the comparable 1949 period.

Using recent average profit mar¬
gin experiences after taxes, 1950
net profits should range from $60
to $70 million.
This would com¬
pare

with

million

a

total of

shown

more

for

than $49

1949.

These

figures are, of course, subject to
subsequent qualification until all
accounts

are

own

settled.

craft

that

the

projec¬

basic

auto¬

fitwise.

deliveries

group,

of

may
some

An
to

right

ties.

easily attain
billion in

$3

man

Some contacts

and

replies

will

be

Our

held in strict

this advertisement.
BOX
Commercial
25 Park

&

Sal¬

basis.

employees

in

securi¬

required.

profit-sharing

will be

made

experienced

over-the-counter

trading

ary

offer

attractive

the

air¬

iy acquired associates in the
motive

TRADER WANTED

fidence.

conservative

tions indicate

the

technological advances
of military aircraft,

forms

ments enter into the renegotiation
processes.

of

Korean

com¬

uniform.

means

Each company

separate

made

Rene¬

extensive subcontracting practices
and should do much better proproc¬

industry is

dynamic
on

1948

new-

subcontracting

aircraft

The

industry, excluding its

The

ele¬

take

may

Renegotiation Act

Our

On the other hand
aircraft

The

static,

a

pletion.

highs

much

processes

more

or

industry

such

construction.

ti&Z

two

reluctant

authorize

related

redeterminations

renegotation.

renegotiation

far, the government has been most
to

other

and

DuPree is with Waddell &

and

note.

of

Under

facilities.

factors
ments.

(Special to The Financial Chronicle)

contracts

series

Thus

plant

widely, depending

vary

types of production, efficiency

on

ST.

Renegotiation

sales

areas

being

how¬

great selectivity is likely to
prevail. Backlogs, the trend of, de¬
liveries and average profit mar¬
gin experiences, and hence earn¬

are

earnings
finally reported they have a

iron

instances, to han¬

some

manufacturers

dustry

and

Within the industry itself,
ever,

payments re¬

differences

craft

ironical

extensive

number

takes

clearly identified.

it

now,

are

not

A
of

other

But

include

prime contracts without

ceived; others do not.

All this would appear to swamp
the aircraft industry and fill the

capacity levels.

builders

to the dilution that

regard

amount

Aircraft Industry Not at

shift

or

fiscal year, pro¬

year.

As of

contract

its

duce their

nqt.

given

fore

next fiscal

has

A

three years be¬
completion and does not

tracting.

to

As such it

does not lend itself to many of the
standard financial ratios peculiar

craft procurement is indicated for

group

be

never

Moreover, what is a company's
backlog? Some aircraft companies
count only firm orders in their
backlogs; others include letters

aircraft procurement.
even

A

It must

In¬

in motion.

set

difficult.

_

take two

are

With

after

ever

take

during 1951.

profit margin of only
taxes, net earnings of
around $90 million should not be

business

going to be evaluated? A

volume

average

3%

producers.

may

the flow of air¬

1951

dle increased

SIS

FINANCIAL REPORTS, INC.

auto¬

industry in the picture,
will be plenty of business

available for

an

ings. will

Despite the entry of the
motive

high

trial groups for aircraft production
slows the immediate build-up in

post-war
pattern
industrial
activity, and
-

come.

peace

the current

duced.

■

and

Dow

time to

production

where

m

20 YEARS
war

at

reverse

output, it does

review

soon.

Appropriations, including sup¬
plemental measures approved for

avoids

NEXT

annual

very

production
saving in ma¬
terial and manpower. This further

tvl

3rd

the

on

sustained

some

likely to

with

to

17, N. y.

now

Nevertheless, it is obvious that
aircraft procurement
levels are

amount;

Dept 5> 225 Park Ave"
New

models

of

additional

lYlLnHT

company.

liveries

■

MeKflY

being assigned for
complete manufacture by another

applies to all military aircraft de¬

goals of

market gains. To get your copy

just clip $1 to this ad and mail

recurrent

list moving into the active

shortages

amazing

product from

dustry is the company it has sud¬
denly acquired, much against its

the

meantime

ii',jr;sk:ini1'

and Keep It!

aircraft

greater chagrin to the aircraft in¬

4,274 aircraft.

the

monthly production rate exceeded

presents

are

guarantee that a prime
builder can prevent his

totaled

its

in Wall Street

no

curement

In

Thursday, January 25, 1951

.

dollar

subcontract¬

stances.

898

a

ing is

extensive

this

duction

How to Make

of

production rate of 50,000 was
not reached until August, 1942—
27 months later—when deliveries
nual

National Federation of Financial Analysts

Societies, Chicago, 111., Jan. 7, 1951.

zation

plane production program, an an¬

ly

President

The

expansion brought
earlier foreign orders

the

Despite

There

time.
New
aircraft
types
take
longer to engineer and tool up
for production.
And there are a

In

trend.

similar

a

acceler¬

delays
industry due to
caused by failure of

bottlenecks

serves

avoiding

essential components to arrive on

in

May, 1940, production was 450
planes. A year later, the monthly
output
was 1,380;
and in May,

a

strike.

a

to

as
a
safety valve in
sharp
fluctuations
in
plant expansion and employment
with subsequent deflationary ad¬
justments. Nevertheless, the utili¬

ess

there

the

budget advanced

This objective will require

year.
a

be

to

May,
1942, production had
risen to 23.202,000 a month; and

model

current

a

This is to say
nothing of the distinctions exist¬
ing in relative dollar costs.
6

conducive

vide

its
counterparts
produced during World War II. 1942, the rate was 3,983.* The
As a result, it now takes approxi¬ peak was in March, 1944, with an
;> !■<'
mately four times as many man output-of 9,113 planes.
than

complex

as

Monday due to

not

later, in May, 1941, the production
rate had risen to 6,229,000 pounds.
By

a common

fallacy

12-month period as

rate

today,

panies

able

than three times with¬

000 plane

in¬

u a

not

was

the in¬
expand

II,
to

by President Truman. Production
in May, 1940, at the time Presi¬
dent Roosevelt announced his 50,-

losophies gov¬
erning its op¬

stance,

War

more

the

to

phi¬

erations.
For

a

airframe

World

conditions.

ating production goals.

ing out planes at 5 times the pres¬
production." Our pres¬
rate of military aircraft pro¬

dustry

essential to

r e n

favorable

This is

ent

During

and

example, despite the press¬
need for its Packet aircraft,

week ago

ent rate of

proper

a

during the next
then
only

months

bound

of

accomplish is

plant has been shut down since

schedules and variations in

pounds

posi¬

tion.

is

The best the indus¬
can

ing

differently.

appraising the aircraft indus¬

try in

in

undertaking.
try thinks it

throughout

In

be

by past
standards,
President
Truman's
projected 5-fold increase in air¬
craft
production
is
a
fantastic
even

Fairchild's Hagerstown, Maryland,

managerial skill, net earnings of individual companies will be
affected

is obvious that

For

Warns, be¬

indicate net earnings of $90 million.

It

under

Looks for $3 billion in aircraft orders in 1951,

which may

Production

in

Fantastic

3-fold expansion

is

year

5-fold Increase

twelve

aircraft industry is not yet operating at capacity

as

production.
cause

II, asserts projected
outlined by President

as

.

i

Industry
a

.

All
con¬

know

of

Write

F-118,

Financial Chronicle,

Place, New York 8, N. Y.

Volume 173

Number 4980

.

.,

The Commercial and Financial Chronicle

Oppose N. Y. City Tax
On Security Trades

r
Steel Production

The

Electric Output

Carloadings
Retail Trade

State of Trade

Auto

Industry

implementation of the defense

program began to

was

markedly above the level for the corresponding

period of 1950.

;

the final

For

quarter of

drive

the rate

since the

by

an

gain of $13,000,000,000
in the preceding quarter and a
$27,000,000,000 jump

Korean

increased

started.

war

investment

This rise

in

to

in part occasioned
facilities by private

was

production

industry together with the faster
Aided to

or a

pace

of defense outlays.

degree by the conversion of business and industry
defense work employment casualties of this nature
helped to

increase in

a

some

degree aggregate claims for unemployment in¬

surance.

This week the steel industry is scheduled to pour more than

2,000,000 tons of steel, for the first time in history, the American
Iron and Steel Institute announced on Monday last.
The present

for

one

year,

high production, if continued without interruption
the Institute adds, would result in an annual output

of

105,166,000 tons of steel. Last year the steel industry made about
96,700,000 tons of steel, or nearly one-half of the entire world's
production.
The first week of 1,000,000 tons' output was achieved in
May,
1917 and the first week of production
exceeding 1,500,000 tons
the

was

week

of Nov.

11, 1940, the Institute notes.

Defense steel requirements are increasing rapidly this

week,
according to "Steel," the weekly magazine of metalworking. Mill
quotas for military orders are being stepped up by Washington,
and by early February volume will show a marked rise.
This
week the Steel Task Committee meets to consider
second-quarter
distribution of steel against not only existing allocation
programs,

including railroad freight cars, but against still other programs
still in the formative stage. Mandatory mill tonnage set-asides of
the various products for DO accounts are being upped
sharply

percentage-wise.
The supply squeeze on civilian goods producers is definitely
tightening. Automobile producers are cutting production this quar¬
ter
20 to 25%, the trade magazine states. Not only are defense
steel requirements rising, but end-use limitations are being im¬
posed, with more in prospect.
V
.
:

Stainless

steel

and

:

will

nickel

products barred for further

be

added

to

soon

the

list

of

in civilian goods manufacture,

use

telegrams sent to Mayor
R.
Impellitteri express
opposition to the proposal of the

wise'and

expectations are that a freeze order will
Washington soon, perhaps in a matter of days. One

Feb.

1

will

be set

the effective

as

Some

date.

of

come

out

guess

is that

rollback

of

scrap

prices is expected in certain quarters but the whole situation is
still very much up in the air.
With the steelmakers

pushing production to the limit of avail¬
expansion in the
making. In the East, this trade paper asserts, word is circulating
to the effect that at least two producers, in addition to U. S. Steel
and National Steel, plan mills in the Delaware river area.
able facilities talk is heard in the trade of further

On

Tuesday of last week the nation's railroads petitioned the

Interstate

Commission

Commerce

for

a

freight rate increase of

to

of

Estimate

of

New

have

In

on

last for such
■

an

increase

on

motion

a

Friday

on

interim basis, upon condition that

an

the railroads will honor claims for refund

;

the Board of Estimate for

variety

Last week's boost in

allow them to raise their
The roads

the ICC to

freight rates 6% immediately.

supplied
Midst

securities

investigate the matter, they will lose millions of dollars

Continued

on

page

32

news"

and

two-cent

a

Mr.

Securities

has

Traders

In

in

City
York, whereas recent in¬
creased activity here should com¬
pensate to a great degree for your
increased
operating
expenses."
Mr. Barbier requested that his or¬
ganization be permitted to testify
on
the proposal at a hearing of
A

of Estimate.

similar

telegram
Impellitteri
by

sent

was

William
Jackman, President of the Inves¬

Mayor
tors

League,

man's

on

Inc. of
June 24.
to

message

175 Fit h
Mr. Jackthe
Mayor

stated:
"In

behalf

the

of

investors

of

the nation, and

particularly those
living in New York State, we
unqualifyingly oppose the pro¬
posal of the Board of Estimate

that

city tax be imposed on the
a tax might

a

sale of securities. Such

seriously

values

security

affect

and drive business to other states.

results would far

Its harmful

ceed any tax

the

At

of New

the Board

a

curb as the market

new

20-year peak, it was affirmatively

"constructive," "psy¬

eyes.of

one
was

morning-after comment, the

journal's

bullishly described

as

"tending to make

its value."

result

net financial loss to the

a

reached

margin account owners keep their positions rather than
liquidate them.
Once they sell present margin holdings they
must put up 75% cash to establish new positions.
The higher
margin requirement tends to make holders of stocks on margin
place more value on the technical position of the account than

being transferred to another state,
adding: "Such a move would be
and

as

many

to New York's financial activities

reluctance

May

increased credit curb

membership of 650, said in
his telegram to the mayor that
levying of such taxes would lead

with

polls

attention fastened on "inflation" as the market's determinant.

a

made

emotional atmosphere, in
classify 70% of the com¬
still bullish, on day following

current

interpreted bullishly as

of the
which

group,

Margin Boost

chologically inflationary," and a depleter of the government's antiinflation ammunition; or negatively ignored vis-a-vis the bullish

impost

Barbier,^ President

a

margin requirements

typical instance of these foibles of
reaction and selective emphasis.

the Reserve Board's
A. Wilfred

each bank check drawn.

on

the

mentators

wide

a

a

the

which

imposts to meet a
$30,000,000 increase in the city's
cost of operations. The proposals
include a city tax on the sale of

ex¬

receipts which might

be obtained."

previous occasions of margin-raising When the market's

following action
impact

was not so auspicious, as during the declining
following the hike of July 5, 1945, its economic
by no means interpreted with such blithe optimism.

session

market

was

War-Peace Bearishness

Similarly oscillating have been the market public's reaction
to war and peace portents.
This can be (and in previous columns
has been)
shown in detail to have occurred in innumerable
instances ever since the Hitlerian aggression of the 1930s.
On a
microcosmic scale was this portrayed in yesterday's market (Wed¬
nesday, Jan. 24), when the market's overall decline was ascribed
to alleged peace feelers—in contrast to previous bull-atmosphere
constructive conclusions from peace prospects and to war-induced
declines.

^
.-•
••
'': 1 ''—-■.■'•-v.,
Taxation constitutes another chameleon changing its color in
conformity with bull and bear environments. During hear periods
the public's consciousness is concentrated on the destructive fea¬
tures of rises in the tax impost, on corporations as well as indi¬
viduals.
At such times even the truism that capital values are

essentially

to net-after-tax income yield is realized and
On the other hand, in rationalizing rising market

tied

emphasized.

action, the alleged bullish features of tax rises are highlighted.
Nor
is
this construction confined
to the passing-on of the

f'orm of selling-price rises, but is applied to
Thus, one able commentator currently affirms: "In the
final analysis all taxes are inevitably inflationary.
This is true
because in the long run they can be paid only out of the sales
corporate tax in the
all taxes.

dollar, which is the consumers' dollar.
Inevitably, almost any
a tax tends to be 'shifted' or pyramided somewhere along

kind of

the line."

Smith, Jleukom Are

The "Bullishness"

G.

John

McKinsey<p&
consultants^t

in

management
Smith

Mr.

has

in

this

to showing the

dollars.
The Selective Emphasis Approach

in

We

see

selective

emphasis also

used in picking

work

Continued

abroad

and

country

Co.,

active

consultant

management
both

beeft

strikingly demonstrated
issued a study entirely

bullish implications of the excess profits
tax, such as its aid to advertising-media companies entailed in
the anticipated increase in "extravagance-spending" of 38-cent
devoted

elected

been

have

Neukom

of Excess Profits Taxation

The process of selective emphasis was
last week when a leading brokerage firm

McKinsey Partners
partners

pointed out that if they have to wait very long for

"the

and

inconsistent

of

E. Everett Smith, Jr., and

In doing so, the railroad operators urged the Commission to

movements

cited

Contradictory Attitudes Toward

telegram to Mayor Vincent
Impellitteri,
the
Securities
York,
Inc.,
President,
Leslie Barbier,
suggested reconsideration of the
proposed taxes which are com¬
prised in the recommendations of
R.

Traders Association of New

to any increases not

as

finally approved by the Commission.

market

ments.

a

6% with maximum and specific increases on certain commodities.
The carriers announced that they^ would file

ticker, and the actual divergence be¬

been

by us as one of the chief
obstacles to the anticipation of market move¬

York

city tax be levied

a

the

tween

the sale of securities.

Avenue,

Steadiness characterizes all sections of the steel market price-

v

successively conclusions from the same outside factor as well as
to select for emphasis from among those economic factors those
which fit as the appropriate causes of the
market's behavior—ex post facto.
The shap¬
ing of "economic" interpretation to conform

in

City that

$297,000,000,000,

The

Vincent

Board

annual rate of

=

current explanations of the stock market's behavior in
terms of external events highlights the proclivity both to draw

to

The presidents of two organiza¬
tions related to the securities busi¬

to

an

•

The Chameleon-Like Market Influences
•

other states.

ness

1950 the

business

investment

report of the President's
Council of Economic Advisers to Congress discloses the fact that
total output of goods and services in the United States advanced
over

•

Inc., and Investors
League, Inc., executives have
sent telegrams to Mayor Impellitterri warning such tax would

pick

up momentum total industrial output for the nation last week
showed a further rise in the already
high level of activity. Overall

production

I

By A. WILFRED MAY.

New York,

Production

Business Failures

J
As the

•

out of the
on

page

since

joining McKinsey & Co. in
the New York office in 1944, and
he

earlier

with The
ARE

PLEASED

ANNOUNCE

TO

THAT

and
••'■''

'

•'
.

RAYMOND

F.

'

'

'

•

REVELL

JOHN

'

I

DEAN
•

r

"

;

/•

*

■

\

•

Division
mours

■

R.

E.

duPont

I.

Arms

de

MR.

Ne¬

joined

the

AS PRESIDENT OF THIS

Mc¬

THE

the
and on the Pacific

marketing,

Chicago area
ASSOCIATED

WITH

US

IN

both

in

DIRECTORS

OFFICERS OF THE

20, 1951, ARE
POOLE

VAN RADEN

GEORGE B. GIBBONS, JR.

DEPARTMENT

J.

Schenin

Co.,

INVESTMENT CO.

LA SALLE STREET

•

CHICAGO

TELEPHONE ANDOVER 3-7055




AND

BENJAMIN

82 Beaver
Street, New York City, is engag¬
ing in a securities business.

BARCLAY

CORPORATION

MONROE V.

OUR

L.

39 SOUTH

POOLE

CORPORATION FROM JANUARY

L. J. Schenin Co.
TRADING

V.

in Chicago in 1934

has been active in the firm's
in

MONROE

Coast.
ARE NOW

ELECTION OF

ANNOUNCE THE

.

Neukom

Kinsey firm
work

SCHOLZ

WE

*

and
CLARENCE

Remington

the

of

& Co.

Mr.
AND

associated

Estabrook & Co., investment

firms, and
■

MURPHY

been

had

First National Bank of

York, Smith, Barney & Co.

New
WE

5

Securities Traders Association of

Commodity Price Index
Food Price Index

and

(433)

i

GEO. B. GIBBONS 8t

COMPANY

INCORPORATED

Irving Gold Opens
Irving Gold is engaging in
curities

business

from

109 East 153rd Street,

20 PINE STREET

a se¬

offices

at

Bronx, N. Y.

NEW YORK 5t N.

Y.

38

'

L

6

(434)

'

■

'

basis, for the fiscal year 1951-1952shows expenditures of $71.6 bil¬
lion, receipts of $55.1 billion at

Personal Thoughts on
Our Financial Situation
V,

By ALLAN SPROUL*

Washington
Ahead of the -News

ing deficit of $16.5 billion. On acash basis, however, which is the
important basis
economic

rent

York

in

terms of

effects

and

cur¬

Treas¬

public borrowing, the figures
improve somewhat, The cash out¬

ury

Asserting direct controls
time, and

weakened by

are

and toward wages,
taxes

-

to

can

lem

Federal

statements, in the past few
days, from those in high author¬
ity;, the first about the need for
direct controls
our

econ¬

the

and

omy,

second

about

fiscal

policy

and debt

We

in

not

let

way

any

stern

our

I

of

referred,

the

there

outlines

and

debt

a

of

management

of

was one

fiscal

a

for rearjmament.

policy

were

The fis¬

pay-as-you-

I think that is imperative. The
debt management policy was one
go.

to

that, in

for
Allan Sproul

"

distribution of goods and services,
and to prevent inflation. We have
measures

allocation
of

of

must

materials,

prices, rents

and

With the general outlines

of this program we must all agree,

though reluctantly, after the

even

more

neces¬

than before—if that be

sary

tofd that these

opinion, would make

my

pay-as-you-go

fair

control

which

cal

pro¬

a

wages.

must

we

heavily and to use
sparingly.
the second public statement

policy

defense, to in-

even

direct controls, and our

on

program

our

duction

and

emphasize,

reliance

some

of

economy

promote

include

I would

sible:

I

afraid

am

that

pos¬

the

an¬

debt management policy

nounced

would 'lead

directly or indi¬
rectly into too much financing by
the

banks,

substantial

nancing.

had

we

amount

And

do

to

in

terms

tions

But it is not

temporarily find other outlets for

intended, I

am

sure,

nonbank

investors

who

that

we should accept it as a com¬ funds
lacking, it would have short¬
plete guard and shield against in¬ comings. It runs the risk of
falling

flation.

short

Direct controls''couldn't do

in

job

the

and

war

that

postwar

of

bank

attracting

investors

pe¬

stance,

riod, and they can do it less well
in a
period of rearmament and

for the

and

willing
the

in

non-

first

in¬

of

creating reluctant
of government securities
longer run. We must have

holders

mobilization, when the final com¬ learned from our experience dur¬
of war are lacking and ing and following the last
war,

pulsions
the

period of required restraint is

indefinite,

but

likely to be

pro¬

longed.

Direct controls may sup¬
press inflation for a time, but they
do not prevent it. They are
likely
be

to

weakened, in application,
soft attitude toward farm

by a
prices and toward
the

long

wages,

they will fail, in

run

in

and

any

with respect to market

bonds, and

more

recently since the Korean
fighting started, with respect to
savings bonds, that these
risks., If these risks

they would
later

be

based

that too much of

mean

financing

our

would

done

sooner

with

the ready

on

real

are

realized,

were

bank

or

credit

availability of

case, unless backed by a strong* Federal Reserve credit. And when
fiscal and credit measures. There that
credit began to express itself
will
inevitably be shortages of in

inflationary price advances,

some

goods and

for. civilian
the

next

will be

piled

a

consumption

during

two, and there
growing national income
year

or

top of

on

liquid

some commodities

a

in

resources

the public.

not reduced
by

New

by

at

the

our

<

to

powers

control

the inflationary brew
greatly impeded by the needs of

of

the

hands

of

traordinary support.

a

Midwinter

Stern

Tax

Action

Fortunately,
with

the

nancing,
tax

as

one

not

of

should

nor

talk

ment

to

fi¬

be for

we

can

faced

deficit

see,

as

if stern

is followed

by stern tax
Despite the inspired com¬

of

of

some

market

our

let¬

immense;

pay-as-you-go

borrowing needs does
market

a

floating

not require

buoyantly

the promise of unlimited,
central

Stock

is

pious proposal which ducks
facts; the magnitude of our

a

the

CORPORATION
Common

be

not

TUNGSTEN

bank

credit.

access

That sort

on

Share

from

ambitious

be sure,

executed by

Orders
your own
or

investment dealer

the

undersigned

will
and

or

now

later become

write

only

come

ELLIER &
Broadway, New
Tel. Dlgby

are

CO.

York 4,N.Y.

4-4500




What
we

some

actual

which,
over

are

have

seems

a

known

fiscal

entirely

time

expenditures.

problem

budget,

on

which

an

in

The pro¬

accounting

altering

this

and

condi¬
of

the

invariably goes
the control

country

altering and ic is
the

that

the

over

ideological

groups

But

without

even

ments, the figures

such

part of industry to get its men into the
positions of power with a view of lessening,

with are manageable.

We

to cover

than

more

taxes
the

cover

t

or

In

great productive economy.

a

fact, if

don't do it; if

we

we

let

ourselves in for another round

•

to

of

what they have

them

reassure

that

cline in

purchasing power of
well find that

our

work and

been

war

sc

and

Carlisle

Bargeron

ernes

look

upon as

their exclusive grounds.

and

while

the

"dollar

seemingly running

them.

When

year"

a

we

would

men

things the real

recall the Leon

be

would

power

Hendersons,

•

Henry Wallaces and the blanketing of Donald Nelson with Sidney 1
Hillman, we know just what was meant.

we may

incentives have-

save

alisiic

come to

moving in

the

of

They yelped in panic as they contemplated Roosevelt the Gieat,
moving away in late '38 and '39 from the domestic scene to global
adventure. They foresaw their replacement in the seats of power
by "dollar a year" men and it took considerable missionary work

continue to rest with

dollar,

impact

do'-'

va

-

inflation, for another serious de¬
the

the

from being put over under the guise of the emergency. Similarly,
the leftwingers resent and resist the intrusion of the industrialists
upon

deficit,

destroy- :

ing those incentives which make
ours

possible,

.

and

can

cash

and we can do it without

exteni

dealing

should

increase

the

to

mobilization upon the country's economy

adjust¬

are

we

As in World War II, there is the effort on

♦

the

could

government

be asked to respond to our present
situation as does the individual.

Now, in the current emergency, industry generally was heart¬
by the naming of General Electric's Charles E. Wilson as the
production chief. As the top man in allocations of ma¬

irreparably'damaged.

ened

Foresees

"Healing Powers
Greater Productivity"

of

overall

terials, plant reconversions, and industrial strategy,

It is not necessary to look too
closely beyond the end of the fis¬

doubtful if this is the

cal

least to

is, be¬
1952—at this time.

In

the ordinary
rapid buildup of
and

of

our

should be

ditures

as

period

for several

armored

might, there '

but it is doubtful that

leveling off of expen¬
the

enter

plateau

powers

productivity,

of

more

Indeed, in

production, and increased national-

Mr. Wilson

that

and

in

carry

terms

a

of

worse,

ability

our

to

fixed

part of

our

different

a

stances

and

set

way

order

of

to

borrowing,

outlets'! for

probably
of

all-

to

*

;

time,

policies,

that

so

would be

we

funds

nonbank
would

in

expansion

of

a

the

prevent

during the

sure

not

*

-

authority to the contrary, that the Public

with their schemes during the

k

emer¬

either

credit,

bank

war,

other than

in

experience

fellows

An
current

war.

We don't

want to make that mistake

financial

we

believe that

will

on

than

not. fI

if

we

Americans

new

just

the

firmly

dedicated

for which

to

sacrifice

we

'

.

our

-

our

the

as

it

when

was

it

is

set

last time.

boy

wonder,

Ed

up

will be

*

on

enterprise
came

,

haven for these

a

The housewives who have been
so,

about which

from.

Taking

a

you

will

soon

,'

don't realize what

the "seminars" of these bright young

men

hear and

is

a

wonder

.

leaf from Stalin's book, his practice

they have decided it would be

to bring into our government

for training in how

600

countries,

nationals

of

unfriendly

Europe, e'c.

North

we

getting Congressional authorization for their project

funds that

are

million

these free

million.

of

appropriated for him.

But that's

a

funds;
lot.

the

good thing

a

,

operate, some '

Korea,

They figure they would have

is that it should be done by Mr. Truman with

act

the

is

bringing in ^'students" from other countries for training in his

Eastern

production

will think and

man,

-v

'

OPA

insight

where it
in

the

the financial front,
on

front

Frankfurter, he is not the slightest embarrassed by his '
and his Fair Deal friends, of course, see no reason

school for revolution,

front, the job is well within
powers,

*

front.

hope

less

on

industrialist

an

clamoring for price ceilings, understandably
harm they have done.

are

interms of the last

to

nightly "seminars" at which they hatch them,
propaganda strategy for putting them into J
Not yet in the government but who*find his way in soon as the "brilliant young;

resumed.

Pritchard, just out of jail in Kentucky by Presidential pardon for
stuffing ballot boxes. A former protege of Chief Justice Vinson;;

The

It used to :

departments

and

been

undoubtedly

adviser"

always busy fighting the next war

war

their

las Led for months:

government securi¬

again opened.

are

effect have

following the

or

and

Office of War Management when John W. Snyder took over, just ,
after the war, arid Snyder's dismissal of him was the cause for a i 5
Leftist smear barrage against the present Treasury Secretary that-;

which

way

unnecessary

when channels of investment

sons.

were

why he should be. Expected to join up with the crowd soon is
Bob Nathan, who in World War II, we were told almost daily
by the columnist propagandists, was the mainstay in every agency
he happened to be serving in. He happened to be serving in the

that,
might review our

we

of tapping all available sources of

cause

with all his

ideas

and Felix

I should hope

goal.

our

at that

town

bright
will

But alter- ;

savings

would" tend

:

borrowing as possible outside the
banking system would continue to

as

in

and

ordinate

dry up, in
these circumstances, and as much

I

expansion

was

needs

hundred of the bright young minds who, from sub- f
positions in the bureaucracy, gave gray hairs to the in¬
dustrialist front men in World War II, have already come back "

should

We would then face

market

war

induslry

defense

the private utilities will be denied adequate materials
for their expansion.
:
.■ V

Federal deficit requiring (Treas-

be

power

increased

scheduled

gency and

circum-?

of

different

a

magnitudes.
ury

its

for

Several

If all-out war comes, we

a

of the

care

materials

Power crowd will make hay

life.

face

of his first public utterances after taking office,

one

needed

Mr. Wilson

be abandoned before such controls
a

if

-

even

projects, including the St. Lawrence waterway-hydroelectric prop¬
osition. This means, as it did in World War II, and quite likely,

pay-as-you-go. program.

become

.

diverted, it would continue to be able to do the job. A few days
later, the President recommended seven additional public power

And, at that time, the strait-jacket
of direct controls could begin to

of

>

he did

as

Mr. Wilson will find

said that the private electrical

ample position to take

eventually might become bet¬

ter,

who went to such extremes

man

shake-up that is to come.
blanketing as he moves along.

income should have time to begin
their work, so that our budgetary
no

a

economic

increased

problem would become

-

against American businesses, who harrassed them so'much, can
be considered a zealous guardian of private enterprise in the great

readiness.

Meanwhile, the healing

It is

already been blanketed, at

He left the department several months ago to enter
private practice and conceivably he may have changed his stripes

course,

continued

rules

a former Department of Justice official who
has been crusading against business as an anti¬

years

trust buster.

we

Mr. Wilson has

extent, with

an

after a'
armed forces

of

increased

case.

our

a

in the

and regulations of the war economy, industry seemed secure.

1951-1952—that

year

yond June 30,

no

present

manageable

terms of pay-as-you-go.

jected

the

as

ties

to

an

of

Maybe that aggregate of taxpayers

appropriations,

At

•

through

describe

would

World

for

Washington, between
individuals. The eco¬

to

the

of

it

names

intensification

an

power

groups

face

nomic

ard

get ready

National Emergency

bring

for

ideological

non-

ordi¬

or

dates

we

budget regardless. He can't ' clash, Insofar as personal ambitions are con¬
cerned Washington is the best market place for
say to the Bureau of Internal Rev¬
them when the nation's energies have pretty
enue, show me where you would
make the cuts
and I'll pay up.
much, if not wholly, come under its direction.

be said that

only estimates,

the facts?

in

The

of

as

his

to

time later will be¬

cash

reductions

expenditures.

always

scramble

expect

even

exception

These crises

re-

nary citizen when faced with a
substantial tax hike has to adjust

*

-

Phone

plans

will be realized

but which

might

further

of

talk draws its only real sustenance

ice 15 Cents per

We

kinds

ters, deficit financing in the period
we are now
entering does not need

NEVADA

ceipts.

nate

Demanded

are

we

necessity

far ahead

action.

Offer

tions

under-estimate

in substantial amounts.

are

Meeting of
the New York State Bankers
Association,
New York City, Jan.
22, 1951.

We

find

level

by Mr. Sproul at Luncheon
the Federal Reserve Bank of

York

again

high

♦Remarks

g-iven

would

heavy taxation, or

and

we

government security market re¬
quiring extended periods of ex¬

If these pressures

ditures

of

experience of the past six months.

the

present situation

further

reduced

any

possible refunding of bank-held
debt, by sale of long-term obliga¬
to

With

This

War III.

of deficit fi¬

even

be

by this writer describing the confusion, the
backbiting, the intrigue that was going on in Washington as we
prepared for World War II came out on the eve of Pearl Harbor.

the

and

billion.

written

book

by making allowance for the usual
tendency to over-estimate expen¬

us

if

$61.3

might

defense

dam

that

In

seg¬

of

sure

control

therefore,

to

legal

control

been

will not hold.

the

credit

must have

ments

credit,

by permit¬

expansion of

unnecessary

private

have

broad

increased

are

an

resolves to tax

been told that
direct

they

diminish

agement.

billion

at

figure

great confidence in those charged
with administering those controls,

man¬

income

deficit at $12.8

By CARLISLE BARGERON
•A

be

may

billion, the cash

some

if

ting

1951-1952

estimated at $74.1
cash

entirely manageable "in terms of pay-as-you-go."

seems

There have been two clear pub¬

we

rise in

fiscal

for

go

soft attitude toward farm prices

estimated

lic

.

a

budget deficit.
Warns Treasury's debt management policy would lead to too
much financing by banks while direct credit controls are not
complete shield against inflation. Holds, however, fiscal prob¬

■"

in

inflation for

suppress

Reserve Bank executive calls for

proposed

cover

a

only

fri

j

Thursday, January 25, 1951

.

.

\

i

>

.

From

present tax rates, and an account¬

■

President, Federal Reserve Bank of New

.

>

The Commercial and Financial Chronicle

Red
a

so

China,

hard

time

their idea

emergency

free

Roosevelt had around $100

Truman, so far, only has about $37

.Volume 173

Number 4980

.

.

.

The Commercial and Financial Chronicle

(435), 7
has brought loan

money

Credit Controls and Bank Earnings
-

vestment

half

/

By WILLIAM A. LYON*

enterprises

brings

forms

large

A

new

calling

:

has

emergency

for

a

are

arrived
national

supreme

borrow

higher rates.

capacity

sets

turn

out

tain

strategic

to

the

increase

that

operating costs.

At

this

Some

turn

being
drastically

are

r

u

or

t

i 1

a

that

may

concen¬

trate

on

i

e r

1

a

finished
But t h

again

and

bank

credit.

It

not

be

can

boundlessly, in-quanti-1
great beyond measuring, until
and

we

the

whelmed

by

world

its

banking

system

had such

a

in

our

well know.

We

with the
credit

are

over¬

immensity. .Our

has not always
limitless credit poten¬
those who have done any

tial, as
reading

economic
are

all

history
familiar:

so

of power in

reserves

machinery

that

our

have

we

to take its matchless

come

a

But here

offsets:

banks
ex¬

of encouraging them
the volume of earning
Thus it was possible to

assets.

is

produced
ties

were

cause

to build up

is

product that
naturally in short supply.
is

1930s

press purpose
Wm. A. Lyon

essential

That

there

activity'

put in reserves for the

were

man¬

e r e

business

decline in interest rates.

ufactures.
one

stimulating

did in the 1920s and

ma-,
s

every

of

one

much

banks

to

the
use

capital

banks

finds

it

several times

as

the

as

loan

small

How good are bank profits when

put next to the earnings of other

competitors for

investment

Much of

A large sample of industrial
companies selected by The Na¬

The

member

banks-of

the

be

can

for

has fallen from

2.63%.

have

factors, in
been

nated.

largely elimi¬
of credit restraint

they have been in the

jority for
have

control-

pretty

In years

—and

credit

ma¬

decade—the controls

a

operated

in

such

a

way

Reserve

trast, showed
net worth of

District, by

con¬

average on their

an

only 5.5%.

the

banks in

ers'

sistance

Federal Reserve Banks.

inflation

to

is

is

exerted.

closely entwined
with the public interest that
any
so

This

poor

samples

ran

a

undermining of its strength is of

The Fed¬

the

banks in

member

District.
return

These

the

merely to the

banks,-but
.

to

the

,

..

to

In what I say I do not wish

the impression that' I
against credit controls in prin¬
ciple or in practice. My desire is
convey

add

from

derived

from

the

other

securities

ac¬

standpoints it is
'

harmful.

rate • adjustments.
The
rate
for
prime loans is all too often a kind

and business are not paying
high enough for the credit

rates

they

It is safe to

use.

adequate are the rates paid. In¬
dustry's earnings easily permit it

loss leader is the article

to

reasonable

pay

Bank

It

is

time

and

commerce

strictive

eral.

plied.

When

influence

the

banks

being

purpose

to

curtail

ap¬

was

to

credit,

sition

"An
23rd

New
New

address

Annual

York
York

by

Supt.

Mid-Winter
State

Lyon
Meeting

Bankers

at

the

of the

Association,
City, Jan. 22, 1951.




for

of

the

bank

deteriorating
earnings

are

The
po¬
sev¬

In the first

place the declin¬
ing importance of loans and the
rising importance of investments
in

banks

for

its

charge

be prepared to accept by negotia¬
tion suitable rates for those prod¬

for

to

more

a

ucts

satis¬

factory relation to the cost of the
service.

The increase in

that

of
banking—chiefly credit—
they use. Customers that are

not

prepared

banking's

commer¬

into

effect

by

by

are

the

large New

earlier

this

York

month,

in

City banks-,

after the in-

definition

the

less

Continued

.

,

ELECTROCHEMICAL
NIAGARA

HIGHLIGHTS

being

same

desirable

on

the

one

COMPANY

ANNUAL

REPORT

..,

•

profit

31%

up

both

..

.

at

full

capacity

$i,884,000 added

to

year

.

.

.

.

RESULTS

$4,'700,000 spent for

.

research facilities

.

OF

■

-

OPERATIONS
'

.

.

,

r

1950

i

total income:

Sales of chemical

en-

capital through conversion of Cum-

For the Year Ended November 30
Our

new

Produc¬

•

ulative Second ■ Preferred.to Common/

r

'

,

1949
'

7

products, parts

and services

Other income.

'

\

y-L

.

$27,897,300

$21,822,200

513,800

484,400

;
'

.

r

■
•

■

■

'

:

'

" '7

Less: Our

7

■

:

•

costs of doing

'"7

■": \

•

•

7*

$28,411,100

business:
.

■'.

'

1!

•

$22,306,600

'o

Wages, salaries, payroll costs......... $ 7,638,800
Raw materials, power,

7

'7'-..

"

Leaves: Profit

Less: Federal

Leaves: Net
Less: Cash

12,202,300

10,287,600

1,514,200

1,368,100

$21,355,300

$18,175,800

$ 7,055,800

$ 4,130,800

3,285,500

1,570,000

$ 3,770,300

$ 2,560.800

2,088,200

1,403,700

$ 1,682,100

$ 1,157,100

buildings, equipment.

on

'

'.

,

■

V" r ;: 'V;'

before income taxes.

„.

•

income taxes.

profit

dividends

$ 6,520,100

fuel, transporta¬

tion, local and state taxes, other costs

Depreciation

condition,

easy money

net

taxes doubled those of 1949.

banking., This kind

......

t..........

hand; and to the re¬

of

periods

curring

larged.

„

consumer

credit

Leaves: Retained

re¬

along

•

I

for use in business.

..

FINANCIAL POSITION AT NOVEMBER 30
Current Assets.
Less: Current Liabilities.

;

j

Ratio.

J

$10,884,600

$12,370,400

2,531,800

1,552,800

......;

Leaves: Net Working capital.

$ 8,352,800

.....

4.30

»...;«

Total Assets.

to recede to any

does not propose

.....

I..,. V

Less Total Liabilities.

.....

to

.

1-

$10,817,600
7.97

to

1

$29,127,300

$27,066,300

3,731,800

3,352,800

$25,395,500

$23,713,500

..■

borrower.
we

to go to the heart

are

of

of

banking's services.

is

to avoid

roads

as

into

growing

far

as

banking

out

of

credit

measures.

Decline

The second
possible in¬

.

in

Loan

earnings
control
.

.

Leaves: Net Worth.

provides is the extension of credit,

second

For this service

,

...........

Annual

Report Available

MANUFACTURERS OF
100

CHEMICALS

THAN

THIRTY

FOR

on

Request

OVER
MORE

INDUSTRIES

f

Rates

portfolios have meant a
shift to a type of asset relatively
less
attractive in yield.
In the
easy

33

on page

NEW YORK

•

plant and other expansion during

V

banking

chronically

22%

Federal income

•

tion facilities maintained
'

comparatively

in .the

shown

credit type of
of

FALLS

1950

•

SUMMARY* Sales up

return on capital various
new
trends are developing.
The
chief one is the interest that is

bank

place, the bias toward

for

rates

accept

charges to be acquiesced in

of

several

to

products

spirit with which they expect their

cial loan rates to prime borrowers

placed

which

heavy volume is centered.
Industry and commerce should

industry rates for

loans that will bear

meager

If

earning assets of the banks.

banking did not
penalize bank earnings when re¬
were

rates

on

the

short-term borrowings.

•

Earnings

reasons

measures

leader with larger
banks,
strangely, in this instance, the

and

Effects of Low Earnings
Out of banking's

It. is
harmful
because
bank the problem in bank earnings, it
weakening of the.
earning power of banks that has earnings have fallen behind the seems to me that there are two
come
about as a consequence of parade since
The first is
the late 1920s, in main lines of attack.
various kinds of monetary con¬ spite of the three-fold growth in to build
up the returns from some
,

loss

of

that the

say

better the credit risk, the more in¬

unnecessary

central

competitors has been for years
principal deterrent to Joan

try

peaks.

77 significant degree from its privi¬
leged position as a below - cost

Deteriorating Position of

to call attention to the unwise and

Classic

to

in¬

one

Reserve

am

trols.

to

up

the

one-half.

and

not

rates

charg¬

more realistic rates for prime
Fear of losing customers

loans.

contestable fact: American indus¬

capital has been cut by

trols.

of

ing

1928 their rate of

Since

on

public generally.
I
I should like to, talk with, you
about the position banking finds
itself in by virtue of these con¬

concern

owners

from standing in the way of

in

the Second

consciously
and
without
Within the last week we
quired from member banks in delay.
what might be called condemna¬ have had new evidence that the
tion proceedings.
This diversion Treasury, whose special status as
of earnings is not necessary to the a government body is forcing the
for
success of
banking's adjustment,
the credit restrictions, need

direct

Bank¬

-

receded

close,

Banks, in turn, pay. straints, on the other, is as yet far
It is well that
over
to the Treasury voluntarily from complete.
the great bulk of their earnings this adjustment should be helped
eral

The time is at hand to
keep the
loan capacity of banks

enormous

only moderately smaller degree.

This contrasts sharply with

10%.

The

earning assets from the com¬
banking system to the

1.63%;

acceptances have

as

mercial

generally the
larger banks, specializing in prime
loans, make the least favorable
comparison for return on capital.

to

The prime commercial pa¬

fallen from 6.04 to

many

shift

1928

the "deterioration of the position of

by the banks
repressive effect on their
earnings. This is so because in¬
terest rates on the obligations of

conditions.

in

hopeful sign.
step, if only a limited one,
right direction.
Brokers'

a

the

loans could well be
brought within
its
scope.
Rather

See

rate is off from 4.85,-to 1.-39%.
Stock Exchange call loans have

showing of the banks is something
during the de¬
pression decade and the war. In
1928, the industrials, utilities and

to permit no escape

market

5.38%

requirements
a

that has developed

from the

reflect

credit.

per

Effects of Pegged Interest Rates y points to:13% while .utilities have
declined slightly to a rate of about'
For some years now compen--

banking as
the- medium
through which much of the re¬

Banking

bank

in

own

Second

our

Banking

emergency.

has

as

announced, is

It is

what has taken place. The rate on
commercial loans in leading cities

race,
earning
around
11%
on
nullify the effects on bank earn¬ their
invested capitals. Since then,
ings of the fall in interest rates.
industriales have improved by two

satory

uc<reserve

was

other leading commodity hafe
experienced so severe a price re¬
any

succeeds best with
offices. Yet there seems no
fully mobilized at the drop of a Treasury's demand that all other way of authorizing each parent in¬
considerations in finance be sub¬
hat.
stitution that
might conceivably
ordinated to its own budgetary de¬
wish to get into the instalment
sire for low coupons has been a
Avoiding Pitfalls of Excessive
loan field to open up a large net¬
Bank Credit.
v
continuing depressant on the in¬ work of new branches.
terest rates on all borrowings. The
Indeed, the chief problem that
Therefore the tendency of large
Chinese Wall around government
we have with
banking during the
banks to acquire smaller ones is
emergencies that have come along securities has made it necessary
A quantity of higher-,
for the Federal Reserve to place growing.
over the last
generation is how to
yielding consumer loans improves
immobilize some of its facilities so major reliance on the raising of
the average loan rate of a port¬
that we can avoid the pitfalls of reserve requirements as the means
folio whose main reliance is prime
of
an
opposing
expansion
in
the
excessive
amount
of
credit.
loans
to large
borrowers.
Low>
Controls over credit by the mone-. money supply.
earnings, moreover, lead to wide
tary authorities have had to be ap¬
Ways have not been worked out
gaps
between
book value and
plied frequently both of a quan¬ for keeping the increases in re¬
market value of bank stocks, ana
titative and qualitative kind.
serve requirements from being in
this circumstance
also accentu¬
Banking of course is in the mid¬ effect an anti-inflation tax applic¬
ates the merger
trend.
Where
dle of the control operation. It is able to commercial banks alone.
earnings rates are satisfactory, on
like
some
farmers
in
Eastern This is not equitable. The banks
large loans as well as small, one
France over whose lands the con¬ are not doing so well that they
of the principal supports for the
tending armies time after time can afford such a special tax. It is
merger movement is removed.
have
surged back and forth in widely realized that the increases
Banking's
adjustment
to
the.
combat.
Sacrifices are involved in reserve requirements operate to
the

rather drastic cut in wages
1920s. It is doubtful if

a

since the

capi¬

tal?

tive capacity can only be
brought
forward by slow stages to the de¬
gree

many

offices do.

strength
the largest borrower, the United
produc-:
States
Treasury, have not been
free, except to a limited degree
of preparedness required by (and that only in the last year), to

for granted.

do

larger

so

Expansive credit policies aimed

at

the

strategic
t

profits than

10%.

we

fered

of¬

earn

tional City Bank averaged 14% on
constitute,their investment in 1949,- Another
largely today, a levy
sample of utilities averaged about
bank earnings.
■;
•

on

,

so

central

they do

as

dis-

even

licensed lender

credit measures did not

d

e

earning assets. In tradi¬
banking restrictive

on

tional

com¬

second. There

a poor

few

a

necessary

once

products.

goods

utilities

several million dollars in size. And

to

amounts and at
But there were off¬

a

continued

,

re-*

forced

were

not

net

their

on

off

comes

are

largfe'

meant in

cer¬

ing

stiffening developed in loan
rates, and this improved the re¬

c

,

Members

serves.

productive efTort. Special steps
are
being taken to enlarge our
to

brought

pressure was

public

fices in the State that

"on short rations."

now

in

or

an

fort in that. Compared to the busi¬
ness of making small loans bank¬

cause
absorption ofr small banks by
Advocates higher loan rates for banks, and points

bank stockholders

out

in

showing, but there is small

of credit and to
ones.

they had been.

rate of

and other

consumer

a

appreciably better
earnings than does capital
used in commercial banking. With
the railroad industry, of
course,
banking does make a favorable

Viewing situation of banking under- credit controls, N. Y.
Banking Superintendent sees in them, unnecessary weakening
of banks' earning power. Because of pegged interest rates,
says compensatory factors in credit control are largely elimi¬
nated, and finds position of bank earnings are deteriorating.
Concludes effect is to force banks into

in¬

Equity capital invested in any
one
of the important industrial
duction

State Superintendent of Banks

New York

less of what

or

and

yields down to levels

The chief service that banking

banking has suf¬

New York Office
Plants: Niagara

•

60 East 42nd Street

Falls, N. Y.

•

Tacoma, Washington

CHEMICALS

The Commercial and Financial Chronicle

(436)

8

Comments

on

Views

on

Another step forward in

be made up

the executive commit¬

tee to formulate

the

term

near

written

article

the

largely of the roundly

eign Situa¬
tion," which
in

tion of this issue would material¬

demption premium. They are call¬
able at 110 compared with 105 for ly improve the status of the new
Consolidated Mortgage in that its
the 4!/2S and 102 for the 4s.
Also
debt

in

line

with

reduction

lien

over-all

the

simplification
program, the company announced
some

time

it

that

ago

cover

now

of the

of

end

maturities

these

1949

be

extended

somewhat of

the aggregate amount of $17,998,000 made up of eight different un¬

the industry as a whole
cently found
reflection

derlying mortgage issues.
Fur¬
thermore, in the past year the
Company has continued its policy
of purchasing in the open market

creased

and

retiring

bonds

the

of

sible

ally

1952-

increases

least

is

known

not

at

become

attractive to
the

on

re¬

S.

be

to

than

$157
than
million of this will represent

million.

no

more

Moreover,

more

no

.

paid on
redemption, or on

formed

were

Grande

Western

San

Francisco.

that

both

all

Times

fflmztirn*#,.
j

N c

o

Members Nat'l Assn. Securities

has

and

on

St.

is

of Economics,

The University of Connecticut
New Haven,

Conn.

He

be

re¬

Rio

Louis-

to

save

case

think, in

It is understood that the

Company,

New Allison Branch

and

accurate,

courageous
He expressed

article I have seen.

and

I

the

and

us

save

the tragedy

AUSTIN, Tex.—M. E. Allison &
has opened a branch in the

Co.

Chilson, Newbery and Company,

will make re¬

available

article

this

of

Chilson, Newbery

world from

of futile world war.

trust that you

prints

Inc., of Kingston, N. Y., announce

Hill,
in

try—Analysis

outlook—East¬

of

Broad

Dillon
& Co.,
15
Street, New York 5, N. Y.
man,

Also

available

Seaboard

analyses of
Sinclair

are

Line

Air

and

Annual

Among other
possibilities along

Forecast—

and

Review

Oil

Canadian

&

and

Gas

Western

Common Stocks and Cash Divi¬

of

common

stocks

the New York Stock Exchange

paid

a

cash dividend in

year for 20 to 103 years—
York Stock Exchange, New

York 5,

N. Y.

Deflated Utility Stocks—Memo¬
randum

on

San Diego Gas & Elec¬

Central

tric,

Power

Arizona

Light

Allen

A.

650 South Grand
Los Angeles 17, Calif.
pany,

Inc.,

if

&

Com¬

Avenue,

63

Inc.,

Co.,

&

Antonio,

San

With

Street, New York 5, N. Y.

time

are

-

and

allowed

interest
to

compounded

operate—Remer,

How to Make

a

Killing in Wall

Exchange '

Street and Keep Itr—David McKay

Exchange

Company
■Vij,

New York

Telephone: HAnover 2-7900
1-911

'

5, N. Y.
"

and

(Department

5),

225

Park

Avenue, New York 17, N. Y.
—$i.oo. - .--v* ; *
*- ,
.

"In Peace

port

on

Financial Chronicle)

,

Me.—Arthur

Se-

by wall, II, is with Montgomery, Scott

article

of

Industry—Reprint

to The

PORTLAND,

Investment Position of the Coal

& Co. of

Philadelphia.

Company, 40 Exchange Place,
New York 5, N. Y.
Since 1932

Leading Banks and Trust Com¬
panies

of

secutive

York—75th

New

120

con¬

comparison—

quarterly

New York Hanseatic

NORTH and SOUTH

CAROLINA

Trust Com¬
panies of Northern New Jersey—
Current semi-annual study—Par¬
Banks

ker

and

New

&

Inc.,

Weissenborn,

Commerce Street,
York

City

MUNICIPAL BONDS

24

■F. W.-

Newark 2, N. J.
Stocks—

Bank

CRAIGIE&CO.

comparison and analysis
of 18 New York City Bank Stocks

Year-end

•RICHMOND, VIRGINIA
Bell System

Bissell

New York

Comparative
1950—The

&

Stocks—

City Bank

figures

First

at Dec.

Boston

War"—Special Re¬
United Wallpaper, Inc.—

31,

Established

1856

;

Corpora¬

tion, 100 Broadway, New York 5,

H. Hentz & Co.

Over-the-Coiinter Index—Book¬

Members

showing an up-to-date com¬
parison between the thirty listed

r

let

New
■.+

industrial stocks used in the DowJones

five

Averages

and

the

over-the-counter

.

thirty-

tation

Bureau

Averages,

York/ Stock

Exchange

York

Exchange

Curb

Chicago
-

both as

Ne"w

Exchange,-

Board

Orleans
And

to

Exchange

Cotton

York

Commodity-

industrial

yield and market performance
over an eleven-year period—Na¬
tional Quotation Bureau, Inc., 46
Front Street. New York 4, N. Y.

New

f New

stocks used in the National Quo¬

of

Cotton

other

>
j

.

f«

Inc.

;

Trade-

Exchange,--

Exchanges

'

\

'

N. Y. Cotton

Exchange Bldg.

NEW YORK 4, N. Y.

or

Gilchrist, Bliss & Co., 488 Madison.
Avenue, New York 22, N. Y.
'

Teletype: RH 83 & 84

Telephone 3-9137

Meeds, 120
Broadway, New York 5, N. Y.

—Laird,

Specialists in

VIRGINIA—WEST VIRGINIA

Corporation,

Broadway, New York 5, N. Y.

Leading

Grow?

.

York Curb

Texas,

Walton, Fahnestock &

Montgomery, Scott

(Special

New York.

Does Your Money

Mitchell & Reitzel, Inc.—208 South
La Salle Street, Chicago 4, 111.

Teletype: NY

Wall

&

—Table showing growth of money

Members New York Stock

Stock

and

Request
How

49 Wall Street

Outlook—Geyer

Electric

California

and

Power—Floyd

Vilas & Hickey

the Midwest

Exchange elected to membership:
William G. Hobbs, Jr., Russ & Co.,

Stocks—Review

Insurance

60

City Company, Limited, 544 Howe
Street, Vancouver, B. C., Canada.

every

on

Co.,

Natural

1951—Brochure—The

in

New

FOR 1951

represent

&

of Rock Island.

RAILROAD OUTLOOK

will

Queens County.

CHICAGO, 111.—The Executive

George F. Shaskan, Jr.—Shaskan

Oil Corp.

New York 4, N. Y.

are

I.,

L.

Co., Chicago, 111.

Beaver Street,

lines

Hamilton of Rich¬

that Frank W.
mond

quickly.

Indus¬

Manufacturing

Aircraft

would

done in the

in the trad¬

was

Financial

and

"Commercial

the

firms mentioned will he pleased
the following literature:

income bonds

was

Jacksonville.

of

Inc.,

Prior thereto he

Chronicle" is the most outspoken,

interested putties

send

to

.

Hentz

as

formerly Execu¬
of
Capital

was

ing

Recommendations and Literature

anticipated

able

,

Vice-President

tive

Committee of

the

their First Mort¬

on




Street.

HORACE J. FULLER
Asst. Professor

Dealer-Broker Investment

that have

Members New

widest

Midwest Exch. Members

■■

&

Salkay

(Special to The Financial Chronicle)

them

on

Available

weak¬

been

You have done well, I

dends—Tables

Letter

Zoltan

have

possible distribution.
Won't you offer reprints and al¬
JACKSONVILLE, Fla.—Zoltan
low me to be among the first to Salkay
has
become
associated
with
Merrill Lynch, Pierce Fenhelp defray the cost?
ner
& Beane, 116 West Forsyth
if
*
if

tax

Gulf, Mobile &
Ohio, which might do a fairly
comprehensive job, Kansas City
Southern, and St. Paul. •

Dealers, Inc.

in

confidence

and

Brochure—H.

these

Telephone BOwling Green 9-6400

allies

leadership

Other

possible

Denver

In neither

outstanding

New York 4, N. Y.

the

should

article

department of Gearhart,
Ernest T. Weir's article, "Eur¬
the basis of this data Mr.
Kinnard
&
Otis, Inc., in New
expressed the view that the opean Attitude on Our Foreign York City.
has lost ground with our Situation," in the Jan. 18 issue of

there likely be any attempt to in¬
clude in such operations the 4J/2%
case

Aito

25 Broad Street

Weir's

Mr.

to come.

presenting Mr. Weir's remarks on
the foreign situation in which our
country finds itself today.
It is long past time when we
bonds
bonds should have some sound thinking

within

on

It

should

interest costs
gage bonds.

at

policy" and who cry for
"unity," when what they really
mean
is vote yes and don't ask
embarrassing questions.
eign

for some

or

world

the

over

trend, and of
potentialities in this direction,

funding issues of

Selected Situations

now

war

a

all

Indicative of this

past week to bid

SECURITIES

commitments

by administrators who would hide
behind a so-called "bipartisan for¬

Thomas B.

groups

RAILROAD

S.

rail¬

income

Federal

Prospective Refundings by
T.Carriers

the

Specialists in

to¬

U.

up

leadership; ideas
Capital National Bank Building.
which, if they can be implemented
W. E. Tinsley is associated with
soon enough, will recapture world
future issues as space permits.
leadership for America, embark the new office.
ALBERT C. LORD
us
onto
the greatest period
of
New York City
prosperity we have ever known,
With

The total remaining will

down

in

Europe

of

cover

the ideas of great

Allowing for the 1951 maturities purchased and retired, are con¬
to be paid in cash and only those sidered as deductible expenses be¬
1950 purchases that were actually fore arriving at taxable income.
announced, Illinois Central's debt Thus, the higher the tax rate the
less net cost to the company in
program since 1941 will have re¬
calling a bond that is redeemable
sulted
in
a
reduction
in
nonequipment debt of more than $174 only at a premium.
million.

propaganda designed to
mistakes of the past.
High time that the people put a
stop to the making of half-baked
ing

prospect of further

in

called for

re¬

at

people should
have the real facts placed before
them without any window dress¬

We publish herewith two letters
commenting on Mr. Weir's article.
Others received will be published

Such

the

Weir

world

the

in

the

when

frank,

in

in¬

Mr.

actions

our

ened.

potenti¬

Premiums

rates.

time, but it amounted to at
$3,300,000.

have

more

roads

done

sur¬

has
in

refunding operations.

operations

1955 maturities. Just how much of
was

a

activity among investment
bankers looking toward other pos¬

this
this

U.

our

prise to financial circles, the gen¬
erally improved sentiment toward

in

cipitate
years

On

as

of

large,

policy in the Far East and the
feeling that Russia will not pre¬

Weir

came

article

ward

natural

step

this

Weir

applied to the long-range effects

In

ported adverse

to

While the recent Illinois Central

1951

outstanding

were

then

the

on

page.

attitude
T.

Ernest

highly important, and
unmortgaged, Edgewood Cut-

the

Off.

intended

paying off with treasury cash all
of the bonds maturing this year.
As

could

cover

and

issue of

our

Jan. 18

of
additional
Consolidated
mortgage outstanding against the sale
Apparently it has been Mortgage bonds to provide for re¬
decided not to refund the $43,293,- tirement of the Debenture 4%s,
465 of Joint Refunding 5s, 1963 at 1966.
They also have a low call

elimina¬

published

was

property.

Moreover,

For¬

Our

on

In addition to the refunding of
It is ex¬
pected that to provide funds for the Joint Refunding 4s and V/zs
the operation
the company will recently approved by the direc¬
sell bonds of the new Consolidated tors, many railroad analysts are of
Mortgage bonds in line with the the opinion that some time this
Company's avowed policy of even¬ year Illinois Central may well
tually having only one blanket give serious consideration to the

price—102 Vk.

"Eur¬

Attitude

opean

the hands of the public.

this time because of the high re¬

the

of

entitled

lion Debenture 4%s,

$18,812,000 of these two series in

re¬

Board, Nation¬
al Steel Corp.,

$43 million Joint 5s, 1963, $35 mil¬
1966, and $48
million of the new, longer term,
Consolidated Mortgage bonds.

plan for refund¬
ing the outstanding Joint Refund¬
ing 4s and 41/fes, 1963. There are
a

been

man

Lynch Firm

Foreign Situation

by Ernest T.
Weir,
Chair¬

(1952-1955) maturities. The bal¬
ance, allowing for refunding of the
two Joint Refunding series, will

early this week that directors had
authorized

of

balance

the

Illinois

Central's long-term debt program
is in prospect.
It was announced

Merrill

has

"Chronicle"

The

Thursday, January 25, 1951

.

.

Zolfon Salkay With

Ernest T. Weir's

ceiving during the last week let¬
ters from readers commenting on

Illinois Central

.

Paper Companies—Data on In¬
ternational

Paper, Crown

Continued

on

Zeller-

page

~38r

CHICAGO

DETROIT

GENEVA,

PITTSBURGH

SWITZERLAND

~

'

Number 4980

Volume 173

i

;

.

Chronicle

The Commercial and Financial

studies

family,

of

expenditures

and income; be conducted-r-to

zation allowed

estimated total

an

of five points for purposes of wage
the index weights up to date.
policy. The Bureau did not add
(7) That the Bureau undertake these points to the index but carstudies of the shifting importance ried a footnote to its regular
of items in family budgets—and monthly releases for some time
correlation studies of price rela- explaining the five points,
keep

.

Tied to Price Index!
By EWAN CLAGUE*

That the Bureau publish
average prices of principal com(8)

and problems of formulating consumer

After describing history

-

indexes, Commissioner Clague sets forth their shortcomings, together with program to revise them. Says, in view
of changes to be made, difficulties will be experienced in
adjusting labor contracts based upon changes in the Con¬
sumers' Price Index.
Warns "there are some things a price
price

_

;
■

Price

Consumers'

the

of

ation

past.

to

back

go

1

p77

The

Con

-

1933.

sumers'

Price

Index,

orig¬

the

sary

in order to discover the more

buying patterns and to de¬
termine a new system of weights
based

of

Cost

Index,
wasv born
in

funds

made

were

of World

tration,

conducted

Clerical

Workers,

enough

will

public

re¬

the

The

agita¬

and
Ewan

average

their

expenditures

These

$1,524.

Clague

data

lated and published indexes of renumber

170

about
in

of

the

in

1903

period. Weights
for these food price indexes were
derived from family expenditure
data collected in the Bureau's 1901

of family spending.
rapid changes in

The

living

costs, particularly in shipbuilding
centers, made it necessary to devise a more comprehensive costused

in

which

index

of-living

could

be

negotiations. So in
Bureau began to compile

wage

1918 the

and publish
shipbuilding

indexes for various
and industrial cen-

ters, and by September, 1919, indexes had been published for 50
individual places. In October, 1919,
estimated index for the United

an

States

compiled by combining

was

indexes for 32 cities, and this in-

series

dex

the

has

continued to

been

present time except that two

additional cities

included in

were

1940.

Weights for the all-item city inshipbuilding and indus-

dexes for

trial

centers

Bureau's

based

were

1918

on

the

of income

survey

expenditures of wage-earner

and

and low-salaried worker's families

in 92 localities.

The average size

this

_

...

.

The Bureau

was

in thus obtaining

modernized

and

fortunate
newly-revised
index before
very

a

Yet

World War II got under way.
this did not

even

prevent

a

con-

troversy from developing. By the
spring of 1943 changes in our econ-

to huge

due

omy,

governmental

of this, the Secretary of

America Statistical

the

reported that

$1,485.

calculated, it

to 1913 in order to

comparison.

war

carried back

was

provide

The

a pre-

accompany-

ing chart, showing the Consumers'
period

Price Index for the entire

of its

existence

(1913-1950)

por¬

trays the rise of prices in World
War I and its immediate aftermath

.

.

committee

this

also

made

ers

were

for

the

next

then

seven

leveled

years

out

during

the

prosperity of the 1920s. (See
Chart.)
With the-advent of the depres¬
sion

of

the 1930s, the index de¬
again, reaching a postwar
(World War I) low point in 1932-

clined

♦Summary
before
ers'

the

of

remarks

by

Radio-Television

Mr.

Clague

Manufacture

Association, N. y. City, Jan. 17,1951.




the
rec-

ommendations. A small national
sample-survey of family spending

conducted in the spring of
1945, and individual city surveys

was

•

the ^ate
three a year were
made in the following years
through 1949. These studies were

anflz,ed.
che€k, the Prices and
| notnrev?sed on the basil of
n"

nf l

tu

the year.

Then, early in 1947, the

to

come

and

sign off

left to the

the

these points,

on

announcement

an

to that effect. The
users

made

was

adjustment

of the

Bureau dropped

Despite this action, the Bureau
to be plagued by
an
item of understatement, which did
not disappear like the others. This
continued

was

the

item

rent

the

in

index.

Meantime,/ the House

Appropriations Committee (Sub-Committee on Labor and Federal Security) initiated and furnished
funds for a survey to answer the

question, "What does
it actually
v*r/-\v»lr i
'n
a

family to live?"

n

rtw* r» Vi
workingman's
m

Under this man-

date, the Bureau in 1946 and 1947

$3,004
in
New
Orleans,
Louisiana, and $3,458 in Washing-

of

rise

their

to

free

level.

market

building

-new

was

not
new

controlled, and rents

on

these

dwellings

at

levels

were

set

above the controlled rents

on

ment

the

on the

dwellings of comparable size and
quality.
Third, the Bureau suf¬
fered a severe budget cut in the

spring of 1947,
draw

new

a

dwellings
the

toward

it was unable to
sample of rental

so

and take some4 steps
correction of the in¬

dex.

Frequent periodic improve¬
ments in an index are absolutely
essential if it is to be kept in good

shape.

'

At this

explain

point, it is necessary to
briefly the 6-group in¬
the

in

dexes

The

Index.

Consumers'

accompanying

index

to

nonfarm

for

prepare

The

communities

munities

of different size and for

specialized industries.
(5) That the Bureau develop
measures of geographic differences
.

f

/V} _.?

.

Y

(6) That frequent small-sample

chart

the 6-group indexes sepa¬
rately, wdth the lines for World
War I and World War II plotted

each

other, with 1918 corre¬
Note that sev¬
eral of the groups behaved very
differently in World War II (see

over

sponding to 1945.

budget procedure,

the

apparel and housefur-

food,

also

how

much less the rent index has

risen

groups).

nishing
'1

Note
'

'

'

Continued

S

•

on

page

offer to sell

or a

solicitation of an offer to buy these securities.

offering is made only by the Prospectus.

$25,000,000

Company of Baltimore
Refunding Mortgage Sinking Fund

First

Series X 2%%, due January
Dated

January 15, 1951

Price 100.67% and

The

Bonds

15, 1986

>: *

accrued interest

obtained in any State in which this announcement is circulatedfrom only
and other dealers as may lawfully offer these securities in such State.

Prospectus may be

such

of the undersigned

HALSEY, STUART & CO. Inc.

DICK A

MERLE-SMITH

WERTHEIM

HIRSCH &,CO.
f

WM. E.

THOMAS

(INCORPORATED)

.

BURR

SCHOELLKOPF, HUTTON & POMEROY, INC.
STROUD

THE ILLINOIS COMPANY

tl COMPANY

&. CO.

1

INCORPORATED

WILLIAM BLAIR & COMPANY

STERN BROTHERS &, CO.

IRAHAUPT &.CO.

THE ROBINSON-HUMPHREY COMPANY

BALL, BURGE & KRAUS

FOLGER, NOLAN INCORPORATED

GREEN, ELLIS &. ANDERSON
January 25, 1951

WEEDEN

mvwnr

BAKER, WEEKS & HARDEN

POLLOCK &. CO., INC.

& COMPANY

INCORPORATED

INCURKUKA
INCORPORATED
Itu

V

BACHE &. CO.

OTIS &. CO.

COFFIN &

A CO.

'

an

in the United States.
(4) That the Bureau of Labor
Statistics publish Indexes for com¬

Price

shows

Let us turn again to the Consumers', Price Index itself. When
price controls were taken off in

This announcement is not an

use

agencies

far
old

.

rectly and that the index properly
should
not attempt to measure
them.
After the end of the war,
the Director of Economic Stabili-

designed to impleof the Consumers'
Price Index in evaluating the economic situation. Briefly these suggestions were:
(1) That the Bureau of Labor
Statistics provide separate restudies

was

index, and

the footnote.

In the first

,

s ve s a e.

riAPr
n v*
a! 1 n
-P/vm
cost
in /J
dollars
for

*

Bureau decided that the time had

in the nature of corre-

lated

terested

and

along

h>n» D- C., with other ciUes rangderreporting
of
prices actually in§ between these two The work
charged. The final report to the on this budget has continued, and
President pointed out that these the
Bureau now has estimated
factors were, not measurable di- current costs and indexes based

spme

about

20%

studies,

iines of the Mills Committee

recommendations that would not

Statistics expand the index coverage to include small cities.
(3) That the Bureau of Labor
Statistics cooperate with other in¬

the

deterioration,

quality

ceptable approximation to recent
changes in living costs." However,

index

that

to

provides a trustworthy measure of
changes in prices paid by consumers for goods and services . .
and "the index provides an ac-

approximately doubled over the
7-year period.
When prices fell in the depres¬
sion of 1920-21, the index declined

Note

cost-of-living

that

announcement

an

main-. the 5-point allowance would soon
of its disappear, probably by the end of

for

developed a City-Workers' Family
Budget to measure the dollars retions substantiated the validity of quired
by a city workingman's
the Consumers' Price Index as a *amily to live at a modest but
reasonably accurate measure of adequate level, and to establish a
price changes, but it was concluded sound measure of the differences
that prices had probably risen 3 to
1?..-^vlrJ£_ cof ? among different
4 percentage points more than the cities.
The data showed that in
Consumers' Price Index indicated. June, 1947, a four-person family
This understatement was due pri- w°uld have required a minimum

within the limiindex

gional indexes.
(2) That the Bureau of Labor

(1913-20).

Mitchell to in-

C

program

improvement

and

was

affect the index directly; the oth-

^

When the national overall index
was

the circumstances that occasioned

forward, the Bureau

vestigate all the claims and counterclaims. All of these investiga-

tations established for it, the

was

was

...

M

Committee,

Associa-

come

index,

the

>

tion to appoint a committee to
review and appraise the index,
This
committee, with Professor
Frederick C. Mills as Chairman,
investigated all aspects of the in¬
dex as a statistical measure, and

of these recommendations would

in

Weslev

194(1,
(on

the advice of the staff of the Bu¬

Labor at

4.8 per-

United States

survey,

included

Dr

official acts

the request of the Bureau asked

and the average family in-

cities

32

.

technical committee un-

a

under wartime strains and distortions, led to much questioning of
the accuracy of the index. Because

sons,

the

4

became

expenditures and the abnormal
changes in our manner of living

only make the index more effective in wartime, but would also
yield lasting benefits. Only a few

of families covered by

in

could be reached and
a report

.

..first

my

I

August,

Second,

the

«

of

in

awaiting an opportunity to

disappearance of cheaper goods,
decrease in special sales, and un-

__

__

In(*ex in World War II

than 40

to less

1907-1912

survey

_

formed
der

.

Commissioner
one

difficulties', i

the

when

rfvise t]?e index on a comprehen-

of the President's

marily

period 1935-39.

total
from

with the
cities varying

prices

man

of

some

example,

jje>e ®"^ey 1resu:Its The Bur.eau

an»,

which covered

inating
For

to

Davis

H

the labor members issued

were
the basis for an extensive
high cost of
living—"old h. c. 1.," it was called, revision of the index weights and
Rising prices became a
public list of items included. That reviissue as early as 1916; they be- sion was completed in early 1940.
came a national problem after the
In addition to revising the interUnited States entered the war in nal structure of the index at that
1917.
time, the index base was shifted
Before 1918 the Bureau calcu- from 1923-25 to the present base

food

into

rose

eased

representing

War Labor

and government
question.
No

industry

agreement

15,000 families in 42 cities.
family size was 3.6
average
income was

about

tion about the

tail

William

This

place, rent control was
extended, so that rents could not

of the

committee

look

_■

to recall those

days

Mr

'a

the

over

and in October,
Roosevelt asked

extensive alleging that the index greatly
understated the rise in the cost of
survey in 1934-36 of Money Dis¬
bursements of Wage-Earners and living. Finally Mr. Davis, Chair-

War

member

to

able,

Those who
old

Board

form

avail¬

the latter days

Controversy

Chairman

labor,

the Bureau, in cooperation
with the Work Projects Adminis¬

I.

the

President

1944,
the

them.

on

When

v

Living

are

But

index continued,

neces¬

was

survey

That the Bureau prepare
publish a summary of the in-

dex concepts and purposes.

last expenditure survey had been
A new

conduct

Bureau

(11)
and

recent

called

inally

consumers

made.

the

cessity of changing its retail outlet samples.
*

had been greatly
into history.
The present is the changed from those in the inflaproduct of the
tionary period 1918-19, when the
is necessary

it

Index

That

(10)

frequent surveys to determine ne-

prices

the pressure on the index by elim¬

reau)

1943

tenance

...

1946,
chart);

(see

: From

developed its

and services.

'

-

•

That .the Bureau pay continuous attention to changes in

specific goods

By this time it was recognized that the spending habits of

•

of

summer

rapidly

Postwar Problems of the Index

modities.

(9)

expected to do."

index cannot do and should not be
To understand the present situ-

;'

tionships.

Commissioner of Labor Statistics

the

*

•

35

10

(438)

The Commercial and Financial Chronicle

rooms are

confidence in the soundness of
liberal home buying credit terms,

seems

that there

ing 1927 and 1928 such a condition existed in the investment business.
Also, this was true during 1935 and 1936. Both periods left
those in the securities business with grevious headaches;
yet while
they lasted

could sell almost anything that looked like

you

average

investor

a

was

Quite

.

which

offer

to

dollars

share

in

the

over-the-counter

market

,

,

,

The

talk

of

-

*
'

the

"time for restraint.

a

,

&
.

/

a

small order for

some

was
•

Sunday radio

tial investors why

they should "Buy

7

you

of your customers

some

tion, than if
many

risky and dubious, low priced,

'
'

;

R.

associated

Baird

&

Sache
with

have

be¬

Robert

W.

money

invest,

Wis.

now

Link, Gorman, Peck
North Broadway.

&

;

Co.,

611

*7'

of

recently with

firm

decided

To
•

he

small

continued,

people

with

•

77/-7 '.7-7'7V'7

educational

radio

is

designed

small

"primarily

income- and

small
lot

a

for

of

with

the

Robert

P.

Gerholz,

1950

presi¬

to

money

investment

on

Jan.

i

of

n

back

under

likely
c e e

d

units,
half

*n o

to

t

or

about
last

accent,"

Mr.

Gerholz

said,

"will be

W

In

mm,

Robert

o n

number

P.

of

a

place, the credit

family with limited

aver¬

resources

for down, payments, while it does

nof seriously curb the family with
ample cash resources.
J

Gerholz

"There

was.

some

vague

of

and labor.!

inflation " and

talk

halting

Building!

luxury

housing

.

a

brisk

number

i
•

market

Tel.:

New

other

BROADWAY

WHitehall

3-6700

duced and

for




price

pro¬

we .may

realigment

of

material ^items' 'like).dumber

ex-;

some

but!

com¬

pany's

sales

force,

Jan.

on

20 at the Wal¬
dorf

Astoria

Hotel,
York

New

City.

'

Speaking
the

24th

on

an¬

m&im

Rupert

H.

niversary

Johnson

the

of

firm's

founding,
Johnson
time

said

that

the

at

Mr.

present

the

company
is
receiving
inquiries and making more

customers than at any time in

history.
will

He

added

increase

its

that

sales

the

force

Johnson

of

the

of

attributed

growth and

the

in

retail

recent

great

a

develop¬

investment

years

to

the

played by Mutual Funds.
1

Predicting that

present in¬

our

flation will remain with

for a,

.us

number of years, Mr. Johnson said

that

in

times such

these, good

as

equities become "one of the best
and

most

satisfactory* means
the problems which

meeting

from

sult

conditions

sueh

of
re¬

as

we

facing, and of preserving
up through years of
careful planning."
/

are

now

estates built

-

,•

Business during 1951,; Mr. John¬

predicted,

son

will .remain

at

a

high volume and corporate prof-,
its and dividends will approxi¬
mate those of 1950. He declared,
however, that securities markets'
in

1951

may

to be of great

prove

"While

such

quick/freeze
moval'

or

controls

controls

on

modification

does, not

permit

production/
of

insure

thaw. Sudden crackdown

a

a

so

wartime
well.

economy,, will

On the program
son,.

who

Franklin
was

W.

77 / "7

-

.

- -

with Mr. John¬

is" also

President

Custodian
Wendell

not
.

of'

FUnds, Inc., ;
Reuss, of Mc¬
-

Laughlin, Reuss & Coi

re¬

credit

a

quick

on

;home

buying credit has. served,,to

of

do

With Harris, Upham
(Special to The Financial

/ CHICAGO,

-

111.

—

Chronicle)!
Robert

W.

re¬

overall cost movement will bet inforce* ther urifbunded' fear that Thomas has; become affiliated with
upward. Indications are that mort-« the
.previous credit terrhsr' were-; Harris,^ Upham &. Co., 135 South
gage money will be in ample sup-' leading to too much; home build¬
La Salle Street. He was

York

Stock Exchange
Principal Exchanges

YORK

a

limited

existing houses. Irn

home-building costs
pect

the

that /are

members

the

any

1915

MEW

for

of! homes

it

and

of

of

supply) buying credit-could halt inflation
or
higher -prices.' They have not,

available

firm,

banking
told

selectivity, some classes of stoeks
upward
spiral
Few people be¬ continuing, their
' price increases.
lieved that controls over home- while others, under the handicap

abo'ut

"With buying power
high and; with* rising costs and - wages all
production cut baek,- there will be1 along;the line.,
:
■'* ~ 7

Members

& Co., in-

vestment

con¬

housing;

the

materials

whatever
may
be the
level in terms of national

will be out! and wilt not, succeed irr doing so
after .the first quarter of the
in a general inflationary
economy
year.»

SO

of R. H. John¬
son

increasingly important role being

■

to

the first

age

V

units out of
of

.

,

business

widespread
interest
being
in
securities,: R. H.
Johnson, head*

business

defense

trol method, is unfair to the

producing the
maximum

ESTABLISHED

the,

Mr.

devious method of credit control.

700,000

'

i»

investment

manifested

deal

said, "it seems
frank, direct type of
control would be preferable to the

year's output.
'."This year's

SALT LAKE CITY1-

it

retail

ment

defense needs," he

ex-

of

the

to me' that

pro¬

gram,- i s

.

equities^

year.

rationing without relation to
"In cutting home production

proper

i

good

by at least 25% during the coming

emergency,
Mr. Gerholz described it as a form

home

production

in

built

7

t

increasing

today is undermanned because of

firm

Criticizing credit control as a
limiting home produc¬

tion

W. C. Gibson &
Co., 231 South La

;«

7

inflation hedge.-

as

j The

method of

Salle Street.

•t

recommends
-

more

Attacks Credit Controls

need.

i

notes

of

sums

7

19 5 1, includi n g
homes

1. A. HOGLE & CO.

and

its

22, stated that

CHICAGO, 111.—Joseph A. Far-

•

7'

by public in securities,

Co.,

Housing Units in 1851

addressing,

rell has been added to the staff
of

DENVER

Johnson

program

7'' 77

/

the Detroit Economic Club

Western Markets in

SPOKANE

the

upon

dent of the National Association of
Real Estate Boards, in

FOR BROKERS AND DEALERS
ANGELES

77"

Gerholz, former head of National Association of
Boards, foresees brisk home real estate market, 7
higher prices and no new luxury housing. Attacks controls on
housing credit.

A. Ken-

Prompt Wire Service

!

a

and

action

7:

H.

bring home to poten¬
Share in America." M

to invest—not for the big people with
since
they
generally
are
acquainted

housing

LOS

he

defense needs for hous¬

new

interest

'

program to

7:7'. 7777:

•; 7

R.

-

Robert P.

now

J

own

7 Stimulate Investment

*

.

to

the defense

i

7^

Real Estate

new

with

13-

a

new

(Special to The Financial Chronicle)

Carlton

—

connected

the

procedure.

W. C. Gibson & Co. Adds

Link, Gorman

MILWAUKEE,

contracted

program,

benefit

associated with Demp¬
sey-Tegeler & Co., 209 South La
Salle Street. He was

(Special to The Financial Chronicle)

Stritzel * is

The

-

.

With

for

program

<

common stocks.

is

into

•

keeping with their

Co., 110 East Wisconsin Norman Mesirow.

Avenue.

has

7

that

still be able to keep

CHICAGO, 111.—Francis

rolls

The program will underscore the fact that
"only through in¬
can American industry get the
money it needs to
grow, to produce the things we must have to protect our
way of
life," Mr. Gellerman declared..
:
./
■
•

(Special to The Financial .Chronicle)

ney

their

momentum, it will gen¬

vested capital

Witfc Dempsey-Tegeler Co.

MILWAUKEE, Wis. — Orlan L.
Prestegard, John F. Rennebohm
come

firm

Predicts 760,600

(Special to The Financial Chronicle)

William

in

in

was

!

potential investors

happy, and also'in a much stronger posi¬
went overboard at this time and offered them too

you

Three With Robert Baird

and

are

in

mean,"

that only "slightly more than
10% of the
population of the United States own securities," and that
many
are held back by "the
mystery in investing."
The program, he said, "will show that
investing, far from
being a mysterious process, is a very simple procedure."

'.

you

(may

families

after surveys disclosed

are
going to kick over the traces when they see and hear about
large profits in other people's accounts, while they are still
holding
some good mutual funds
and other stable securities.
But if

involved,

sponsor

Henry Gellerman, Public Relations Director of Bache &

said
'

people

the risk

it

Says Mutual Funds

-

Bache

Alfred P. Sloan, Jr., Chairman of the Board of Directors of
General Motors Corp., heads a list of prominent
personages who
swill be interviewed on the program.
He will be interviewed on
.the initial Bache broadcast, this
Sunday.

be an attempt to keep accounts well
balanced.!. Edu¬
cational work along the lines of direct
mail, and even conferences
in the office with clients, can be
helpful in keeping investors satis¬
fied with sound programs along conservative lines. Some

assume

The

•Sunday.

should

advise them to invest in speculations that

of

WNBC beginning Jan. 21.

on

sponsor a 13-week

*

'

-/
It seems to me that securities men who are retailing stocks
today should seek a middle course. Where customers desire to
try and make capital gains, if they can afford the risk, well selected
values (where available)
can be offered.
But meanwhile there

ability to

housing

*

told that
.

week period

-

.

conducting

director

sponsor, for the 13^-week period,
the half-hour Sunday radio program "Tex & Jinx"
appearing on
12:00 o'clock, noon; The Bache series will
begin next

com¬

?

shown

are

publie relations

NEW YORK, N. Y.—Because "too few
people understand the vital
part investing plays in the life of the nation," Bache &
Co., mem¬
ber of the New York Stock
Exchange, has announced that it will

'

"buy something," as he put it: Several days later he
they bought their stocks through another broker;

Falkenburg

(left)

tour of station WNBC.*' Bache <& Co. will

on a

WNBC at

because he found out that the money
represented the
cash reserve of the people who came in and wanted to

entire

%

7.7.

stocks

mon

Jinx

and

Gellerman,

Co.,

the popular "Tex & Jinx" Sunday radio

;

,

McCrary

Henry

.

,

putting too much of their assets into "stocks for a profit." ;
During these times a conscientious! salesman often sees the other 7.
fellow, who is following the lines of least resistance, making more..
progress with less,effort than he can make. Last week I was told
by the manager of a certain branch office of a New York Stock *'
down

Tex

-

overboard along with the crowd when it,.

Exchange firm that he turned

be¬

ever

our

than

ing."

,

It may be difficult at times to try and,
idea that they should have conserva¬

go

better

housing

more

of

facts

up

erate

/

to

comes

is

program

sell your customers on the

tive securities, and not

States

Condition

picks

"war

But from the standpoint of the retail dealer in securities, and
salesman who desires to continue in this
business, I do think

it is

as

said,
"that we will not face a sudden,
frantic need for defense housing.
Rather, as the defense production

tomer's men, etp., can hold the public back if it makes
up its mind
7
/ that it wants to go on a "gambling spree."
;
;
:/7"7'77!/

'V„;.v

United

100 population than

"These

for

they are beginning to move upward
baby" is once more in'the air.- These
things in themselves are only a natural result of the times and
conditions. Quite frankly I don't see anything wrong in it, and it
is; my opinion that when the public wants to "gamble!' in stocks
there is very little that any one can do about it. I don't think the
SEC or the Federal Reserve, or even the New York Stock Exchange and the various Associations of Traders, Dealers, Cusagain.

the

American

several years, you will see that

,

many

,

again

appear

under

a

past four

1940, he said, and home ownership
lis at a new peak with 55% of all

stock,,

penny stocks.
Dealers are being urged to look into
speculations which they might offer to their clients.
check the price range on many stocks that have sold

five

the

per

supply

prone.

If you will

>low priced

years

in

the four years preceding Pearl

homes.

kind of speculations.
advertisements are beginning

few

a

as

houses

fore.

V

to buy the most hazardous
*

is rebuilt."

market,

Harbor, Mr. Gerholz said that gov¬
ernment figures show we have in

are a

few signs that speculative fever directed toward the stock market
is once more reappearing.
Could it be that another "seller's
market" for those in the securities business is near at hand? Dur¬

and toward the end of both booms the

the

try has produced twice
in

again. It

up

in

Pointing out that private indus¬

JOHN DUTTON

filling

Thursday, January 25, 1951

.

and

Securities Salesman's Corner
The board

.

as

Bache & Go. to Sponsor fladio Program

By

.

_

S. N.

ply, and the second quarter of the

Y.

Teletype NY

1-1856

year may

see some

slight soften¬

ing in interest rates."

ing in time of

formerly

peace..

Relaxing of

credit controls will not automatic¬

with. Paine,

Webher,. Jackson &

ally

Curtis;

Ames,

so

remove

a

encouraged.

fear that has been

The

thaw

occurs

and

Co., Inc.

-

Emerich

&

Volume 173

Number 4980

.

.

The Commercial and Financial Chronicle

.

(439)

11

1
,

sion

Outlook foi Utilities

figures

for

ended October

the

12

months

1950, has been

pared.

.

.

% Increase

By C. A. O'NEIL*

c/o

-

Duff and Phelps, Chicago, 111.

Over

Operating

Preceding

Hevenue
Fuel

Stressing,exemption of utilities from Federal
taxation, Mr. O'Neil forecasts

,.V

profits

excess

Estimates

year.

accruals.

tion

Sees further gas pipe bne
materials shortage.

.

and

16.5

2.9

Taxes, oth. than income

10.1

9.5

Total

61.7

Depreciation

With'

expansion, despite

first

considered opinion that
significant single development affecting public utility
companies in the last year or so
the

was

special

them

corded

profits

tax

the

and

To

under

law

of

that

establish

which I have

it

urement

back

to

tion

and

early 1942
the

situation*
the

yardstick
to that

of

somewhat

;present.

sentations

Based

on

made

the increase in hydro generation

over

im

month

The

to

is

repre-

21.6%.

was

ure

fact that

there

consistent

only

not appear to

gain

but it is actually 5.6%.

the

per-

^gnrficance would be clearer if
the condition were restated: in the
Jatesf period the industry was able

principally formance

special position of the regu- widespread strikes curtailed sales
lated utility industry—surtax re- to industry.
During the summer
lief

weather

abnormally cool

preferred stock dividends,

on

tended

to minimize refrigeration and air
conditioning loads in practically
quite unimportant in dollars. The all parts of the country. More
effect of the law that was enacted cently
the aftermaths of Korea

That

concession

in

portance

to

was

some

im-

but

was

J?

7

V

saddle

dustries

of

was

principle

tax

a

heavy that relief in the form

mtePnorLJI
rate

of

Sains

m

-

-

,

.

united

in

presenting a
program to Congress.
more

effective

and.a

case

crease

Certainly

but the

be

tv,P

expect

to

this

indefinitely to
on the other
band) our conversation
with a
missioners.
The
composition
of
iarge
number
of
companies
this organization is such that in
through the fall and early winter
effect it speaks for every reguindicated that war production was
latory commission, state and Fedthen an important factor in
eral, in the entire nation. It is most localities.
cjasg

taken by the National Association
of

Railroad

and

Utilities

™L? SSIl?,hrA!f^
™

kwh. sales

mitted

by its committee to

'frota-

Conthat, by reason of the
regulation which
the members
themselves
enforce, there were
and could be no excess profits in
the regulated utility industry and
therefore that no excess profits
tax should

The

received

in
in

,

{

effectively

tically

all

utilities from

ap-^

any

preciable excess profits tax payment.

foHowed

saies#

The

however

crpasp

what

Vbre

sales,

for

has

been

several

reasons, -

their

taxtreatment

as

now

substantial.

But it does not over-

their^ommissfon
their, commission

and, public

„

«

sumers

have
will

average

™

further.

recognition of the fact that regulation

in

the

is

my

plblic

feeling

policy is

from

established it is likely

and until
there is clear showing to the con-

tention
sions of

\

months

.,

.,

.

held its

;

-

-

i

t

,

.

Utility Industry,

Electric
far

"

"

.

operations

as

throughout

ox

1950,

i

October

con¬
i

•

n;»*'

utility industry
M

f

™

.,

fc

a
'

•

v

"...

reduce

tnis

*

a

expenses.. In-order

•.

'

-

'

Analysts

Societies,




Chicago,

111.,^

1

based

on

credit

pro

forma

issuance

of

new

senior securities in the period im¬

mediately following their issuance'
and for a continuing period run¬
ning to the time the property thus
financed

ation.

actually

The

tends to

be

construction

into oper¬

goes

of

amount

stable

so

program

the

long

credit

the

as

remains

cording to present plans.

as

much

.

as

I should like to be able to
sent

definitive

a

1949

do

and

are

that

1950, but
the

because

so

the

the increase

a

little

no

was

and may prove

unable to

I estimate
as

a

whole

less than 8%

to be 9%
It will be

more.

data

necessary

industry

in

common

am

not fully available.

for

pre¬

relationship be¬

tween the balance for

or

even

realized

buy any of these securities.
of the Prospectus.
...

,

January 19,1951

ISSUE

' '

($10 Par Value)

M-v;

,

■

v

Holders of the Company's outstanding Common Stock are being offered the right
to subscribe at $15,875 per share for the above shares at the rate of one new share
for each ten shares held of record on January 18, 1951. Subscription Warrants
will

expire

at

The several

3:00 P.M., Central Standard Time, on January 31, 1951.
Underwriters have agreed, subject to certain

to

do

The

so.

The First Boston

was

pur-

of the subProspectus,

•

BIyth & Co., Inc.

Corporation

Glore, Forgan & Co.

Eastman, Dillon & Co.

Central Republic Company
(Incorporated)

Goldman, Sachs & Co.

Lehman Brothers

A. C.

Bacon, Whipple & Co.

Smith, Barney & Co.
i

Allyn and Company

A. G. Becker & Co.
»

Incorporated

William Blair &

in-

Farwell, Chapman & Co.

•.

*

McCormick & Co.

'

Straus & Blosser

Schwabacher & Co.
Blunt Ellis & Simmons

Hornblower & Weeks

Paul H. Davis & Co.

*

H. M.

-

Incorporated

(Incorporated)

:

Laurence M. Marks & Co.
•

v

,

Harris, Hal! & Company

Company

,

The preceding tabulation shows;

Ames, Emerich & Co., Inc.
Cruttenden & Col

Byllesby and Company
(Incorporated)

51.6% for the latest available •

seem

,

to

Copies of the Prospectus may be obtained from any of the several underwriters
only in States in which such underwriters are qualified to act as dealers
in securities and in which the Prospectus may legally be distributed.

It will undoubtedly con-

so.

conditions,

chase any unsubscribed shares.and, prior to and after the expiration
senpuon offer, may offer shares of Common Stock as set forth m the

.

The Ohio

Edward D. Jones & Co.

Demptey & Company

Company

Stern Brothers & Co.

Sills, Fairman & Harris

Carl H. Pforzheimer & Co.

Incorporated

F. S. Yantis & Co.

53%. Thus comparison of the

Bateman, Eichler & Co.

Bosworth, Sullivan & Company, Inc.

Incorporated

12 inonths periods would

Dixon Bretscher Noonan Inc.

to indicate that the industry
about hoiding its own ak to

Pacific Company

Metropolitan St. Louis Company

-

Pacific Northwest Company

of California

Scherck, Richter Company

profit, margin, exclusive of taxes

Closer scrutiny of reresults = shows it ;ig doing
a•
somewhat better;than that. Comdlscussi0n 9^.
paring, each month,, of 1950 with
to show the :the same month in 1949 we find
on

income.

'

cent

.

William R. Staats Co.

Brown, Lisle & Marshall

Stifel, Nicolaus & Company

i

Incorporated

Burns, Corbett & Pickard, Inc.

Davenport & Co.

„

Dixon & Company

e

items,

nancial

Just

.

Forum

January tf, 1951.

the

Common Stock

ligure, to

relative magnitude of the several; that net operating income -before
the

This

minimize the

of

Company

tZ

iheSuuiitaynCFor°im ^th^Thirdi

Midwest
of the National Federation of Fi-

and

The Illinois Company

-*wo

consistently
1

taxes.

latest single month.

Julien Collins & Company

over

maximum of 23.3%

>v>'-

effect

Central Illinois Public Service

period, exclusive of general taxes.
The1-corresponding figure for the
2
h-ui,..
preceding 12 months was slightly

u

increased

thereafter to
in

are

but

ruary

about

10% in the latest.12

property aGcount, as might be ex-t

was

the

with.no

T

to

that the industry operating ratio

January and Feb-'

in

■

r

cerned the electric

own

before

in depreciation is about
proportionate to the increase, in

-v

+u
:— ~—n.. £
single month
varying
greatly from

,

'

So

10

construction.

tends to

fairly constant in magnitude,

crease,

medial tinue

about 10%

customers and 8%

commercial

first

were

at- these percentages. Industrial'revin the light of the discus¬
enue,; on the
other hand, about
' v.
a new tax bill to be taken

before long.
;

-

In. detail,

increases

during

certain

negligible proportions

continue

.

pected.

This phase commands

trary.

'

revenue

utility industry. It
from residential
that once such a

to be maintained except

up

13.7%.

at

nue,

Precludes^excess^ earnings

in

ine'reased^anVundoubtldly

other

credit to income deductions which
most companies take for interest

267,600 Shares

diversity tends to minimize

•
*
+
rate on all sales. Nonetheless, Ocin fact, goes one
established a new hieh for
Congress has gone tober established a new high for
far toward establishing as policy, the year in increase m total reye-

!•'

exist

^ aCCelerated
Sal6S t0 theSe COn"
have reduced the

the

ing as new money securities are
sold for construction
purposes.. But
it is well to keep in mind the

which condition should prevail for
the next two or three years ac¬

merci^\ ^d other-branches. Their ,

In-

My thinking

t

step

not

rates are lower
major classes, so

industrial

than

preferred stock divi¬
They are of course increas¬

1-

in-

consumlower step on the rate sched-

compared with nine years ago is ^ules;

NFW

; -•

tiuctuatl0ns m tne total, u-enerai
taxes are, related to tne amount oi
Pr°Pdrty, to local tax rates, ana to

ers a

and

dends.

rise in income

pointed out that net
taxes
actually
had
in¬
period

ac¬

next to payments

come

we

senior securities income deduc¬

The offering is made only by means

otber expenses are made up of
some^be large number of materials that
S » into the direct operating, com-

moderate

Working down the income

a

^

thelrend est a"d dlvldends'

revenue

42% rate in 1950.

was

over

tq

increase

we

equivalent

net

applicable

another

compared with the

This advertisement is neither an offer to sell nor a solicitation of offers to

5% wage increase would

practica]Iy

The benefit to utility earnings creased usage earns for

^

in

1950

repre¬

itself,

is

as

decidely satisfactory amount that I have in mind here total balover 1949, despite the
higher in¬
Continued on page 34
come tax.
Interim figures such as

by

"utility"revenues in terl^s ?fJhe balance for inter--

electric

kwh

of

a

affect net operating income before

".

wlreTnfluencef -'by t4x^ ^
0n income

eou^e

is

is

of

computation satisfies us that
complete
1950
record
will
show that the electric utility bal¬
ance of earnings available for in¬
terest and dividends has increased

hf about 60% before taxes on in-

chan^s ln of]?OSled
fates
and by
fuel
adjustment
cfauseT

the

tax

of

tax

28%

the

the wage bill is not critical
the electric utility industry. At a typical operating ratio

operation

prac-

does

come, a

"V*7

find that
rate

which

taxes

income

by

the

to

rate

10%

over

revenues

consistent

a

.

vv,x"v-"

tax

to
continue tor be the order,
But I at about 20% of operating

not

data

tr£nds;

game

show

s

FPC

re¬

rate

4
points or only
10% higher than the
Applying this 10% in¬

statesK where arbitration boards
]>.ave been c^e?ted- From obs®"a"
annual increases around 5%

*

lier

Coneon

exclude

this

gain Qn the Qrder of lg% Qver the
correspondjng weeks a year ear-

gress.;,
Both, in fact, appear to
have set out to draft a bill which
would

with

^

utilities
of
oi

while

which

foU

t

The EEI fl

sympathetic

Hous/s
nouses

both
ootn

fianrp<i

tax
tax

was

be obtained
Electric
Institutefons,

eomnarable

income

over

17,5%; in the

wages did,; and
still does, continue upward. Only
within the rather narrow, limits
of negotiation does management
have control over them, and even

may

*

for

decidedly

a

hearine
nearing

f

apply to it.

presentation

Edison

wppklv

gress to say

1950

some time lag.
The trend of

rate;

a

An approximation of more je-

■

cent

*

continue

to

expand at such

Com-

income

before

differ¬

published
income

above it

6°% of total kwh- sales
de";
sigped to pass^ on to large power
"fers- variations in fuel costs;
they have accomplished their purP°se' although in most cas^s after

20%

It would probably

over-optimistic

purposes

presently

ment clauses covering upwards^of

Vear

some

tax

known

This

in

earlv

from deduction of

1950

The

creased

be¬

applicable

and

2.8%

taxes

spread

statements

sented

with

of net be¬

then

well

.between

before

returns

tions

first

For calendar

income

the

in

1951

deal

turns.

net

somewhat during the year. Before
living the, subject of, fuel we
wlsb to point ou. that fuel adjust-

industrial in-

with

compares

in midsummer.

probably
the position

was

i;nP w;th

lonJreCord

and

impressive

more

rial

industries

for

crease

}arSe number of companies stated
actually dechned

triai. The residential and commer-

in

electric

and

gas

occurred

indus-

in

interest

42%

rate

on

The

rate

1949 rate.

coal miners wages

increase in

of

one

figure and the 38% in¬

course

slightly

wmcn occurred early in iyou, a

10.8%-in

commercial, and 33.1%

,

Tax^. developments
since last
stand
sharp contrast.

summer

the

be

income

taxes.

stems of

of

Despite

ended

themselves a
measure in
this re9

47%

consideration of

sur.tax.

tax

ences

toward holding the
fVel costs .to onJy

corresponding

residential classification,

cable.

The

rthe

over

such

months'

fop-

nntpnt

nave been^.a decidedly potent tactor.. Specifically in October the

a

shall

and

and from

The real

months

not

impact of the 42% rate!
point out here that the

full

should

count,

and

come

element which contributed sorpe-

diftpracti- months in 1949 were 13.8%, in the

became

increases

HprirlpHlv

a

so

in-

burden

hppn

havp

•

the-regulated

with

to

come

Federal

tween this

the preceding period. The lmprovement results, of course, from
^taUation of new generating

the

of

fore

for many years back.
by individual companies.
Con- Variations of the trend during the
gress
wrote into
that war tax year were attributable to specific-to. produce 5.6% more kwh. with
measure one minor concession
to developments.
Early in the year the use of no more fuel than* m
,

and which has

amounted to about 28%

be great,

a

was

with

bers does

;

••

profit characteristic of

I

1949

October (the last aseompared with 1.24 pounds in

12

are

the

taxes,

•

the

satisfactory

utility industry, which
has helped materially to pull it
through earlier difficult periods

normal

and

for

October last

cremental

I turn next to

only 4% in that item as
with an
increase of

those

spect, because all utilities had not
fully reflected in those statements

to f unction.

month for which official data are the preceding 12 months. The difavailable) the corresponding fig-, ference between those two num-

a

similar

month

4%

over

na-

faced

each

acceleration

clear-indication that the basic in¬

in-'

an

recent

the firm props under its favorable
investment standing, is continuing

corded anrexpansion of a*Tittle - foi;each kwh. in the latest period

by

refer

when the

'

Congress

costs,; the

1949.,a greater use of natural gas. Most
More than that, the rate of gain important was the increase in effiaccelerated as the year wore on: ciency of fuel generation — only
January and February each re-; 1.17 pounds of coal were required

meas-

to

fuel

of itself

account

corresponding

•w**

necessary

11.7 7 "

point to be noted is

crease

good

a

increased

ac-

excess

law.

the

come

is

the

5.2

9.1

in slightly over 10% in kwh. produc1950. According to Federal Power tion.
The ' divergence
is
com?
Commission figures for class • A pounded of several elements. Reand class B companies, kwh, sales latively unimportant were a slight
gave

recently enacted,
leading up to en-

events

actment

treatment

to

respect

The

the electric

—5.6

<

Other

compared
It is my
the most

4.0

19.2

wages

electric

new

capacity at 4,800,000 kw. and capital expenditures at $2.3
billion, of waich $800 million will be provided from deprecia¬

*

12 Months

15.9

Salaries

continuation of electric and

a

expansion in current

gas company

October,

is emphasized when it is related to
the 10.9% increase for the full 12
months ended
October.
This is

pre¬

V

.

following
°

'tabulation^
,

Federal Power Commis-

'

taxes increased 11.2%
,

,

ih August,
,

,

_

.

13.1% m September,; and 17.5^ in.

First Securities

Company of Chicago

McJunkin, Patton & Co.
.

Carter H. Harrison & Co.

Mullaney, Wells &, Company

.

,

Mason, Moran & Co.

Scott, Horner & Mason, Inc.

12

(440)

The Commercial and Financial Chronicle

small number of

What's Ahead for Stock Prices?

fund

market

financial

relationships of

for various groups

ent

in

vestment

and

tries
The

outlook

the

for

standpoint

by

me

mar¬

dividends

from

little

prospective

of

earnings, dividends and the

sup¬

and

de¬

ply

mand

tionship

f

o

of

busi¬

activity
commod¬

in

1950.

dividend

industrial
stock

average

provides

a

The

rate

of

The

equities
The

of

new

utility

com¬

stock

financing expected this
to be inadequate to
satisfy the demand for new equity
year

seems

investments.

measure

trend

of

This

the level

corporation

showed earnings of
in 1948, $24.99 in 1949 and

$29.50 in 1950.

The boom follow¬

in Korea caused the

war

nual

rate

of

earnings
to
$25.64 in the

sharply

from

half

$32.00

to

adjusted
passed
rience
duce

in

for

the

the

Past

should

some

much

first

half,
law

tax

new

throw

an¬

rise

last

in December.

how

on

Increased Investment in

expe¬

light

taxes may

war

increased
stocks.

common

well continue

yields

on

yield

This

are

about

available

Inflation

the

in earnings

rising

moving sideways dur¬

The

combination

1942-1945.

It

seems

reason¬

pros¬

pect will again have the effect of

cutting

back

current

$32.00
level.

Korea

earnings
rate

from
the

to

World

the
pre-

II

War

experience, therefore, suggests
earnings
$25.00

during

the

An

estimate

period.
would

elapse before
rearmament

Dividend

we

$23.00-

rearmament
of

*

reasonable

seem

1951 because

year

about

of

range

an

some

$25.00
for

the

time will

fully in the

are

economy.

War II likewise

moved sideways. On this assump¬
tion, dividends on the Dow indus¬
trials
during
the
rearmament

period
with

might

$14.00

1951.

be

around

the

as

of $15.50

in

$12.50,

estimate

This compares with

dend

for

divi¬

a

1950, $12.00 in

1949 and $10.42 in 1948.
Outlook

Bank

citing,

but

income

as

ual
as

not

are

very

ex¬

they have real merit
investments and

grad¬
long-term capital appreciation
earnings are plowed back and

book

values

rise.

Higher

taxes

and increased costs should be off¬
set

by

increased

loans,

higher

interest rates and rise in deposits.
The experience in World War II,
when

earnings

suggests
dividends

that

rose

bank

should

be

moderately,
earnings and
in

a

stable-

to-rising trend.
Insurance

earnings

are

expected to remain stable, similar
to the experience of World War
II.

Dividends,

likewise, are ex¬
or
slightly above

pected to hold at

the present level.
The net income of public utili¬

ties dropped about 10%
War

II,

and

that

is

market
of

llk%

in

World

about

the

worst that is

likely to happen this
However, if the industry
retain the equitable tax treat¬

3

to

fo

yields and'the gradual de¬
in

this

the

purchasing

reduced

drastically

bond

power

of

income has

so

the

reduced

of investors that

come

vidual

and

in

stocks.

common

stocks.

use

York

New

subject

of

and

of

to

introduction

legislation which would permit
purchase of common stocks.

tive

minishes

of

1950

This premise

conserva¬

7%

to

dividend
vide

a

on

a

this

range

while the
would pro¬

yield of 4.7% to 5.6%.

Leading
about

bank

4.4%

dividends
tractive

stocks

yielding

definitely at¬
comparison with a

appear

in

yield of 3.75%

afforded by high-

preferred

stocks.

Leading

for stocks

to

as

In

has

investment

expanded.
funds

larger investors;
indicate

their

over

$2.5

sales

of

large

part

vested in

have

billion

and

funds'

that

of

no

pension funds.

record

as

to

the

competent

observers

income

investment.

would

not

These

diminished

be

of the present

some

The

rise.

prospective yield

6.5%

of

*An
Annua!

address

by Mr. Kulp at the 4th
Forecasting Conference sponsored

by the Research Council of the Chamber
of

Commerce, Philadelphia, Pa., Jan. 18,

1951.




common

stocks, the influence

on

the stock
market will be pro¬
nounced because the demand will
be concentrated
in a

relatively

$

$

$

2.10

.15

.03

2.56

Chase

Y.

Fifth

23.64

21.86

2.81

3.08

________

National

Chemical
Corn

&

Trust

Bank

.___

National

___

Guaranty Trust
Hanover Bank

Irving Trust

2.13

.09

.22

*

2.90

3.30

2.50

2.36

.33

.27

2.83

2.63

2.79

.30

.36

3.18

3.15

3.07

3.20

.09

.12

3.16

3.32

Exchange

First

$

-

*

2.88

Nationals.

Empire Trust

fr.

•1?

j*:

&

*

4.83

4.96

10.27

8.78

64.18

75.55

16.89

17.44

6.78

6.83

1.48

1.38

4.63

4.32

".16

.14

4.79

4.46

16.61

13.71

.36

4.97

16.97

18.68

3.70

3.47

.27

.19

3.97

3.65

__

__________

3.28

2.08

13.55

10.86

15.31

3.51

79.49

79.06

.14

.07

17.03

17.51

1.00

.99

7.78

U.

S.

;

Trust_____._

*Not reported

In

turers

7.82

.05

1.48

1.43

tlncludes City Bank Farmers Trust Company.

separately.

the above
computations, the per share figures of Manufac¬
Trust, Public National and U. S. Trust for the two years

have been adjusted
stock dividend
and

__

to

the present

paid during the

was

Empire Trust have both

to be paid this
year, their figures
standing at the end of 1950.

In

level

general

of

the

capitalization.

In

each

case

based

are

a

Although Hanover Bank

year.

announced stock dividends of 14

banking operations for

the

on

1950

2/7%

shares

reflect

the

out¬

high

business

and industrial activity which
prevailed during
Of primary importance and the factor which enabled

the period.

banks to offset higher
expenses and taxes
in loan volume.

Loans

to

business

reached

and income from this source

was

record
more

the

was

levels

sharp expansion

during

the

period

than sufficient to compen¬

than the other groups discussed if
the indeterminate long-run out¬

sate for the lower return from

look

ticularly tax-exempt obligations, also aided in the overall showing.
The rise in living costs
during the year as well as the larger

for

the

For

industry is consid¬
the

near

term

the

ment securities.

An

increase

a

in

smaller

volume of business handled resulted in
There was also an increase in other

road

totals, however,

earnings

stocks

and

suggest

rise, but they

a

are

excess

further

probably

companies

must

will

be

par¬

most

in

be

expected " to

and below sound

in¬

value
are

ranges,
such
nevertheless help¬

setting

up an investment
adapted to the needs of

particular

Increased

speculators than

industries and

among

individual

or

it2 stof/

With

4

;

.(Special to Th?

Finanpia^ Chronicle)

WHITE RIVER

tax

rates

Merrill Lynch Adds

JUNCTION, Vt.

—Ronald L. Cheney is with
Amott,
Baker & Co., Inc., of N. Y.

City.

absorbed

large

a

part

nevertheless

were

of

the

able

to

Joins J. A. Warner Co.

(Special to The Financial Chronicle)

OMAHA, Neb.—William
has

been

added

to

the

(Special to The

R. Fox

staff

of

Merrill

Lynch, Pierce, Fenner &
Beane, Patterson Building.

Blyth Co. Adds
PORTLAND,

Ore.—Donald

Parvin is with Blyth &
Pacific Building.

OUR

R.

Co., Inc.,

ANALYSIS

18 N. Y.

sent

on

Leon

R.

Inc.,

431 Main Street.

Reed

OMAHA,
Neb. — Arthur
R.
Thatcher is with Waddell & Reed,
Inc., of Kansas City, Mo.

of

City

NATIONAL BANK
oi INDIA, LIMITED
Bankers to

the Government in

Kenya Colony and Uganda
Head

be

Chronicle)
—

White has become connected with
J.
Arthur
Warner
&
Co.,

Bank Stocks
Will

Me.

(Special to The Financial Chronicle)

YEAR-END
&

Financial

ROCKLAND,

With Waddell &

(Special to The Financial Chronicle)

Office:

request

26,

London,

Bishopsgate,
E.

C.

Branches in

Members New York Stock Exchange
Members New

4

increase in wage costs.

operating

considerable gain.

a

corporate

Laird, Bissell & Meeds

Amott, Baker

par¬

expenses.
These
for the most part moderate and income be¬

improved operations, but most banks
earnings.

COMPARISON

—

an

other sources,

report higher

insti¬

«-

were

fore taxes showed

holding of U. S. Govern¬

income from

profits tax position of most rail¬

it

flow

Bankers

been

(Special to The Financial Chhonicle)

*

$
2.41

umd

*

only

v

N.

mo

4.29

rate of.about $1.5

f

Manhattan

of

to
nm
to

❖

the

billion.. Even if
modest percentage of this
of
savings is invested in

of

am
15)50

..

Total Earnings

n)4p

17.04

BOSTON,
Mass.
Richard * C.
have1 estir Kelley has become
affiliated with

a

Bank
Bank

".

■

Security Profits

i»5<>

17.11

ment received in the 1950 tax
law;

present rate of earnings and

■

Operating Earnings

6.64

Inc.,

can

"=<r:.:>■

to
or

5.15

that '

-mated

but, according
amortization accounts

to

7.20

pension funds are A.
Allyn & Company,
currently investing at an annual 30 Federal Street.

time.

separately

directly

.15

Joins A. C. Allyn Co.:

of

by pension
funds, but it must be large since

reported

earned

.10

rela¬

There is

amount

not

are

are

.60

in

tution.

stocks bought

common

s

.03

a

of

profi

reserves.

4.14

program

Then there is an entirely new,
large and growing investor in the

form

security

managements,

6.54

ful

stocks.

so far as possible, been computed so that
comparable for the two years. In some instance, Bank
& Fifth
Avenue, Corn Exchange and U. S. Trust,

York

4.55

projections

$250,000,000.
A
this money is in¬

figures have,

are

New

7.17

vestment

in

about

common

All

Public National

swing above

net

particularly satisfactory

achieved despite an increase in Federal income taxes.
comparison of the earnings of the 18 major New York City
banks for the past two years is
presented in the following tabula¬
tion. Operating earnings and
security profits as well as the total
earnings for the two periods are shown on a per share basis.
were

A

New York Trust_______

attractive

appear

markets

now

shares

they

showed only minor changes.

considered

are

dends

of the varying
short-term and long-term outlook,
as well as the market
price factor.
Past experience tells us that while

become

are

These earning resuLs

1.

important because

for

Mutual

Current reports

resources

mutual

were

-

reported

Morgan, J. P
National Cityf

ticular

addition;- the' demand

stocks

12

area,

Leading insurance stocks yield¬
ing 3.3% on well-protected divi¬

nation

present stock holdings.

York

Trust

investors.

investors add

New

Manufacturers

better suited for

the

the

bank stocks could easily rise 10%.

floating supply of
These are generous yields for
outstanding
stocks * by
causing
many
investors to hold on to apparently well-protected divi¬
stocks even in high markets when dends in high-grade stocks.
It is
they
might
otherwise
become important to realize, though, that
we are
in period where discrimi¬
sellers, and by increasing the de¬
mand

however, profits from securities

Commercial

well-protected

on

in

range

provide a yield
a
$12.00-$14.00

assumption,

of

market

quarters.
It is
thought which di¬

major banks

The

The floor of this lat¬

would

range

6%

to favor

seems

favorable

investment
trend

195-236.

in

18

some

of

target of 205-260.

a

generally
ter

ered.

the

thinking in

In

about

industrial

the

cases, returns from this source were substantially higher,
notably First National and Empire Trust, while in others, profits
were lower as
in the case of J. P.
Morgan. For the most part,

they

indicated for five leading railroad
stocks probably harbors more risk

The significance of all this lies in
the trend of

higher than

of 200-250.

The

life

reported

are

the

Of

conservative investment school

10%

We

insurance companies have studied

considering

up

JOHNSON

higher operating earnings for 1950 than for 1949. The other six
institutions showed only minor variations from the
previous year.
Concerning security profits, no defini.e trend was in evidence.

sound

depressed by war and inflation
fears and seems entitled to a 5%-

find New York savings banks are

be

sets

a

range

Dow-Jones

much even if

in New York were
authorized to invest up to 35% of

this

was

suggest

favorable tax position is lost.
market for utility stocks has

trusts

common

range

yields

steadily increased their com¬
mon-stock holdings in order to
improve
income.
During 1950,

resources

discussed

trends

value

10%
the

for

indi¬

have

legal

to

when

E.

This Week—Bank Stocks

i

investors

corporate

and

High-grade public utility stocks
currently yielding 5%% to 6%%
appear to have outstanding merit

in¬

real

both

assumptions

stocks,

investment

H.

Earnings of New York City banks for the year 1950 as re¬
vealed in operating statements
recently published compare favor¬
ably with the results of the previous period.

Values

high-grade preferred stock
yields if due consideration is given
to the growth
factor; their market
price should hold up well. :-V

trend.

bond

1950

stocks

stock

Stock

tion to

important factor in

cline

this

for Various Groups

stocks

an

undoubt¬

talking about the possible

payments for this

average in World

have

trends

in

tween fixed-income securities and
common

grade

preferred stocks.

were

able to exp'ect that taxes in

double the

high-grade
bonds and about 50% higher than
the yield provided by high-grade

edly been

ing

may

on

In World War II
levied which resulted

taxes

trend

in

long as dividend
high-grade com¬

so

many

stocks

mon

investment

Rise

analysis, together with
yield
relationships be¬

present

ceiling

There still appears to be a trend
toward

re¬

earnings.

Common

Stocks

average

$25.41

ing

the

and

earnings.

a

dividend

this

of

convenient in¬
dex to

in

5%

amount

industrial and public
mon

institutions
predominant in¬

investment

new

present

toward

become

The

relation¬

points

By

as

$2.80 might rise

$3.00.
supply-demand

earnings

investing

Predicted

by five large roads,
prospects are esti¬

in

ship in
strength.

earnings. The
Dow, Jones 30

earnings

$8.92

to

high

con¬

$10.20

with

-

major factor in determining stock
prices.

clauses.

$8.25,
compared
1948, $6.32 in 1949

ity prices now
existing leads
very

output

around

to say

corporation

Kulp

mated

price

reducing the relatively

fluence in the stock market, divi¬
dend yields more than ever are a

difficult to gauge.

more

earnings

have

with

power

industry

the

and

high yield which stocks have been
providing.

increased

escalator

measured

and

offset

railroad

outlook is

1951

and

Moyer

The

As

level

largely

a
development
powerful influence in

improving

continue

Increased

contain

tracts

common

high

should

since industrial

costs

stocks.

ness

,A.

should

1 h-

r e

The

Such
a

Since

change.

Bank and Insurance Stocks

the
our

are

dollars.

particular companies.

the stock

be discussed

trends

be
on
phase in

history

would be

ratio

Foresees

generally higher stock
importance of discrimination among indus¬

values, but stresses

ket will

of stocks, and forecasts increased in¬

shares.

common

fund

new

Thursday, January 25; 1951

.

com¬

whereby
the
becoming insti¬
tutionalized in equities as well as

stocks. Finds situation differ¬

common

a

savings

mass

analyst discusses stock market outlook from

viewpoint of prospective earnings, dividends and supply and
demand

of

.

mutual

recent

may

we

threshold

Vice-President and Executive Director, Wellington Fund

high-grade

If

pension

and

continue,

By A. MOYER KULP*

Stock

stocks.

mon

.

York

Curb

Exchange

120 BROADWAY, NEW YORK 5, N. Y.

Telephone:
Bell

Colony,

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

Subscribed

Paid-up
Reserve

Zanzibar

Capital

Capital
Fund

£4.000,000
£2,000,000
£2,500,000

BArclay 7-3500

Teletype—NY 1-1248-49

The

Bank

conducts

benking

and

every description oi
exchange- business

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

Specialists in Bank Stocks

Trusteeships and Executorships
also undertaken

Number 4980 .".

Volume 173

The Commercial and Financial Chronicle

.

4*

f

agement,
public.

,

Rising Prices
By DAVID M. FREUDENTHAL
Business Consultant

•

;

stockholders

of

LIFO

interest is primarily in mak¬

as

sharing

ing a profit on our retailing op¬
eration, not on fluctuations of the
value of our inventory. As store¬

working retailers

plan

of

I

approached

years

accounting friends many
ago on the subject of LIFO,

their

general attitude is best

my

in

^ Question of lime

ex-

While

emplified by a
story told me

adopted LIFO,
written

summer.

'■*

of two Welshwho

visiting

jj$|
pHR

Lonthe

first time

one." I am reminded of the similarity with the period

*

FfjiPr

in

.

the

-

tfflVm

Mem-

i

of

Victorian

WKmMm. SSKStm
Da«id Frcudenthal

Architecture.
Welsh-

man

turned to the other and

said,

"What is it,

whatever?" To which
replied after gazing at

the monstrosity for three full min-

"Oh

I hope
not." And in the years that followed, through the long period
of
preparation
for the famous
Hutzler

Goodness

Brothers

know

you

me,

which, as
the guinea pig case

was

case,

tried before the Tax Court of the

United
of

the

States—and

the court trial,

following,
"What

it

Goodness

long days

and the weeks

continued to

many

is

whatever?"

and

I hope not."
For
originally the use of

LIFO was not thought of as

method

orthodox

an

say

"Oh

me,

certainly,

being

account-

of

ing. Ihdeedf the ingenious method
of using index numbers to make

it

applicable to retailing was said by
including the Treasury, to
be
impossible
and
that
LIFO

some,

could

never

erogeneous

of

be applied to so

het-

inventory

that

an

time

and

opinions

has

usage

of

many.

thought this talk
of when

pose

find

is

LIFO.

to

go

as

Retail Department Store. But

a

when

lished, this

ac-

It

was gener-

group

advantages of the Retail Method
either and if you look at the early

I

the
was

to be

an ex-

the best time to
surprised to

was

program

was

pub-

to be in the nature

you

tensively employed."

To

the

1930's.
into

come

best of

goods to sell to

my

could

do

for

so

tax

A number of industrial

however, used FIFO for
purposes
before
1939
and

LIFO

for

our

other

all

purposes,

ac¬

and effort of

maintaining two sets

of records in

order, management-

times

and

real

our

was

it

wasn't

made

until

1939

that

it

generally available for
,

.

it to present a more meaningful
statement of income to the

profit when

we

Nonetheless, in the retail field I
remember discussions concerning

has retailed them for $32.50 apiece

its adoption and the benefits to be

and

derived

from

and

1937

it

as

far

back

apiece

as

details of

coats.

practicality, and cur¬
rent pertinency of LIFO, let me
take a few minutes to go into the
broader aspects of LIFO for those
of you who may not be too famil¬

risen

iar with what and

means

this

In

out,

with

a

clash

here

the

method

believe.

clined

Too

would

often

us

are

in¬

another

reorder

the

100

the

As

the

him

cost

looks

demand

stock is then
higher retail of
The merchant sold during
entire
the

at

the

total

inventory.

just

where

one

It is

sound

as

deals

to

do

practical

piece

would look like

the FIFO basis

on

(Table II).
And then

the LIFO basis the

on

result would be

with

so

man-

geneous an

to

by

inventory

as

as

shown in Table

what

is

does

to

the

fers

take

method
profit the

into

that

profit until

when

Now,

a

A

assume

the

$1,975
2,175

Conservative

Its

measure.

strict

reverse.

profits

derived

do this? What is
the basic theory behind this en¬
deavor of pricing your inventory
do

during the period of rising
prices and rising taxes beginning
with

the

These

are

the

Second

the tax

we

World

..

situation:

(1)

The

course

future

of

■

(2; Fluctuations in tax rates.
(3) Variations in the amount of

physical
end

The

(4)
law

inventories
existence

such

of

Sales

3,450

Cost of sales__

2,075

Gross profit

; ~

in

Opening inventory at cost (100 at $19.75)____
cost (100 at $21.75)

$1,975

Purchases at

isn't

Sooner

or

clines

in

a

be

we

one

Due

closing inventory (100 at $21.75)

prices.

Won't

all wash out?

heavily

more

to

Let

$1,975

out,

is

total

liabilities

tax

the

profit

(2)

selective

If

taxes

profits

(3)
in

taxes

Total

r(

Cost of sales.——
it.

p,a^TS

7~""i

Cost of sales

of falling prices.
If losses in bad years cannot
against prof¬

years

(4)

be completely offset

its earned in good years.

to

FIFO

re¬

LIFO

versus

The effect of conditions

two
as

on

■-PsTrfr-rKrtr

—

i-j.-uu-jaui.-fj

>-r

-

i/

a/,

50 State Street, Boston 9, Mass.
2,175

.

Gross-profit--—$1,275




i

V--""

•

•

and

against LIFO is apparent.
As
acts to inflate your profit

during good
or

years,

selective

a

increase

a

progressive

will

tax

liability at

tend

to

much more
rapid rate than LIFO would tend
a

sustain

it during deflationary
This becomes even more
important when one realizes that
to

periods..

selective
are

less during a

taxes

an

excess

deflationary period.

But these are
and not too

as

relatively meaning¬
special situations

frequently applicable,

although obviously increasing in
frequency.
Of far greater and
more

basic

importance has

Continued

Incorporated

3% Contingent.

$100 Debenture

executed through your own broker or
undersigned. OFFERING CIRCULAR on request.

"OiiH hi r->bo'4

one

tax liabilities under FIFO

FIFO

LUCKHURST & COMPANY,

^1^^3>2,175

.}»

*>

1,975

in

If incqme taxes are higher
of rising prices than in

$4,150

Less closing inventory (100 at $19.75)

as

years

Orders

the

levied

are

Price $100 Per Unit

$1,975
2,175

Purchases at cost

such

income tax.

an

TABLE III

Opening inventory at cost-

pro¬

undistributed profits taxes or ex¬

and 5 Shares of Common Stock

$1,475

to

following conditions prevail:

Per Share
a

tend

(1) If income is taxed at
gressive rates.

as

April 15, 1961. Interest 3% Fixed,

1,975

___

sav¬

larger under FIFO than under
LIFO to the extent that any of

such

those actually
operations
and

doing business

our

be

During periods of

Offered in Units of

3,450

—

Cost of sales—

penalized

examine this part of

us

eradicate those derived from price

appreciation.

Par Value $1

Cost of sales--

these

^Von't

picture.

14,975 Shares Common Stock

2,175

street.

way

-

later there will be de¬

advantages

Dry Ginger Ale

$4,150

tax

The natural question then arises:
This

$299,500 Convertible Sinking Fund Debentures

2,175

the

an

The Moxie Bottling Company

II

the

overs.

profits tax

Measure

influence

from

also

$1,375
TABLE

American

at

averaging device
carry-backs and carry¬

loss

as

held

the tax year.

of

2,075
$2,075

price

movements.

$4,150

Cost of goods sold.

War.

implications in

reverse

LIFO, therefore, in periods of
rising prices is a conservative

car¬

these

that largely

LIFO

later pe¬

the

earnings is highly desirable.

a

Frankly,
ones

attracted retailers to the value of

FIFO

higher value of the remaining in¬
ventory,
whereas the
LIFO
method does the opposite—it de¬

hetero¬

that

the

are

addition to

there¬

vital importance,

LIFO.

of

aspects

cess

Clearly

department store, that
the last goods in is the first sold,

ried

pects

III.

assume,

of

we have to
cognizant of the financial as¬

be

the
Actually,
even
when
price fluctuations tend to balance

riod.

fore

broader, basic aspects

are

piece accounting at cost, his gross
profit calculation would look as

accounting in a de¬
partment store, so let us see what
tnis
gross
profit computation

to substitute habit for fact

by

realistic

more

later, which will offset
ings now?

We know that it is not

with

have

we

While "the

a

re?

the year 50 coats at $34.50 and 50
at $36.50.
If there were an actual

to

actual practice as some opponents
to

He

indicated in Table I.

prevailing usual accounting
method FIFO, which is first infirst out.
Or to get to the basic

is there

!

Wool and labor prices have
and

$36.50.

the

$1,975.

inventory of
Our merchant

reorder

to

remarked

simply last in-first

it contrasts

retail.

at

strong,

The Broad Aspects

of

dollar

a

$21.75.

why it is.

total

a

has

decides

Before I get into the

LIFO

or

$3,250

1938.

the benefits,

Why

Total

Gross

at
to

an
opening inventory of 100
spring coats which cost him $19.75

,

„

tax use- many large conce™ used

Closing inventory (50 coats at $21.75 and 50 at
$19.75)

Sales

afford

giving

again

has

wise, to have the benefits of LIFO.

and

Opening inventory at cost (100 coats at $19.75)

•;

customers

can't

we

proclaim our established cus¬
ing the early years of the Second
takes place,* LIFO defers taking
World War, LIFO is neither a new tom the perfect method for no
other reason than that we have into profit the effect of the lowernor untried principle.
Manufacpriced goods remaining in inven¬
turing and extractive companies, done it that way. Actually; ^s
tory, so that what you have here
who constantly had to cope with many of you who have mingled is a
method under which profits
with merchandising can well sus¬
wide fluctuations in raw material
are
more
nearly leveled out as
prices and at the same time main- tain, the newest garments, the
latest
shipments, are frequently compared with the FIFO method
tain sizable inventories in order
where
the
fluctuations are much
the ones that sell the fastest.
It
to remain in business, have utilis the slow moving merchandise, wider as between the good and
ized LIFO or some variation of the
the goods with the older season the bad years.
Both methods are
"normal stock" method for at
letter that too frequently continue approximate methods and the ad¬
least thirty years. Even when it
to make up a fair percentage of
vantage
of greater stability of
couldn't be used for tax purposes,

Purchases at cost (100 coats at $21.75)____—__

*

stock of

a

goods, not, as happens under FIFO,
when we simply buy more of the
same at a higher price and mark
our inventory up accordingly.
Let us be specific.
A merchant

tually going through the expense

Nor

Although to the retailer LIFO
has become prominent and assumed importance only since
prices began to rise sharply dur-

must have

we

sell

as

Less

keepers

>7

TABLE I

;

early

will find that there
were debates on that subject too.
theory: In LIFO inventory stocks
In a recent article in tne Harare
assumed to be exhausted in
vard School of Business Review,
the inverse order of their acqui¬
Dr. J. Keith Butters, Professor of
sition, Why this? Simply so that
Finance at the Harvard School of
the gross revenue is expressed in
Business, stated: "Management interms
of the
increased cost of
ertia and ignorance have constimerchandise.
(We shall give ex¬
tuted one of the major reasons
amples shortly.)
that LIFO has not been more exgress,

changed the
Originally, I and

was

the

make

There remained a
who just couldn't see the

minutes of this Controller's Con-

One

utes,

effective

an

in

the retailers

tney

ally adopted.

1, that
perfect horror

other

as

fections, eventually it

a

the

debated

took time but with all its imper-

famous

o r

ing

was be-

counting method for retailers.

passing

Albert

when the

''WFlM Retail Inventory Method

their lives and
w e r e

much has been

so

the subject that I feel

fl| retailer the question no longer is,
'SK "should one," but "when should

i

were

for

don

on

that for the medium and larger

/It is the story
men

to date

that

true

relatively few retailers have

iMpBpMMj

England

this

it is

of

We

tax

of a debate and my role was to
justify the use of LIFO.

some

step

a

our

all

is time for consideration of its universal adoption.

now

first

was

be

may

gamble with the value of it.

concerns,

eludes

names, -

before

purposes.

;

*

knowledge none of them used it

of income to management, stockholders and the public. Con-

"When

some

this

:

,

importance; Caterpil¬

Tractor

-

j
,

declining prices, it works in
verse
older, reducing
losses
fcvaluationay the inventory.""1«

practiced for 30

to present more

pos¬

namely conservatism. ''As retailers

■[

years

as

sible?

Endicott Johnson in 1936, and be¬
cause
of
their
employee profit

the. picture?

effectively
meaningful statements

close to the actual cost

as

attributed to one of the
cardinahs laws-o-of
c co u n t i n g,

When did

cations, showing that its basic principle has been

the

tional Lead adopted LIFO method
of evaluating inventories in 1920,

lar

Retailing authority clarifies LIFO's accounting and tax impli¬

and

Na¬

mention

tremendous

Formerly Vice-President and Treasurer, Bloomingdale's

;

*

Basically it is economic and
accounting realism.
Secondly, it

To

Reconsideration of UFO

13

(441)

INC.
*

40 Exchange Place, New York 5, N.

Y.

on

been

page

32

ii

14

(442)

The Commercial and Financial
Chronicle

.

.

Thursday, January 25, 1951

.

■■■

V

ent.

Mr. Coleman in his talk

phasized

Mutual Funds

FJIATIOInAL
of

prospectus

NATIONAL

program
upon

ment

and
Assets

More Than $2,500,000;
Shareholders Total 939,000

request

SECURITIES

&

New

CORPORATION

RESEARCH

120 BROADWAY, NEW YORK 5,

1950

and

of mutual

As

sales

of

funds, it

was announced

Investment
now

—

of

than

more

000,000—and
oer

Companies.

the

Total

.in

of 1949,

in¬

exceeded

those

the previous peak year.

Total

funds

1950

net

Dec.

on

of

assets

98

31, 1950

mutual

riod

531,000,000, an increase of $557,000,000 over Dec. 31, 1949. Num¬
ber

of

shareholders

939,000
lier.

from

Sales

1950

842,000

of

1949

net

demptions,

ear¬

after

the

in

Annual

Report

Balanced

to

share-

liiil

0OMMONWEALTH
Investment Company

•

PUTNAM
MULTIPLE

FUND

will-

the

of

long

a

economy

indefi¬
strait-

Rather,

that the basic

&o6ton
PROGRAM
Putnam Fund Distributor, Inc
50 State

.

A Flexible Plan for

Street, Boston

Systematic Investment

it

is

cause

of

Prospectus and details from^.
-..Investment dealers

A Mutual Investment
Fund

..

met."

or

-r

.fir**-

■

North American Securities Co.

V

some

$43 billion.'

"It is clear that the

■

t

.

p'i'.V-V-'

k

»'*'*■

I

v

\

■2500* Russ Bldg., San Francisco 4
■if:

'•urF'.;'

Illlll ■Mimnm

$151,000,000 compared with $100,-

in

put into effect will fall far short

increases

COMPANIES, Inc.

-

$7.7 billion

000,000 in 1949.

tax

•

.

contrasted with the 1950

as

budget of

exceeded

that

have

been

'e.4

'

of

Institute President
1

Prospectus from

your

local Dealer,

or

Forecasts Greater

American Funds

650 S.

Spring St., Los Angeles 14, Cal.

i

rather

by the country's
that

1950's

v

than

retarded

mobilization

war

He expressed the belief

program.

record

—~

fund .sales,

^

es

^

timated from figures fdr the first

nhnGnnnUai

i?3? or

m°re

000,000/ should be equaled
ceeded

1951.

in

The

a

year-end

outlook for the

ex^

estimate

brings industry assets to
total of $2,500,000,000.
In

a

industry, Mr. Bardo

or

PHILADELPHIA

2, PA.

greater

with

last

fu-

on

Increasing numbers of
individuals realize that "security "
matter what form

no

does not exist.

plans

savings

t

influence

ture sales.

m

promised,

Also that enforced
or

fixed-income

m-

vestments, because of the low
urn
offered, are no longer
adequate

answer

costs

the

ing

and

people

high

re-

an

living

dwindling purchas¬

of

power

more

to

the

see a

dollar.

Many

solution to their

problem of providing for the fu¬
ture

eystone

Custodian

in

the

the

Certificates of

Participation in

INVESTMENT FUNDS

investing tkeir capital
IN
BONDS
(Series B1-B2-B3-B4)

PREFERRED STOCKS
(Series K.1-K.2)

COMMON STOCKS
(Series S1-S2-S3-S4)

effects

making

Tke

be obtained from

Keystone Company
of Boston
50

Congress Street

Boston 9, Massachusetts

-1




on

Institute's

more money

their interest in long-term

half a\vay, and

and a
forde(}
"If

time

some

of

are

goods

frankly
faced

more

general
of

vigorously educate the

public

ownership
be

to

the

advantages

investment.

These

ignored, he said, if the

funds

are

public acceptance.

to

secure-

wide

The

lem

of

government

preventing

inflation

already have it," but
"holding it in check lest it

reach disastrous

proportions,"

ac-

about

:as

of September

(Mutual

lower;,

a

of

the

we

Institutional

should 'be

jeas^

reduce the deficit to

o^pahlp

Shares, .Ltd.

available.

^

Distributed

Eisele & King,

HARE'S
19

Libaire, Stout & Co.
50

at

Broadway

YORK

STREET

6,

N.

Y.

Prospectus may be obtained from

New York 4, N. Y.

man-

RECTOR

NEW

of

by

LTD.

the above or local dealer.

nrnnnrtinn* "

Meanwhile
sofar

possible

Funds)

'•

10-year record

are

standard

it

Investment

30,1950

expen¬

recognized, that

the

the

as

production

study said, "In-

level

is

of

industrial

concerned,

we

are

unquestionably facing a period of
capacity output for the indefinite
future," and any decline in pfoduction during the transition from
a peacetime to an armament econ¬
omy "should at the worst
fairly short duration."

be

American Business

Shares, Inc.

of

Prospectus

The "nature rather than the size

request

upon

.

.

of industrial output is the present
more
immediate concern of the

investor," the Bullock firm said.
For instance,
recent orders
re¬
stricting the use in civilian goods
of such strategic raw materials as
copper, aluminum and cobalt in¬
dicate
of

we

durable

sumer

On

are

the

the

Lord. Abbett & Co
New York'

——

Chicago

——

Los

Atlanta

Angeles

threshold

decline

in

con-

j

goods."

other

other

and

"on

significant

a

hand,

consumer

foodstuffs
nondurable

j

goods should be

in ample supply '
the exception of the textile
some

tightness '

because
and

the

of

the*

small '

cotton crop, the study said.
Residential construction, it con-

tinued,
a

J

be expected to suffer F

may

sizable curtailment due to credit'

restrictions

and shortages of
materials, it noted.
"
^

.

*

raw

!

u

Coleman Is Host

pany, and

of

selling

discount of

Group Shares

Stock and Bond Group
Shares

afr

are

,>•

A

Coleman, President of

Commonwealth Investment

"we

are

35% from stated asset value

curtailed, production
increased,
and
it
is

with

S. Waldo.

major problem facing the
today is inflation—a prob¬

not

a

"At Dealer Luncheon'

.

Bullock's "Perspective"
Analyzes Inflation
nation

at

year

make

living,

He

and

we

to

a

Shares

together with higher taxes,

ditures

with

the ideals of trusteeship on Which
their form of investment is
based,

insurance

ASSOCIATION

transition

added, however, that the Industry
where
investment companies face a real
may be expected
challenge in future years in two shortage of wool
directions.
They must preserve 1950

since
"IS

economy

the

investing.

;

' t

war

,

'

;

a

over

and have less
on
which to spend it.
This, cou¬
pled
with
their'. concern
over
today's uncertainties, should in¬

mutual
may

of

prospects,

cannot

Protpeclut

by

President said that people will be

crease
»

provided

fund

shares, he said.
expressing no concern

In

sales

unds

: investment

mutual

tures appears to be at least

broad

diversification
continuous management

the

and

of

the

inevitable.

seems

Bank Group Shares

SHAWMUT

.

the

of

cora
year's record
Dusiness and
business
ana should
snouia

investment dealer

Aviation Group Shares

is, of course, impossible tom'ake up all this deficit imme¬
diately with taxes.
Fortunately,
the
LUG peak
p'
rate of budget expend!-

record

tholet said that in his opinion two

a

request

"It

nonessential

appraisal

factors had much to
exert

upon

re¬

.

crease

your

Prospectus

gap

r>
1
D
1
r.
•,
£4.1
uct which will probably be in
Paul Bartholet, President of
the, excess o( $300 bil]ion }n 1951 as
Mutual Fund Institute, said today
compared
with $280
billion
in
that public acceptance of the mu,950
a
further substantial
intual investment funds should be

accelerated

''prospectus from

inflationary

ceipts which will be forthcoming
a higher gross national
prod-

,

Distributors, Inc.

the

allowed for increased tax

from

Public Acceptance
,

meeting

even

Western

hosts
Las

at

Salle

Com¬

Martin Pe Tamble, MidRepresentative,
were

a

luncheori," held

at

Hotel, Chicago, Friday,
dealers,

out-of-town,

both

local

were pres-

may

be obtained from

investment dealer
200

ai

or

The Parker

yotir

local

Corporation,

Berkeley St., Boston 16, Mass...
i

•

Investment

Diversified Investment Company

Prospectus

the

Jan. 19.
and from

*1;

PURCHASE

this

billion

to

u

pe¬

inefficient

controls.
be

r»

■

cannot continue

we

the

in

for

new

increase

invested in government and Cor-

connection, the analysis
continued, "the Federal budget is
pointing up to a potential of $75

respective

1950

Reports

a

an

r,

In

re^-

distributions

shackle

necessary

$238,000,000 and

were

time,

inflation

$519,000,000
$386,000,000
in

sales,

$278,000,000
in
years.
Dividend
shareholders

year

_

Howard

iJUMJMLAJUN

endure

can

of

nitely
jacket

to

*

with

while

a

to

to

shares during

new

amounted

compared

increased

.

Howard

&

at

high of $62,923*
«of $12,299,454
since the beginning of the year,
Shares outstanding increased during the year from 1,865,204 to 2,149,102 and asset value per share
increased from' $27.14 to $29.28.
Twenty per cent of the Fund is

792,

step toward controlling in-

a

which

$2,-

were

..

&

holders dated Dec' 31> 1930' shows

of

by rationing."
Controls,
nevertheless, "serve
only as a temporary stop-gap in
halting inflation," the study said.
It observed that, "faced as we are
with a heavy armament
program.

creased in every .year since
1941,
the Association said, Sales of new

shares

million

one

assets

be ineffective unless accompanied

num-

have

over

department ol the firm

a larSe extent price control

$2,500,-

aggregate

sftareholders

em-

Mutual

Fund

which must be coupled with con-?«
tr<>ls of wages, is inevitable in thenear future." However, the anal-*-,
ysis stated, "it is probable that to-

shares

new

of

amounts to $2%

hv'<fK^^1 mnriifcrp»~

flation, the study said, "imposition
of some form of price controls,

today by the National Association
of

0

,

Eaton

Calvin Bullock.

high records were set in
assets, number of share-

in

holders,

N. Y.

$w\/ainwnfc

with

Eaton

Set New Records

Details

billion,
„

An Open

growth
now

stockholders.

By ROBERT R. RICH

Mutual Funds

the

Funds which

..

i''1

FOUNDED

I 9 2 s

•

m

.

'

yolume 173

porate

Number 4980

.

.

The Commercial and Financial Chronicle

.

(443)

Bonds,

17% in Preferred es in Canadian holdings featured
and 62% is invested in changes in -the- fund's portfolio
Common
Stocks;- 1%. is unin-! during the last quarter.
'
' :
:

t

How Wage and Price
.^arg--St 9om™on stock* Commonwealth International '7
iJl!P rrf6 rln
Power and holdings
primarily Cana- r!
Controls Feed Inflation
1' laSiu ^nsiJrooce,^ Natural: dian securities. The recent port-

„

s and Chemical industries.

Eaton

&

Howard

1950

annual

ers

shows

doubled

report

to

assets

since

the year.

Stock

Fund-that

sharehold-

beginning
total

now

changes

said to indicate
anticipate a

are

to support the side that

;

Mutual Increases

outstanding increased during the
from 175,057 to 335,206 and:

individual

effort.

value

share

per

from $18.22 to $20.37

1

A

,

'•••-

.

,

<

debate

trols,

make slaves of free men, sap productive
strength, and thus
foster further inflation and defeat ourselves over a long
period

L

-

•s

increased

is

,

ance
1

and

rayon

insurand chemical industries.

Incorporated

Investors

William
stated

A.

with

reached

17%
...

The Fund, which with the

' I.

bless theml-

want?

••

a

high at the close of business

ProP0ft!on of textiles oil,, natural,.
;€as'.fteel, and retail trade stocks,;
companies On the other hand building stocks

Tuesday, topping $100 million.
Incorporated Investors is one of
the largest investment
in the country. The

company was

started

in

Parker

and

Boston
was

in

1925

of

one

^

by Mr.

the

first

-

organizations to bring professional
investments, management

^

■-

^r.edUCed.,

for-

outside

>we

caused

our

*

mighty

borders.

the time to draw

Morris

Sayre

military

Confusion

in

.find-ourselves

a

line,

Colonel

as

Travis did at the Alamo, and get
'nn

sidp

nnp

nr

thp

nthpr

Fnr

wp

of

need

by more buying power
goods. To stop it we must

than

reduce

buying power or increase !
production, Or both. It's as simple
that!

j

•

taxation evenly

there
heavv
.

L

taxation

but

taxes

Ywa
and
nfnrp

LS ™
X? f L

to

power is thought

Yiuch

be

I

?

spread

politically inexpedient.

to ^

So

aboutj

talk
one

'ex-

can

bracketi locll
ffirnnr^S1'
corporations j

on UDner

™

n0 X« ' *
While Rome burns in ation goes

here is her weapon, and you and
I must not be confused.
This is

hascomewhen

+^0-

rrtmhonicc

Growth

common

oifr American reduce buying

ity, ou
American
freedom are

our

a

The time has come wherf
I as business leaders, and

We all fear inflation and would

But

We know, too, that Russia
fights an insidious and ruthless
way of warfare, inside as well as

0 u r, children

t>land'-<o'f twirs;-'
^
The time

life,
by

wage con¬

stop it. Economists
tell us, as does
sense,
that inflation is J

power.

opr..

portunity

security

Vc

of

menaced

'
^,,;v.,v\\ .in this beloved!

^T- "r' •<.* c„./T i
<jrowf" Companies
Reports 89% Gain
•

The

to

-•

serving

L?

xxro

way

J

all Americans, must be honest and
realistic about them.

i.

homes0our

d up -

Is_, managed, by; Investors about. d e,i n g
Diversified .Services,. .Inc., -also my modest-bit *
showed significant increases -in. toward p r e -

Wage Controls

question that cries out foi

you and

as

Ti.i

^ aYl

seven

i-4nv^ors'-vs"t'e a m e

President,

that the total net assets of

Incorporated Investors
new

around

months previously/,

■'

7.:C,>.;

Parker,

wmers.• uou

bonds, at the-end of

-contrasted

Tops $100 Million

six'

dividually clear about our purpose
in this fight.
For what are we
willing to fight? Just what do we

b® treated

char"er fc"rItles' predominantly.

textile,

i

to price and

as

a

enemy.

...

-

light,

1

-

clear, unselfish, objective think-*
ing. There is plenty of confusion
here, much to the delight of the

invested

w,

and

Take, for example, the presenl

Eighty-five-

cent of this Fund

per

rights, and reward for-

This must be our ultimate:

Price

portlon of net
held by In- V
of cold war. Pleads for equitable
taxation, tight budgeting,
veStors Mutual, Inc.,. invested in i '■
and adequate credit controls.
*railroad securities during the six
in a diversified
group of 72 com- Pontlls
ended, Nov. ,30, -last,- is .«•
.
,
mon stocks reoresenting ?ft indue
indicated in the current-issue of ; - When the Pennsylvania Bakers among your employees and in
tries. Two per cent is invpstpd in "The Mutual Investor," sent to the £aYe me this invitation to appear your communities, have
a real
Corporate Bonds
8%
in
IT
fund's 93.000 shareholders Jan. 22. before you I accepted forthwith; job here. And it is necessary that
Government Bonds and 5^ is un
About 25% of the $240,000,000 '
among you are many friends, your own thinking be clear. That's
part of the price of peace.
invested.
Largest common stock held by one of the world's largest and> of course,
First of all, then, let's be in¬
holdings are in the oil, power and balar>ced ft"*? was invested in *W.
means
asset

en¬

boy

purpose and use of peace.

Prominent industrialist, asserting time has come for sound
thinking in the national emergency, condemns bureaucraticsystem of price and wage controls, and contends such controls

.•7

A.marked increase m the pro-

year

a

'

of. present world conditions,

Railroad Holdings
*
•
■■ s--'.[

purpose be

our

to produce, that
upholds human dignity and self ;
respect, • individual responsibility,!
courages

President, Corn Products Refining Co.
Past President, National Association of Manufacturers

$6,826,-'-

865, compared with $3,189,671 at
the beginning of the year. Shares!'

every

clear

Let

Canadian industry due to

in

sion

in

and act.

\

By MORRIS SAYRE*

•

directors

fund

greatly accelerated rate of expan-

than

more

the

Assets

folio

.

question,

word

are now

no

public

every

Stocks,

15

7 Washington j
demand for production, the in- r

Gn ancl' despite

.

centive to produce is diminished.,.

we .nna ;ourselves m neea or ,f7b77n"ideological"war' *
r And so there is a great hue and;
tntaVsound thinking-m the 'National r&ni dn ia««108icdi war.
cry for controls. But let's analyze
Wm.
.-Tudor Gardiner, former net assets for the first (ive m<,rtths Emergency confronting us. Per- i The Communist believes in the controls ta the Ught of these prin.
'•}Governor of Maine, is Chairman ^of its oneration"1 ThYYwaip- haPs 1 maV be useful to you by .all powerful State and its disci- JJljgdemocracy-for Which" we
,of
the
Board, and Sumner H. l00ZdXt!l r^olrcesthl' ^gesting^or your consideration, pline on the individual. We beiemocmcy
U"iyersit.y Pro-! open-end mutual fund to $485,142 a few ideas about it, in a very few
Most everyone agrees that in-i
investor.

average

renortpd

-

,

.

Companies, Ind., today
inrrpn^p

an

in

.tor wmcn

1S

in

cash

and

securities

on

Dec.

31,

'-titutiona.

During
ended

the

Dec.

niMcoc

u0

nmvHino

Vio

vo

uucuwnumuvci

re-

ply_credit
F J

nj
^imwith,^ are ail.- ^
Reports ■;otSfs
,

12-month

period

31, 1950, the net asset

The audited report of the Fund

,

.

u

_

To.begin

,«n

'

a

_

j.

tl

with,,

iL

—

i

are

we

ac

all ap-

1^:

a—

as

he pleases,, providing
MffhTcf

tnunfo

—

tno

in

com a

Athnvc

«,nc mvuvj

control-and
>er

avernment.
e

o'l^^^enemies6 -I?"has

seemed

The Communist meets the prob-

sort1

tightf
°
1
consti-i

the

Federal

Reserve

spenders,

Board

has

-Tight budgeting,
however, is still needed, but as

done

of"dfeWbuUoris"paVd

sive

from
Dividends pai d

security profits.
tro

ordinary

m

met

incomq

amountedTo*75cTer"share"

com-

™

pared with 67c paid in 1949
■

•
- *i
Aviation
Up
a

During
ended

«

55.7%

the

12-month

period

31, 1950, the net asset
value per share of.Aviation Group
increased

by

55.7%; or
$8.33 to $12.97, inclusive of
paid from .security

from

distributions

profits.

Dividends paid from

dmary

income

net

per share Gn AuS- h
1950. The net asset value per
share was after PaJ^ent'of an
™«al dividend on rDec.'26 of 16
per

Dec.

Shares

pnce of

or-

amounted

to

46c per share, compared with 32c
paid ip 1949.

share

from

the"Siberian

net

pines

assets

National

of

°n r 1950^
t

C9RQ0

If

Shares

increased
,

,

,,

dowm to-The

Is-'

Solomon

;

•

,

;fands where our boys,

>

That was indeed a grim holiday, encouraging every man to plan
And we had it again in and create wealth for himself in
preferred December 1944 when the Germans the belief that, if he respects the
stock-all selected for their broke through our lines in Bel- equal rights of others, his prospergrowth possibilities in line with gium and the Battle of the Bulge sty will inevitably contribute to
the primary objective of the Fund w^s not turned until about this the general good—that God made
listed at $49,848. The portfolio on
31, last, consisted of 39 com-

Dec.

m0n

and

stocks

season..

one.

time in

-capital gain.

n

_

Net

enough fear into the masses to

in fox holes Democraey and Human Self,shness
Unrealized appreciation of iri: around Henderson
Field, had"
Democracy meets the problem
vestments i-at the
year-end was-barely a toe hold on Guadalcanal: of human selfishness uniquely by

realized securities profits.

The !

National Shares Reports

Corporatfon

r"

All of you can remember tHat control and carry out the plan, by
New Year of 1943, when the Japs, use of the early morning calls.of
having d"e"st7oyed"our Pacific Fleet the secret police and
the year before, had chased us, in-Slave Labor Camp! God forbid

of

organization

i

u

man

1945.

to

after

dividends

and

•

4,u

But both those crisesiwere sue-

Growth'.

c°mpanies> Inc.,
1>}c.- ,ast
cessfuily passed-passed you remarked the initial association of member because of the courage of
four of the nation s outstanding our splendid boys andbecause.we

.

and

n.,r

on

..

,

,

. .

M

amountediit

365

T.Iitn tn-lQ i

n2.

ar'p

9h!r«

There

3fin nnft

wl,
nai stock »?f
outstanding.
r

Common

ci

.

stocks

dent of that company; Dr.. Zay crushing discouragement at Valley and training in individual responrecently retired Vice- Forge; Lincoln many times^ dur-..£ibility and voIuntary cooperation,
It President of General Flectric Co. ing the Civil War. I remind you, taught in our homes, schools and
P" and past President of the Amer- in this fashion, to point .out that; churches, to make our system
Jeff"es,

,

ican

Society for Metals; Dr. Soger- while we now seem to be

facing

work;

otherwise

our

courts

are

the the darkest period in all our his- overworked and democracy fails,
78% of total assets on Dec. 31, American Association for the Ad- tory, a situation that no one should
That's where you and I as citi:last, while cash and U; S.~ and vancement of Science-^and past underestimate,-we too can have zens come
ancj we bave not
Canadian Government obligations President of the American Chem-S.enough strength to avoid a war, been
comjng jn> instead, for the
and
receivables
accounted
for ical Society; and Dr. Clyde E.Wil- or to win it if it comes, providing last 2o years we have looked to
17.9% and preferred stocks .4.1%. liams/'the Director of' Battelle we show the courage, vigor and tbe planners, with Government
represented

President

Adams,

of

8">e ^en

temporanly

but it, Joo, is unpopular

if bitter

talk, too, about political pressure
from the farmers, tne promem 01

retail^ lag. and no talk anout tne
Port prices or tne luu.uuu people
t0 administer controls

You bakers would^ have snon
were ^

memories maeed lx yo

P

$3157

$2 30

a&6ut
whisper

eheap transportation, hard roads production and distribution, and
great rndustry.'He used for to that extent feed inflation.. Yoi,
. ■ n.
relatively
little
of
the saw OP A prices steadily go up!

and

disburrement

of

2*.?
pnce

basically responsible, good, think that price and wage controls
not bad.
Henry Ford is an had anything but a, restraining.ef,
fjis enterprise gave us feet. Certainly they restrict both

a? the end^of ipd ustrta lists and, scientists mth wqre girded up a;s ne-v^before,; wealth he created. Most of it has
of total !he
mutua' fund >«dustry. . The to keep hem apd ouy all'« aup" been dedicated to public welfare,
n^r share S- foUruare: r?uyaud ?' JC5?k1!' 3
enemas
foree
heir rf
Now we have laws- courts and
eluding oavment
Dec 23 1950
"lember of the board of directors our enemies and force their .retQ enforce „that respect for
L.S S".
of General Motors Corporation treat.
..-the rights of others," but primarily
sharj ifnl
Uli
and recently retired Vice-Presi-:
Washmgton, on his knees, faced we depend on 0ur historic belief
1949

1950

good job.

'

cents
per share from income and bitter retreat, from the Philip- that we ever have that method!
0f
4
cents

' I

-

of.l4-7%,over thei initial offering "to us"beTore"

a

,

you saw

black markets and under-

the-counter selling get so bad
it was about the only selling.
erywhere controls tended to
duce production, create

that

Ev4

re-j

shortages

and lower morale.
In our busi4
ness it was impossible to buy
enough corn at O.P.A. prices, and
production was greatly reducedin your business it was necessary
to be not only bakers but corn
traders with nylons and Ford cars!
And I suppose we were only one
of tbe suppiiers you served to d1
nttle

a

baking!

.

j.,

'm'
. '
uommonwealtn Assets
Net

assets

of

the

mutual

Memorial Institute for Industrial will that has won for us in

.Up

Research

fund,

Commonwealth International Cor-

poration
48%

Limited,
during 3950,
than

more

the

to

fund's

68th

a

$10,000,000,

shareholders
The

increased, by
to

recent

which

total

of

according
report

to

accompanied

consecutive

dividend

and

past

President

of

the American Institute ?of Mining
and Metallurgical Engineers. - All

past.

'

>

^ !!

the

control boards and even Govern-

!

ment competition with

T

individual

business. We have made it impossible for our sons to have the

board of directors of which ■ Dr.
Williams is Chairman.
7

This, therefore, is no^time for
fright about the prospect of another all-out war, the atom bomb,,
or wishful thinking
that we can
forget about it all as something
unpleasant. It's time right now;

of

high time, for sound thinking and

public good by incentive encour-

four assisted in the organization
of the new fund and serve on its

Other members of the board

success

of Henry Ford.

We have

largely forgotten that our success
has been due to using and harnessing human selfishness for the

concerted action by every citizen; agement, freedom and a sense of
For only as citizens think and de-. individual responsibility.
cide in a democracy can we have
We let the planners berate busidian investors .generally are beand
the
Pennsylvania
Bankers unity of purpose and performance ness and tax away the incentive to
coming increasingly aware of the
Association, and John M. Temple- so vital for victory. You, who ex- produce.
This is a Communist
advantages offered by this investton, President of Templeton, Dob- ert much influence and leadership game. You can read it in Marx

payment.
This

growth

shows

that

Cana-

ment medium.

Elimination

include

Harry

J.

President

of

both

directors

former

American

Bankers

brow-and
of

manv

many

Ampriran
American

securities and substantial increas-




.

Vance,
v

*

-

Continued

Fear Buying
?
Yet sincere and experienced men
argue that a price and wage freeze
are now desirable.
They argup
that, in this mobilization for waq,
we have to give way to the planf
ner, with all the shortcomings o£
price and wage controls, rationr
ing and shortages.

like

;the

investment
■

>

—_

777 afJfl,PS5 Kv Mr s»vre h*for* the
A" address^ by Mr. Sayre before the

Pennsylvania

page

38

Bakers

Association,

Pitts-

and
the "Daily Worker."
t,a+'c Ha
thpn
this
Let's be

which

curp
sure

side

we

in
fight.
then, in
this fight,
are really on—in

contrary

For war, umto peace, ref

quires central planning and tkr
submerging of the individual.
They have started a wave of feajs
buying that makes price control

Haas,

Association

on

and

;

seem necessary.

'

gut I submit to you
we are by no means in
,

.

,

Continued

jirst—th^t
total, war,
To

on

page oo

I6

(444)

The Commercial and Financial Chronicle

Nominating

*

Fenner

&

Michael

Committee:

Louis

Beane;

J.

Wechsler,

Heaney

Ogden,

Notes

P.

Germain,

Publishing
Sharp,

Co.;

Walker,

BOND

William

Arthur
D.

Chairman,

Mayer,

Laird,

Van

Bissell

Riper,

<fc

D.

O'Connor,

Warner

&

Co.,

Chairman,

M.

Fitzgerald &

Roald

Inc.;

Commercial

Inc.;

Blue

Chronicle;

Investment

Chairman,

Mayer,

Co.,

Morton,

A.

Financial

&

Digest; Raymond Trigger,
Quotation Bureau, Inc.
John

Hawkins & Co. Opens
In Cleveland Feb. f

Legg

C.

"

Seibert,

Committee:

Merrill Lynch, Pierce/
Michael J. Heaney, '
& Co.; Arnold J.

Meeds;

John

Dealers

National

Reception

CINCINNATI STOCK AND

J.

Herbert

Investment

Louis

M.

Gibbs,

Co,; Milton
Wechsler & Co.

Publicity Committee:
John

NSTA

John

A,

&

List

Eliot

H.

Dealers

Digest;

Lynch,

Pierce,

Merrill

Thursday, January 25, 1951

;

-

Fenner & Beane; Richard F.
Abbe, Wertheim & Co.; James F. FitzGerald. W. L.
Canady & Co., Inc.; Michael J. Heaney, Michael
J. Heaney & Co.; John E.
Kassebaum, Van Alstyne, Noel & Co.; John J. O'Kane, Jr., John J. O'Kane, Jr.
& Co.; E. Winthrop B.
Pizzini, B. W. Pizzini & Co., Inc.; Stanley L. Roggenburg,
Roggenburg & Co.; Walter F. Saunders, Dominion Securities Corp.; Harold B.
Smith, Pershing & Co.; Willis M. Summers, Troster, Singer & Co.; Eenjamin H.
Van Keegan, Frank C. Masterson &
Co.; Wilbur R. Wittich, Grimm & Co.

CLUB

Sports

Committee:
Harry D. Casper, Chairman, John J. O'Kane, Jr. & Co.;
Eurian, Daniel F. Rice & Co.; James A. Donnelly, Jr., Reynolds & Co.;
Sidney Jacobs Co.; Charles M. Kaiser, Grady, Berwald & Co.;

Arthur J.

Sidney
Inc.;
&

Jacobs,

Herman

Co.,

Ralph
&

D.

Meyer,

and

T.

Co.;

Legislation

Dimpel,

Melville

Corp.;

Pizzini

Wien,

&

Veterans

S.

Wien

Committee:

Samuel

Co.,

Theodore

F.

P.
&
&

Plumridge,

W.

E.

Co.,

Fox,

Arthur

J.

Inc.;

Chairman,

P.

H.

Mewing,

Walter

F.

Warner

Fox

&

Co.;

D'Assern

Co.

Walter

Colwell,

Fred

F.

Saunders,

Hutton

&

Chairman,

Co.;

B.

Dominion

Daniel

Secu¬

Winthrop Pizzini,

B.

M.

Hawkins

Harvey L. Hawkins

W.

Inc.
Committee:

Elmer

E.

&

George A. Searight,
Rollins & Co., Inc.

Blair,

Co.;

Lubetkin

M.

John

Co.;

&

Committee:

Seligman,

S.

Transportation
rities

Gruntal

Inc.

Tax

Kassebaum,

Van

E.

Alstyne,
Eisele &

Myers,

Chairman,

George

B.

Wallace

&

Co.;

Noel & Co.;
Edwin
J.
Markham, Wertheim
King, Libaire, Stout & Co.; Herbert L. Seijas,

Insurance and Forum Committees have not been
appointed for
Should warranting occasions
arise, these groups will be
activated promptly.
1951.

SECURITY TRADERS ASSOCIATION OF NEW YORK
The Security Traders
Bowling League standings

Association
as

yv

TEAM

of

of Jan, 19

;

V

of the Cincinnati

Stock

and

seated left to
right, Jack C. Siegman, Bohmer, Reinhart &
Co., First Vice-President; Gilbert A. Davis, partner of Harrison
& Co.,
President, and Cletus H. Oilier, Secretary and Treasurer
are:

•

of Edw.

Brocknaus & Co., Inc., Second Vice-President.

ing: left to right,

Secretary, and Peter
BOSTON

1951.

Meyer (Capt.), Smith, Farrell, A. Krankel, La Pato___
Mewing (Capt.), Klein, Flanagan, Manney, Ghegan

Stand¬

Goodman

'-

Dinner, to be held at the Parker House, Friday, Feb. 9,
6

to

7

Dinner 7:15

p.m.;

included). t' Early
\

reservations

mittee.

Members of

Tickets

p.m.,

requested

are

$12.50

are

by the

A.

members'

luncheon

for out-of-town

guests will be held

at

House, Feb. 9, at 12:30.

evening, April 13, 1951. Dinner tickets will be $14 per person,
all taxes included, and dress informal.
The Arrangements Com¬
mittee has made ambitious plans for this affair and a
large attend¬
ance
is expec ed. Therefore the Committee
reservations

be

made

general announcements
Dinner

Unterberg & Co.
with

by

members and

may

be

made

with

Committee

firms

before

Thomas

Greenberg,

BOwling Green S-3365), and Hotel
Weissman, Siegel & Co. (Tel.: DIgby
'

..

STANY

their

(Tel.:

Bernard

Torpie,

Torpie

Co.;

report

Lynch,

Committee:

Bernard

Nathan

A.

Pierce,

J.

Saltzman, and his hard
the deal practically gone on

Fenner

&

D.

Raymond

Conlon,

P.
Siegel

Krumholz,

driving

In

Beane;

Kenney,

F.

Fox

&

<fe

Co.;

Charles

Arnold

J.

Co.;

Chairman,

D.

Wellington

Hunter,

James

Wechsler,

O'Brien

Ogden,

Murphy

III,

Wechsler

&

&

Merrill

Jan.

Committee:
Stanley L. Roggenburg, Chairman, Roggenburg & Co.;
Heaney, Michael J.. Heaney & Co.; John J.
O'Kane, Jr.,
John
J.
& Co.; William K.
Porter, Hemphill Noyes, Graham Parsons & Co.;
Eenjamin H. Van Keegan, Frank C. Masterson &
Co.

J..

Jr.

Employment
&

Co.;

D.

Committee:

Raymond

Membership

Kenney,

Arnold

D,

Committee:

J.

Wechsler,

Raymond

Charles

Kenney

Chairman,
&

Ogden,

Wechsler

Co.

O'Brien

Murphy
III,
Chairman, . Merrill
Conlon, P. F. Fox & Co.; Frank E.

Lynch, Pierce, Fenner &
Beane; Bernard J.
Mulligan, Joseph McManus & Co.;
Harry F. Reed, Carl M. Loeb, Rhoades &
Co.;
Serlen, Joseph thai & Co.; John R.
Stein, Frank Ginberg & Co.; Wilbur
ft. Wittich, Grimm & Co.
,

w

JCen&etn
crick

&

26, 1951

Baltimore

New

C.

Ebbitt,

Co.;

liaupt & Co.

Shelby

Davis

Kales,

ing to act as underwriters and
dealers and brokers in municipal

sociation

(Baltimore, Md.)

Jan. 29, 1951
Bond

Paris 8- Russell, Jr., Chairman, Glore, Forgan

Cullom

Wood,

Davis

&

Gundy

Co.;

Paul

O.* Frederick,

& "Co.,Inc.;

Anniversary

Dinner

at

24

and

25

Members of the

Club

of

Twin

the

Annual

of NSTA

Bond

dinner
of

33

are

urged

Harry

Paul

J.

&

Co.;

Board

of

of

the

at

Detroit

(Special to The Financial

■

become

Dealers Associa¬
Convention

at

-

J

of

Summer

Outing

Country Club, Oreland,

with Hulburd,
Chandler, 208 South La
Salle Street, members of the New
York

Traders

"j-

:

Dallas
umbus

*"•»

'

•

•

•

he

past

Board

ation

of

of

Governors

Stock

.

of Associ¬

Exchange

Firms

Anderson,

Club

annual

Chronicle)

has become associated with
Paine,

Col¬

Jackson

&

Curtis,

209

Mr. Smith

formerly for many years with
Lynch, Pierce, Fenner &

Merrill

outing.
1951

to The Financial

CHICAGO, 111.—Lome C. Smith

Beane.

Prior
of

manager

(Hollywood

thereto

he

was

investment

the

de¬

partment of the Chicago office of
Shields & Co.

Saunders, King Ltd.
Formed in Toronto
TORONTO, Ont., Canada—E. M.
Saunders

BALTIMORE, Md.—Mead, Mil¬
ler
&
Co.,
Ill
East
Redwood

and

ited

Street, members of the New York

in

with

Trust

Carman
G.
King
Saunders, King Lim¬

offices

Building

Canadian

and

winter meeting.

In the

Co.

of

Co.

have formed

Feb. 8-9, 1951 (Dallas, Tex.)

head

South La Salle Street.

In Mead, Miller Go.

<,

,

Eddins &

Paine, Webber Firm

Frank D. Mead Partner

Firms

Ex¬

Lome G. Smith With

was

Investment Bankers Association
Annual Convention at the Holly¬

of Associ¬

Exchange

Stock

formerly man¬
trading department
was

was

Webber,

'

(Dallas, Tex.)

Bond

Day

'

wood Beach Hotel.

Governors

Stock

He
the

of

Plotz &

As¬

Beach, Fla.)

Firms

Midwest

and

for Goven,

(Coronado Beach,

Security

Oct; 12, 1951

Associ¬

Chronicle)

associated

changes.

(Philadelphia, Pa.)

Sept. 30, 1951

Annual

Exchange

winter meeting.

in

to

the

act

Montreal

as

government

dealers
munici¬

Philadelphia-Baltimore Stock pal and
corporation bonds. They
Exchanges, announce that Frank were
formerly Vice-Presidents of
Feb. 9, 1951 (Boston, Mass.)
D. Mead has been admitted
to
Fairclough & Company, Ltd., and
Boston Securities Traders Asso¬ general partnership in the firm.
prior thereto were in business as
ciation Annual Dinner at the Par¬

Mr. Mead

ker House.

Feb. 20, 1951 (Detroit, Mich.)
'
t/lj'."

_

U

rfii

in

with

.

with

Commander.
■

Saunders, King & Co.

i

1928.

Mead,

extended^duty 4?b the Pa¬
cific, he emerged f,rom. the service
.the
rank;: of Uieutenant-

(Philadelphia, Pa.)

Philadelphia Winter Banquet.

Virginia

associated

After

Investment Traders Association
of

graduated from the

& Co. from 1935 to 1942,
when he ente,^ .th^U^I?. Navy.

Annual
Dinner at the Hotel Statler.

21, 1951

was

of

Irvine

r

Delist Stpck .Exchange

Feb.

was

University
He

Ira
-5

of

careers

Co., remaining with

CHICAGO, 111.—Paul Plotz has

sociation Convention opens at Co¬
ronado Hotel.

meeting.

of

investment

&

will

years,

Hulburd, Warren Go.

annual

Pa.

(Houston, Tex.)
Governors

90

Paul Plofz Now With

Feb. 6-7, 1951 (San Antonio, Tex.)

ation

their
Otis

of

Dinner at the Manufacturers

National

(St. Louis, Mo.)

Stock

field

The firm, it is understood, will
acquire
a
membership
on
the
Midwest Stock Exchange.

(Jasper Park,

Philadelphia

Nov. 25-30,

Fred-

Peiser,
•_

began
with

(Special

4, 1951

a

in¬

the

12

season.

Calif.)

Security Traders Club of St.
Louis Winter Dinner for Tri-City

Feb.

in

Warren &

15, 1951

Golf and

(Detroit, Mich.)

1, 1951

experience

vestment

Investment Traders Association

Tri-City Parties.

of

securities.

firm, who have

be Daniel M. Hawkins, Harvey L.
Hawkins and Lyman G. Smith. All

ager

Securities Traders
hosts at second stage

Club

market

26

Dinner

Club

Canada

of

June

Chicago

Dinner at the Book Cadillac Hotel.
Feb.

general

27

Jasper Park Lodge.

(Minneapolis, Minn.)

Jan. 31, 1951

formed

be

18

(Dallas, Tex.)

Bond

Investment

City

Association

will

19

Canada)
tion

Mid-Winter

Jan. 30, 1951

*




York

June 11-14, 1951

(Chicago, 111.)

Traders

Co.

in the Leader Build¬

21

(New York City)

May 30, 1951

Field

Security Traders As¬

Annual

&

20

Waldorf-Astoria Hotel.

Lord Baltimore Hotel.

Board

By-Laws

O'Kane,

23

,

Co.

V.

&

Michael

22

Ken¬

Hunter

Auditing Committee:
Berger Egenes, Chairman, Merrill Lynch, Pierce, Fen¬
Beane; Otto A. Berwald, Grady, Berwald &
Co., Inc.; Charles H. Jann,
Estabrook & Co.; Walter
Murphy; Jr., Walter Murphy, Jr. & Co.
ner

with offices

.

Memorial Day outing.

winter

Raymond

CLEVELAND, Ohio—On Feb. 1
Hawkins

21

Security Traders Association of

Dallas

ation

Committee:; Daniel Gordon Mullin,
Chairman, Tucker, Anthony
Torpie, Vice-Chairman, Torpie & Saltzman; John C. Blockley,
Harris, Upham & Co.; Joseph C. Cabbie, Abraham & Co.; David H. Callaway, Jr.,
First of Michigan Corp.; Thomas
Greenberg, C. E. Unterberg & Co.; Joseph M.
Helly, J. Arthur Warner & Co.; Wilbur Krisam,
Geyer & Co., Inc.; Salvatore J.
Fappa, F. S. Moseley & Co.; Bernard Weissman,
Siegel & Co.

Co.;

Investment

Smith

21

combined

Bowling

G.

24

H.

all members

so

Lyman

24

root.

EVENTS

"when

a

Arrangements

&

the

18

19

Party of NSTA.

.

&

Standing Committees appointed for 1951 follow:

Advertising
&

of

April 13, 1951

issued" basis.

The

Meyer,

27

26

that firm until December of 1950.

.

4-237°).
James

half

three way tie

a

published.

are

reservations

reservations

ney

and

COMING

suggests Dinner and

Co.;

possibility of

first

and

The Fifteenth Annual Dinner of the
Security Traders Asso¬
ciation of New York will be held at the Waldorf-Astoria on
Friday

E.

out

come

the

at the Furniture Club of America.

SECURITY TRADERS ASSOCIATION OF NEW YORK

C.

to

ends

out-of-town

the Hawthorne Room, Parker

Hotel

Thursday
a

the

reservations, contact John R. Hunt, Stroud
& Co., Inc., Philadelphia; John S.
French, A. C. Allyn & Co. Inc.,
New York or Robert B.
Calvert, Tifft Bros., Hartford.
A

This

There is

C.

Ticket

For

M.

16

17

:

Reservations should be made with Edward F.
Hines,
Perrin, West & Winslow, Inc., and Room Reservations with Rod¬
ney M. Darling, Moors & Cabot.
,

Valentine,

29

28

com¬

Dinner Committee are: Arthur C. Murphy,
Allyn and Company, Incorporated; Frank S.
Breen, Schirmer, Atherton & Co.; John J. D'Arc.y, F. L. Putnam
& Co., Inc.; Alexander W.
Moore, J. Arthur Warner & Co., Inc.;
Burton F.
Whitcomb, Harriman, Ripley & Co., Inc., President of
Boston Securities Traders
Association; Wilfred B. Perham, R. H.
Johnson & Co.; Edward F.
Powers, Hodgdon & Co.; T. Edmund
Williams, Hooper-Kim ball, Inc.; Henry E. Tabb, Townsend, Dabney & Tyson, Treasurer of the Association.

Chairman,

Casper,

Kumm (Capt.), Weseman,
Tisch, Strauss, Jacobs..
Greenberg (Capt.), Sullivan, Stein, Wechsler, Siegel__.__

its 27th

announces

(Capt.),

Frankel

Schwindt.Seasongood & Mayer, Treas.

Securities Traders Association

Cocktails

(tax

meister

SECURITIES TRADERS ASSOCIATION

The Boston

Annual

E.

Won Lost

H.

George F. Oswald, Clair S. Hall & Co.,

are:

(STANY)

(Capt.), Kaiser, Growney, Gronick, Rappa_____>___
Burian (Capt.), Manson, King,
Voccoli, G. Montanyne__
Krisam (Capt.), Bradley,
Montanyne, Weissman, Gannon
Leone (Capt.), Krasowich,
Nieman, Pollack, Gavin
Serlen (Capt.),
Gersten, Gold, Krumholz, Young
Hunter (Capt.), Lytle, Reid,
Kruge, Swenson
Donadio
(Capt.), Demaye, O'Connor, Whiting, Werk-

Club

Bond

York

follows:

as

"'iXSV

Bean

Newly elected officers

New

are

Geo. R. Holland Assoc.
MIAMI, Fla.—George R. Holland
has formed George R. Holland As¬

sociates

with

offices

in

the

Pan

,

and.

ciated with Mead,

became,

asso¬

Miller & Co.

American
gage

Bank

Building

to

en¬

in the securities business.

Volume 173

Number 4980

.The Commercial and Financial Chronicle

.

.

(445)

Phelps Witter Oilman,
of L. A. Exchange
LOS

ANGELES,

Witter,

a

&

was

Our

Calif.—Phelps

partner of Dean Witter
elected Chairman of
the Board of Governors by"the
membership
Co.,

of

the

Los

its

Wed nesday,

the

It

best

has

gains being posted by the most distant
welcome change from the uncertainty

been

was

experimenting

monetary forces.

the

of

year

term

Phelps Witter

(William R. Staats
Co.), and Edward Calin (Crowell,
Weedon & Co.).
Witter

elected

was

Chair¬

under
the
Exchange's re¬
cently amended constitution which

man

provides for the

by

Chairman

the

to

be

in¬

membership

stead of the

governing board, and
additional board mem¬

creating
bership.

an

regular

board

Under

eligible

to

Exchange

members

rules,
not

are

themselves.

succeed
elected to

was

third year

a

Chairman, extending his threeterm on the board by one

year

year.

The three

members elected

new

to fill

vacancies left

by the
expiration of the terms of Phelps
Witter; Warren H. Crowell, Cro¬

well, Weedon & Co., and Stephen
C. Turner, Turner-Poindexter &
Co.
All

three

elected

to

previously

the

of

the board

governors

have

served

on

the Exchange's gov¬

erning board.

Frank F. Hargear,

partner of Sutro & Co., has been

a

member

a

of

1929.

He

board

from

as

the

was

Exchange since

and

the

on

1931

Exchange

1935

to

borrowing rate

kept intact.

This

reported

the

H.

member
1928.

Exchange,
of

He

the

in

has

been

term

a

was

1948.

Edward

dealer

at

a

since
the

on

Exchange

in

from

Calin,
No.

post

3,

1934.

member of the

President

for the

more

of

the

United

States

factor in fighting the forces of inflation.

as a

Evidently other
sought and used by the monetary authorities in
struggle against inflation, because the opinion seems to be that
raising of interest rates by x/s's and %'s does not appear to be

the
the

effective

in

keeping

in check

that add to the inflation

loans

other

and

monetary forces

potential.

financing of the "garrison economy" by the Treasury will
not be a reality until later in the year, but in the interim a pattern
of rates will be evolving. It is the opinion of many money market
followers that there will not be too much of

a change in the pat¬
already exists, although this does not mean there will
not be some alterations, especially in the shorter maturities.
A
lx/2% rate for certificates and 1%% for intermediates, with the
2x/2% rate for long-terms, looks like the working base. There
might even be a 2% rate inserted into the pattern later on in
the year, according to the opinion of some close observers of the
government market. There will most likely, however, be greater
flexibility within the pattern of rates that will be developing than
was
the case during the last war period. /(This assuming there
is no all-out war.) The monetary authorities are not going to make

as

it

the creation of

any easier despite the statement by
Treasury'Secretary Snyder about the maximum cost of long-term
borrowings.
reserves

excess

with

1945

to

odd

lot

joined

the

board in

was

1942.

being

longer-term maturities.

buoyed,

There

considerable

was

posal
will
to

most

Those

that

quickly pulled when the

were

came

likely be the

follow.

There

are

in the market for dis¬

were

news

broke.

The taps moved

in and cooled off the enthusiasm and this

that the authorities will continue
wild beliefs that the market will be

course

no

allowed to get out of hand on the upside, because
Federal

has

securities

the

to

keep

a

and

it is well known
it within desired limits

they will not hesitate to let out enough obligations to do just

that.

Nevertheless, the feeling in government circles is one of
growing confidence, and this is bringing more buyers into these
securities, even to the extent of building some positions (not too
sizable yet) among certain dealers, which have been largely on
the sidelines. It is the opinion in not a few spots in the financial
district that

better year is in the offing for operators in Treasury

a

*

There will
issues

TREASURY
:

MUNICIPAL

over,
This
of

the

as

should
seems

STATE and

pro¬

uptrend, without too heavy volume, par¬
ticularly in the eligible issues, because there were not many of

these securities for sale.

obligations.

U. S.

especially the

fessionalism in the initial

that

He

list

whole

the

add

most likely be
wears

year

to

on,

confidence

the

a

greater demand for government

and the freeze in long-term rates
of buyers of these obligations.
It

though the period of experimentation in money rates is

as

because of the changed international and national conditions.
means a stable government market, fluctuating within limits

steadiness, but with enough leeway so as not to tie the hands

of

the regulators,

to

be

purely

or

to make the whole procedure so simple as

cut and dried affair.

a

Cassell Appoints
New Officers

City, members of the

New

York

Stock

admit Peter Y.

Aubrey G. Lanston
& Co.
INCORPORATED

15

BrAad

Street

NEW YORK 5

WHitehall 3-1200

i

45 Milk Street

BOSTON 9

HAncock 6-6463




limited

to

Feb.

1.

bald

Douglas, Jr., member of the

ner

in

the

partnership
same

now a

firm,

Cassell

&

Co., Inc.,

west

Stock

114 Third

Exchange,

Philip Wick, that Eugene H.

Jr.,

Exchange, and

F.

Exchange, will Street, N. E., members of the Mid¬

Francisco to gen¬

eral partnership and

On the

Va. —C.

CHARLOTTESVILLE,

Pershing & Co., 120 Broadway,
York

on

date Archi¬

elected
of

the

ment

Cassell

will

become

a

Mr. Francisco is manager of the

firm's order department.

altogether from
the

in¬

of the gold reserve in isolation it
is not

For

portion of the British gold
borrowed gold. ;

a

very

reserve

large

pro¬

consists of

|

-

It is to be deplored that this fact has-not
made
sufficiently clear by the state¬
ment issued by the
Treasury, or by the com¬
ments made by the Chancellor of the
Exchequer.. Although the
usual observations were made about
prospects of difficulties and
about.the temporary character of some of the
factors responsible
,

Dr.

Paul

been

Einzig

for the increase of the gold
reserve, these reservations cannot be
regarded as adequate. They have been repeated after each

terly statement since January 1950, and the further increase of
the gold reserve that followed on each
occasion has materially
weakened the effect of the
present warnings.
The result of
the false impression conveyed
by the apparently non-stop in¬
crease of the gold reserve is
likely to be very harmful to Britain.
Public opinion in the United States and other countries
is liable
to

Britain of

accuse

Vice-President

Municipal

and

All

these

Government
considers

be

could

little less keen

a

its

own

eliminated

be
on

if

the

British

claiming credit for what it

achievements

or.

those

of

the

country

under its

guidance, by displaying the largest possible increase of
To that end, large amounts of borrowed gold are
included in the quarterly figures, without
indicating that a sub¬
stantial proportion of the gold stock does not
really belong to
the gold stock.

Each

official statement on the gold reserve
ought to point
emphatically that the amount includes $300 million obtained
from the International Monetary Fund and $375 million obtained
from the Canadian Government.

These short-term liabilities must

be regarded as representing a

direct first charge on the gold re¬
serve, and it is utterly misleading to omit any reference to them.
In

its

effort to

conceal these

liabilities, the government goes
the annual report on the Public Debt
the $300 million owed to the International
Monetary Fund as an
far

so

as

internal
did
it

to

represent in

debt.

loan

not

Technically
the

British

this

against payment in sterling.

be

justified,

for the Fund
$300 million but sold
Sooner or later the transaction

may

Government

the

will have to be

reversed, however, in which case Britain will lose
corresponding amount of gold. It is true, conceivably part of the
sterling held by the I. M. F. might be sold to countries short of
a

sterling, in which

it is used up in payment for imports from
Even under that solution the $300 million rep¬
payment received in advance for future exports which, if
case

the sterling area.
resents
and

when they materialize, will not yield any foreign currencies.
is, therefore, necessary to regard that amount as an internal
liability.
It

As far as the Canadian credit is concerned, part of it was used
during the first two quarters of 1950, at a time when gold was
pouring in well in excess of Marshall aid receipts.
This means
that the credit was used, not for meeting the dollar gap for
which purpose it was granted, but for increasing further the gold
reserve.
If the gold reserve is increased deliberately at the cost
of a corresponding addition to Britain's short-term dollar liabil¬
ities then the operation has distinctly the character of windowdressing.
It

is

believed
reserve

that

practically the whole of the increase of

during the last quarter of 1950 consists of bor¬

gold, inasmuch

as it is the result of the flight to the pound
anticipation of a revaluation. There is no reason
about this influx, and it is utterly mis¬
leading to allow the British public to be pleased about it. Even

October

whatever

in

to

be pleased

though the authorities have made vague references to the factor
of hot money influx, the increase of the gold figure is apt to
attract much more attention than any half-hearted efforts to
explain its cause. The government would have been in a position
to prevent altogether this misleading and useless increase, by
using the proceeds of hot money influx for the repayment of the
less, it would have been possible to come to arrangements with
both
authorities
that
the
amounts
repaid should... remain at
Britain's disposal in case "it should be necessary to use theim
again. To do so would have saved the government many a re¬
proach from abroad for the apparent inadequacy of Britain's Con¬
tribution to democratic, defense, and also wages, claims at home.

been

Charge
Depart¬

Dennin has

Cooper has been trans¬

Charlottesville.

disadvantages

were

to

liabilities to the I.

in

Bond

Joseph W.

ferred from the

common

has

urer.

Fred B.

being unwilling to contribute to the

of democratic defense in
proportion to her increased wealth.
The British workers and consumers are liable to
pay scant atten¬
tion to the exhortations for additional efforts and
sacrifices.
cause

announce

general part¬ been elected Secretary and Treas¬

limited partner.

apart

regard

in

New

in¬

the increase of the Brit¬

Yet

reserve.

all that it appears to be.

rowed

Admit Partners

gold

crease

the gold

SECURITIES

Pershing & Co. to

other

out

The response market-wise to the speech of Secretary Snyder
favorable

evidence and

most

the fact that other indices
point to the opposite
direction, even if we were to

Britain.

Market Reaction Favorable

was

in

more

quar¬

The

tern

much

are

to'register than

apt to be attached to
ish

and

methods will be

they

easier

dices, and because gold is still regarded as the
symbol of wealth, exaggerated importance is

be

say about the 2x/2% rate
distant government bonds seem to show an agreement
important powers that be, about more distant interest

among the

ahead until Federal

board

of the

only one
prosperity and staoility.

of the many indices of

Because

McCabe of the Federal Reserve Board with what Sec¬

of the Treasury Snyder had to

same period, and is
apt
entirely false picture of the rela¬

tive position of the two countries.
Changes in
the amount of the gold reserves are

a

retary

both

Kenneth

Exchange

served

governing

would

governing

treasurer

1942.

government securities of 2x/2%

on

concurrence

Chairman

rates

a

to convey an

strong pronouncement from the top brass
monetary group and should leave little doubt about what
is going to be the future course of long-term interest rates. The

1943, serving

Powell, odd lot dealer at post No.
on

showed

in the

middle and
2

reserve

Long 2Vz% Rate Impregnable

Powell

were

1950 the British
further increase of $544
million, rising to a
$3,300 million. This was in striking contrast with the
fall
in the American gold reserve

gold

total of

much

neth

as

democratic defense.
LONDON, Eng.—During the last quarter of

market.

The outstanding development in the
money markets was the
surprise statement by Treasury Secretary Snyder that the long-

Witter

divulging true situation, contending it will be
claim Britain is not
doing its share in

were

(Sutro &

Dr. Einzig

reserve,

for

The

the

gold

during the

Co.), H. Ken¬

elected

basis

as

expected to con¬
longest bank issue, the shortest and middle maturities
taps were the spotlighted ones, in a volume expanding

tinue.

Frank F. Har-

Mr.

used

Although all of the gains were not maintained by certain
issues because of selling by the Central
Banks, there is a buoyant,
confident tone in the market as a whole. This is

governing
board to fill

gear

for not

ernment

a

attempt to slow the inflationary

members

-

with

recent rise in British

on

it is apt to convey entirely false
picture of relative posi¬
tions of U. S. and Great Britain.
Says large portion of British
gold increase has been borrowed and he blames British Gov¬

influence of

of

that has surrounded the market since Federal
with slightly higher rates in an

Exchange

three

under the

the speech by Secretary of the
Treasury Snyder, in which he stated
that long-term rates would be frozen at
2x/2%, probably for the

maturities.

Jan. 17, 1951.
Three other

terms

Commenting
says

government market is operating

list-wise

held

to

The

the emergency.
There was no question about the
interpretation of this statement because prices moved
ahead quite briskly after a rather timid start. The advance was

annual

elected

By PAUL EINZIG

market's

at

meeting

's Borrowed Gold

Governments

on

By JOHN T. CHIPPENDALE, JR.

duration

Angeles Stock

Exchange

Reporter

17

Radford office to

M. F. and the Canadian Government.

Doubt¬

Unfortunately considerations of domestic politics prevailed.
propaganda Vglue of being ablq to display a further spec¬
tacular increase of ^he gold reserve was too tempting to be re¬
sisted.
So Britain Ms added further to the amount "of her

The

borrowed gold stock.

'

18

The Commercial and Financial Chronicle

(446)

Canada's Prospects for
A Free Economy
By JAMES MUIR*

bank

Canadian

Prominent

executive

1950 toward free economy
of

;

<

dation that these sterling balances
be settled in such a way as to re¬

may

this

of

controls

Canada to be

is

for

the

the

forth

set

to

Bank policy to

working model of free

a

Today, the object of this review
of events and estimate of possibilities

ain's

avoid many
incident to inflation, and advocates removal
on
international capital movements.
Wants

restrictions

free

pros-

in

economy

shall

I

1951.

consider, first,
the

steps

have

the

to

sterling

debts

This

would

there

were a

into

U.

dollars.

S.

be the case only if
flight from the pound
owing to the overvaluation of ster¬
ling. But overvaluation will not

goods and

on

listed

these

economically preferable to saving induced by the hope of re-

should

let the market

determine rates of

exchange, as it
after the first

we

preference
would

otic

divi-

no

either

come

and the

one

bullish

or

bearish .at

which
best

order

free

a

advised

accept,

But

the

war.

.

This

.

means

free

As

matter

a

ex-

faces the

now

*

x.

of

Britain

fact,

hausted,

reward

dilemma that

same

effi-

Agreement: in fact, we may find
useful after the free exchange
market has done its work."
^

g

g

September 1950, the flow of

g

capital to Canada had

third,

the prospects of freedom
with special reference to our own
Canadian economy.

tt

f^to

int0

our

c

reserves
re,eives,

be-?

^rmr-ori

greatly
greatly

weakweaK.

ened. our
tion, and
uncertainty, even
exchange position.

d^^s.^a "^+^nnri(^
created in
instability
a
our foreign

Towards

the

Free

Economy in 1950

Under the

September, and October, 1949,
first

break

made

was

trols

with

the

30.5%

of

sterling, the

of

other

soft

the

in

log-jam of postwar exchange

con-

devaluation

devaluations

mass

currencies,

and the

9.1% devaluation of the Canadian
dollar.
lar

This step to meet the dol-

shortage

taken with

was

some

reluctance; but the effect of devaluation, long obscure to many,
has

become

now

The

evident to all.

sterling-area

.

current

balance

with

account

on

,

the'dollar

changed from a deficit of
$359jnillions in the third quarter
area,,
of

1949

to

millions
and there

the

of

fourth

$31

only

quarter;

continued improve1950 as shown by a sur-

ment in

liibl
first

deficit

a

in

was

1111 ee

minima

qudl lers

for

OI

nprinri

Canada
United

s

rrf-

,

,

_

,

trade balance with the

States

also

showed

marked improvement

,

a

three

quarters of 1950 she-' h&d U

dollar

deficit

U.

on

S.

tradetiof

only $71.5 millions compared with
deficit

of $432 millions for the
period of 1949.

same

Of

course

be

cannot

alone.

all

this improvement

traced

to

late

1949

movement

nctMtv

industrial

and

early

was

intensified

after

But, with due allowance
accidental
factors,
devaluation
be

a

powerful

engine

of aeriod^of so-called stable rates
witn recurring, and
or

.TrV.5r.V-,

delivered by

Mui:

Mr.
»t
Meeting of the Sharehoiders
of
the Royal Bank of
Canada,
Montreai, January n, 1951.

the

82nd

Annual




long-term

certain devices of monetary

outbreak

of

war

in

Korea_

The

government expendi-

But,

Once

the

of

limits

voluntary

by that

war and by the threat of saving have been reached we are
elsewhere, have caught our forced to rely on increased taxes,

war

economy in
and fatigue,

state of weakness and on physical controls.
Physiowing to the effects cal controls may operate indirectly

a

struggle

with

infla-

curbs or directly
through government allocation of
through

credit

materials combined in vari-

scarce
ous

.

j

in

appraising the usefulness of higher interest rates in the
fight against inflation, we must

As taxes

holders

;

machinery

of

control
.

.

.

h

by
'

;

begin to decrease the

more money
as

.

important

very

monetary and credit
the Central Bank.

1

back into the market,

of

ities unload

government

on

,

secur-

the Central Bank

the pegged price.
In
other
words, if the Central Bank is required to maintain low interest
rates by pegging the price of govat

:

rates may be only an encouraging
symptom that monetary and fis-

cal operations against inflation

enjoying

are

*

some measure of success.

•-

But the maintenance of low rates

ture.

inflationary problems, posed

new

reduced

on

was cast in sudden shadow by the

degrees with price control and
.

;

in the face of this tendency means
that initial success may be turned
into
failure.
Apart
altogether, '
therefore, from the direct effect

of higher rates in encouraging
saving or discouraging borrowing,..7
the effectiveness of fiscal and v;
,

monetary policy may depend in
small measure on allowing interest rates to rise.

no

5

,

.

the unstable
era demand is the
cost of wartime
"efaViilTrorl*'
nPViio"

rnfop

Tirxivrx

were

"stabilized"

c,
V
armament.

o rm Q m

v-1

nrtd

This

rebe

cannot

tional Monetary Fund), but were war economics is to
in fact at the

m'ercy of speculative only

capital flight.

-

^

/

■

-

,

-4

the

.peacetime

Only the free market could, as tailed.
time, enlist the speculator
In this

in olden

himself in the

cause

of economic

least
■

essential

demand

way

disclocation

we

of

is

part

thus

in total war,

stitute for devices that really atT
tack inflation.

of

So

cur-

our

economy
by new armament expen-

stability.

the

Canadian

government

to

set

fectiveness of

our

Sept. 30, 1950. at the same time
During the summer and fall of that the freedom

war

on

can

ensure

aim

to

de-

1950, the spectacular flight to the fend will in fact be preserved.

in

the

U.

S.

dollar

trade

balance

and the prospect of a "sure

cial

complications

in

BritainJs

case.

area

'

most economically be sacri-

can
fieerl

npprte

against

a

indirectly

.or

to

drastic
increases
in
corporate
taxes, including an excess profits
tax.
Extremely high
corporate
taxes,
especially
excess
profits
taxes, tend to encourage waste in

their

their final effect.

free exchange

a.

.

.

management; and, in addition, ex¬
cess profits.taxes are arbitrary in

been

inflationary pressure, has
confined to the following:

1

.

reduce

•

nf

lie*? 10 the T*6?** dfense?
there' arp broadly three

0

;

?^ma^d

areas

.

^hight conceivably be made. They
are:;(1)
demand by consumei^> esPeciady for durable goods;

For

counliteciigrid

:

in-

criterion would rule5 out

impact

and

inflationary

in

The personal, income tax is it-

.

what part of peacetime -demand

thing"

for speculators

"

~

a

self a blunt instrument that may
hit spenders and savers alike; ,.
nevertheless it may prove to be the r
only weapon with sufficient power r
to check spending, even though in <
(4) the controls on
instalment the process some saving is hit as
credit and on the use of steel; and wjell.
!
i
(5) the increased excise taxes on
To minimize these faults, and
iion-essentials. - >'
to ensure fairness, I would suggest
But, in this gathering-storm, our tljat any increase in income tax «.
main concern must^be with future burdens should recognize: (1) tha^ I
policy rather than with the com- an effective attack upon inflation- I
paratively mild devices so far a(y spending can only^ be made by
adopted." In the "struggle against broadening the tax base through j
inflation, the most effective weap- lower personal exemptions;
(2) 4
ons are to be found in the realm
that equity demands the vigorous 1
of monetary and fiscal policy, to reduction of, income tax evasion, j

effort, and

we
we

directly

'

policy,

Such

market, and the removal of import restrictions; (2) the steppedup campaign to sell Canada savings bonds;
(3) the shift to a
higher
interest-rate
structure;

were

dollar free

the

■

government

(1) the return to

-fv 1 caused
apparently the diture. If we can reduce this dismain considerations that prompted location we can increase the
efThese facts

far

tended

reduce the

can

action-.

controls have their use,

that

ensure

pressure

Physical
especially
but they are no sub-

direct

through

Un

nrir,v,A+

cost

in a formal sense (at the fixed Postponed. It must be met at once.
parb;ies submitted to the Interna- And the fundamental problem of

which I

now

-

now

•

16th the Bank of Can-

all too apparent outside the \

-«jced wage and salary

group; (3) j
ta»
a,nd
«
efficiency,
zValike
to 2%.. In
the absence of -any demand the exemption from in-present need for the chartered come.tax wherever possible of.
banks to borrow from the Central the bona fide saving of the public. ,
Bank, the importance of this ac- In its simplest form, this might in-1
tion must be confined to its psy- clude the limded exemption of inOn Oct.

'

turn. '.

••

ada raised the bank .rate from 1

■

,

,

'

still, another

g°ods and services.

etiological effect.
This psychojThe reduction of non-military logical effect, though important in
potential drain of speeti- demand can be -brought about by itself, was further buttressed by

drastic, revi- part must be earmarked
upward under

on

proper

*ure after the Second World War credit, and public-debt policy and

example, some part of (2) _the demand by business for
for economic readjustment.
the phenomenal, gain in Britain^ raaterials needed in the expansion
Devaluation allowed the price dollar reserves
(from $1,425 milPlant and equipment;, and (3)
system to work, but only in a lion in September, 1949, to
$2,756 the demand by government for
limited way. There was no guar- million
in
September," 1950, to non-military goods and services.
antee that the new exchange rates over
$3 billion at the end of' the
' Further inflation can be avoidwere
the right ones: they were
year) must be earmarked against e.d
the money value of increased
still: (fixed rates maintained by her
obligations as banker to the armament is offset by the reduced
exchange control. Thp prospect in sterling area^ part must be ear- demand by consumers, business,
January, 1950 was a continuation marked fbr debts-to
hoh-sterling- and government for non-military

sions downward

savers to save
more, nor
to force borrowers to borrow less,

.

holding an undervalued currency for a rise.' ' ''
for these '
There are, it is true, some spe-

to

to induce

.

n

This

ly

and

inflationary

m

1950-

June 1950 by the events following
the .outbreak
of
war
in >Korea,

proved

in-

capacity in capital and manpower rationing. '<
'
1
?
that made possible more guns and
These
physical
controls
are
Aside from the order o,f Dec. 2,
more butter in the early years of placed lowest on the scale because
1950, setting up priorities in steel,
the last 'struggle. Full employ- they are not, properly speaking, Canada is still far behind the f
ment of men and resources is. a deflationary at all.
From bitter United States in the imposition of *
symptom of economic strength in experience after the last war, we physical controls.
But
physical
peacetime. It means however that know that physical controls con- controls, as I have said, should be
any additional demands upon the ceal but do not directly reduce used for
purposes other than the
a rate would not stem the inward
economy can be met only by cur- inflationary pressure. They attack direct attack
upon inflation.
•'
V
flow of speculative-capital; too tailing demand elsewhere.This
the symptoms and leave the dis.The most powerful weapon ir*.4>
high: a rate would reverse the means that the additional demand ease itself unchecked.- Their the
fight against inflation is gen-rf
capital flow, weaken the trade upon our economy arising out ;of
proper use is to divert
demand erally supposed to be a stiff in- u
balance,' and force a humiliating rearmament must be met by cut- from
scarce
to
relatively
less crease in the income tax. But the f
return to a lower exchange rate. ; ting back our normal
peacetime scarce goods and services; or, in test of efficiency must be that any Only the free market could de- demand for capital and consump- some
cases, to provide a stop-gap income tax .increases shall penalt^Yne'the
raTe"
rmine the Vme
true rate:
*!
'
' tion goods.
until fiscal and monetary policy ize spending and reward saving.
termlne the tlue rate*
'
Only
the free
market
could
This curtailment of peacetime can reduce

f^U^/e?ni;owPHmtl1pria,lLatln Canadian. d?»arf]v^ TtC^edr
fnSr^l activity
a very, S„,lmila- £ilgh. to sterlm;?;
prompted again by improvement
American
American

gradually brightening pic-

the

policy, and must re-,

what the new rate should be was as
deep a mystery in September 1950
as d had been in September 1949;
an.d the penalties for making a
mistake were for greater on the
upward adjustment than they had
been on the downward adjustment in September 1949. Too low

devaluation

Increased U.-S. demand for

interest rate

is

save

short-

of

function

lems could be met only by raising tion since the end of the Second
the Canadian dollar to a higher World War.
value in terms of U. S. funds. But
>We no longer have' that excess

in the year

following devaluation. In the first

Mone-

The

^ary Fund Agreement these prob- of the long

t»S

period ot

'

~

,

lyau

deficit of $1,321

a

tho

1040
*

a

International

Othile07auarters8 ol^lTfobring
"to an end
in which rates

compared with

Anti-Inflation Policy for

Efficiency and Freedom

ciency

and
freedom; and>

An

;

neither

serve

ertiment bonds, the whole effort
to fight inflation may be wasted,
The tendency towards higher

we

pre-

serve

the

moderate

any

in rates will

This increase in the in-

if

would

In

-

because

been

to

dicated

Steps

r»

example, that higher rates are in¬
effective defenses against infla-

has

abundant.

immediately

world

.

4

It

ducement

did

~

Muir

care-

money
supply (that is, as they
begin to achieve their purpose),
a
low-interest-rate policy forces

economy

patriotic restraint have

i

a

argued, for

of

resources

right incomplex

expect

may

through' patri-" not ignore their
is
morally
and position
in
the

once

a

>

been exis better than
punishment.
Saving induced by
inl950,seco d, changes, except for government
Canada faced
before the
dollar
the hope of reward, through in^
Pe^gir>g j against violent move- wag se^. free<: And, as in Canada's terest income or through the apate threat +A
to ' ments
due to speculative capital
casej
there is no
escape
from
preciation of capital values, may
^/ee flows. It means abandoning at Britain's dilemma so long as the check demand in the present by
economy from
least temporarily the rigid exp0und is maintained at a fixed
induced
postponing expenditure until a
exchange parities established by ra^e
by the clumsy devices of exbetter
inflation .and the International
day,
when
consumption
^Monetary Fund^ change control
the policy ingoods
and
services
are
more
We need not abandon the Fund cnange co^Eroi.
, ,
towards

free

;„insn.Mn^

James

we

is;

new

makers.

tion

society

to

upon

ful weighing of many considerations
by
government
policy-

crease

of

the

of

policy

saving

restraint

ward.

time.

same

be

Voluntary

sion of opinion and all traders be-

in the

saving

problem
rate

and

one;

cf

sources

the following words:

market in which there is

The
terest

-

have

I

increased

t/" 777*4.

But much depends
vigor with which the
policy is pursued..
C

serv-

ices.

.

post-war

the

the

general public

the

rates.

hope of reward. Or increased saving may be involuntary, that is, it may be imposed on
the community through decreased
payments by government to the
general
public,
increased
payments (of taxes) by the general
public
to
government,
or
increased physical controls by government over expenditure by the

her

during

We
have
already seen some
hardening of short- and long-term

sense

be voluntary, that is, it may
from patriotic restraint or

from

that

all

convert

to

this

in

and

war

period.

defense.

saving

Thursday, January 25, 1951

.

.

broadest! policy maintained throughout the

result

a

creditors

offset

to

Increased

threat

assume

the

increased savincreased national

the pressure of speculative capi- °cc.ur in a free market and specutal flows. It was with this prob- la?lve capital in a free market
lem in mind that I urged a return
to a free exchange market in my witn controlled excnange i ates ao
annual address of January 1950, in
°iL,*a

we

made

-

in action.

economy

not

must

we

in

or,

of the word,

expenditure for

freely convertible
pound, with its value determined
in the free market, would have to
mean an immediate rush by Brit¬

economic barriers. ..Pleads for free

new

single

ing

stability of the pound."-

But

-

"greatest

the return

in Canada through abandonment

and sound Central

interest rates

direct

of

penditure

her

sense

to the

in

progress

exchange and similar controls, and describes current threats

from reimposition

pects

recounts

dwarf

1950,

present dollar reserves; and hence,
in Britain's case, I prefaced my
last year's plea for a free
ex¬
change market with a recommen¬

move

President, The Royal Bank of Canada

in

billion

£3V2

.

as

reserve

lS;oeHapHal's^^
sterling be incJeaje<J saving, increased taxes,
revalued.
and
decreased
government
ex-

the Bank's announcement that

*

and

Purchases( of savings bohtfs
year-

it,--1

presumably the government
Britains sterling obligations penditure. All three methods in- 1 as well, had changed their views
alone, still amounting to about volve reduced non-military ex¬ regarding
the
low-interest-rate
.

^

•

.

'

over i

.

4

'

awara 'hat to implement,

the third suggestion may be work
a genius in political and social
Continued on

page

24

Volume 173

Number 4980

...

The Commercial and Financial Chronicle

19

(447)

will replace imports and the Do¬

minion will then be in

Canadian Securities

is

decade

likely to reach still
greater heights in the period im¬
mediately ahead as a result of the
Western
World's
long-term re¬
armament program. In view of its
incomparable wealth of natural
resources which are now only at
an early stage of exploitation, the
Dominion will be relatively unaf¬
fected by the serious raw mate¬
rials problem that now confronts
Europe and even the hitherto self-

As

far

the

world's

Prospects for Groat hdnslrial
Expansion in Canada

realization of the prediction
recently
made
by
responsible
foremost Canadian officials, that the Cana¬
dian

oil

as

similar

the

By WILLIAM J. McKAY i
The phenomenal growth of the eventually
Canadian
economy
in the past exporter.

a

position to that occupied by this
country following World War I.
With this prospect in view there
appears to be every probability of

is

concerned

the

Alberta
story
is
already
well
known, but spectacular as results
have hitherto proved, it must be
borne in mind that it was only as
recently as early 1947 that the
first major field since Turner Val¬
ley
was
discovered
at
Leduc.

at

a

Joseph E." McCully, Bank of Montreal Executive,

expresses

optimism regarding

gas,

discoveries of oil, natural
iron ore in the Dominion.

will

eventually be quoted
premium against the U. S.

dollar.

*

new

Speaking recently at a dinner of
During the week there was a the Eastern Group of the Treasury
quiet demand for external bonds Division, Association of American
which continued in scant supply.
Railroads, at the Hotel Statler,
There was also steady investor
Joseph E. Mc¬
interest in short term Dominion
Cully,
assist¬
internals. The corporate-arbitrage ant
a g e n
t,
When it is considered that poten¬ rate was virtually
unchanged at Bank of Monttial

oil

lands

Canadian

the

cover

Western

entire

plains

area

from the U. S. border to the Arctic

♦

,

6%%-5%% and the Canadian dol¬
lar

was

sure.

r e a 1,
New
again under selling pres¬ \York, said
is a normal develop¬ that
recent

This

sufficient United States.
On the Ocean-it is evident that the sur¬ ment
at this season of the year
contrary the growing world short¬ face has so far just been scratched. When
imports tend to outstrip
age of a mounting list of items es¬ Almost
every major U.
S. and exports: the seasonal weakness has
sential to the defense effort can Canadian oil
company is now fev¬ been accentuated this year follow¬
serve only to stimulate Canada's erishly
engaged
in
exploration ing the removal of import restric¬

already booming

mineral

&is-

coveries

may
make the Do¬
a

land

economy.
and
drilling operations so that tions and the liquidation of weak o f e v e n
ambitious projects that there is little doubt that the Cana¬ bull positions. Stocks were steady
greater
op¬
dian
oil
would
boom is also in its early to higher led by the base-metals
normally have remained
portunity than
dormant for indefinite periods are stages.
With the completion of and Western oils. Steep Rock Iron
the
United
now in course of energetic devel¬
further pipe-lines now in course was an outstanding performer and
Joseph E. McCully
States in the
opment. In the northern wilder¬ of projection further impetus will before reacting slightly reached
next decade.
ness
of
British
Columbia
the be given to production. As in the a new high of $10. Golds follow¬
Pointing out that there has been
Aluminum Co. of Canada has just case of iron-ore the Dominion will
ing their recent sustained advance
a
large migration of ^Canadian
set in motion the long contem¬ eventually be in a position to sup¬ showed a tendency to fade.
young
men
and women to the
plated $500 million scheme for the ply all its own needs and will
United
States, he said: "This great
development of a 1,500,000 h.p. have in addition an exportable
movement of Canadians to your
hydro-electric plant. This power surplus of oil and natural gas.
country may stop now that Canada
will be utilized to process bauxite
At the same time Canada's pos¬
has/'struck it rich.' Your pastures
at a giant smelter to be construct¬
sibly greatest economic asset, the
may not look so green. Thanks to
ed at Kitimat, which is conven¬
fabulous two million square-mile
Walston, Hoffman & Goodwin, the. discovery of vast new natural;
iently situated at tidewater near area of the

Many

mineral-rich Xauren-

growing Pacific port of Prince
Rupert, the western terminus of
the Canadian National Railways.
Canada is already in the leading
ranks of the world's suppliers of
aluminum, but with the comple¬
tion of this vast project her ex¬
portable surplus should be almost
doubled.
As

ing

/
result

a

of

fears

concern¬

members of

the New York

Stock

being actively pros¬
Exchange and other 'leading ex¬
pected. /In addition to gold and
base metals, recent new discov¬ changes throughout the country,
have opened a new office at 884
eries of uranium, titanium, chroFlatbush Avenue, corner of Church
mite, molybdenum and vermicuAvenue, in Brooklyn. With this,
lite now assume greater
impor¬ the firm has established
its fourth
tance
in view of the defense ef¬
As in World War II renewed
efforts will be made to uncover

the

riches of this immense

unri¬

....

fore it requires little imagination kets of the Western Hemisphere,
have contributed to make Canada
to foresee that Canada will not
a

become

only

self-sufficient

but
,

"manufacturer's paradise."

The Dominion's tremendous in¬

f

V

CANADIAN BONUS
Government
Provincial
Municipal

y

Corporation

•

territory, with
of

an

office

Wall Street.

the

in

establishment

New

in

York

at

35

Since then, additional

eastern offices

have been opened

Philadelphia,

risburgh

Pearl & Co.

Mr. Koster has been

with

CANADA

Gude, Winmill & Co. since
1934 and previously with White-

house & Co. since 1929.

SECURITIES

CANADIAN STOCKS
Y

SERVICE
For information

I

on

oil

A. E. Ames & Co.

or quotations
industrial, mining or
security, consult us.

any

We

can

help

you.

Mr; Mur¬

partner in the firm of
H. E. Herman & Co. and has been
a
registered representative with
Walston,
Hoffman
&
Goodwin
since 1949.
Mr. Siegel formerly
was
co-manager of the
uptown
New York office of Newburger,
ray was a

Loeb & Co.

^

INCORPORATED
Two

Wall Street

jMlilner, I^oss & Co.

NewYork5,NiY.
WORTH 4-2400

The Toronto Stock Exchange

The Investment Dealers* Association




330

Bay St. Toronto, Canada'

Hamilton

Brantford

Sudbury«

Walter E. Travers, Jr., will ac¬

quire the

New

York

Stock Ex¬

change membership of Thomas A.

of Canada

Beaton 0, Mass.

Trayers & Bartsch Admit

Members:

NY 1-1045

Filtr,Contr«M Street

now

on

Windsor

Brampton

iron

more

—

and

of

a

of that
which has been dug out of Mesabi
Range, thus placing Canada among
the world's top-ranking iron ore
producers. He added that con¬
struction of a railway from the
Gulf

St. Lawrence to

of

fields

miles

340

ticipated
ore

the

ore

at an an¬

away

of $100 million is
and "large quantities
start pouring, out of

cost

under way
of

all

grade—than

will

this mine in about three years."

Wyckoff Head Dept.
For Laird, Bissell
PHILADELPHIA, Pa.—The for¬
mation

of

a

the

to becoming
trial nation.

way

a

de¬

municipal bond

great indus¬

Mr.

McCully went on to enu¬
some
of the new things
are creating this
great opportunity, such as the
prospect of -great expansion in

Gaines and
mitted
&

to

Bartsch,

York City.

on

Feb. 1 will be

ad¬

partnership in Travers
120

Broadway,

New

widely

in

known

merate

bond field.

in Canada which

New Jersey

He is

a

municipal

the

member of the

Municipal Bond Club
Club of
Philadelphia.
,
-

and

the Municipal Bond

jaluniinum production, particularly
in British Columbia; the oil strikes
in Alberta and bon ore discov¬

Monroe Poole Pres.

eries in Ontario and Quebec.

Of Geo. Gibbons Co.

Asserting that Alberta is "fabu¬
lously rich," Mr. McCully pointed
out

that its

cities and towns

are

heated

by cheap natural gas that
may ultimately be piped to Toronto
and Montreal.
Natural gas lines
may also be laid over the Rockies
to heat Vancouver, possibly Seat¬
tle and other Pacific Coast cities.

"There is enough coal under the

Monroe V. Poole has been elect¬
President of Geo. B. Gibbons
&; Co. Inc., 20 Pine Street, New

ed

York City, specialists in

municipal

bonds. He has been associated with
the organization for

30 years and:

since 1934;
Mr.
Poole succeeds Mr. Benj ami n Van
Vice-jPresident

-

surface soil of Alberta," he said, Raden, who is remaining- with the
firm as an officer and director but
"to
supply Canada's needs for
is limiting ? his activities.: /' 4 •
5,000 years — more coal reserves
than those of Germany and Poland

together."
In

First

Michigan Elects.

regard to new sources of iron
DETROIT, Mich —Allan. Shelsupplies, he said that "140 den, III, who is affiliated with the

Pittsburgh, Har- ore
and Wilkes-Barre, Pa.; miles north of Port Arthur we
Hagerstown, Md.; East Orange, have Steep Rock Iron Mines. Here
N. J., and Hartford, Conn;
The we have a town of 3,000 and no
nomic strength derived from the
firm's western offices are in San outside connection by highway—
unrivaled wealth of her farms,
Francisco and Los Angeles.
forests, and fisheries. Canada is
the Canadian National Railways
Mr.
Rosenfield
was
now well on the
formerly is the
way towards selfonly means of transporta¬
with
Francis
I.
duPont
&
Co.
and
sufficiency in oil, coal, iron, and
tion. Eight years ago 130 billion
has
been
active
in
Wall
Street
steel, which hitherto have consti¬
Jane Stellman Mc¬
tuted
important
import
items. since 1928.
After that stage is reached exports Cormick has been in charge of the
ladies departments of Whitehouse
& Co.; Gude, Winmill & Co., and
dustrial development potential is
growing force that has recently
supplemented Canada's vast eco¬

a

■

>

is

un¬

at the rate
a year. One
has to see this operation to appre¬
ciate its magnitude."
Regarding the more recent dis¬
covery
in Labrador in eastern
Canada, Mr. McCully said it had
been estimated that this discovery

'

fort.

early

Canada

has been

ore

of 1,200 thousand tons

partment under the direction, of
George - H.
Wyckoff
was
an¬
nounced by Laird, Bissell & Meeds,
"Our
population
has
nearly Lincoln Liberty Building, mem¬
doubled since World War I. For bers of
.the New York Stock Ex¬
the last ten years our rate of
change and other principal stoch
growth on a percentage basis has arid commodity exchanges.
office in the Greater New York been
greater than that of the
Mr. Wyckoff, who was formerly
area and the 35th in its national
United States and it may well .in¬
manager of the municipal depart¬
crease at an even faster rate."
organization.
ment of J. W. Sparks & Co., is

tian Shield is

exhaustion of the valed
The firm's other offices in New
source of base and precious
rich hematite deposits of the Min¬
York are located at The Waldorfmetals.
nesota iron ranges, attention has
Astoria Hotel and 1370 Broadway.
Canada is also now at the stage
been
increasingly
directed
to
t
The new branch, which has been
Canadian sources of iron. Accord¬ where her industries are keeping
opened for -the convenience of
ing to the U. S. Bureau of Mines pace with her agricultural, for¬
Brooklyn
investors, will be Yin
the Quebec-Labrador fields, now estry, and mining capacities. The
charge of Eugene Rosenfield, as
now
ranks
seventh
in course o'f urgent development Dominion
resident manager. Jane Stellman
by U. S.-Canadian interests, the among the industrial countries of McCormick
is
manager
of the
the world, and. manufacturing ac¬
deposits in this area are even
brokerage department and Sidney
counts for 30%
of the national
greater than those of the famed
A. Siegel is manager of the in¬
income as compared with 20% for
Mesabi range. Just recently also
vestment department.
Registered
new
discoveries adjacent to the agriculture, mining and fishing.
representatives are Harold E. KosIn recent years U. S.,
British,
and
Steep Rock Iron Mines in Ontario
ter and Joseph T. Murray.
v
are reported to be almost equal in European industry has recognized
The opening of the new Brook¬
the advantage of the establishment
extent to the fabulous Labrador
of branch plants, in the Dominion. lyn office marks another step in
deposits. Several U. S. steel com¬
Low cost factory sites, with ample the nationwide expansion of Wal¬
panies arei now actively engaged
in this, area and also in the Michi- scope for expansion/cheap electric ston, Hoffman & Goodwin, a firm
power, plentiful supplies of fresh well known since its inception on
poeeten districts of Western Onta¬
.water,reasy access to sources of the West Coast in 1932. In late
rio.
With respect to iron there¬ raw materials and
the vast mar* 1948 the firm entered the eastern
the

resources

iron

der way for four years

Walston, Hoffman
Office in Brooklyn

the

of water were pumped
Steep Rock Lake and pro¬

duction of

higher

Canada
minion

gallons
from

contains

in

and

Shelden Land Co. of Detroit,
been

has

elected to the board of di¬

rectors of First of Michigan Corp.,

Buhl tBuilding,
Detroit

changes.

and

members

Midwest

of

Stock

the
Ex¬

""VkaMr1

20

(448)

The Commercial and Financial Chronicle

only that news which the Russians unified Fatherland, and who do
want to get out.
It is noticeable not want to be "sold" into Eisen¬
that during the last several days hower's army, to rise and
put

Two Russian Fronts

and

By HUGH BAILLIE*
1

President, United Press Association

Prominent

press

leaders

well

and

.J,*—

as

official reports
as

his

on

forces

start

mans

Adenauer

*

that

personal observations while in Asia

and

war

No.

Korea

create

Germans

West

their

own

the

will

Russians

not

stand

organization of the

army

which/has

And

•

to

help

themselves, including Unter
Linden, with its embassies,'

den

.

hotels,

palaces

and

cathedrals.

it And that's the worst-ruined part

This is

man

met

com¬

or

of the first moves, in

one

campaign to frustrate the

by the

Germany.

ing out because the Russians want
it to get out. It is the first move,

army,

-

♦

j

'

alert police army emerges
from the Russian zone, it will be

undertaken, by

been

General Eisenhower.

2, while Konrad D.

have

to

the

for

Holds Russian strategy is to have East Ger¬

wants

stories,

many

gave advance warning of inter*
Korea, but waited in hope they could annihilate U.N.

frontier.

at

out.

for

corre¬ along, they will send their alert of all Berlin. .,'
been able- to file police army to take a hand in the
Konrad Adenauer
carrying the news proceedings. As soon as the Ger¬

has

spondent,

Europe. Says Red China

vention in

correspondent in ..Adenauer

our

Thursday, January 25, 1951

.

.

Moscow, the United Press

v

views and interviews with

on

weeks,

.

maybe

divisions.

German

in

And

also.

The

civilians

terrible

forces

divisions.

by the British

more

their

American

Two

Two

ordinary

will

have

a

Now you are

going to be hear¬
ing more and more about this
chap
Konrad
Adenauer,
the
Chancellor

of

West

Germany,
old,
lean, jaunty and seemingly tireT
less. He can take on the
High
from

now

He is 75 years

on.

time

of
the
United
making up their Commissioners
army. minds what they want to do.
together with U. S. military force capable of confronting
If States, Great Britain and France
They may be expected .to try they join the German insurrection and negotiate with them for hours
Russia. Concludes, as of today, Russia is calling the tune.
many other things.
they risk their necks, and if they at a stretch. After keeping them
Having traveled from Korea to off Korea. When
iicu
the
tuc
Americans
nmici iucuis
r irst, xney
First,
they win
will try to scare the don't they risk their necks, be¬ in session for eight hours or so,
Europe and back to Washington, appeared on the field of battle, Germans out of joining General cause the East Germans will say they will emerge from the meet¬
I am
to them that they will take care ing looking all beaten up. Ade¬
prepared to give you my and in the air, and on the sea, I Eisenhower's
army.
They
will
of
them
later.
Meanwhile the nauer
reporter's observations of what I am sure the Russians felt they had also start an agitation
will
come
out
looking
M^AVMVlVll
Jill
in this
l/JtlXk
saw
on
thfico
'
r"'
saw
on
those
been mouse-trapped.
They had country against arming the Nazis, German army from the Russian fresh as a daisy. He thrives on
zone will be fighting the Ameri¬
been hoaxed,
trips. I won't
negotiating and bargaining. If he
They may be expected to create
make any pre¬
People have asked me why the an incident, like the Berlin block- can army and possibly the Brit¬ were in this country, he would
dictions or in¬
ish and maybe some French, with probably be a labor negotiator. ; i
Chinese didn't get into the war
ade, which will take our minds off
dulge in any
Adenauer is striving to drive a
earlier, and come down into Ko-/;the
business
of
building
this the Russians standing on the side¬
editorial com¬
lines just like the Chinese stood tough bargain with the victorious
rea and keep us from advancing
North Atlantic Treaty army.
Of
ization

.

-

.

organ¬

Eisenhower's

vii

„.w

..

w

of

-

viAfc

»

v

,

ment.
am

What I

going

tell

me

is

you

what

told

was

by

The

far.

so

to

to that is that

answer

Russians

don't

been

at

themselves, personally.

this
particular campaign.
They prefer wars like the one in Korea,
thought the North Koreans could As one -distinguished British

are

handle

the
"

running
show.

months for the

.

First, let me
sketch lightly
over

alone.

where

move

Hugh Baillie

.

_

several

statesman

Chinese Army, to

into

Manchuria

sians

said

to

people's

along the border and get ready to

Those

.

xix

Korea, I

saw General MacArthur.
And I will
say right at the outset
that few
military commanders in

icans

lives."

T T— -'i

~

,

Arthur had
the

1

^

*T

•

J

advanced

»»

"

that

far

so

.

-

told

very much

surprised when he

ii

j

x

o'clock

there

he
7
at

i

x

the

in

telecom

the

was
was

they have been trying to do

Tkn

cinrp

with

army,

for

him

fight in Korea.':

saw

to

military

miracle

.

/: ' holding

line

a.

in

mess

They

,,

a

.

j

No

2

And

this

is

•

,

would

hfve,

around,^he old

We all remember the enthu- Pusan perimeter.
He was faburiasm and the cheers which
greet-.lously outnumbered at all times.
M the United Nations'
interven- When I was over there the artillion in Korea. The

a

have

also

been

instructed

ern'zone

of

g0

about

it

in the East-

Germany,

an

army

most of which

utable.

to

re-

attrib-

are

not

having enough
popular, thing is-to

troops, the
second-guess him.

The thing for

'Is to get in

fight

to do in Korea

us

get out.
half-war. You

a

or

were

I

accompanied

Seoul, at the time

7

Get Out!

or

You can't
can't

pull
your punches.
Yet that is exactly
what we'are doing in Asia.:, We
are pulling our
punches. We are

negotiations With West Ger-

Kor<;arJ communists to such

extent that they

he turned the government over to

ta|king to Adenauer at his office
located in
px.inp

vdia at Bonn

a

iact

month

the

on

when the orig-

.

^

Syngman Rhe?'
Presfo,ent ^ wohi
South Korea, MacArthur thought

foe war was over, and said so.
During the ceremony MacArthur

from

nQte

of

handed

President

East

'

to him.

Grote-'

Germany
I

was

remember that

Adenauer turned to

me

and said,

certainly live in interesting
led in the Lords Prayer, and
timesy. .
y
K
thanked God for the victory- I
•
nnrad
our punches because
Adenauer
no
our-puncnes
oecause the
me
was there in the assembly hall of ; Now, Konrad
Adenauer has
nas no
Umted Nations is
Knrpan Panitol building
and intention
of getting deeply mgetting shaky tne Korean capitoi puiiam«, ana
on the
issues
and because those remember the broken
negotiations wirn
with t
the'
glass that solved in. negotiations
Ju issues, ana oecause tnose
back here who are
tumbling down around our East Germans about unification of
running,,the came tumbling down
arouna oui
.

Dullin<*
puiiin

i

<how
now

feel
ieer

.

,

that
mar

can't
can
i

we

risk
rM

a
a

ears

at

intervals

,

two-front
have
nave

now

under

.^ouu,uuu, men

The

last

vorresponding
supplies
supplies

time

war

under
unaer

men
men

We

time..

1500 000 : men

two-front

a

12 364 000
u^or.uuu
-and
ana

this

about
aDour

arms.

r^ught

at

war

terea aome,

anc^ prayed.
*
j

mies

had

as

aS+n ere is
^

tn
to

The

cost

and
c

question .of

libertv

to

be

is

up,

as

we

a

1

can

verything else, the

\r\rt

-et!

*

of

Rut

This

Well,

Arthur'

ain't

we

I

as

up

aP
ris-

nothing

is young.

war

told

is

said,
me

he

Mac-

was

sur-

prised at being ordered into Korea.

If

there

surprised

thur,
<

it

was

than
the

was

anybody

General

elves

Thev

United

did

States

to

had he^rd official

more

MacAr-

Russians
not

them-

expect

show up

the

They

pronouncements

;

to the effect that
;

we

had written
,

♦An

address

by Mr

a
as

Baillie before the'

were




unified

Germanv

no

un-

in a unilied ueima y
der Communist domination.
But

•

-

T

,

''

*

,

.

ly- international Army,pn terms
terms

and
ana
conditions by which Germany will

-

escape

Chinese Gave Advance Warning

wTar.

its punishment for the last

Therefore he will

ga
us pleiitv of
iney gave
us
plenty or advance
aavance exchanging
•

^

notes

with

0^vprnmpnt
They issued statements, German government,

warning.
,

made

brnaduasts

®uadt 'ILa.v
they

would
would

approach

of

the

nnt
not

annnnnrinP

Se

tolerate

United

Nobody believed
the Chinese then, any more than
we
believe the Russians
now,

time

gotiations

f
„ioners
missioners,

Nobody ting

believed them.

when they

same

he
the

Nations

he

with

Will

the

continue

the

-and

East

at
at
continue

ana

High

the
tne
ne-

Com-

on
question uj.
of put
puton the
tne que&uuu

Germans into Eisenhowers

army.
;

When

Russians

the time
want

comes

to

that the

create

this

they will not stand Korea No. 2, the formula is simidly by and see us organize a pie. The East Germans announce
Western European army, particu- that Adenauer has been
wasting
larly with a backbone of German their time.
They would say that
say

troops.

I

he,' and he alone was standing, in
The Russians are making those the way of a unified
Fatherland,
threats' at
frequent
intervals. If they follow the classic formula
They are discounted in this coun- they will denounce him as a tool
try. It is comrpop knowledge that of Wall Street and the
American

eS,°. ' Association,Inc^ the Moscow 'correspondents

Chicago, ill., Jan. 22, 1951.

^

futuie

ar-

for_
tor

.

forces to their frontiers.

General

that

§

a

Like

see.

price
seen

well
we

verv
very

that
he personally would have
*

snoke
spone

.

going
COSl OI 11Deriy 1S g°mg

j

pvi„t
exist

Korea...But the Chinese,

,

war s on nowv The
how fast it will spread.

is

knows
Knows

anxious to do^^is to
midable antagonists, as was derrvthe
onstrated by the rapidity with rnake a deal
deal with
yviin me Western
wesxern
ships, wmcn we advanced
advanced into
into North
iNortn powers,
v
» to furnish soldiers for.the

why,, the

war,

question

„

ne

-

And
Ana

sorts
sorts.

going

.

Germany.

shat-

The Korean Red

ceased

.

whether

the

Mar
Arthur
lviac/vrmui

had

we

arms
aims.

munitions,
of uii
all
or

we

from

-

able

to

file

through

are cannibals, and they will call on
censorship all loyal Germans who want a

a

he

thinks

or

way,

way,

In return for their
this army, Germany
emancipated. That's his

services

in

be

will

into

converted

treaty

Ambassadors.

become

to

a

the High Commis¬

and he wants
sioners

Occupation

the

wants

He

Statute

He

has

intention of paying
Hitler's debts. Nor has he any
intention of continuing to pay the
costs Of the Occupation. He wants

tervals.

the

German

,

man Chancellor Adenauer,
looking
ready to
toward a unification of Germany.
Collapse, the tide was turned .and
r So happens that I was actually
the enemy army was virtually de-

an

^troyed.
When
MacArthur to

'

KQrea—Either Get in

foe

a

to persuade these men
that they ought to join the In¬
ternational Army, in the interests
has

refugees. The signal
is to be one long blast and five
short blasts on the siren, which
will be repeated at frequent in¬

the

of

The Frankfurt collection points
are estimated to be seven minutes

ig caRed the "alert

has

nauer

plan.

foot.

on

.

MacArthur has suffered

having already been licked twice.
He is very much afraid of the
Russians who are literally just
across
the street from him—just
down the road a piece. He doesn't

await the arrival of those

police."
^ have heard its figures given as
jet plane flight from the nearest
enthusiasm, of lery ammunition was rationed, 20
ag
100
000
men.
This
is
a fully
United
Nations
Soviet
airfield, so the, average
evaporated rounds to a gun per day.
Then
epuipped army) with tanks and
under adversity. And
dependent
is
inclined
to
look
now, some through the maneuver of the Inairplanes ready to roll. Now the
of our most powerful
friends are chon landing
upon
the ' evacuation
and the constant
arrange¬
^
Germans
are endeavoring to
looking for the exits. And now air attacks which had weakened
ments
as
mainly academic and
that

losing

of Germany.

Ue

verses,

He doesn't want to be on
side in another war,

army.

the

assembly points in the out¬
lying areas in each city where
those with cars are to gather and

ment

r

TCorcn

by

and

on

if they decide to move, they \*mU
will
PnHeavnr
to
create
inside
Ger-

,

Korea

.

clothing

kit of concentrated food, a
kit and so forth on hand.

Group convoy leaders have been
Russian Strategy v
appointed who are supposed to
Germany that keep order and direct the move¬

i

...

General MacArthur achieved

,

get

-:

all they want to
unify their country.

essential

small

come

ever

last
r,
since last Novpmhpr
November...-•

4:00

morning and

directive

a

and

o

xu

to

that

me

that

form

-

-

pean

Chinese obviously decided to

the Chinese thought it would me
to annihilate us later. That s .w.hat

Na-

t'ons. ; He

railed

;

United

to

individual German is

The

reluctant to get into uni¬
again, and join anybody's

quite

/•

.ar^n(!

the

according

2,

Germany. Amer¬

Allies.

who

.

of

No.

in

have

fighting Germans who tell

world

do is to

is - actually .gom-, to
intobeing, Tand emerg
history ever did so much with so lay back and let him come all the from the,
blueprint .-stage
va
little as General MacArthur has
way
up
to the frontier.
The they arerit convinced yet thatt
accomplished in Korea. How little Asiatic
style of warfare, so I was<5Vill),
they will do. sometning
won't be known until it's all over,
told in Korea, is predicated on the drastic.
Meanwhile they won
General MacArthur risked his annihilation oi the enemy.
The
,/;■■*
ral 0
.U /.
reputation in this Korean war at deeper we advanced the easier print army..
•

the command

while

a

"The RusMeanwhile, arrangements have
with other been completed for evacuating
^
the dependents cf the American

me,

are very generous

and

up

intervene.r-•

In

x.

took

Korea

what I heard in
the

for

are
on
the ground military
personnel
from
Ger-: want to join Eisenhower's army
■-■■■>.■and running the show in Germany many. All Occupation dependents and be caught drilling with a
when
the
Russians
have
been provided with a cirT broomstick
By that
jo.y
mat ume,
time, under
unaer clearance Relieve
believe that■
that .if.
if the Russians
.Russians get
AU
from the United Nations,
Mac- the idea that the Western Euro- cular advising them to have a bag show up with tanks. But Ade¬

I

went and who and what I saw.
„«w.

It

sidelines

And there you would

your

They

people. By the
people who

it

Asia.

get
Or

least, without getting into the

war

the

on

want

war, so to speak, if they can
what they want without war.

supposed by the Russians
they would need the Chinese in

other

the

course

the Chinese weren't ready to enter the war earliey. It had never

view

the

And

in

situation

the

fatalistically.

meantime

more

de¬

pendents continue to arrive.
Of course, any evacuation of
Americans from Berlin would be
out of the question. Berlin is en¬

tirely
sians.
the

surrounded
It's about

Iron

Berlin

the

Rus¬

100 miles behind

Curtain.

that

by
I

the

told

was

in

to be let

scientists

to

stead

of

for

,

its

Our

Berlin

garrison is small but

General Maxwell D.

remember

you may

Taylor, whom
as

the Super¬

intendent of West Point.

Taylor has just
from

been

General

transferred

Berlin

to
Washington for
important
assignment.
Many of the Russians have the
highest respect for General Tay¬
lor's capabilities.

another

.

General
Handy is the 4-star
general who has command of the
American troops

He

conquerors.

have the right
merchant marine
and
air fleet.
(No doubt with
American money, like everybody
else.)
And instead of furnishing
combat.; teams
to
Eisenhowers
army,
to
be
commanded
y
Frenchmen, Americans or British,
wants Germany to

wants the

Adenauer

their own

have

have

It isn't fantastic
If the present trend

short months ago.

more.

Germany

happen.
The

by the way, or
of those with whom

Japanese,

at least some

"Why,
what has happened in
Korea?" They have an attitude of

that

is,

unless

to

Russians

the

sire to commit their
which would be

ourselves,

of

American

Berlin.

They

at the

t

they will say, why
take
care
of the

;

them.

blame
us

same

time

Malayans,

And

Chinese. And at

we'll also handle

and

the

at

;

What Japanese Will

air

occasional

of

;
;

Koreans and the

re¬

is take

look

sympathetically,

say

for you." Well, you can

time
let

not

,

Indo-

Chinese for you.

be

do, all they need to do

ruins

same

;

attitude to-

troubles in Korea. They

and

hardly

the

power can
an

our

"so sorry

unlikely, at least

what

patronizing

of

lot

the

in the early stages.
If the Russians need to
minded

de¬

a

the

appro¬

priated the best part of the city

When

ganizing

it comes

make

to

Do

actually

•

or¬

however, the
going to hang back

army,

an

Japanese are
and

,

there, had

in contact out

came

air force

own

,
^

are

we

if

all

<

peace

a

smile

air

,

about to :
treaty with Japan, to be followed by the or¬
ganization of a Japanese army o
,
lend a hand in the Far East, the
chances are that two of our pnncinal allies in the future will be
the two countries that we brought
^1
to total defeat in the last,war,
•
Germany and Japan. That :ls,^if
Russia sits still and lets all this
negotiate

ward

the

..

back in business.

since

And

ready to fight the East Germans

have

...

with then

army

there. General Handy's forces are

.

<

general staff. All this would
seemed fantastic only a few

own

I

invade
the
American
zone. I would figure the impres¬
sion is that the battle, if it came
to that, would-be about a standcf on the ground. But we would

:

Ger.^ai??Jp

throughout Ger¬
many.
His! headquarters are at
Heidelberg, and
I
visited
him

they

\

to build its own

airfields; continues, and the Russians don t
Templehof and Gatow, are right1
succeed in frustrating the plan
next door to Russian airfields and
in about two years you will see
would
be grabbed
immediately.
it has been commanded by one of
the best generals in the Army,

.

conduct their^ research
for the benefit of Germany, inloose

any

two

no

terms

just

like

the

(

.

Number 4980

Volume 173

.

.

The Commercial and Financial Chronicle

.

(449)

of

to grab the Persian oil fields be-

all

Yoshida, who is a
twinkling little man who speaks
perfect English;
says
that * toe
should not forget it is not con¬
stitutionally possible for Japan* to
raise ah army. Of course-jt isn't,
at
the
present
time.
But
the
Japanese" are
being handed
a

fore they could enter into a fullscale war. The first move in such

Korea.

a

They

tremendous

break

use so

difficulties

with

Germans.

Japan,

The

by our present
the

Their constitution
if

need

we

enough.

Russians.
be

can

tneir

;

makes

no

*

-

appreciation

changed,

troops
"

■

Adenauer

his

Minister

Prime

Mr.

of

he has been handed

secret

the
a

badly

fact

of

that

tremendous

break by the Russians. He intends
take

to

full

advantage

of

it.

In

his conversation with me, he laid
stress

still

fact

the

on

that

element

there

is

in

Germany
which believes the smart thing to
an

do would be to hook up with the

therefore, would be Rus-

war,

sian occupation of the rich

Azer-

baijan oil fields in Persia.

How-

it must be remembered that

ever

Russia

dependent

much

armor

as

do.

we

horde, like the Chinese.
the

amazing

features

Korean

war

Chinese

managed to

air

sive

One

has

of
how

been

the

do

transport. The fact that they
human

use

beings

instead" of

trucks, very largely, gives them
a big advantage. You can shoot
up
the

roads

and

the

destroy

but it's harder

voys,

con-

to interrupt

the

supplies
when
they're all
brought down on the heads or
people.

oi

As.

of*

matter

a

have a highly
ing together could lick the British- modernized European-style army
and
the
Americans.
They
feel fighting in a primitive country,
they wouldn't: make the mistake The enemy knows how to use his
again of getting into

a

with

war

each otnei. Ana the Germans sun

cling

into

entered

Russia, they
that

belief that if
a
partnership

the

to

they would

they
with

much smarter

are so

fact,

Korea

m

?S'

we

hasnt
been riding , in
since

;

automobiles
walk

infancy. He

the side of

going up

like

mountain

up-a

a-

But

they

in

war

Unprecedented
Steel Expansion Program

to

willing

are

if you call it appeasement,

it's common sen^e. And
since they all went through the
wringer
in the last war, and
would be very 'close to the front
in this one, it is not difficult to
see how they get that way.
say

By TOM C. CAMPBELL*

Editor, "The Iron Age"

there

4s,' particularly in
Britain, an inclination to blameof the United States for getting into
the a war which it can't handle, and:

it, with-*and without exten-

power

to call off the

eager

argue

They
the form of another Asiatic

take

out

oil

on

Their armies don't

than the West.

Russians. This crowd believes that' backs

the Russians and Germans work¬

less

is

so

can

a

Also

calling"

therefore
the

'free

When

this

to

in

of steel products.

use

I

me

the present steel expan- for

When

,,

time.

'

■

•

sion

is

program

*

is

Adenauer

keep fighting
be

have

out

to

to

16

think

he "expects

or

dertakeri

in

game.

Korea,,

him

United

the

for

Press, the Russians would win the
game

without losing

Adenauer

be

lasting

United

told

me

peace

States

which

sider

when

able

a

to-

would

con¬

con¬

that to

He said

dangerous.

the

military force

Soviets

the

him

always

the

/.

.*

The American

such

needs. Germany.

a

And that
whole¬

is

a

a

.pre*

edu^

in really rejoining, ,up, but that

/

The

position today is that we

are

represent

one

prevail

Shortly

called

.....

British

told

Ger-

the

there would be war if they

entered

Poland.

I

remember: be-;

Prime Minister Attlee

knock /off

would

,

Attlees Attitude

shoulder

of Great

which

get

the

Britain is very,

anxious to have

us

hearted

cent

schedules daily.

are

hours'

two

were

notice.

In

Western

Adenauer/said,

Germany,

American

and

he

there
two

looks

come

old and

divisions.

Then

at

and

Well, what are thing in

you

Adenauer
us

says,

going to do about it?

the

He feels that

British

you

in

blow

tary
ture.

expansion

and

Britain's

start the war.

from

down

Canada

East

the

to

High

grade

pit

open

Quebec-Labrador
to Seven

would

be

too

an open war

every-

when he

can

continue to attain his objectives by

in his desire to have

discontinue the war. in Asia, is

subversion.

In this

man

with Attlee who also

agrees

Islands, Quebec, by sum- all steel needs until the military
or. before.
About the makes up its mind what it wants,
will be moving up
Construction of

same

time

from

Venezuela.

ore

the 360 mile

railroad from

Seven

Like the British, we

when

was

there

there

was

so

or
10 months ago if was believed
time that the expansion program wouid
much dissen- be no more than 6 million tons.

such

a

sion in high places, so many con-

trary opinions of what ought

d.one,

or

respect Schu* it.

to be

how to go about doing
;
% '' "
"

/ I have been on a long trip and
seen a lot of people—people who

the foresees an intensification of Rusother European
in presumably know the answers—1
underground: methods
statesmen with' sia's
whom I talked last month. What seeking
its
objectives,
without people who are in command—
war.
And
two
of
Russia's
prime people who bear the responsibility,
they want of course is for us to
liquidate the. war in Korea and objectives, of course, are Italy and Yet I think I can say, without jokFrance
where
the
communists
bring our army over to Europe.
ing, that this is a case where the
The French .would like to have are a large and powerful political more you see and hear, the less
our Korean army over in Europe;
party.
you know.
and our Korean supplies over in
General DeGaulle. struck me as
The less you know-for sure,
entire-

in

agreement

with

Indo-China,, where they have a
war of their own. And I was told

one

of

the

most

astute

The controlled materials
plan cannot be put into effect for

1954

mer

fu- still calling the tune,

prudent, and that he
wise to risk

known its overall program to in-

from mare.

ore

be moving

may

line; We drew a line against the
Russians
in ' Korea:
We
have

Never

individu-

this

revised

to. about
10 million tons but this last figure

Later

is

as.dead as

now

The

sharp
than

a

dodo bird.

to

.

in popula-

increase

1940

tion -from
more

was

will

1950

adequately cared

be

for

by steel expansion plans and construetion.
There is already evi-

because

dence,
tional

situation

and

the

internadefense

the

that population

program,

between

of

growih

1950 and 1960 will again

outstrip the sober estimates of the

The

experts.

Korean

fected the marriage mart

anyway.

.

the

to

a

Stalin has be-

or-

Birmingham area dustry. Until it does so the "DO"
and
to
the
Pittsburgh-Youngs- priority system will be pretty
town-Cleveland area.
■
». much of a steel scheduler's nightCoast,

when it wants it and why.
The most interesting part of the (
steel expansion program will af-

feet the Eastern part of the United States; if poses problems of

War
in

af-

some-

materials, manpower and dis-

raw

tribution.

Justin Jacobs Now ;

..

immediate

Most of these

ders are increasing in tonnage and
has number but are on a hit or miss

.

on: 24

up

r

.

.

"DO" priorities
mill order

assigned
cluttering

being

have drawn Islands, Quebec, to Knob Lake has
already started, despite subzero
cooperation of' (Germans out of Korea. He regards any war
temperatures. Construction of the
only when they no longer feel in Asia as a bottomless pit for drawn a line against the Russians 94 mile railroad in Venezuela to
they are a second-class power the white race. And this attitude jn Europe. I have been on both run from Cerro Bolivar to the
under
Occupation.
That's
the is heartily echoed by Bevin, the fronts;
On
the
Korean
front Orinoco River may get under way
basis of his argument.
Foreign Secretary.
V,
* where we are at grips with the by April this year. Engineering He then went on to say that the
In
France, I; found, the same communists/and on the European plans and equipment programs
Russians have in the Eastern zone
thing.
Premier Pleven believes front where we are preparing to are well along towards comple¬
of Germany 30 divisions on a full that we can be bled to death in come to
grips with them if they tion.
V' "
war footing,
consisting of motor¬ Asia.
Foreign - Minister " Schu- advance.
The current expansion program
ized units, armored divisions, jet man thinks the same
thing.'
But
The war has already started. in steel is going faster thair even
planes and bombers. They are Schuman
doesn't
believe
that The question is' whether it will those in government and industry
fully equipped and able to strike Stalin is going to strike a milL spread, and how fast. Russia is ever expected it would. Only 9
will

America

-

handled differently .by

are

expansion
phases in re*steel

as

orders—direct and indirect—

tary

fastest

the

government

such

..

Could do nothing; however Poland
with Rusr would be the' chip that Germany.

sia*

of

;
like Britain been completed iron ore will be basis.,
Germany in 1939. You may " moving up from Venezuela and
The Pentagon has not yet made

situation

same

in a war

after

projects

Russia

called

mans

for

in

well

too

allocation

Voluntary

steel

has;

program;

working

been

steel.

under

history.

unlimited quan*,

standoff. Much the

Campbell

The Position Todayi >.

asked
the * British
what
they
titles, and give each of _them am could do to defend Poland from
automatic
weapon,
and uts
a the Germans. The reply was they
would

Tom

/ 1 / i

;
,

not

and

discussion

vof

'

of jng jn London at that time and I

Chinese coolie

a

purposes,

sponsored
railroad cars, (
expected to be ships and barges, etc. has been
completed by working out well because known
the middle of requirements are being matched
1953; This will against known productipn.
Mili-

Europe

tech/: recall ,the

cation. He is hot expendable. Put:

are

;

.

•

came

with background and

nician,

United I

the

force

build

There

have

soldier

instrument, trained,

cision

,

States

they- just:.;

ditch.

where he

more

priority-allocation

1

Current

those

comes back and says we
discourage the Russians, and

armjng and

on

annua

programs

j^e

about believe

worries

back/

into

him against
a man.
;
there would:; whom there

only

was

front Russia with

are

so

with¬
fight. As he put it when I

him

carrying
throw

Europe

occupy

interviewed

nobody

indirect

ships, barges and steel for steel
expansion.
In recent weeks the two-headed \

as

mil-

tons

an

That is/the Yanks are
coming: They don't think Washington would ever let Ike down.
can

17

or

basis.

thing.

jf

much

as

lion

course,' the appointment of Generaj Eisenhower "meant just one

c?n

we

will

we

Russians'

white

bled

could
a

Korea,

if

the Russians- desire- to

me

us

they

in

the

playing

He told

that

sure

and

completed

he wouldn't have unit..Td 1 Europeans, of

I

But

succeed,

-

•

the Russians.

direct

the *—indirect defense needs assumed
General Eisenhower has prob- grand total of steel ingot capa- to include such things as railroad
ably been handed" the toughest as- city additions since January, 1950 cars,
locomotives, farm implem a
y
amount
ments, strategic oil and gas lines,
signment of all at this particular

*

■keep- j0n ^hmg ^lt/day and be needs a certain number of
be running
J1?.^ j f ?sn nfej a
Plant- American -divisions as a starter,
behin<|
his hnes. And when he a* he'll5 get them. That's what they
wounded

soon

Sees allocation and priority system

unworkable until overall military program is known.

"Look

replying,

help
who's talking."

fly-encourage

house,,and

said

was

couldn't

■

assistance,

for

world

"

Editor of leading iron and steel trade journal, in pointing out
completed and proposed expansion of steel producing capacity,
forecasts in coming years both defense and domestic increases

rest" of

the

on

-21

With Lober Brothers
Justin Jacobs has become

cjated

street

Broad

30

Exchange
a c o

b

merjv
a „

city
Stock 1

Mr.
for-

s

m a n

e'd

New York

0f the New York

members

j

asso-

with'Lober BrothCTsV^Co.,

-

the in-

vestment

re-

search departments of J. F.

Reiuy

co.|

&

Luckhurst

&

Company, and
Bros

strailco

He

was

ajSo

a«ss0ciated
w^h

Moody's

investors Service and Dreyfus
was

tor

&

Co.

aiSo
0f

He
Justin Jacobs

edi-

"High-

als I met in Europe. He is out of
Twice before in our generation what the same way as World War lights of Wall Street" and "The
quite frankly in France that the office now; but he has a politi- the.lights of freedom have burned 11 did in the early 40's all of Wan street Searchlight," both of
issue in Indo-China depends on cal
which were syndicated over the
party of his own which
low all over the world. Twice be- which adds up to more people.
whether
the
Americans
make expected
Direct and indirect defense or- names of various investment dealto
show
considerable fore they have been rekindled by
good on their commitments to strength at the next election. Da- the United States. The question ders for steel will skyrocket in ers from coast to coast,
furnish material
of war. Uncle Gaulle is not pro-American or before us now is, whether we^ will number and tonnage, by April or
Sam bears many responsibilities
pro
anything else except, pro-* have/to rekindle them this third May of-this year. Soon after that
in this day and age. \
time as much as 50% of steel pro¬
French
and
pro
his ' particular*" time?
duction will be earmarked for di¬
kind of French, you might say."
A
A
—
Will The Russians Move?
<
rect defense orders, indirect de¬
He believes that the Americans
You have heard the
question will
fense-orders and essential civilian
fight in Europe for their own
asked, if the Russians actually self interest. :
are
going to move, why don't
In
going around Europe ancf
they do it now? They'll never
(Special to The Financial Chronicle)
assuming no war breaks out be- Thornhill have formed Wyilie a t
talking to the people, not only the
find Europe any flatter, or less
~
ST. PETERSBURG, Fla.—Good- tween Russia and the United Thornhill With offices
statesmen or politicians, call them
able to resist, than right now this
tional Bank Building to engage
what you will, but the publishers body. & Co., members of the New States
January.
Well it could be of
Demand for flat rolled material ^ a
and the leaders in various con/ York Stock Exchange, have opened
course
they are waiting for the
such as sheets, strip, roofing, eluding corporate
munities, you run .across a fre- a ;branch office in the Quimby
snow to thaw and the ground to
plates, tinplate and raw material and
"
r
v
po^ii
<fear that the Building st. Petersburg, and also for
harden so as to carry their armor. quently; expressed
pipe, all of which will be used ^dy officers
great rivalry in
the world now
'
B'
J^ . Churchill believes it's the atom is between the United States and ln
for
.direct
and
indirect
defense
Company,
Inc..,
Van Skike Building
-

Wyilie and Thornhill
Bpen Own Inv. Firm

Goodbody Opens Two

Branches in Florida,

general security business; instocks and boqd,

,

in his opinion, is the

great deterrent to the Russians.
They sknow we have more atom
bombs1 than they
have,
and a
better delivery system.

Russia and that if both the United
States

Other

British

authorities

trend

told

the Russians first Would have




Russia

would

pull

in

M.

Blair Corkran will

be associated

with the St. Peters-

Sarasota.

their horns there wouldn't be any
b
trouble.
But that if the present

'

me

and

to be

a

offi
...

,,

and
0

0scar L. deLano
,

continues, there is boundSarasota
major war with Europe as were formerly With

the battlefield.

of C. F. Cassell &

..

.

bomb. This,

That's why they're & Co.

...

rMK?
sibly

-

office,
A. M. Kidder

and Cohu & Torrey.

much'as 60 to' 65%

as

Bendix, Luitweiler Partner

the

-

cfalalltby Mr. ^mpbdl befcni
of
Customers
Brokers,

Association

New York

City, Jan. is, 1951.

Bendix, ^Luitweiler

of

flat rolled material will be going

&

Co., .52

Wall Street, New York City, members of the New York Stock Exchange

Z,

P

\

admit

wiH
^

u-

Gesztv to nartnership on

Louis

1

Feb. 1.

E.

""N,.

22

The Commercial and Financial Chronicle

(450)

HENRY J.

current

of

summary

thinking

house is

series

in

I

conducted in conjunction with
the

International

Home

Fur-

Market, January 8
through 19 in The Merchan¬
dise Mart.
These conferences
and
panel discussions were

well

as

of

trate

GRAVER

basic

Corporation

materials

aluminum,

copper,

cobalt—are

all

However,

short

and

supply.

had

company

our

an
last

excellent

quarter
we

and

expect

to

it

in

equal

January, February
and
March.

We

first

expect
quarter

pro-

duction
of

in

of them

None

of

quarter,

1950,

but

be¬

period it is

anybody's
guess.

line

new

recently introduced

of

radio

and

a

television

sets and have endeavored in
every

to

way

keep

prices

down.

The

three models that we carried over
into this year from last year were

carried at the 1950 level with the
idea of
I

holding prices down.

have

been

asked

event materials become

if,

in

hope

manufacture of radio sets to main¬
tain production of television.
I

particularly of the
higher-priced
units.
However,
during a war, dissemination of
so,

is

news

the
was

important.

very

lines

we

introduced

small radio and

a

be able to

keep

a

sential

times

try to

that
up

in

use

with

they

of

are

stress.

are

es¬

cut back

we

prevent

ending

unbalanced inventory.

an

*

*

where

with

Sales Manager, Electric Appliance

higher

it

will

be

needed

of

that

year.

Since

the

and

It

We

how

long

can

continue

to

are

in

and

orders

month and have

pres¬

concerned with

There

One

of

this

at

The

perhaps

as

low

remember

won't

we

be

V. Duffy

Texas.

important

products

raw

we

use

converted to munitions.

linters

use

we

powder

estimate

much

same

we

have

to

how

as

the government is going

Another

,

available

drain

supply of

is the amount of

the

on

bedding required




January,
lot in my opinion.

last

which is

year

inflation in dollar sales
remember

the

that

greatest

building that we have
in the past two years.

all familiar with

the

linters

have

being used
risen

demand

sumer

tarded.

As

a

retailers would
every

also

since June and
some

to

grades.

retail

reflect

raw

much

as

&

I

don't

have

the

materials.

A

Los

linters that cost $4,000 in May

foamiirubber

the

frame

a

in

short
the

rubber

the

will

be

stantly expanding.

.

sort

a

figures obtained from sales
sheets and that business looks bet¬
than

From

must,

retailer's

in turn,
buying.

more
"

'

1

thought

we

a

it

would.

standpoint, it
interpreted in

be

•

❖

❖

*

v'

STEELE WINTERER
A.

and

M.

of

that,

outlook is
I am

less

or

that

President

policy of

a

will

have to deal to

we

material

get

we

have

fill
our

do

the

it

the

and

everything
civilian

plans

plan to

we

government
so

that

can

we

production

time

same

many

is

that

conduct

to

us

plants

level of

see

on,

accordingly.

maintain

and at

so

definite

enable

will

We
to

and

more

will

ourselves

orders

Jin

keep a

can

we

employment about where

during the transition from
peacetime to

wartime

econ-

omy.

I

might add that I'm

sure

that

the greatest worry of many of our
officials in Washington who have
to

do

the

with

New York,

V

a

a

maxi¬

part

their

ventory

six

months

softening

control

lines.

will

be

more pop¬

these

of

names

in

both

carpet

their orders.

At

moment,

in

the

in
as
or

in¬

posi¬

At

e m a n

bidden

and

while

all
the

limited.

of

types

chemical

This short¬

In Belgium and

manufacturers

to

export

countries

rayon

need

all

are

for¬

because

they

can

they
the
t

r

No¬

vember

and

price phase of our picture
is interesting.
We were paying
a 68c blend average
in December
That

1949.

blend

I believe, this
proximately $1.75.
up,

carpet

average

month to

is

ap¬

uses

a

t

r

is

of these fibres is raised

Another

one

cent

a

left

our

through¬

probably

the

coun-

durable

area

from

industry $2,000,000.
major factor affecting

industry today is manpower
shortage.
In December, 53 men
forces.

general

a

of

overtime

and

families
now
or

have two

three work¬

ing

members

Prices

one.

have

not

time the price

mills to
An

enter the armed

equal

number

will

Al¬
though the loss of 53 men could
not materially cut production, a
continual monthly drain of man¬
power

leave in

could.

January.

a

emendous

with any per¬

every

is

employment,

fibres.

So,

There

of

amount

there

instead of

industry

income.

emendous

minimum of 200,000,000 pounds of

December
the

in June, compared to

were

national

gone

centage

up

com¬

our

Since

*

Relatively, furniture and bed¬
ding are better values today than

amount

The

The

very
-

#

,

in

fibres

produce.

of

are

W. A. TOMLINSON

is worldwide.

these

is

President, Tomlinson of High
Point, High Point, N. C.

Steele Winterer

for

d

man-made

age

which

over-

Whelming
d

weeks

inventories
*

there

an

con¬

considerably

up

expected after
buying.
From
our
company's point of view, our dis¬

tail

demand.

few

to

normally

the present

is

modest.

retailer

Christmas

becoming

time

think retail

I

very

picked

last

that

going

are

from

has

the

not

are

obtain.

that

effort

willing to

are

release

sumer

rayons

wool

for

every

time when the government

Movement

be¬

is

It

think

military agencies

inventories

short

supply

and

to the

will be

very

I

industry will
during the

is being made to maintain produc¬
tion of civilian products right up
or

covering
lines of brand

disrupted
period.

that

the carpet

was

quite a
business in
In

that

the

transition
reason

to be justified
in terms of re¬

was

of

1951

of

say

that

parable

out

there

become

N. Y.

that the purchasing
power of the country during the
first

is

-

pound, it has increased the cost of

tion

Dilg

of

they

been

whether

not

H.

the

quandary

to

things

Karagheusian

I believe

„

Holland,

year

have

goods

developing

sales

fibres is very

months.

x

the

in

-

i

latter

try,

auto¬

of

of half
run-away conditions.
This
has been influenced
by excellent

ter

whom

getting

industry is beyond the pilot plant
stage,
its
capacity
to
produce

inventory position in the last

ca¬

con¬

re¬

*

ately placed themselves in

supply

is

to

;

procedure with the operating di¬
vision
of
the
government with

tributors'

think that most of the larger
in the nation
deliber¬

bedding

plants

product

manu¬

hopeful

more

nominal.

retailers

Fred

not

mind

of

in

ourselves

are

we

set

which

>

watch

that

has

increasingly

Angeles, Cal.

carload

June, costs $13,000 today.

begun

the

to

Vice-President, Barker Brothers,

additional

or

of

must

Fred Wilson

difficult

FRED H. DILG

as

of

pacity

heading of critical

assure
a

things they
necessarily

are

items.

into

business
%

mum

have

Beyond

feels

of them.

in

turn

these supplies.

going

perhaps—

care

sup¬

facture

re¬

new

relations.

I

the

We

effort in bolstering customer

in

prices

ever

consequence,
all
be wise to exert

than

more

in

strictions in home building and if
this building is to be cut back to
a basis of 50%
of last year, con¬

|

v

we

boom

Towards

that

the'
or

cause

s

turning out
as

in

of war workers.

.

thing

consumer

by the armed forces and relocation

on

ex¬

present time.

to

products

our

are

an

make

to

and

yet

as

The

used

are

easily

are

industry, * but the productive

such

in

factor

industry is that most of the

our

year—the

is in there with price

over

must

had,

any

highly

buying today

under

the

of

some

weeks

mean a

had

home

there

and

lint until midAugust when they start cutting in
A

the
We

E.

is

year

last

two

of it

have

crop

as

first

increases

shortage
cotton

believe

than

causing

file with

con¬

consumer

take

to

necessarily be reduced. Buy¬ high. I would
ing, which has been heavy during ular floor-

Much

changed,
orders on

pliers who

a

legitimate needs they

some

of
^

hear about taxes—30%

we

pendable income of the

troubles is the

in cotton.

the

will

our

the
not

are

think many of the

many question marks
optimism in 1951.
If

to

are

greater

busi¬

be
and

are

the

stories

biggest

of

no

to

we

we

form

some

controls.

as

There has been

T. J. Newcomb

subject to

of

are or go up

think

things

*•

are

does not

cost in

by

as

prices

intoxication

.

ding.

'alloca¬

month

we

find ourselves very perplexed
to what might happen if soon

we

we

and

to

we

that

going

We

encourage

the

started

how

any¬

of manu¬

ness

300%

tell

prices,

such

likewise

in carpeting,
and in uphol¬

the part

on

I

are

these

progress
which can't

the

are

evidence at the present time

inventory
on
hand, work in

obscure.

I

controlling

they

We have

year.

down—rather that they will stay

other manufacturers for materials.

no

of production
of this

quarter

where they

I

is

but

what

of

company
way

first

are

critical things

furniture

wood

and

referring to those manufac¬

by

the

interested

more

have

am

People

that he cannot outsmart the price
situation any longer and if they

a

do

can

broader

much

a

demand.

so-called

sumer

any

merchandise, is of

we

during

excellent and clear

an

our

only interested in appliances

component part nature in which
the manufacturer is dependent on

facturing bed¬

allo¬

.^We

other line of

or

has

in

feeling

rea¬

merchan¬

new

furnishings

dise.

stay

the

have

distribu¬

a

major problems in

home

it

few weeks prior to that time.
It seems that it is either

controls fairly
adjusted to each line of merchan¬

making

on

tions.

in

should

!js

are more

what

we

our

a

manufac¬

ture

been

place

Si*.

ent.

200%

of

is

affected

Military reverses
We have
re - occasioned, picture in

retail business, as of now,

television,

in

manufacturing today, whether it

of

industry is going to surprise
body with anything new at

crisis

tors

maintain

as

is doubtful that the bedding

mattresses

take no orders

the

that

.

Capehart-Farnsworth Corporation,
Fort Wayne, Ind.

consumer

are

#

*

FRED WILSON

stered furniture than they were

President, National Association of
This matter of prices and con¬
Bedding Manufacturers,
trols, I think, is of vital concern
General Manager, E. B. Malone
Co., to everyone. Ours is a mail order
Miami, Florida
business and a retail business and

believe

these

in

farther

E. V. DUFFY

Cotton

beginning

in advance

levels

little closer

a

know

well

as

i'f

of the Korean

cations

work

can

get

of

our

is

are

dise.
One

in

as

Henry J. Stentiford

substantial in¬

the is

at

sound civilian economy.

than

the first quar¬
ter

very

can

require.

I would estimate that produc¬
tion in the appliance industry will
be cut back 15% below the last

but

ones,

this

duce

Corp.,

Mansfield, Ohio

1950,
decidedly

larger
have

this year.
*

the minds of people, the need
anticipate hard-to-get things.
The only difference that I see

and

happens, I know that turers who must depend on raw
harness itself to pro¬ materials such as cotton, leather,
defense items that are steel, etc. Where there apparently

When

industry

J. NEWCOMB

of

will

up

manufacturers'

we

can

advance just what can be used in
the
way
of
critical
materials.

no

quarter

set

*

Division, Westinghouse

the

sonable amount of

we

or

spread

make

and

they

soon

them

smokeless
T.

re¬

concen¬

know what

boards

various

How¬

the wood cabinets

in, to

come

hope to

the market

on

feel that

if materials

ever,
will

we

of

portion at least

of the small radios

because

One

recently

we

larly

the first quarter and I

that

industry

now

the

even more

difficult to obtain, there will be a
cutback
in
the
production and

believe

and

occasioned,

not

perhaps.

us

do beyond

the

yond that time

We have

models of

some

i

first

R. A. Graver

one

ranges,

1951 to exceed

that

Obviously,

ing appliances to the public.

nickel

in

present
time,
particu¬

ventories
and
very
substantial
In the last commitments.
There is no panic
war, we concentrated on a few
on the part of the manufacturer.
models in order to give more of
Buying has proceeded on a very
the basic refrigerators and cook¬
normal basis and

radio—

in

good

and

human

way.

in

the

at

ers,

be produced

This

specific.

more

same

to

scare-

there

Chicago, Illinois
The

common

other models

on

in the

buying. Deal¬

firm's

a

far

were

both

are

manu¬

little

appliances.

The merchant and the

found

cut¬

the most of what

public.

frigerators,

Vice-President in Charge of Sales,
Admiral

the

more

A.

necessitates

models from

some

could exclude

of retail stores.
RICHARD

it

If

is available for the

executives

as

which

In

or

lines and make

television, floor covering in¬
dustries

many

contemplating

of

of

November

and

attributable, no doubt, to the
imposition of credit regulations

and

the dealer.

October

was

talking with

if Westing-

asked

their models

exclude

and

radio

been

We

the sale of appli¬

came,

production

of

manufac-

turer

allocate

ting back further, I believe a
patriotic approach would be to

participated in by members of
furniture and bedding, house¬
appliances,

have

materials.

nishings

wares,

We

I

in

ances

any change
facturers since
excluding any.
my arrival, I
That will depend on criticalness of
have

conferences

press

order."

"back

tion, availability of materials,
and prices as outlined in a
of

the

about 30 days ahead.

produc¬

on

standpoint

requirements.

a

STENTIFORD

Vice-President, Alden's Incorpor¬

Anticipate production in early months to exceed 1950, v/ith
remainder of year depending on supply of materials and clari¬

CHICAGO—A

Thursday, January 25, 1951

.

.

have great hopes, however,
maintaining civilian production
was
ated, Chicago, 111.
running considerably below at a high level. In 1949, the car¬
The International Home Fur¬ that of the year 1949, and this pet industry produced 73,000,000
was somewhat
of a paradox be¬ yards; in 1950, it is estimated that
nishings Market staged in Jan¬
cause it was
generally concluded they produced 85,000,000. It is my
uary,
1951, is jn my opinion a
that there would be a restrictive estimate that 70,000,000 yards will
very sensible one, both from the

Furnishing Goods Leaders Expect Active First
Quarter; Uncertain Over Longer-Term
fication of Defense

which

.

to

W. A. Tomlinson

in¬

of

come.

I would

face

of

like to add that in

the

increases

ranging from
20% to 75% in various and sundry
raw

materials used

facture,

it

has

markable to hold
increases to
As

to

we are

the

a

in pur manu¬

been, quite re¬
our end product

level of about 15%.

matter

of

scarcities,

patterning our assumptions

.Volume 173

World

on

Number 4980

War

II, and

.

.

if

know

we

that

"Pay-as-You~Go"PolicyDisastrous

things seldom happen twice
in the same way.
In that war we
had nearly 11,000,000 men in the
armed

time
of

started from

activity in

We

which

tossed off

low

a

engaged in a
certainly not be

1943

don't

rate

to

seven or

tion,

we

them

up,

will

we

the

eight years ago. In addi¬
have a tremendous ex¬

occasion

for

scare

Sales

instinctively,

make

no

every

effort to supply

goods and to sup¬
ply wanted goods. It is ingrained
in us and we do everything we
turn

out

merchandise

volume and in the style and

that

ranges

are

of much of our

economic
recently made in

was

editorial

lead

in

price

wanted. And pro¬
we need, for it is

duction is what

the best price control there is.

V.

Finishes, details and styles, will

ation.

No

litical

expediency, and
sophistry, should

consideration

mitted to blunt
to

our

hand work

carving

slow work, such as
inlays, would not be

in

emphasized

designs

or

out in
same
same

We

With

of

deal

or

or

of

favor

which

can

patterns
be turned

greater quantities with the
amount

of

labor

the

in

or

in

a

certain

fortunate position

supplies.

is

There

rubber

of
foam
although nylon is

plenty*

and,

not generally
assured of sup¬

of

po¬

eco¬

be

per¬

determination

*

the

because

case

and

manpower

materials

are

productive

destructive
This leaves for the ci¬

used

and

of

goods

civilian
wise

for

case.

The

prices,

on

other¬

than would

the

pressure

non¬

smaller amount
services to supply

and

wants

be

for

up

upward

therefore,

is

inevitable.

Taxes,

Sales Dollar,

the

and

Inflation

y

Furthermore, taxes—and in the
final analysis, I believe

all taxes—
are
themselves inevitably infla^
tionary. This is true because in

the long run they can be paid
only
out
of
the
sales
dollar,
plies of nylon upholstered fabrics which is the consumers' dollar.
through the first quarter, which, is
Inevitably, almost any kind of a
about all a firm could expect to

available,

are

we

be assured of under normal situa¬

tions.

....

'•>*

v.-:

.*

*

.j.

tax tends to be ^'shifted" or pyra¬

mided
so

-Vw.

Nashville,

up

Tenn..

Co. k
..

.

prices, which

approximately 15% above

those at the June Home Furnish¬

ings Market,
'<■

:-v

/

will

higher

a

point

otherwise be the

Cabinet

It is believed that
are

r

l. davis
Davis

somewhere along the line,

that ultimate prices

to

President,

are

than

raised
would

case.

."Further, if the tax burden be¬
comes
so
heavy that expansion,
risk

taking,

duction

are

and maximum
discouraged or

tailed, then the

cur¬

taxes them¬

selves

because of the

which of themselves lead to

government
request to

prices for necessitous products for
which the demand is relatively

maintain them

of

lead

very

pro¬

level at their
present
state

output,

to, a smaller volume
create shortages,

and

higher

Today there
tual

inelastic.

n

dealers'

ventories

are

Excess

high.

Profits

Tax

the

Most

Inflationary

ac¬

shortage

and

i

an

furniture

of

Mgr. for
Merrill, Lynch, Omaha

very

OMAHA, Neb.—Ray P. Hiffer¬
has been named manager ofi!
Omaha
office
of
Merrill

nan

lib¬

the

we

are

allegedly

mobilizing

our

Lynch, Pierce,

Some taxes, of course, are more

inflationary than others.

there is

ample,

probably

For ex¬

tax

no

known to economics which creates
more

difficult

problems,

destroys

initiative, penalizes efficiency, en¬
turers already
courages waste, and boosts costs
are
feeling and selling prices, than the re¬
the
effect
of cently enacted excess profits tax.

-

Deficit
We

Financing the

Beanc,

have

both

Root

high de¬
gree of inflation and the heaviest
taxes in our history.
Too little

Shiftable

now

a

attention is given to the fact that,

the sales tax
tend to be "shifted"
purchaser of certain
even

as

objective

every

student

the

of

qualified

and

situation

the very basis of our

knows,

high prices

of

and

tax for commodities which
agricultural production at a time!
Willard A. Johnson
Ray P. Hiffernan
importantly influence his cost of when our economy has been oper¬
living, would do his utmost to get ating at a record high level; and,- during the absence of Willard A.
further wage increases from his most of
all, the monstrous wastes Johnson, present manager, who
employer—just as now, under the in the operation of our great and has been called for duty with the

sales

gain in efficiency, naturally per annum, have for years been
to higher costs and higher called to the attention of
Congress
prices.
by all tax experts and tax organi¬
ing

On

the

other

for

lead

Also, for many commodities, if
or any other taxes are
high, enough drastically to de¬
crease the demand for, and sale of
sales taxes

retail

sales tax,

f

Refsnes, Ely, Beck Co.

To Be NYSE Members

a

Mr.

period of one year.
has been

Hiffernan

in the*

brokerage business since 1926. He-,
started out as a board marker^;,

and have been more re¬
"aired" by ex-President became a customer's man in 1928^
Hoover and by Senator Byrd.
and manager of a local office of
zations,

cently

for

Further,

many

years

the

&

Cruttenden

Co.

Ho

1947.

in

product, then, along with cur¬ TJ. S. Treasury has pushed its loans joined Merrill Lynch when the
tailed volume, costs of production out to the public at an artificially firm's Omaha office was opener!
and distribution rise—and prices low interest rate, thus keeping all last year.
During World War U,
Hiffernan
served
with the
must rise accordingly, or whole¬ money rates relatively too low, Mr.
and
20th
Armored
Division.
~
sale failures will result. In other
thereby
encouraging
the

the

a vicious economic circle
easily and unwittingly be cre¬

growth of "inflation." A more or
Mr.
Johnson
joined
Merrill
less
unwilling Federal Reserve Lynch upon his release from the
System
has
been
"forced", to service in 1946. After, graduating
oretically least harmful levies, if "support" the government bond from the Merrill Lynch Training
market through its purchase of School he went to
tfie tax burden goes too far.
Houston, Texan,

words,
can

ated

as

The

a

result of

power

to

even

has always
destroy. Infla¬

tax

been the power to

.

the the¬

Government
amounts.

securities

in

vast

The U. S. Treasury has

and

then

Amarillo, Texas, as ai>
In 1948 he be¬

account executive.

tion, carried to extremes, is a very persistently refused to make its came an assistant to the sales di¬
serious
economic
and
political loans,,truly attractive to individ¬ vision manager atthe firm's head¬
ual and institutional savers and
quarters in New York. When Mer¬
evil. However; the experience of
investors by paying adequate in¬ rill
Lynch decided to open an of¬
all countries throughout history
terest rates and by arranging suf¬ fice in Omaha in January, .1950,
shows that there is a distinct limit
ficiently long maturities. No long¬ Mr. Johnson was named manager.
beyond which a Government can¬
time and economically balanced He graduated from Wichita Uni¬
not safely tax its citizens without
taking away their freedom of ac¬ plan of financing has yet been versity in 1939, did graduate worls
adopted for handling the finances in merchandising at Northwestern
tion, destroying their initiative,
of our Government.
University the following year, and
and "shrinking" the tax base to a
Certainly, the time has come then transferred to the Harvard
point where economic conditions
when every thoughtful and patri¬ Business School, receiving the de-r
grow worse and worse. More and
otic citizen should call a spade a gree of Master of Business Ad-'
more, under such conditions,. the
spade. The laws of gravity do not ministration in 1943. From 194£
average citizen becomes merely a
nor
does the economic to 1946 Mr. Johnson was in the
slave to his Government. This is change,
very

nearly the situation in Great

has

been

stated

au¬

that

only 86 people

left whose retained earned in¬

come

multiplication table change.

Ad¬ Army Air Force.

push
country further down the road

ditional taxes will inevitably
our

unless the cancer
governmental waste,
both of money and of manpower,
after national taxes, is now
our
artificial
agricultural price

thoritatively

as

recently

where

high

as

to

of

destruction,

Nevada Tungsten

Stk.
Offered by Tellier

colossal

$16,800!

Tellier & Co. on Jan. 24 publicly
supports and restrictions on pro¬
duction, and our shortsighted in¬ offered "as a speculation" 1,999,000"
sistence on artificially low interest shares of common stock (par 10)
The most careful students of the
rates for Government loans, are of Nevada Tungsten Corp. at 150
history and theory of taxation
completely eliminated in these per share.
long ago found from observation,
The proceeds of the offering will
parlous times. There
are
even
and from the records, that it is al¬
worse
threats
to
our
economic be used by the company to pay
most
impossible to maintain a
and political existence than some for properties, in the amount, o£
sound economic and free political
degree of "inflation." All the gov¬ $42,500, and the balance will bo
system, when the governmental ernmental controls and
restric¬ used for working capital.
powers take as much as 25%
of tions which can be devised by
Nevada Tungsten Corp. was or¬
The

Threat to Freedom

hand, the general
much as we may
all deplore such a burden on the
items made of metal.
is probably the the national income "produced"
I think that most of us are too average citizen,
ingenious
men
will ultimately
in taxes. Some 20 years ago, the
alarmed nover the present situa¬ least inflationary tax which could
avail nothing, unless our central
now be devised in order to bring
average taxes imposed by all coun¬
tion.
Government speedily puts its own
Perhaps
it will
become
in further substantial amounts of tries of the world amounted to
even more acute during the next
economic house in order.
little more than 15% of their ag¬
revenue.
; ,,
Probably, also, one more World
ninety days or perhaps a little
gregate national income, while War will
Such a tax also leaves a certain
completely destroy the
longer while the government
for the United States, the taxes
so-called "American System," and
stockpiles' critical materials.
At amount of freedom of choice to
levied by all governmental auth¬
the- end of that period, notwith¬ individuals in that they may buy
perhaps all modern civilization,
orities were scarcely 11% of our
win, lose, or draw. Pray God that
standing an all - out war, the more prudently, or may postpone
estimated
national income pro¬
shortage situation should be eased altogether the purchase of those
in this New Year those high placed
duced. Now, however, contrary to
commodities which are not imme¬
considerably.
common
misinformation,
under in our Government, as well as all
diately necessary or essential to
their
well-being,
even
though prevailing business conditions and responsible citizens who are in
price levels, the total taxes being
positions of leadership, will stop
they may be normally desirable. collected
by Federal, State, mu¬
name
calling, will stop rushing
Further, such a tax would tend to nicipal and local governments (in¬
I
conserve
Social
Security taxes around in all directions under the
many necessitous basic cluding
PHOENIX, Ariz.—Paul D. Beck materials needed by the Govern¬ which are a current cash burden) influence of meaningless or mis¬
are even now at a rate around $70
will acquire the New York Stock
ment in case of war.
Thus, the billion per annum, or almost one- leading slogans, and will devote
Exchange membership of Clifford
their highest energies, and their
third of the estimated national in¬
prices
which
the
Government
V. Brokaw, Jr., and Refsnes, Ely
noblest efforts, to
the cause of
Beck & Company, 112 West Adams would have to pay for materials come produced.
Despite all the theoretical argu¬ "Peace on earth, goodwill toward
Street, on1 Feb. T will become and
equipment might be held
ments in favor of financing our
members of the Exchange. Part¬
men" before our nationy and per¬
down, or even reduced, as com¬
ners
in the firm are Joseph E.
present and prospective "defense"
haps all nations, shall h&ve met
pared
with
the
costs
and
prices
operations
on
a
pay-as-you-go
Refsnes, Sims Ely, Jr., and Mr.
which might otherwise prevail.
basis, it is a very serious question death by suicide!
Beck.

shortages,
however, particularly so in those




Fenner &

economy.

first party..

are

Manufac¬

W. L. Davis

types

goods

it

not

the

from

Levy

Britain at the present time,

there.

is

Hiffernan

on

Federal
Government U. S. Air Force, Winthrop If.
foregoing would seem to be payroll deduction personal income sprawling
tax plan, he tries to get wages suf¬
a
organization, whose cash budget Smith, the nationwide investment
very unfortunate statement of
ficiently high to compensate for has continued at a level fully five firm's
managing
partner,
an¬
an economic "half-truth."
the deduction of taxes from his times as
Mr. Johnson, a
high as some ten years nounced today.
Any kind of a war is itself in¬
pay check!
Such wage increases, ago! Wastes, conservatively esti¬ Captain in the Air Force Reserve,
evitably "inflationary."
This is
unaccompanied by a correspond¬ mated from $6 billion-$10 billion has been ordered to active duty

amount of time.
are

our

no

employ it to the hilt."

vilian economy a

good

burdens

economy.

The

six months by the labor situation.
a

of

one

well

may

the

purposes.

requiring

of

widely read newspapers:

probably be influenced in the next
Styles

on

"The

nomic

to

own.

However,

most

I think most American business¬

can

will

waste and puts its

present

the

fears.

men,

government controls

The following statement, repre¬

questfons,

shortage

or

tax

An intelligent study
of financial history shows that we

our

goods to the buyer of has been the continued deficit fi¬
services produced "by nancing of our Federal Govern¬
Undoubtedly, the ment in times of "peace"; the con¬
strongest single weapon
against inflation that we have in average worker who might be tinued direct and indirect price
in¬ our arsenal is the
called
upon to pay a 10% or 15%. supports and restrictions on basic
weapon of tax¬

everything and I am
to say that there is

of

clined

no

government eliminates

superficial thinking

pansion of productivity and
productive capacity in this coun¬
try

unless

sentative

them

replacing

already exceeded

of

erties and that freedom for which

and

replace them at

were

we

Concludes

taken here.

so

avail

armaments of war

use

have

not

materials

not

limit

ing for ourselves those

economic house in order.

stockpile

we

munitions and
and

of

1944.

and

If

being

immaterial, the situ¬

as

ation is not comparable to that

have

safe

long endure present or in¬
creasing tax burdens, without los¬

on

profits most inflationary and a general retail sales levy .
least harmful. On premise of threat to freedom if taxation
takes one-quarter of national income, warns one-third is now,

we are

can

inflationary, with that

are

excess

two fronts.

on

we

the

cannot

all taxes

Economist maintains

rate

economy.

own

our

fighting

were

Today, while
war

By ARTHUR W. MILLER

services, and at the same

we

7&

(451)

The Commercial and Financial Chronicle

.

ganized

in

Delaware

on

Oct. 20,

1950, to engage in the business of
operating a tungsten, lead, silver,
copper, zinc and gold custom milt
and other mining activities.
The
mill

is

tons

of

presently, treating

3,000

tungsten tailings averag¬

ing V2 of 1% or a value of $20 per
on a $40 per unit mar¬

ton based

ket.

There is, in addition,

able

some

which

have

avail¬

of tailings,
not been sampled or

7,000

tons

tested.

Kenneth Dieiz Partner
In Seskis & Wohlstelte?
Kenneth

Dietz

F.

will be

ad¬

mitted: to partnership in Seskis &"
Wohlstetter, 25 Broad Street^ New
York City, members of the New
York Stock Exchange, on Feb. 1.
Mr. Dietz was formerly with E. F,
Hutton
&

&

and

Co.

Comnanv.

•

J.

H. Brooke

■i

24

(452)
*

.

'*

.
,

LETTER TO

■

V1

•

.

THE

'

'

fense, to
In

Objects to SEC Commissioner
N.

Lawson, of Detroit,

in it

sees

The

Commercial

nancial

astounded

was

from

SEC

and

Mr.

to

read

of

McEntire

of

reported
in
your
of Jan 4 (page 22)

he

is

operating?
to

port

on

obtain

his

the

defense?

statement in
sonal

Does

citizen

a

permission to

make

can

There

support of his

calling

live

etc.,"

.

the

Richard

glass

is it "the pot

or

kettle

in

black."

has

the

per-

The

SEC does plenty if dissemination

rich
is

B.

N0TE.

The
to

fme.

and

letter

a

SEC Commissioner

McEntire

to

the

Thomas

Mr.

Mr.

Graham

Louisville,

McEntire

invention; but, if

for publication of a

re¬

planned

so,

should

we

I

hearing before the Securities and

Exchange Commission

Oct. 20.

on

spirit

that

the

to

think

to

the

left

than

it

positive danger to democ¬
racy itself. The extremes of "left"
and "right" in the world
today are

Economy

mediated in the great democracies

among

these

even

strong middle class. It would
tragedy indeed if democracy

should perish because, in the
sup¬
posed interest of its own defense,
it liquidated this guardian of dem¬
ocratic institutions.
The suggestions made in this
ap¬
praisal of ways to fight inflation

would,

should

not

ignore

tion should be
encouraged, by the

precept

and

example of govern¬
ment, business, and private citi¬
zens; i. e., through less non-mili¬
tary expenditure by government,
less capital expansion
by
less consumption

in

the

recent

critics

it

years.

have

am sure we

said

that

at

a

American

have

time

one

or

capital

over our economy.

have

we

no

If

playing

Canadian

is

developing
our

My

our

resources

industry the

credit)

on

on

tain

by

allowing a continued
higher interest

rates.

(3)

Taxes

whether

required

to prevent
penalize
con¬

should

sumption,

and

reward

through

consumption

or

saving,

direct taxes

through

on

income

taxes that exempt to some
the bona fide saving of the

degree
public.

(4) Direct controls, especially in
the form of price control and ra¬

tioning, should be
stop-gap

stitutes

for

devices,
a

of the

measures

last resort, and should

ary

more

to

emphasize the

lowest

possible

level.

If

demo¬

true

be treated

not

sub¬

as

anti-inflation¬

policy.

The importance of

choosing the

right kind of policy to combat in¬
flation

is hard
to overestimate.
it is important also that we
should not make our problem
big¬
ger than it need be, by a dispro¬

But

portionate

expansion of military
expenditures.
The allocation of

armament

expenditures

is

for miliarty experts; but the




a

job

over¬

Van

and

on

let

acter
In

short

enterprise

Hardwick

the

us

been

greatly

en¬

Stires

•

announced by Francis S.

President of the bank.

Bancroft,

Mr. Stires,

couraged by the government's lead
in

freeing the dollar, by the ten¬

tative movement towards free in¬
terest

rates, and by the removal
import restrictions on Jan. 1

of

Bishop Stires of the Dio¬
cese of Long Island, .is a
partner
in the firm of Scudder, Stevens &
Clark,
investment
counsellors,
1932.

He

Harvard

,

in

*

was

the

firm

the

name

all

the

Hanover
New

Bank

York

Feb.

their

at

Co.

Trust
annual

ings

shorten

the

title

corporate

institution

to

The

of

Hanover

2000. It
that

was

no

the

our

change

bank's

banking
meeting

in

or
on

Jan. 17 the stockhold¬

also authorized

ers

involved

was

operations, or in its
trust services. At their
amendment

an

to the institution's charter to
pro¬
vide for
150,000 new shares of

of

But we cannot stop here. Bar¬
governments fail to meet
obligation, they will in effect ring the need to return to a totalwar
footing, government and pri¬
giving a measure of aid and
•

comfort to
the enemy.
At this
stage, the most important weapon
in

the whole

is

trols

arsenal of

the

control

on

was

Nov. 1, 1903, and
incorporated with

of Cruikshank

being

Company,

acquired

Cruikshank

and

Mr. DeBost
of

the

ordinary

government expenditure.
So important is the issue
for support

ing

these

and guidance in
responsibilities,

cratic

governments

about

setting

that,

meet¬

demo¬

might

think

advisory

up

consisting of

com¬

governors of

Banks, representatives of

industry, finance, and labor, and
senior civil servants to review

penditures and advise
economies.

on

possible

The functions of these

suggest new expenditures or
the increase of those
already pro¬
posed.

Emphatically, the price of our
safety is not only the expenditure
vast sums

and
over

taxes,
the

A

has'such

an

major defense

impact

upon our

nomic resources and
of

living that

a

effort

our

democratic

ernment would be

eco¬

standard
gov¬

guilty of crimi¬

nal negligence if it did not do all
it could to preserve the free econ¬
omy

by confining its ordinary

penditures
mum.

to
.

the
'

absolute

■

t

ex¬

mini¬
-

$20

par

was

Vice-

company

until

elected

was

elected

Chairman

of

Mr.

DeBost

was

director

a

following companies: Metro¬
politan Life Insurance Co., New
York Telephone Co., Home Insur¬

Co., Bankers Trust Co., Cobel

Royalties,. Inc.; formerly
director

a

panies

of

Chamber

was

of

of

was
com¬

Cruikshank
of

the

Pres¬

was

that

body from 1926-to
1928, inclusive; he was a member

of the

Real

Estate

Board of New

1

is Jwith
now

and

the

some

from the
austere

relief

menace

problems

that

I

of war,

of

de¬

Co.

of

New

meeting

results

of

cheap

as soon as

controls

possible to
the

over

re¬

interna¬

tional movement of

ing
to

on

capital, rely¬
the free exchange market

exert

the

control.

necessary

Fourth, to accept any controls
necessary for the short-run re¬
quirements of defense only after
safeguards have been provided for
the

automatic

market

at

the

These

return
end

of

to

the free

the

emer¬

immediate

economic

Canada

danger.

steps in gen¬
policy, along with

through her present

These
that

ensure

when

the

measures

she

time

will

comes,

be

to

should

ready,
exploit

to the full her tremendous
poten¬
tial for economic development. It

omy in action, and a constant re¬
minder to the world at large that
the road to economic freedom is
also
to

the

annual

17 approved the
directors in declare

the

the

shortest

social progress.

and

safest

road

Trust

authorized

Feb.

1.

dividend, consisting of

The

directors of
of

declaration

a

stock

by

the

dividend

out

undivided profits was referred
in
these
columns
Dec.
28,

to

office.

The

tribute

a

of

New

exhibit,

to

York

designed

its

the

the

450th

anniver¬

exploration

of

the

North American coast by

the Por¬
tuguese navigator brothers, CorteReal.

The

shown

exhibit

in

the

will

Trust

also

be

Company's

office at Madison and 28th Street.

Thomas J. Shanahan, President
of the Federation Bank and Trust

Company of New York announced
that

at

a

directors

meeting on Jan. 9, the
appointed William Lar-

Assistant Vice-President, Jo¬
T.
Sandleitner,
Assistant
Secretary and Vincent J. Badala,

sen,

seph

Assistant

2542.,

page

of

capital

additional share for each eight
on
Jan. 5, is payable

one

Co.

correspondent
banks in Portugal, has been set
up by the Colonial Trust Co. to

40,000 to 45,000 shares.

stock

Treasurer

of

the

bank.

■

*

*

Mr.

*

James M. Nicely, Vice-President
of the First National Bank of New

Larsen

and

Mr.

has

member of
of

the

the

been
board

University

Bell,

elected
of

of

is

also

Trust

Badala

was'1

Officer,

formerly

Auditor.

;

•

York. City,

-

the specific
anti-inflationary de¬
vices already mentioned, should
see

their

at

Trust

stock dividend, and voted to

a

Laird

gency period.
eral

York

Clinton

shares held

Third,
move

ing

of

of

<

Jan.

on

The

inevitable

ter

sary

#

-f

Stockholders

stock from

money.

Colonial

■

in its 48th Street Rockefeller Cen¬

commemorate

Hv

sound

the

Board 'of

stockholders of record Jan. 22/

posed to the fiscal substitutes for
are

Co.

member of the

a

Commerce

State of New York and

ident

he

other

many

including

Mr. DeBost

as

increase

that

of

the

share payable Jan. 2 to sharehold¬
ers of record Dec.
11), The stock
dividend is payable Feb.
15 to

Second, to rehabilitate monetary
(or Central Bank) policy as op¬

policy

the

21,(10 addition
to the regular dividend of $1 per

action

monetary

by

Nov.

on

cident to inflation.

Canada may become, as it were, a
working model of the free econ¬

Prospects of the Free Economy
,!?i>r
j; jam in Canada
It

direct controls otherwise in¬

the

per

declared

was

monetary policy

may not be too much to hope that

'

III

turn

and

effective and to avoid the need for
many

to which these funds

uses

put.

are

provided by savings
eternal vigilance

but

fiscal

make

ex¬

committees should be confined to
restrictive action with no power

of

First, to free interest rates, at
to
the extent required to

by

William

York for over 40 years and served
share each, in¬
at one time as its
Vice-President;
creasing the number of outstand¬
memiber of the Commerce and
ing shares from 1,050,000 to 1,Industry Association, etc.
200,000 and the bank's capital from
■i{.
' if
•
$21,000,000 to $24,000,000. Incident
A special exhibit of Portuguese
to; the enlarged capital a stock
dividend of one share of capital products and handcraft? is being
stock for each seven shares held
aisplayed in the windows of the

stock,

least

con¬

war

of

vate citizens should cooperate:

the

A.. Cruik-

E.

Bank, at 6th Avenue and
Street, New York.
In 1947

was

issue of Nov. 23, page
noted at
that time

of
on

The senior

stock

was

ance

which reference

to

as

firm

Board of Trustees of the bank, f

of

meet¬

business

the

20,1924, when he

40th

Jan. 17 approved the plans

on

the

and

80 years

his

President of the Union Dime Sav¬

'

The stockholders of the Central

was

partner,
Cruikshank, retired from

President

graduated

,

*

He

with

firm

Co.

L. DeBost..

1923.

-f

18.

business

he

Trustees

this year.

of

he

...

1893, he went with

&

Warren

of

son

to

this spirit of

run,

has

11,

Edwin A.

capital

.

the

Co.,

#

started

1886

estate

the

ing

take

*

He
in

shank

made in

to

Trust

Wickle, Stout & Co. and

Feb.

dian

refuses

absorbed

Assistant Secretary.

an

Jan.

on

age.

career

reason

cratic

to

inflation

as

to this end I should

ordinary expenditures at the

Central

movement towards

been

and economic obligation of
democratic governments to main¬

the part of private

(2) Voluntary saving should be
encouraged,
borrowing discour¬
aged, and fiscal policy made ef¬
fective

once

mittees

citizens.

has

of

Bank,

From here

made

died

is too meagre for the job, but that,
in spite of the
high stakes, Cana¬

capital

Manufacturers

after

years

was

Dime Savings Bank of New York,

capital is

large enough part

a

four

*

to blame but

one

1929,

the Yorkville Bank

was

some

I believe this is the spirit
appro¬
priate to the true Canadian char¬

amount of

expansion

means

business,
(especially

and

required

moral

be

(1) Voluntary saving through
the patriotic restraint of
consump¬

it

1916 with the Yorkville

In

■

a

like

whether inside

follows:

York,

Bank.

William Ludlam De Bost, Chair¬
man
of the Board of the Union

since

created

As

this

or

New

of

in

career

by

from

risk.

by that expansion
must somehow be met.

I think, be broadly ac¬
ceptable to a majority of citizens,

outside the gov¬
ernment. I would summarize them

been

was

critics

must be not that Canadian

matter

a

determined, the inflationary prob¬
lem

has

real

least

example, I

expanding

the generals.

the

once

Stires

trustee of Excelsior Sav¬

a

Bank

re¬

in

prove a

But

ings

ply is simply that, if this is true,

not

the

armaments

Hardwick

elected

a

heard

then

v/e

Bankers

and

OFFICERS, ETC.

that Canada's

course

at
is

that

ourselves.

to

Perhaps

i

CAPITALIZATIONS

these prerequisites:

contrary

taking

said, too important

be

NEW

will

-

as

,

NEW BRANCHES

REVISED

must have noticed much evidence

all-size of the defense
programme,
like war itself, is as Clemenceau
once

•.

.

Thursday, January 25, 1951

..

..

coun¬

see to
possibility that, having failed
penalizes spending.
it that our
to realize their hopes of capitalist
vision, our energy and
The failure to
exempt saving,
our
risk
taking spirit are not
collapse through postwar depres¬
when income taxes are
very high
found wanting.
sion, the communists are now try¬
will not only reduce their
power
Actually a new spirit of enter¬
ing to engineer capitalist collapse
to prevent inflation in the
short
prise is abroad in the land—per¬
run,
but may in the long run through the inflationary pressure
of a continuous armaments boom. sonally I have great faith in it.

a

"

.1

that we
produce
stolid and unimaginative citizens.

For

income tax may ben
come
a
dangerous and perverse
weapon that penalizes saving even

be

./

*

■

,

the years pass.

as

reputation,
Canadians,

all

looking for him. Otherwise, as
rates rise, the blunt instru¬

a

.

degree, the
apparently increasing

It is true of

rebuked

statement of what transpired at a

A Free

by

,

abundant

in

second

Ky.,

has

first in

degree

Company,

which

risk-taking

Canada

Canada's Prospects for

more

*

make their expectations come true.

another

of

\

try must have "great expecta¬
tions," together with the energy

Continued from page 18

be

L

CONSOLIDATIONS

have

must

natural
and

Second, the citizens of that

Graham, President of the Bankers
Bond

country

diversified

case.

tax

'**

,

News About Banks

Canada has

prerequisites

Socialism

Nevertheless,

ment

■

.

economy are the badge of national
poverty not of national wealth. <

LAWSON.

reference
by

the

and

sources.

no

Mich,

ED1T0R,S

going

in

who

.

.

,

in

even

and peace economy

certain

are

First,

'

there

mean

Pembroke Road

Detroit 21

addressed

views?

"People
houses

jf

f

a

prosecutor,

as

SEWARD
323Q

re-

public

a

this

fine

Who

hearings before

SEC before he

\

i.

free economy: some nations
have them and some do not.

views

own

Does

kind of dictatorship does he think

have

its

the

this fellow McEntire, and what

is

;'

economy.

or

and prosper by adhering to the
principles of the free economy.

to

judge and jury.

as

paper

Fi-

Chronicle:

free

a

world,

war

remarkable opportunity to grow

a

deprivation of

a

as

peaceful

of the past few years,

individual's right of free speech.

letter

«<.

.

longer view of Can¬

a

future

a

the mixed

McEntire's Attitude
Seward

I

•

-v."

EDITOR:

ada's

Editor,

,

The Commercial and Financial Chronicle

*

'*•

.

*

/

a

Election

trustees

Chicago,

Chairman

of
the
Jan. 20. A

ers

in

of

Elwood

?

Gi* Child-

as Vice-President,
continuing
charge of Personnel, was an¬

Board, announced on
graduate of the University of Chi¬
cago in
1920, Mr. Nicely is the

nounced on Jan. 10 by Walter E.
Kolb, President, of the Industrial

fourteenth

Mr.

member

of

alumnus

to

become

a

the

Chicago board of

*

*

trustees.
*

1947

Assistant Vice-President in charge
of the Columbus Circle office .of

New

Manufacturers

Trust

Co.

in

York, has been promoted to

Vice-President

charge

of

and Bronx

all

and
upper

placed

in

Manhattan

offices, it is announced

by Henry C. Von Elm, President.
Mr.

Childers,

Lieutenant Com¬

a

mander in the Naval

Reserve,

formerly

Union

with

the

Company of Washington.

Richard R. Schilling, since

the

Bank of Commerce, of New York.

Schilling started his banking

W.

Ashley

Assistant

advanced

was

Secretary

Vice-President

of

to.

the

was

Trust

Albert
from

Assistant
Industrial

Bank.
*

James
The

Marine

pany

the

ing

G.

*

*

Blaine,
Midland

~

President -of
Trust Com¬

of New.York, has announced

promotion of Henry F. Stubto Assistant Vice-President.
,

Other
promotions
included
Stanley Strick and Frank F. Stet-

Volume 173

Number 4980

.

.

¥■

to

son

Assistant

Vincent

B.

Treasurers, and

Hubbell

Secretary. *"

*.

'

>

i

'

i

'

;

to

.

also,

Vice-President

Charles
H. the tax return, charges the houses
given the additional wife's account for the amount of
title of Mortgage Offi'/sr.
the tax, and forwards this sum
*
*
*
together with the return to the
The Dec. 29 report of condition Collector of Internal Revenue.

Assistant

Robinson

-

was

r

The

Bronx

New

York

Martin
dent
M.

H.

Savings

has

Bank

announced

that

Nosworthy,* Assistant

to

President, have been elected
tees of the bank.
*

The

of

Bluethner, Vice-Presi¬
Comptroller, and John

and

J>:

the

;

-

Trust

Merchants
Co.

of

National

Syracuse,

issued at the

100th Anniver¬

*

meeting

of

the

was

insert

an

by the

in

booklet

a

bank

under

"One Hundred Years

of New

shows

gotten

the

title

of Service"

of

Jan. 16, Raymond B. Cray
elected Assistant Vice-Presion

and

dent,

Miss Mary D.

and Karl W. Johnson

Assistant

Cramer
elected

were

Treasurers.

Mr.

Cray,

netx earnings

for 1950 of formerly Assistant Treasurer, is
with total
assets
in¬ Manager of the personal loan and
$45,832,537, The state¬ time sales department of which
marked
the
enlargement of an ment reflects the sale of the ad¬ department Miss Cramer and Mr.
office that was
initially opened ditional stock during the year Johnson are Assistant Managers.
just a little over four years ago. which
raised
the
capital
from All the other officers were re&
*
#
*
$750,000 to $1,000,000; in addition elected.
*
*
*
John J. Mackey, a member of to the $250,000 added to surplus
from this sale an additional
the bank's legal staff for the
Andrew
H.
$250,Miller,
Manager,
past
000 was transferred
from undi¬ Mortgage
18. years, was appointed solicitor
Loan
Department
of
Plains

doors

Road,

Jan.

on

6.

opened

The

$339,231,

its

to

creased

occasion

■

and head

of

The

of the

Dime

Brooklyn,
monthly

N.

vided

legal department
Savings Bank of

Y.,

at

meeting

board of trustees

the

of

.

increase

Mr.

%

Mackey succeeds Arthur C. Weywho recently died.

mann

served

At

He had

Weymann's Assist¬
ant since Dec. 20, 1940. .Frank S.
Scimeca,
a
member
of
"The
Dime's"

legal staff for

named

..was

11

Assistant

all

General

White

,

as

for

the

Organization,

both,

following

to the new

the

Francis

A.

G.

Potter

real

!

tendent of Insurance

and
were

H.

Shepard,

and

Charles

to

served'two

to

J.

Devens

to

A.

Bul-

Raymond

H.

Ernest H.

Osgood, Jr.
Vice-President; Ver¬

Assistant

non

Superin¬

Philip

Edward

Treasurer;

Choate and

with Lawyers

State

re-elected

President; Ernest W. Lay, Clement
W.
Deasy, Walter E. Dow, Jr.,

lard

with

of

office of Senior Vice-

his

years

board

promotions

Samuel

Vice-President;

was

the

Wolcott, Clif¬
ford L. Lyall, S. St. John Morgan

Mr. Scimeca, before
connection
with
The
Dime

Savings Bank,

*

of

were

estate firms.

Title Co., for 10 years,

B. Hitchins to Assistant Vice-

liquidator
of the Lawyers Mortgage
Co., and

President and Trust

for

3rd, to Trust Officer. The follow¬
ing new officers were elected;
Grafton E. Wentworth, Assistant
Treasurer;
Ivon S.
Cahill
and

three

admitted

to

the

bar

*

;

the

Commission.;

v

•

as

with

years

Mortgage

'

E.

officers

the

Vice-President and

Counsel

%

meeting

a

voted:

Mr.

Mackey. Before joining the bank's
staff in
1932, Mr. Mackey had
served, as attorney for Realty As¬
sociates and

institutions

Company of Boston, held Jan. 15,

years,

to

the

directors of the State Street Trust

Mr.

as

in

capital appeared in these columns
Jan. 4, page 94;

bank's
19.

profits to raise the surplus
A brief reference to

$1,250,000.

the

regular

the
Jan.

on

to

*

in; 1923.
.*

1

tal

was

*

The Williston National

Williston

E. Sellars and John

State

He

j

Bank

!

of

Park, New York

$120,000),

has

(capi¬
consoli¬

been

Richard

Casey, Assistant Sec¬
John L. Shannon, As¬

retaries;

with

the

Central

sistant

Real

Officer.

Estate
:j;

National

t|c

\

in charge of the bank's office at
21st and Granby Streets, Norfolk,
Va. R. Herndon Dixon, Assistant
Cashier in charge
of the new

Vice-President.

Three

sistant

Cashiers

Marks,

of

the

new

Frank

are

AsR.

G.,

Walter

Bellairs,

Assistant

and

Trust

E3

E. L

of

Co.

Philadelphia,

bMcGa^rigan
McGarrigan, As^tTn^fca^hAssistant CashS-'md

and Trust

tion of five years on active military duty during the last war. He
was made an Assistant Cashier in
January,

1946,

and

Assistant

an

_

to Assistant Treasurers.

TH;W
niami^ As^tant; Trust OUiffecuruief o^er in the Cor-

™f e

The

Office

Jan.

of

8

Bulletin

of

Providence

the

under the

the

National

title

William

and

Bank

of the Providence

National

Bank,

Fulton

Kurtz

President

elected

and

re-

was

also

was

Comptroller of the
also reports that the rUnion National Bank and Trust -elected Chairman of the Board of
of
The
Pennsylvania
will be $300,000, Co. As noted in our issue of Dec. Directors
with initial undivided profits of 21, page
2458, the consolidated Company for Banking and Trusts
bank will have a capital of $3,- of Philadelphia following the annot less than $130,000. The office
of the
Williston National Bank 250,000 divided in 130,000 shares, nual meeting of stockholders of

will

surplus

be

the

operated

Central

consolidation
Dec.

as

branch

a

National

Bank.

became

effective

".

29.

V-'

of

The

*

%

.

Wallace N. Watson of Harrison,

N.

Y.,

has

been

elected

Vice-

a

President of The County Trust Co.
of

White

Plains, N. Y., according
to

a

his

later

insurance field.
of

ber

the

Board.

Mr.

Watson

will

devote

his

time

It is

to

plan¬
the

and

investment

and trust

Aft¬

receiving

a

en-

n

eering

from

Purdue

g

i

started

Watson

the

entered
He is

Million

a

life

Dollar

life

mem¬

Round

Mr. Watson left life insur¬

Table.
ance

the

work

to

R.

Berwind,

Clarence

Shipley,

A.

David H.- Harshaw and
Anthony G. Felix. New officers
named were George F. Hansmann,
Earle J. Hinkle and George R.
Warden,

field. Assistant Secretaries; James

of

With the Santa Fe Rail¬

He

*

The Putnam Trust Company

service
for
bank
customers whereby
it
will completely handle Social Se¬
curity tax returns for servants.

degree in

career

road.

*

*

Charles

W.

the

er

Mr.

tive Jan. 8.

G.

Charles

Roberts,

Direc-

Isaac

were

Chairman

accounts.

University,

effec¬

re-elected

Wilson, Jr.,

ness

Watson

became

hall in the Chairmanship.
tors

sue-

Stevenson New-

tor W. Bean and William F. Dela-

of

N.

consolidation

The

He

Jan. 15.

on

late C.

Greenwich, Conn., has announced

advisory busi¬

Wallace

tal of $2,000,000, while the capital
of the Union Trust was $1,000,000.

ceeds the

Knoll, Assistant Treasurers; Vic-

development

.

The

$2,100,000.

the bank held

of

ning

"

than

Provi¬
dence National Bank had a capi¬

Andrew

estate

4

initial

each; it will also have an
of $4,750,000 and
undivided
profits of not

surplus

statement

by

.

initial

less

::
sU

par $25

become

President

development of

a new

pointed out by the company
that under the present Social Se¬

curity law, if an employer pays
a

household

$50 during
and

the

a

servant

as

much

quarter of the

domestic

works

as

year

to

send'this

deduction, plus
an
equal payment from himself,
with a report of the wages paid,
the employee's name and his so¬
cial security number, to the Col¬
lector
cent F.

of

Internal

Revenue.

Vin¬

Ostrom, Vice-President of

the company,

explains that

check form is

now

Raymond Brunner
and
John W. Hulton, Assistant
Trust Operations Officers.
Gusand

tav

Loesch and John A.

K.

from

promoted

were

it

easy

a new

available which

for

Assistant

Treasurers to Assistant Vice-Pres-

, >

idents
a:

the

announces

Board

election

of Managers

.

„

■

Following the armual_ meeting

customers

JJreyer, John E. prick, Paul E.
Farrier, Glenn M. Forgan, and
J^om2s
Johnson, Assistant
Vice-Presidents, were promoted
to Vice-Presidents. The following,
who wfr? Assistant Cashiers, were
promoted to Assistant Vice-Presidents: Guy A. Crum, John S.
Gleason, Jr., J. Russell Hanson,
^i)sePd11
^erna'+v, t?t 1

by

the

of L. Warren

n

„

Jjfwhall, **. Kenneth Newhall,
£larence J. Riuethlmg,a:nd George
F. Sisler. Kenneth G. Morton,
Assistant Secretaryand Robert
S. Swaim, Trust Officer, were
promoted to Assistant Vice--Presi-

?ax m1*'L
Brandritf, Gordon T. Shearer,
,sf ^ " Trust Officers, and Harold
Hawes, Assistant Secretary,
were promoted;to Trust O:fficers.
Walter E. Grau, Assistant Cashier,
d Assistant Auditor.
!jrCeT?r^^ected were. 1Chrisderds-

^?p^e^

vt

Frnest J. Hutlgren, H._S a
y
Fickford, Frank W. Goodhue,
Kenneth A. Willen, William J.
Burnham

A.

Converse,

and-.Russell V. Carlson, Assistant
Cashiers; and August J. Hurt, J .,
Assistant Secretary.
*

*

*

*

Commercial Loan Di-

Thomas J. Downs and Laurance
H. Armour, Jr., were elected di¬

appointment is effective Feb. 15.
Mr. Elwell for the

rectors of the La Salle National
Bank of Chicago at the annual

past 17 years has been associated

meeting of the shareholders, held
Jan. a.
Mr. Downs is a member
of the bar of the Illinois and
United States Supreme Courts. He

Elwell

the

as

Assistant

bank's

in

The

vision.

with

Treasurer

Pearson & Co., compaper bankers of Phila-

Weil,

mercial

delphia.
*

.

to

*

is head of the law

*

the

with

department. All other
board

the

of

members

were

re¬

except Leo J. Sheridan,
President of the real estate and
elected

Sheridan

Mr.

Co.

&

Sheridan

J.

Joseph K. Clark and William

Co.

Trust Officers of the La
National, were appointed
Assistant Vice-Presidents in the
G. Dahl,

Salle

firms of Downs,

department.

trust

bank's

Roger

Lester S. Cain,

Brinkman and

B.

formerly Assistant Trust Officers,
were
named Trust Officers.
All
officers

other

were

re-appointed,
named
banking

and Ernest E. Fumasoli was

Cashier in the

Assistant

department.
.j.-

elected
Comptroller

Curry

K.

was

and

Vice-President

Mercantile-Commerce Na¬

the

of

*

*

si:

Leslie

St.

in

Bank

tional

Louis

at

the

meeting of the directors
Jan. 9. He had not previously

annual
on

the

with

' associated

been

Frank

bank.

Merget, Vice-President,
and Assistant Trust Of¬

B.

Cashier

ficer, was promoted to Vice-Pres¬
ident
and Secretary.
Walter L.

Vice-Presi¬

Kaltwasser, Assistant

dent, was promoted to Cashier and
Assistant Trust Officer. Mr. Curry
is

Vice-President of the Mercan¬
Bank

tile-Commerce

and

Trust

Louis. He was Presi¬
dent of the Missouri Bankers As¬
St.

of

Co.

his
clerk with
National Bank of Kirksville
1924 and served as Assistant

sociation

last year; he began

banking

career

the

1933

Korsvik,

*

Geoffrey S. Smith, President of
Girard Trust Co. of Philadelphia

•

makes

Onsa

many

24 days

and

Real Estate

Assistant

Vernon,

Officer,

*

as

during the quarter, the
employer is expected to deduct
11/2 % from the servant's wages

as

R.

University.

associated

now

bank's trust

Credit Department.

Committee

the

Currency
initial

is

in

onthe directors of The First NaOn Jan. 3 the stockholders of
Bank of Mineola, N. Y.
(capital
Credit
for
Providence
National
Bank Consumer
Group
I, tional Bank of Chicago on Jan. 9,
$250,000)- under the charter and the
titie of the latter. The consoli¬ and the Union Trust Co., both of Pennsylvania Bankers Association, promotions in the official, staff
it
is
announced
dated bank wili have an initial Providence, R. I., approved
by C. A. Sienkie- and the election of new officers
the
announced by Edward E.
capital; of
$505,000,
in
101,000 consolidation of the two institu¬ wicz, Chairman, Group I, P.B.A. was
:
/
*
*
*
Brown,
Chairman.
Leslie
H.
under the
charter of
the
shares of common stock, par $5 tions
of

members

each.

He

his

Com¬

of

School

the

Northwestern

merce,

porate
Trllst Dept" and Richard
Clark wag made Manager of the

Vice-President,

Assistant

Central-Penn

RalphC. Scot-

in

studies

resumed

he

1946,

cember,

because
of
government
the 2900 West Broad Street office asked,
in Richmond; and H. G. Jennings, regulations, that his name not be
submitted for re-election, due to
of the bank's office in Petersburg,
Va. Mr. Bates has been with the his election on Jan. 8 to the board
of the
Chicago Title and Trust
bank since 1929, with the excep-

advanced

:

intelligence

military

serving in Germany. Upon
release from active duty in De¬

.

Secretary of the Land Title Bank

the

in

Richmond building management firm of L.

South

office; Joseph F. Matthai, Jr., of

,

ney,

%

while

Vice-President in September, 1949.
Mr. Hatch joined the staff of The
The Monclair
Savings Bank of Bank of Virginia in June, 1940.
Montclair, N. J., was elected Vice- From 1942-46 he served as an
President of the annual meeting of. officer with the Navy in the Pathe Board of Managers on Jan. 9. chic Theater. He was elected an
The appointment was announced Assistant Cashier of the Bank in
by T. Philip Reitinger, President. November, 1947, and in March,
Mr.
Miller
has
been
associated 1949, was named Assistant Branch
with The Montclair Savings Bank Manager and Operating officer of
since 1941. After serving in World the bank's office in Norfolk.
In
War II he returned to the bank November of the same year he
in his former capacity as Assistant assumed
duties as Officer in
Treasurer.
His
appointment
as
Charge.
•.
•
Manager of the Mortgage Loan
*
*
Department
was
announced
in
Nine promotions were anAugust, 1945, the responsibilities nounced at the directors meeting
for which office he will continue on Jan- 17 which followed the anto assume as Vice-President.
He nual stockholders meeting of The
was formerly associated with the
Cleveland Trust Co. of Cleveland,
Real
Estate
Department of the Ohio.
H. J. ^Lambacher, H. M,
Howard Savings Institution prior Sheeler and J.. A... Sheetz, Assistto which he was engaged in busi- ant Trust Officers, were advanced
ness
with
several
New
York to Trust Officers; Jack W. Woodbrokerage concerns.
burn and W. W. Wheeler were

L.

.

dated

Officer; Ralph
T. G. Nichols,

ant

in Richmond, and R. Norris Hatch,

organization
directors of The

institution;-the statement enclosed

N. J.

bank's office at 1620 Hull Street

Accounts Department at the 8th
and Main Streets office in RichPlainfield, mond, was promoted to Assistant

annual

e

Plainfield Trust Co.

out

York, at 233rd Street and

*

.

At. t h

Y.,

Open House on Dec 30 by
Crandall Melvin, President of the
as

newly enlarged Wakefield

*

Bank

N.

sary

trus¬

/

the

&

was

-

«

of

office of North Side
Savings Bank

White

25

(453)

'

«

'

.

The Commercial and Financial Chronicle

.

'

as

a

From
with the
Federal Land Bank of St. Louis
as
Chief Examiner and Assistant
to the President.
He joined the
Mercantile-Commerce Bank and
1926 to 1933.

Cashier from

1935,

Co. in

Trust

Assistant

he

1935

and

was

appointed

was

Cashier in 1937, Assist¬

Vice-President in 1940, and
Vice-President
in 1941.

ant

elected

.Merget began work with the
Bank and
Trust Co. in 1934 in the Safe De¬
Mr.

Mercantile-Commerce

He was trans¬
Deposit Depart¬
ment of the Mercantile-Commerce
National Bank in 1935, and be¬

posit Department.
ferred to the Safe

Manager in 1940.

came

In 1942 he

promoted to Assistant Cash¬

was

ier, then Cashier in 1945, and
Vice-President, Cashier, and As¬

1949. Mr.
with the Mer¬
cantile-Commerce Bank and Trust
Co. in 1929. In 1934 he was trans¬
ferred
to
the
Mercantile-Com¬
merce National Bank as a teller.
sistant Trust Officer in
Kaltwasser began

He

subsequently became a teller

supervisor,

Assistant Cashier in
Vice-President

1946 and Assistant

in

1949.
,:

The
as

1

*

*

*

resignation of F. Guy

Vice-President

First

cepted by the board of

was

Hitt
ac¬

directors

Bank of
St. Louis, effective Jan. 3.
Mr.
Hitt became First Vice-President
of the Reserve Bank on Dec. 16,
of

the

Federal

Reserve

1937, and was re-elected for suc¬
cessive 5-year terms in 1941 and
1946. Before joining the bank as an
active officer he

served

ber of its board

of directors from

1932 to 1937.

Olin
Hitt

First Vice-President.

Attebery
officer

The directors elected

Attebery to succeed Mr.

M.
as

as a mem¬

has

of

been

the

an

Federal

Reserve

Bank of St. Louis since its

lishment in

1914.

Mr.

executive
estab¬

Scheib, Osborne & Johnson in
*
*
*
Chicago, and Downs, Scheib &
A.
M.
McGrigor,
Chairman of
McArdle in Washington.
He is
James
Finlay & Co. Ltd., has
the information which appears on four others were promoted at the also a partner in Dube Manufacently in< the business of estate
the check, the bank is able to de¬ annual meeting of the bank's di- turing Co.
Mr. Armour enlisted joined the board of directors of
planning under the name of The termine whether or not a tax is rectors and stockholders on Jan. in the Army in 1943 while a
the National Bank of India Lim¬
Wa.tson Co. At the meeting of the due. At the end of each quarter, 12. The new Vice-Presidents are student at Princeton University,
ited, it was announced on Jan. 9.
Richard
F.
Bates,
in
charge
of
the
and
was
commissioned
a
Lieuten¬
the
bank
directors of the
automatically prepares
of

the

Estate

Planning

Corp.

of

New York

City. Since early 1949,
he -has been operating independ¬

County Trust Co.




conform with the law. This check

clears

housewife's
ordinary checking account. From
through

the

Two

officers

of

The

Richmond,

Bank

of

Va., were
advanced to Vice-Presidents and
Virginia

at

!6

(454)

The Commercial and Financial
Chronicle

Continued

from first

for

page

savings bonds!

Now if the Administration has found

As

W

It

See

e

stock

supply and demand

equation.

from the rank and

The

Tom, Dick and Harry have

\

prospect that

j

will have

we

Certain Peculiarities

dispassionate observer all this presents certain
peculiarities not often encountered. Whatever the ulti¬

What this
country must do if it is to avoid disaster
is to find a
way to

manager when he appraises the
earnings outlook for individual
companies. (Naturally, there are
many other forces that have to be

mate wisdom of
any or

President and

studied.)

tion is

Congress either to provide
intelligent leadership.

or

very substantially reduce the growth of infla¬
tionary potentials, in existing circumstances, depends upon
the nature of the taxes
imposed and their incidence. •

.

To the

doubt

persuade

all of the program the Administra¬
permitting the public to scan, it is without

now

of the most drastic if not the most drastic in

one

have ever known.
coming forward with these proposals
precisely at a time when signs are numerous and multi¬
plying that doubt about his policies in the field of inter¬

his

advisers have

arrived

at

the President is
laying out.
dangerous procedure. There is nothing to be
gained by being mealy-mouthed about it. Indeed, silence
-

course

This is

on

the part of those who

be

a

distinct

time.

do their

disservice to

the

own

thinking would

American

people at this

Our

noisy belligerence naturally runs the risk of
precipitating war long before we can be prepared to be
immediately effective in any global conflict with the

Kremlin and

its

enough to the

men

normally would

cohorts.

This

fact

is, of

plain

course,

of the world in those countries which
be the first victims of the Kremlin on

mad

a

rampage. Our policies in general in and out of
the halls of the United
Nations, therefore, expose us to
the double risk of

precipitating total war before we are
ready and of costing us rather than
making friends at
precisely the time when we need them most.
The President is

obstinate man, who still feels the

an

self-satisfaction that

him

to

came

with

his

success

in

talking to the

rank and file of the
people in 1948. He
does not .seem at all
impressed or deterred by evident
signs that there is widespread lack of confidence in
his

judgment. -His impetuosity and

times

at

downright ill-

temper, examples of which he has shown on a
number
occasions, do not tend to stimulate faith in his
calm
judgment. But he is evidently determined to
shape
the policies of the
country both at home and abroad, and
of recent

expects those around him
this

state

of

recent weeks.

but here is
Of

a

affairs

to "take orders."

have

discouragingly

Heaven knows what

Illustrations of

abounded

in

be done about
it,
state of affairs which each
and
every one
can

must face.

us

The

,

Secretary of

the

law last week both to
men
was
was

Treasury in laying down the
and

experience everywhere in large financial
matters
careful to
say that the doctrines and the
plans he

enunciating

being announced

were

with the President

—

as

after consultation

if

many of these matters
as within the
purview of

were

rightly to be regarded
practical
politicians, which, of course, the President
primarily is!
And the
program set forth clearly revealed its
origin—
that
is

its

creation by men who
understand very,
very
little of problems
involved in the
financing of such an
effort as we are

planning.

The Secretary
suavely an¬
nounces—as
might Mr. Stalin—that yield rates on obli¬
gations of the Federal Government
will not be
greater
.than 21/2%— not
just for the present, not
just for the
next few
months, but for the duration! At the
same time
he is said to
plan to force a substantial
portion of present
bank
holdings of governments into the hands of
the

banking community.
Now it

consistent
now

seems

the

or soon

broad

and

that either this is
sheer and in¬
else the National

us

will reach

basic field

Government has

a

of

point of dictatorial power

finance that is little if
any short of that wielded
by the Kremlin. What the Ad¬
ministration appears to be
saying is that it intends to
tax the
rank and file

and

at

change

the
a

same

very

as

time

it has

never

rate of

substantial part of the

interest which must




been taxed

oblige the general public

lias in its
possession into IOU's of the
a

under

outlook

for

not

this

heading the

money it

before,
to

already

Treasury—and

excpfed 2

ex¬

all

except

a

we

worry

market,

should

pur¬

discussion, I
very

be

investment

every

we

think

are

go¬

active economy

probably do not have
much

as

usual

as

fluctuations

about

in

activity,
commodity
prices,
purchasing
power, etc. Furthermore, I think
should keep in mind the
pros¬

we

inflationary gap that is
represented by the surplus of dis¬
posable personal income over per¬

of

business

trends of pri¬
expansion and contrac¬
forces. We still
have to follow those
items; but, I
think that we will all
agree that
their

at

namic
and

similar

significance

this juncture

is

expenditures.

Money Supply

going to run on. up to some¬
But, just as we are keeping our
thing like $50 billion a year, or
perhaps more, it doesn't seem eye on that inflationary gap, we
must
remember that officials in
quite
logical
to
anticipate
a
drooping, or a sluggish, economy, Washington can see precisely the
same thing.
in spite of the fact that the
Judging from my re¬
dy¬

inventories, the
and

consumption

are

vate debt

tion

sonal

itures for defense and
foreign aid

expend¬
itures for new plant and
equip¬
ment, the broad relationships be¬
tween the normal
supply and de¬
mand factors, the
probable trend
of
commodity prices, the status

consumers'

residential

dustries

durable

will be

at

submerged

jority

in¬

ficials

that there is

not

—with

the

room enough in
the economy
produce as many homes, auto¬

Board, and

many of¬
Administration
possible exception of

within

to

by the probabil¬

Washington, the ma¬
Congressmen, the Fed¬

of

eral Reserve

lower level.

a

We, already know

cent visits to

goods

construction

the

the

Treasury Department
extremely concerned about

are

—

the
mobiles,
refrigerators,
washing
increasing gov¬ machines, etc., as the public would inflation potentialities. Some of
ernment expenditures for
defense like to have. If
these people are
trying to attack
military require¬
and foreign aid will be
the most ments were not
the problem by efforts to
control
going to absorb
dominant economic force for the
the
our
entire
effects of the inflationary
productive capacity,

ity

that

sharply

next year or so at
least.

It

happens that

so

tions

point

plant

and

debt

in

and

to

then

the

indica¬

an

expansion of
expenditures
for
new

business

equipment.

the

real

form

estate

Personal

of

instalment

loans

should

de¬

cline.

By ordinary measurements,
inventories look high.
But our

interpretation
normally
to

be

da

are

important
for

that

has

government
Under
normal

would

be

expenditures.

conditions,

looking

for

I

sharp
business setback at this
point, be¬
cause production has
been exceed¬
ing demand and we would have
to have

while

excessive

a
however,
inventory takes

pect of

At

the

"burden¬
the

on

Usually,
be

a

decline

in

activity

accompanied by
by — weakness in

or

—

raw

prices; but, we have the
opposite of that condition
today.
In a peacetime business
cycles, the vision of sharp de¬
clines for the very
dynamic dur¬
able goods and residential
con¬

industries

the most ominous

the
we

in

levels.

trols.

have this

assurance

would

have

implications

for

than made up by
military work
little later on.
Instead of a

a

pic¬

ture

of

unemployment,

our

labor

problem

I

purposes,
the

over

the

Typical, of course, are the
demands for wage and price con¬

long as we
huge gov¬

of

skip

Others recognize the
importance
getting at the causes, that is,
the
inflation forces

important

eco¬

For

conclude

that

tions

think

we

usually

forces

and

business outlook

economy

operating

of

military

can

calls

for

at full

themselves.

example,

prospect

must

have the restric¬

Of

a
more
fundamental
nature, the Federal Reserve Board

capa¬

has ordered

This

we

instalment and mortagage

on

loans.

an

city.

necessarily

set

must

increase in the

an

that

serves

carry with it the assurance of full

commercial

has his

own

projection of the ef¬

fect of taxes

ing

on

I

personal purchas¬

My

power.

against their deposit

up

about

12

in

was

13%

or

the

Under

higher

than

third quarter of

more

creation

it

be

more

in

which this

upon

could

power

ply

of

increasing the

civilian

demand,

Undoubtedly,

individuals

more money

and

services

but

there

that

disposable

is

are

a

will

available

indication

every

income

will

still

exceed consumer expenditures for

trouble

any

because

of

business

supply;

-/

happens to be a fact that a
declining trend in money supply
almost invariably is followed
by
a
declining trend in stock prices.
On

the

can

now

for those goods

that

have
market

It

decrease.

spend

stock

matter of money

for

will have

we

a

going to have ,trouble,; it is my
opinion that it may stem from this

sup¬

services

is

because of very sharply
declining
earnings and dividends.* If we are

.

goods ;and

there

activity
or
commodity prices, or con¬
tracting purchasing power, or even

expended.
The
military expenditures will cause
an increase in
purchasing power,
but instead of

will

we

the

declining

purchasing

be

because

this
little

a

lower

offset by a commensurate increase
in the supply of goods and serv¬

ices

into

go

possibility that it may
a
strong bearing on invest¬
policies. Briefly, I
don't

think

less

or

to

situation in

detail,

ment

1950.

conditions, such
purchasing power

would

like

of the

Board
powers

distinct
have

normal

increase in

would

aspect

studies sug¬
gest that disposable income at the
end of this year is
likely to be
own

re¬

banks

employment with overtime, which liabilities.
However, the
simply means a high level of per¬ has nearly exhausted its
sonal income.
Probably everyone to increase reserves.

broad

economy.
But today,
know that the loss of
activity
those industries will be more

As

ernment expenditures for

an

very

struction

indicated

as¬

valuable asset.

a

would

pro¬

inven¬

liquidated.

were

moment,
some"

a

period of declining

a

duction
tories

forces.

other

influence, harhely; sharply

rising

durable goods and housing
activity could be raised above the

nomic

of these forces that

adjusted

major

basis

of

factors

measure,

that

we

I expect to

see

declining trend in money sup¬
ply for the first several months
a

of this year, but there would seem
to be reason for

is going to be one of
goods and services. In World War
believing that the
shortage.
II part of this
surplus was mopped declining trend would only be
I
am
impelled to. drag you
up by the repayment of private temporary and should be reversed
through these details because I
debt; and a very large part of the before the second quarter has
sometimes see a tendency to in¬
been
balance
went
into
completed.
government
However,
it
terpret some of the economic in¬ bonds.
This time, I think we will would be embarrassing if we in¬
dicators just as we would inter¬
have
the
retirement of private terpreted the declining trend of
acute

pret

them

tions.
ment

loans

to

nonsense or

reached

non-

that

conclude that

may

ing to have
to

sellers'

But for the broad

cyclical

material

Federal Reserve authorities

of

consider

preceded,

Political Finance

;

-

And Business Outlook

conclusion that the best
way to
heroics. But however that
may

the sort of

we

to

this

of

poses

least permit

very

interest

from oper¬

come

a

pective

the

gain adherents is through
be, he is pursuing policies
both at home and abroad which
patently do not arouse
much enthusiasm
among our most important allies in
Europe, among the Germans, or among those independent
minds everywhere whose
opinions count so heavily in

has
of

Investment Policies

widespread
apparently spreading. One is sometimes led to suspect

that the President and

the

at

in

tight
implications

.

Continued from first
page

national affairs and his
programs at home is
and

ating

on
or

active economy, and that
companies will be receiving

very

the benefits that

stubborn, politically minded
the whole, a too indulgent

a

confused and,

a

.

a

many

and that

many ways the people of this country
Now the President is

at

Thursday, January 25, 1951

.

just enough left to maintain themselves on a
reduced
plane of living, and at the same time
persuade these gen¬
tlemen to
buy bonds and buy bonds—long after it hurts
—then maybe it could
accomplish all this. Otherwise
Well, otherwise the plans of the
Treasury appear to be
unrealistic, to say the least.

halt

in

.

common

a

way to take current income
away
file down to the
point where

.

For
in
to

under

normal

example,

the

ratio

of

bank debits

condi¬

debt, but I am not so sure that the
maladjust¬ balance will find its
way into gov¬

a

commercial

usually is

a

reliable

indicator, but I think the
interpretation of that same ratio
needs
the

considerable

moment,

to

refinement

make

at

allowance

for the unusual conditions.
out
disparaging these

With¬

ernment

bonds, because I find

an

amazing

awareness on the part

of

the

public that fixed income se¬
curities do not afford any protec¬
tion whatsoever
against inflation¬
price trends.

ary

indicators

in any way, I am inclined to
sug¬
gest that you should test your
conclusions on a common sense

basis,
the

rather than

reliable

record

index may have
mal conditions.

follow
that

had

blindly
a

under

given
nor¬

With
a
rather
well-assured
prospect that government expend¬

as

willing

bonds
and

I

am

not at

all

that the public is going to be

sure

it

as

buy

was

in

government

World

War

to

find that the trend

continue

I

think

the

possibility

surplus

that

funds

some

might

of

find

their way

into other types of in¬

vestment

is

a

matter

that

ask

should

look
the

into

when

demand

side

we

of

was

of

going

arbitrary

ers

*1

it

is

quite

likely

Reserve

Board

Congress for additional
to control the

don't

know

be

t
that
will
pow¬

supply of money,

what

these

powers

how

they will bp. ex¬
But with a majority of

or

Congress and the
about

Board

worried

inflation, I should think the
would be granted and

powers

ercised.

.

complications

are

knowns

the

dered

ex¬

*

we

The
studying

because

Federal

will
II

as only temporary
couple of months from

a

action taken in Washington,

ercised.

the

these

to

supply

money

and then
now

in

no

this
less

.

and

un¬

are

ren¬

situation

confusing

by

the

Number 4980

Volume 173

.

.

The Commercial and Financial

.

(455)

Chronicle

would make him decide to enter
Department's insistence savings bonds. The individual in¬
into an all-out aggression in the
interest rates must vestor that I have talked to does
near future.
If an-out war devel¬
be pegged at 2V2%. This policy, if not look upon the bonds with fa¬
oped, undoubtedly, there would
it continues, is going to make it vor because it is obvious to him
be an emotional shock to investor
difficult to counteract the infla¬ that there has been a deteriora¬

common

stocks.

get on a bond of something less
than top quality. Why shouldn't

(7) In the field of important uncertainties, we1 will continue to

he buy the stock for his pension
fund, even though the speculator

the

observes that the issue is currently

the

crease

Treasury

for

demand

that long-term

If the Federal Reserve

tion forces.

increases

Board

require¬

reserve

both in confidence that would disturb se¬
respect to the principal and in¬ curity markets. However, we

then the Federal Re¬
Banks have to buy up the

ments, and
serve

liquidated by the commer¬
banks
so
that government

bonds

cial

-

bond

sustained,
anti-inflation nature

prices

be

may

nothing of an
will be accomplished.

The

how

steady flow of per¬
sonal investment funds from bonds

common

judge

later tne

that there is

into

see

•

'

work out. I am bringing
the subject this evening be¬

ing

to

up

believe that

I

cause

the

our

outcome

for

should

Throughout

wherein

public

tfie

the

consider

discourage the tendency to put

extreme, there are
believe that Russia does

might have an important bearing
on
investment policies. We must
reinember constantly that the of¬
ficials
in
Washington recognize

Nevertheless,

that

recognize
new

forces

are

a

cies

on

make
j}ow

Jones averages.

the Russian people in
of the basic falla¬

date, or that the Dow Jones Aver-

ditions,

to rush right up to
300 before April Fools
Day.
I
think that practically all of us m

and investment

Communistic

whole

the

maintain

prospects call for a con¬ equation, and, if other forces were
But, personally, I find it very dif¬
dition of excess demand over sup¬ unchanged, stocks should sell on a ficult 10 anucipaie tnat the inter¬
national situation could suddenly
ply—a surplus of income over and lower yield basis.
above the supply
of goods and
swing
over
to the point wnere
Price-Earnings Ratios (
services upon which that income
everybody agreed to peace and
can
be expended. That being so,
disarmament.
If such a thing did
My next major topic concerns
we
may
logically anticipate all earnings and dividends and their happen in the near future, I think
sorts -of steps, may
be taken to relation to stock prices. Forecast¬ we would have a considerable de¬

but.

I

forecasts, and it is

have -to temper our ideas ists to give me their ideas of the
about the strength of the infla¬ 1951
earnings prospects for the
tion-potentials which I, for one, companies that they keep under
have been emphasizing in recent constant
analysis. In this appraisal

to

months.

the

may

Common Stock Demand

of

the

supply and demand for com¬
mon stocks.' As a result of .devel¬
opments in recent years, I think
we have present today some fac¬
tors, influencing the demand for
common stocks that we never had
before.

Hence,

we

find

may

some

justification for altering some of
our measurements of security val^
and stock price behavior.

ues

Peculiarly enough,
labor has
a development that may be
bullish for common stocks. I re¬

caused

fer, of course, to the pension funds.
The net economic result of this
maneuver

is to channel a portion

that

ating in

a

from

result

It

pressures

oper¬

sellers' market.

building

consider

a

up.

If we

we

a

will have to take into our

Depending upon the time

that the earnings

built up.

companies will be off only mod¬

factor, the extent of such backlog
demand would have a strong in¬
fluence on the outlook.

Some companies
are
likely to earn as much this
I look upon the two alternatives
year as they did last year, and a
few are likely to show some im¬ in the [foreign situation as con¬
provement.
On the average, it tingencies that we will have to
looks like the earnings would be follow carefully as we go along.
off something like 15-20%.
Ob¬ The greatest probability, in my
viously, it is very early in the opinion, is a continuation of the
year
to make such projections, armament program, with the Com¬
and these figures are distinctly of munists continuing their annoy¬
a
preliminary nature. But, with ances around the periphery of

erately in 1951.

funds into the secur¬
Sooner or later, we may
the prornise of an active economy, Russia.
We never had that
cto'rporateearnings power is not hope to have sufficient strength
kind of demand for securities be¬
to
control the annoyance at its
fore—at least hot to the presently heading into an abysmal pit; give
Admittedly, Russia can
the American businessman a good source.
indicated substantial extent. It is
demand for his product, and he disrupt this time-table at almost
impractical to calculate the amount
will manage to record good prof¬ any point.
■ *'■.
of money that may be involved
in total. We happen to know that its, in spite of the obstacles.
Investment Policies
When we relate these earnings
the total for three companies alone
I warned you in the beginning
to probable dividend
suggests a demand for securities prospects
that I was going to ramble over
we
find stock after
at the rate of about $100 million payments,
a
very wide field.
Now, I would
a year.
To a considerable extent, stock that affords a good yield on
like to try to pull some of these
this demand comes into the mar¬ current prices with the dividend
disjointed pieces into a pattern for
to be covered by a
ket sin a most cold-blooded ana promising
investment policy, if possible.
automatic
fashion; it does
not -rather comfortable margin.
In formulating investment poli¬
seem to wait for a reaction or the
We conclude
that, in, general,
cies we have to consider the •fol¬
hope that a given stock might be corporate earnings will be lower'
purchased for a half point con¬ in 1951 than they were in 1950, lowing conditions:
of corporate

markets.

ity

cession.

1

>

but not so

low that current

prices

unreasonably high.
Furthermore, in view of the in¬
creasing
investment interest in
interest rate, have caused an in¬ common stocks for income, we are
impressed with the number of is¬
crease ,in $he demand for common
I

stocks.

believe

New

companies

insurance

York

the

that

sues

5%

ments

we'

can

common

envisage
stocks

beenf'presetit before.
In

a

"

hasn't

realiza¬
general

inflation. Conse¬
quently, there is a tendency to di¬
against price

instead

of

into

stocks
From the

common

bonds.

government's viewpoint, this is a
serious mattfci:'because many bil¬
lions of savings

bonds mature over
Secretary

a

going to continue

full war with Rus¬

would appear that her
strength in comparison
ours is at its most favorable

point,

it

military
'

with

the next several years.

point right now, and

Snyder seems to think that
continuation of a 2.9% yield

deteriorate as our

encourage

the
will

the public to hold these




probabilities

Will

have

a

suggest

very

in

a

busy

and that we do

(2) In general, the outlook does
seem
to call for a sharp de¬

gram

will tend to

armament pro¬

progresses.

that, and it may be

tioned the

companies,

surance

dividends, even though
probably be

tor

and yields.

teract

some

of the other inflation

potentials, but I have earmarked
this factor as an unknown quan¬
tity at the moment that
watched carefully.
(6)

has to be

We can see unusual forces

Stalin knows
operating that
the factor that

are

tending to in¬

\s

busi-

through this line of reason.

practical logic of one of my
previous observations,namely, that'
the

bet-

I think that the chances are
averages may

stock

that

ter-than-even

price

have an intermedi-

future, but I did not

The life in-

the manager

My, thought, of

yield

with

5 V2 %

a

If you

of one of these

well-assured

look
to

3%

turn

a

a

on

a

>

common

yield on a bond.

If the

the stock declined, you
coming in
with
which you could
average
down the cost of your stock com¬
mitment. I know of some pension
funds that are conducting a cold¬
blooded dollar averaging opera¬
tion in accumulating a back-log
of

price

recommend

single issue in

sayings banks cently reviewed.

re¬
stock would
rather attractive in relation

funds,

a

funds that I re-

good degree of assurance, ■
•were

liquidation of
three investment

highest

the

them

is f0 encourage a

course

recogni¬

objectives of a given
acc0unt. and to suggest to you that

tion

the

of

increasing number of accounts
becoming much more inter¬
ested in
individual values than

an

are

they are in your opinion, or mine,
to whether or not the averages

as

are

g0ing to have an

intermediate

reacti0n

would have more funds

First

Bosfon-Blyih

Utility Stock Offer

stocks.

inventory of common

The
First
Boston
Corp.
and
perspective is sharply dif¬
ferent than that of the speculator Blyth & Co., Inc., jointly head an
and board-room trader. The man- investment group of 52 members
This

pension fund is hoping which is underwriting an offering
the by Central Illinois Public Service
speculator either fears it, or tries Co. to its common stockholders of
to anticipate it.
The speculator's rights to subscribe at $15.87J/2 per
emotions and decisions still have share for 267,600 additional shares
an
influence on the market, but of common stock at the rate of one
the investor's attitude is .likely to share for each 10 shares held of
become a more important market record
Ian., 18, 1951.,, The subdeterminant than it has been in scriptiom'warrants expire on Jan.
the past.
31, 195i.
And, since this i n v e s t m e n t The p&ceeds of the sale of the
viewpoint is becoming of increas- new shares will be used to pay, or
ing importance, investment advis- reimburse the company in part,;
ors may have to adjust their viewfor the cost of additions, extenof

ager
for

a

,,

reaction in stock prices;

a

illustrate my point,
specialists has recently
the affairs of a

me

sions

and

improvements

to

its

properties, principally the electric
properties.
The company estiembarked mates that expenditures for this

reviewing

been

which has
stage of expansion 'purpose for the period Sept. 1,
promises to increase the size 1950, to Dec. 31, 1952, will aggreearnings power of the com- -gate
approximately $35,000,000.

that
and
pany

(3)

taking'/

are

jng that I hope you will recognize

pension funds will be looking
the investment that will give

and

upon

to earnings

n

types of demand
that have been

new

entering the picture.

company

relation

funds and

for common stocks

not

figures
will
lower than 1950.

that

changes

ness

all of us.

be important to

terioration in total corporate earn¬
1951

certain

piace jn the character of the

over

You will recall that I have men- a^e reaction in the reasonably near

.

One of our

normal economy.

ings and

looked

have

recommend the sale of

not have
to worry very much about many
of
the
deflationary forces that
keep us on guard most of the time point. Let
economy

(4) There is a satisfactory
type of
economy
with low military ex¬ spread between dividend income
penditures. I find a fair number and bond yields.
(5) Perhaps, we have been plac¬
of individuals who favor one or
the other of the alternatives of ing too much emphasis on infla¬
tion
potentials.
I have pointed
my basic presumption.
Obviously, the foreign situation out the possibility that the author¬
ities may engineer a contraction
is very critical.
Looking at the
of money supply that would coun¬
situation from the Russian view¬

that fixed income securi¬
ties do not provide any protection

savings into

foregoing com¬

we

sia or a return to a peace

'addition, as I remarked be¬

public

rect

;

based on the presump¬

cies would be

\

fore, there is an amazing
tion ori the part of the

'

The

(1)
that

An analysis of the figures
with an armed-carmp type of econ¬ does not suggest that the prices of
^stocks
are
inordinately high in
omy.
The two other contingen¬

demand

that

are

tion that we are

mari" investment policy. Here

again,
for

bond yields.

Now, all of my

.

giving consideration to the."pru¬
dent

a

Foreign Situation

of their assets in common
Several other states are

stocks.

afford

in relation to

permit them to invest up

ture to

relatively at¬
yield—certainly attractive

that

tractive

and

savings banks expect the Legisla¬

td

look

would

too,
the inflationary
trends, and the insistence of the
Federal Administration on a 2y2.%
Then

I

stock. This may sound
illogical^ but as a matter of

may

couple of years from now,
cal¬
culations the extent to which de¬
ferred civilian demand has been

omy

companies,

emphasize them as

that the stock price aver¬
going up or down. I sug-,;;
gest this change of emphasis, be-...
cause I think it will
conform to

fact, I think it brings up a cl^es"
tion of investment perspective that

peacetime econ¬

the

Ld dltXd pros!

individual

0f

more

of

snslvsis

ages are

But, within the

prices.

not

very

power

applied

be

an

rather than to

single

a

to

proof

week,

did

I

without
of extreme demand

now

are

earn"ng

such
this very policy pects

three sizable investment

material prices could

raw

have to

study over this list, I find
for a great many

As I

adjustment.

stock

should

intenselv

example, I happen to think
that the chances are a little better
than even that we are just about
due for an "intermediate reaction"
past

con-

corporate earning power
policies. However,
think that the results of such

studies

For

their present levels

that

very

benefits

the

hold

active economy, and most
My next major topic concerns companies will be enjoying the
a

an

would be difficult to see how some

they have given consideration to
the probability that we will have

"c?

through

go

j

business

will influence

that

sideration.

in

It has been

here to encourage the
study of all of the major forces

worthly of our serious con-

that is

you

my pUrp0se

called upon to make

are

we

ing the earnings of a given com¬ flation because the supply of goods
and services would probably ex¬
pany is always a treacnerous job,
we but I have asked my staff special¬ ceed demand and we would have

that

may

investment business feel thst

the

conclude at the

suspect

.

ages are going

counteract the inflationary forces.

moment,

n

Now, at this point, in a talk of
kind
the speaker is usually

:

that the

It is too early to

buy more stock anyway.

expected to
stick his chin out,'
and predict that, on the basis of a
balancing of the foregoing major
forces, the stock market will go
into a nose dive on some specific

might

bomb and the

.

...

....

AT

theory.

demand-side of the common stock

,

•
disappointing to some
j am no^. g0ing to
precise predictions about the

because

of

single

any

on

,

0f

she is afraid

would not be able to

war

weight

of these forces.

one

.

,

+

,

this

atom

his hold

we
do have to
several relatively
operating on the

would like

because I

much

too

this of our productive capacity. It is
change argued that Stalin is afraid that
he

out the

to

i

speculator may be right .
^r0Jn,. s sbort ^J1?. v.iewpomt,
an^ the accuracy of his judgment
™ay pay °ff for him
.Profits,
However, the manager of the pen*10n fun£ 1!? not+ very impressed
becaus(r he +has \°
inc°™e
?n hls investment and he wants to
e

f

influences that we have

numerous

to

prices.

recognize that the demand of
type is treacherous—it can
at a moment's notice.

purposely strung

have

I

strong inflationary forces

not want war because

of

uPrrt?° fast'

have to try
investment policies.

be the determining factor

those wno

ac¬

intense like, or dislike,
common
stocks and we must

<

influ-

may

of forces that we

to fashion our

At the other

an

which

It is out of this broad and varied

set

embar¬

might be

stocks

stock

of

financial history we have had

quired

investment in

rassing temporarily, but sooner or

is to be found in

forces.

inflation

the

and I

stocks

reason

perioas

-

any

a

common

that the

A heavy

interna-

tense

"

soiling at the highest price on recence the outlook one way or the
ord, an<f concludes that the price
other in an unpredictable fashion, should react because it "has run

have high economic activity, and the
the United prospects for inflation would be
enhanced.

us

tional situation

picture of very

would still have a

with

have

we

is my observation

it

but

States,

of us can
foretell how this situation is go¬
I

although

clients located all over

ada¬

Snyder only last week.

power

Maybe I do not see a true

cross-section,

rates was
Secretary

partment on interest
forcefully
stated
by
don't

come.'

Treasury De¬

mant attitude of the

of purchasing

tion

.0

27

a

new

substantially in the next five ;Against

these

expenditures

the

This company is expected company is applying, in addition
to report earnings around $6.50 to the proceeds of this sale, $5,per share for 1950. And even with 940,000 received from the sale of

years.

a

full year of excess

profits taxes, debentures in December, 1950, and

should be in approximately $2,000,000 from
the
neighborhood of $6.00 per other sources. - The company also
share. This is a good coverage for expects
to
obtain
$14,000,000
the present $3.00 dividend pay- from the sale, late in 1951 or in
ment on which the current yield 1952, of additional securities,
results

the

is

in

1951

The company
look at this value service to about

around 6.6%.
Now

let

us

entirely sepamarket in
general. The investment manager
sees an attractive cucBedt return
with a rather well-apsyrgd dividend
and prospects fof growth
that mav' provide a c^d hed<*e
against long-term inflation. The
yield is twice as much as he can
as

it

rate

may

from

appear,

the

stock

supplies electric
216,300 customers

in 500 communities and adjacent
rural areas in 61 counties in genr,

tral and

southern Illinois.

The

company also distributes natural
gas in a part of its territory.
•

For the 12 months ended Oct. 31,
1950, the company reported total
operating revenues of $29,796,201

and net income of $5,085,684.

1

23

(456)

The Commercial and Financial Chronicle

Continued from page

action for

3

field commander fac¬

a

ing the threat of
by

"Are We
worth

not

to the

must have seemed
flolsheviks

Che

cook

like

of

hungry
of

western

outfit, "Come and get it!"
And
ihey came—another instalment we
paying on the cost of our New
JDeal amateurs.
Dr.

we should
infantry for
Lurope and concentrate on super¬
bombs and the means of getting

Palyi's idea that

Fayetteville, Ark.

Russia

to

fits in with what
reluctance

It
to be the

sound.

seems
seems

European countries

of

to make much of an effort to de¬

fend themselves.
fltalin

where

aggression

all right for

were

action

take

to

may

It would seem to
that other points

questioned.
be telling him

»'im

fight

will

we

be

of

to tell

is advisable

it

Whether

the

For

on

present, he is doing all right.at
where we will not fight,
Dr. Palyi
is in China.
thinks

in

aggression

largely our fault.
that

assurance

is

Korea

Our repeated
had[no designs

we

China, would not attack China,

«en

etc., instead of making a good
neighbor out of Mao, merely conhim

vinced

mark,
China
<Io

an

risk.

Just what

mess.

now

China

in

tiot say:

And

Dr.

the

so

should

we

Palyi does

Probably like the rest of

he does not know.

%is

His idea of

iion

for

aH-out prepara-

an

super

a

bomb

-

blitz-

breig to deter Stalin from starting
or for quick retaliation

romething
In

he

case-

seems

should
snouia

vxe
we

be

to

the

me

for

that

We

onre
is
once
is

blitz-kneg,
the

piirnosp

materia"

cur

blitz-kneg

for at
tor
at

nrenarp
prepaie

propaganda

e.

reckless

so

«nnrl
good

ceems

It

should

using

truth

Cheir

friends,

that

your

"Chron¬

icle,"

..—i

j

analyze

We

might

recall

the

fact

Gtalin in 1921 tried to

€00,000

farmers

Valley

the

write

to

their

and

ors

their

saved

lives

in

behalf

Government, in
well

the

to

the

of

American

Relief

even

from

terrible catastroohe

were

j

uh

1 e 111 d i e catastropne
!

ic

has liquidated him.

We might csll upon the Russisn

f>eople

to

liquidate

his

upon

units

defeating

launched

surprise

a

by a
that

if

before

even

their

the

rulers4

death

of

'j

H. P. B. Jenkins

plans.
And,
plan which would almost

a

of

in

serious

such

fact

violates
violates

when

plan

a

not known to

are

be

would

challenge

it
it

that
tnat

s a y

valuable

mogt

stimulating

and

contribution to the free discussion
ciarification

d

n

America's

of

strategic problems,/ and that your
«Chronicle*» performed a valuable

public service in publishing it.

to

open

the grounds

on

of
or

most
most

the

ac-

In both of these cases, says Palyi,
the aggressors expected a quick

would

ver

was

Ver

open

said that

a

life.

^

it

the gates of any
mule load of sil-

We might promise

Ilussian fliers who

are

scheduled

to.eome this way with bombs that
f

they drop them

in

the Atlantic

and land

on

be

citizenship later

given

our

of

difficult

a

This

in

is not the

detail

shares they will

country.




m

our

a

affect

probable

effective¬

merely
questions which must

few

a

Let

me

be

correctly answered before we
agree to Dr. Palyi's plan of de¬
fense
by
threat
of
American
counter-attack.
First, do the

interests

❖

*

in

the

*

L. AULL

San Juan, Puerto Rico

Let

extend

me

to the author,
Palyi, and to you
publishing it, my congratula¬
tions on his splendid article in
Mr.

Melchior

for

issue

your

place to discuss

vital

our

world.

Falling
Trap?".

of any

ness

ask

the

confidence in

full

and cheap victory, and would not

have launched their wars in the
absence of that definite expectation. Now it seems to me that

would

DaragraDh-

those examples, together with the
case
of Japan>s attack at Pearl

run

of

Russia

are

of

Into

is

It

Jan.

to

good

some

can

think.

who

11,

"Are ' We

History's

still

know

Greatest

that

there

informed

people
I hope this will

be

widely read, and it should be
read by every legislator at Wash¬
ington.

■'*

-

-i

*

not

covered

#

*

,

de¬

own

FARRINGTON

common sense

and vision.

then the threat
counter

the

protect

by

W. J.

with

agree

their

fensive measures,
of
an
American

error

risk

of

masters

the

-

blitz

countries

proposed

W. E. COLE

new

Orlando, Fla.

Monroe Doctrine from being over¬

As

^

European, like Dr. Palyi,

a

by the Red armies, with con¬ who
* *
experienced the first World
sequences similar
to those now
War
"over
Russia 1S ln ine naDn: OI c
*
Harbor
can
there," and subse¬
be interpreted in an
occurring in South Korea.
nnttmg nrmed aggression upon
»
quently lived in most Western
Secondly, it is fair to ask Dr.
every
enuxeiy aixiexerii w«iy xium unn
* undefended country within
European countries, I find myself
nt those which are
suggested by Dr. Palyi.
Suppose Palyi whether he is certain that
.

ner reacn, except tnose wmcn ate
under the announced protection of
•

-td

the United States.

Russia intends
real war,

a

There-

by a blitzkreig

win

classifv

those

cases

as

his estimates of the

of

of

inat we ciassny ,xnose cases as

examples
t

t

to

tyrants

the

of

tendency

reach

to

completely

a

edcn

a

co

p

i

y

S^ncybetal SSTJ
.

th

Hiffieultv

.

in

American

an

effectiveness

counter-blitz

is

the

down
..

beyond awareness of the true realities in
Raq_
their situation.
In other word?,

line

n^rps!qiono

of

the aggressions oi uus
and/or her satellites canan

States.

cannot

Such

Monroe

a

feasible, because Rus¬
expect to win

"real

a

tvrants

in

war,

risk

the

of

provoking

an

situation

any

own

A

made

good

which

in

and

power

be

long

the

know

effectiveness

American

counter

-

of

blitz

an

against

may

tendency of misjudging the factors

either

or a

Indeed, how can even the
military experts actually

best

not Russia, before it is put to the test?
tvrantc he suhipot to thp fatal
ail tyrants be supject to tne iatai Meanwhile, is it not wise to re¬

stake?

blitz-attack

sur-

since tyrants are necessarily sur
rounded by "yes men,"

war" against the United States by
a

necessarilv

are

prestige

is

at

could

argument

in

this

support of
interpretation

ternative

their

al¬

of ' the
And if

^kdnterpretatSn

teacceuted

as

_

a
lightning war,"
sufficient to defeat

Rn^inn

hlit7irrei<*

,Hussiaa

bl tzkieig

against

America and a deliver an overwhelming counter - blitz against
Russia> ^ immediate retaliation
'for

3ttsck bv tho Rods' oithor

snv

Ameria

upon

included in

or

our

countries

upon

new

the

huge

Monroe Doc-

armed

forces

that would be required to fight
general
The

war

flect that overconfidence

novel

weapon

counter-attack

in

even

in

some

method

or

might

of

rise

give

free country to the same

a

mistaken expectation of quick and

decisive

victory

that caused

the

downfall of the Kaiser, Hitler and
the Japanese war lords?
Such

In
short, could
expectation of a quick victory as power!
*hey are ,to Pursue the long-run blind and untested faith
(and perhaps equally erroneous) overwhelming power of an

Pjaa ^ Jr/ln?

bankrupt the
States by cold wars. If a

sudden, though ill-advised, blitz-

'
R
6 . /pither on Ampr.
f«acK oy jtussia tenner on Amer
itself or on countries taken
under, American protection in Dr.
suggested new M!cnroe
,

ican

counter-blitz

be viewed

eral

take

us

importance.

In

of these considerations,

(3)

of action which Dr.

can

be

shall comment
weakest

In
on

this

on

sev-

letter,

I

only three of its

points:

(1) Dr.
may

challenged

grounds.

Palyi's

closer

a

look

the

let
the

at

of the free world
an

plan

by the threat of

immediate American

attack

rests

assumption

so

war

counter-

the

upon

that

counter-stroke
be

strategic

Dr. Palyi's plan for defense

the

would

implied

American

necessarily

devastating to the Russian

power

that the

men

in

fairly* be .called "defense by Kremlin, being hard-headed

threat
attack."

of

ler in 1941 could not conquer even
the English Channel.
The present

hysterical fear of America is not
of

direct

invasion

Russia—which
the

Eurasian

Harold
the

but that

soon,

already

controls
(of Sir

Heartland

Mackinder)—may

jeweler's

window

break

running

across xnid-Germany and seize the
jewels in the industrial workshop

of

Western

Europe, toward world

conquest later.
not

the

The

thickness

glass,

but

the

car

is not far

ter double the

A-bombs,

deterrent
the

of

police

knowledge

that

cars

than

a

Bet¬

away.

police

etc.)

is

plate

(B-36's,

thicken

the

glass.

Amer¬

against Russia

a new

and

more

dan¬

American

The analogous

countercourse

of

ists, would

never

putting Russia

run

on

the

real-

the risk of

the

receiving

However, while I agree with Dr.
Palyi that "Russia's idea is not
when and how to start World War

III,"

I

do

think

continue World
never
as

a

she

War

intends

to

II, which has

ended!

That may continue
relatively cold, cool or hot
temperature rising to

war—the
such

degree

thinks

present

a strategic plan offered by Dr. Palyi.

Palyi recommends for the United
States

most

on

that

will

not

the

Politburo

provoke

the

May I add in conclusion that
United States (or United Nations)
my comments and questions about
to drop bombs on the Kremlin.
Dr. Palyi's plan are not intended
to

utmost

a

the

illusion?

®v®nts

the

as

not
in

form of the Maginot Line

gerous

doctrine) is

of the normal kind.

course

general agreement
points of his thesis.

^

of

merely

in

Surely it is fantastic to believe
really accurate. What if we could
that Russia would/or could at¬
cripple Russia's war power only
tempt any invasion of America in
by a long, general war and with
the foreseeable future, when Hit¬
the assistance of all free coun¬

imply that I

with the
strategy.
On
the contrary, I would be glad to
agree

American

America adopt a better plan
than has so far
been
officially
see

revealed
menace

I

ever,

for
disposing
of
the
of Red imperialism. How¬

cannot

agree

that

Dr.

.

would open the gates of
any

besieged city.

solution

But how much weight

actually give to Dr. Palyi's

can we

misunderstanding of his
meaning, I have summarized Dr.
pal .,g
thesis
in
tbe
following

considerabie

At

through

maintain

Some thousands of
years ago

program,

tion that modern aggressors will Dr.
Palyi's
estimate
of
the
Mt. Vernon, N. Y.
"aggress" only where and when overwhelming
power
of
our
I am afraid Dr. Palyi is a voice
If
they expect to win by a blitz- counter-blitz?
they
should
crying in the wilderness. It's too
attack, Dr. Palyi cites the cases of either mistakenly underestimate bad
some of our men of
power in
the Kaiser's generals and Hitler. its power, or if they should have Washington haven't a little of his

at

♦minimum loss of

defense

our

do
soundly

now

gider that hig article constitutes a

Ought

a

are

military

a

cepted principles of war.
(2) In support of his proposi-

ruPtlng bfcrself through trying to light

themselves

is

itself

that> while j do not agreed with
hig recommendations, I do con-

trl.e^(ls and allies without bank-

it

problem.

basic assumption before it is actu¬

they

do

in

we

make

program which does not seek im¬

ably true to the realities of our
situation, then indeed we should
adopt Dr. Palyi's plan as the most

ally tested in war?

%vipe out their Russian masters if
has to be done, but that

it

to

must agree that if

we

while

one of the possible
that we must take into
frtalin Or the start of war.
W^e trine.
By following this strategic account ..in.' our^ strategic plancihould tell
the
Russian
people plan, America could protect her ninS, then the wisdom of our own
that we have the super-bombs to
friends arH niiip« without hank
strateSlc Plan becomes a matter of
♦.low,

And

that assumption were unquestion¬

economical

strong
enemy
to
the

access

tion.

a

re¬

guard
for

rear

counterattack
in

of

case

no

commander

commander's tactical

exist

gyD? £aly?
m a v

aAny

.

RtAlfn
filalin

his

those conditions

the

nrnnncpd

i-e->

Which threatened them."
whom

field

ican armed forces.

necessities

saved

based

name

adoption

_

death, and whole vil¬

lages and

iu

the

mentioned below, nevertheless the

Before deal.

which would be "adequate to the

,

in

pajyi

raved from

Anri

this

all

"economy."
On the strength
of that same assumption, Dr. Palyi

possible counter-blitz
launched against Russia by Amer¬

that
of
maintaining only that
minimum amount of armed force

I,.

recommend

strategy under certain conditions

terly unselfish efforts of the ARA,
millions of people of all ages were
cities

of

Although the

preparations.

to build up a
"main body" of armed
at home—and he would

bmtygof befnfcon^f

fare-

"Thanks to the tremendous, ut¬

the

these

trying

stop

counterattack
upon tnis interpretation be accepted as
miscalculations may not be en¬
Russia's most probable
as^aT o^
course of action, therefore, is that J?mty
being correct as that ol tirely confined to tyrants. We
can
still remember when many
o£ undermining the American fered by Dr. Palyi, then we^must
economy through cold wars. The conclude that the rulers of Russia people, even some with military
proper "armament policy for the are •'V/^aS ^ely to launch a sud- experience, believed that we could
United States in this situation is ^en blitzkreig m the erroneous defeat
infantry attacks by
air

Administration, said:

:

believe that

have

and

sending to Dr.

American

Soviet

official

an

the

forces

curtain,

certainly be disastrous in the field
might possibly "work" in global

™n

We

article,

that

Nevertheless, I

us

iron

the

a copy
of which I am

and the rulers of Russia will never

chould recall the fact that Kamenev

this

letter,

sia

September,

Palyi's

sound

This

enemy, especially
had
unrestricted

Palyi's
proposals and

United

because

up

and

<

Doctrine is

they would not
farms; that from
1921, to July, 1923,
Hoover fed these 10,000,000 farm-

tfive

is

impregnable.

attack

not go witnout tne certainty oi an
"irrevocable counteraction
by the

Volga

it

States cannot

impossibility.

and

without thp certaintv of

starve!/10,-

in

certainly
United

Services

Dr.

powerful

lying entirely

Dr.

sia

that

regards

only his rear guard and a
small reserve- for counterattack,
meanwhile notifying his enemy of

success

appraise.

laymg
j
s

x

Armed

on

As

field

successful

to

me

w h l c h

democracy out of Russia.

<a

Chairman, House Committee

near

common

fhould
cnoum be
oe the
for tne
the people
people
tne signal
signal lor
to
overthrow
their rulers
and

Congressman from Georgia,

all of his flank guards and most of
his main body, keeping
in the

for

stimu¬

lated

to

cnemv
is tne
the poimmro,
Politburo
that tne
the
enemy
is
tnat
death of Stalin or the start of war

make

and

tries?

the

J

article

except those which she can expect

might start out by convinc-

HON. CARL VINSON

this

of

"islands of resistance" in countries

and

Thursday, January 25, 1951

.

counter-

strength

"islands of resistance,"

disband

to

mander, I know of

issue of

to avoid the risk of

and

tr"th

resources.

invitation

Palyi's

nr

on

1951,

easy

set-up that could be taken

a

without

«>n

were

we

published

in the Jan. 11,

f»oints

China's

of his

mortal

a

the

.

pregnability for our land, but
maintenance of mobile assault
which does seek a sound posture
units for immediate counterattack would have us violate most of the
of defense capable of
rapid expan¬
t«Are We
FalRng jnto History's is always an important part of the accepted principles of war in our
sion to
meet aggressions
which
Greatest Trap?", which appeared battle plan of a good field com- strategic planning
and prepara¬
your

comments

fio slow on masses of

them

JENKINS

B.

University of Arkansas

camping

ore

P.

all

On

advance guards,

bodies

ward

such

of

blitz.

assumption, Dr. Palyi would have
us abandon our preparations for a
general war, i. e., have us stop
maintaining and reinforcing our

commander

send to their homes all of his for¬

Professor of Economics,

invitation

the

a

H.

this

defending—all

a

that

Falling Into
History 's Greatest Trap?"

end

surprise attack
strong enemy would be for
a

.

Palyi
plan

has

we

given

uncertainties

taken
in

us

the

strategic

need, in view of the many

into

that

account.

have
I

to

fear

be

that

"Pearl

rather

Harbor"

that would
than

might in

in

the

near

help America

hurt, by uniting her

a

common

cause.

/ And

Stalin is not likely to oblige that
way."
V
;
:
Asia

is

separate

a

vision

and

be the main Russian objec¬
tive rather than Europe, because

may
less

dangerous

to

the

Kremlin

occupants, but the European pic¬
ture which I

see

in

Stalin's

eyes

is this:

1

RUSSIA

adopting Dr. Palyi's plan, while Poland

we

might possibly avoid the trap

of

economic

should
in

No

future:

soon

Red

need

keep

traps.

a

us

exhaustion,

we

(and
East

find ourselves caught

slave

labor

strategic
out

of

v,

camps.

plan

that

either

of

v

We
will
those

Czechslovakia) = China
Germany
=
North Korea

Russia declares for
of

Germany

occupation
States

armament.

in

troops.

stresses

Germany.

The

West

That

diSfrnamenl

withdrawal

and

German

means

The

East

of

United

civil

re¬

war

German

Number 4980

yolume 173

to

prevent" West

German

rearma¬

United

the

Would

ment.

States

in monetary

they have "guns and butter"

spite of universal military train¬

tion.

ing

no

for

stand

generations.
Swiss

the

;

army

(I under¬
mobiliza¬

29

(457)

The Commercial and Financial Chronicle

.

the North Korean)
unify Germany and

(like

army

marches

.

.

Soviet
found

means

nate

i.e.,

instability,

Tne

inflation,

infla¬

system

to elimi¬

way

a

in

even

has. by
It

peace.

scientists, seeking A scientific utopia and freedom
Projects as from want was its outer frame¬
a
It waa
way to abundance (at least for work—its false pretense.
them and their Science Founda¬ science that set the stage for all

has

made

our

Manhattan

abundant

the
naively
generoua
contrary, tried to meet tion) into convinced socialists or this—for
self
like North Korea?
If East Ger- population of 4,000,000.)
styled
communists! appeasements at Teheran, Yalta
But then its effects by much the same sort even
the
Swiss
Republic
is
united, of measures here threatened, This latest pressure-group lobby and Potsdam, and the disbandmany is defeated (like N. Korea)
the Polish (and Czechoslovakian)
"speaks softly and carries a big summed up by President Truman offers, indeed, an abunaance of ment of our armies and substitu¬
as
tne "police state."
It is science that
By such everything except common sense tion of ECA.
army
marches to protect its stick," and leaves the world alone;
boundaries
(like
the Chinese). instead of bellowing loudly and means it has eliminated one of and moral stamina. This was well owes, not us alone, but humanity
Russia still keeps herself aloof.
waving an umbrella—as has been the greatest dangers in modern demonstrated by Lord Stamp's (including especially that seg¬
ment in Korea), not merely itu
Then, would the United States the custom in Washington, D. C. war, namely, lawlessness in labor retort to their "optimistic'' view
"The
Frustration
of apologies, but a reversal of Mod¬
be
at
war
with
Poland
(like Upon that maybe we are agreed. strhe, by eliminating strikes as that only
measures
of collective "bargain¬ Science" (a book by well-known ern Materialism (see "Philosophy
China)?
And should
we
drop
"liberal"
scientists)
by for the Future," Macmillan, 1949;
bombs on Poland?—or on Mos¬
ing."
With this advantage (for British
ALDEN A. POTTER \
cow?
In any case, Russia would
prevents the American counterpart of Brit¬
war) their problem is to so man¬ "monopoly capitalism"

then

(UN)

bomb

Germany

East

tion

potential

is

750,000

from

a

has,

on the

-

,

the

force

United

States

(UN)

Bethesda, Md.

to

drop the A-bomb, or other bombs,

Thus the United States may
into position to

first.
be

maneuvered

starting World War (as
wars), so that

appear as

distinct from local
Russian

the

and satellites

people

That auto¬

support the Kremlin.

matically would quiet
referred

unrest

"They

again:

of the

some

To

to.

do

.

.

We

do

are

not

agreed that the Soviets

want

but that
they will press to the limit they
think they can get away with,
short of involving the USA.
But,
like Hitler, they may miscalculate,
like

and

critic,

war

Miss

soon,

Margaret's

receive
as

nose!

damaged

a

I cannot be so

Remember Korea.

naive

music

to believe that the Soviet

military power was built for noth¬
ing (or for defense—from whom?)
that

—or

it
threat to support
their satellites in

powerful

a

as

they will fail to

and

encourage

aggression.

Palyi

Dr.

use

abso¬

is

Palyi presents

age

far better

a

foreign policy program than that
now oeing pursued.
He thinks, in
effect, that we should sit tight lest
into

tionary situation

Greatest

methods

don

can

stalling

into
war¬

This

the

not

t

e

the

attrition

finance.

remodels

to rule
i.e., the

Potter

have

it

nothing;
is

failure

the

with

becomes

out socialistic
elimination of
or "monopoly."
be approached,

to

idea that the

that

Before

"experimentally"

but
Alden A.

otherwise

stop by military meas¬
(and obviously no one thinks

been

V"

Y',';

;■

Eu¬
rope before June 25
.?" Well,
perhaps because the Kremlin did
overrun
.

want

not

(in

"wake

to

Russia

before

1952?).

up"

"And what

waiting for now? .«/
is

no

sign

ready

seemed

Korea

To continue:

America

was

are

socialism),

article:

of

logic

tion

having increased.

had

any

expenditure
defense"

"civilian

*

.

crush

us
.

activity for military preparedness,
and
to

there

was

no

precipitate

a

Korea

Russia and

guise for
of

crisis.

Maybe

real blessing in dis¬

a

For now

us.

decision

Politburo

need for Russia

great misfortune for

a

was

is

at

matic

immunity).

for

to do so?

the hour

hand,

as

us

of
for

veterans

the

an

strike

times

to

Our

at

critical
to

moments

provide

so

determine the effectiveness

could
of an

a

psychology be

mob

at

Failure

war.

disorders

other

or

lest

resorted

in

namely,

provides,

system of
law and
community.
This
iron-handed
control

in every

means

all

shelters

-

strong home-guard of
set to assure what the
a

Constitution

over

not silly

Is it

bomb

than

Better

would be

order

If he

.

on

they

this
would be the#12th hour. .
." I
don't agree, and I don't believe
the danger has yet passed.
Until
the past few weeks, the United
States has shown no sign of real
to

means

is imperative has
tersely stated in "Price
J. Jervis that it
"It is painfully

democracy is at present not
merely uneducated, but misedu-

atomic attack for the
domestic

own

enemy.

discipline and

morale are, as
surest

way

Dr. Palyi says, the
to keep the Kremlin

attempting

from

a

blitz-kreig in

Europe with the hope of crushing
an

inadequate allied defense there

and

creating panic and confusion

here by following through, as we
did
in
Japan, with a
bombing

must

gigantic

sees

be

to

strike

1951

stop the war of attrition by other
than military containment on the

the

long Russian periphery where it

must

answer

year.

One

year

America, and it

be deferred

one

will not bankrupt
seems to me that

"mobilization potential" this year,
and
"readiness
potential," with

will cost

us

so

much

more

does the Soviet that it

they,

would

could not

than it

is we, not

that

;

atomic energy)

sustain

a

(of

mastery

is lodged the one

living everywhere."

of

and

Contrast

with

"Rockefeller

the

paradise

fools'

this

restraint

the

expressed

Foundation

by
Re¬

(p. 26): "Inherent

systematic efforts to pro¬

our

welfare

the

mankind

of

there may

be an assumption that
by taking thought we may add a
cubit to

stature.

our

.

.

.

Some

cultured

living

in Europe?




Yet disorder

can

due

cling,
to

of

industrial

conditions

of

—

im¬

the
recanted.

bureaucracy

must

of

Then

only need

then

and

fully

be

we. no

longer fear that the Kremlin can.
wage

successful

a

cold

war

<

by

boring

which sells itself

it

before

betrays
that

"ideals"'

down the river
democracy for
welfare-state

its

but

reason

no

in

grounded

are

hypocrisy.
The
world is finding socialism to be a
and

Only our own scientific
Utopians are preserving it as the
nidus of subversive revolutions to
flop.

appeased and as something to

be

glorifying the

fight about while

Utopians for their patriotic

same

provision of the
destruction.

(and profitable)
weapons of mass

1945), the

learned

Kremlin's
defeat¬

shall

our own

Where do

ism

would be swept

—with the control of the speed

common

earth, of its revo¬
lution about the sun?
Shall we
also learn to control the chain re¬

not rest

on

this

score

the

aside and the whole morale of the

intelligentsia

who

are

primarily

for the Utopian fal¬
lacies of socialism, cquld thus be
responsible

shifted

"overnight" to the side of

navigate the tides we
control them?
t
.

to

also

.

think

we

we

shall stop
of

rotation of the

action
all

in

our

the

life

sun

and

whence

.

comes

indeed, to goeth before a fall.
All our ef¬
side with
any
such
anarchistic forts will
promote only disaster if
laissez faire as is presented by
they are not done in the humility
the Marxian ideal of a fully "with¬
appropriate to our
ignorance,
ered" state, or the similar Keynesnever forgetting that we have not
ian
Utopia
of
a
decline
in made the eartn or the heavens
capitalism—but

interest

arrives

to

to

zero

when

facilitate

paradise

savings

This

well ^suspect that
the Politburo looks with cynical
one

tions

may

even

that
to

can

denominator

that

does

politics, but on

power

on

the conduct
uncompromising
diplo¬

truth, is essential in
the

of

macy

of peace.
*

utopia is impossible,
their Sacred Cow, that

HON.

O.

*

*

,

have

read

E.

science
to

see

to

a

that

trouble

is

policy
through

no

differences

conclusion and
conclusion
on

then pursue
into others

though these may tread on
the toes of their Sacred Cow.
It
even

seems

fair

to

pressure group

its

reverence

lately the Gordon Gray report, to
the President, presenting itself as
an
"endless frontier" capable of

we

with Melchior

heartily agree

Palyi in his article entitled "Are
We Falling Into History's Great¬
est

Trap?"

The "Fair Dealers" have become

hysterical. But what can we ex¬
charge that as a
pect from men hopelessly me¬
science abandoned diocre, even below the average in
for the truth and
ordinary- common sense!

joined the damagogues when it
produced the Bush Report and

what

I

C. YOUNG

Oberlin, Ohio

that, organized

developed

has
these

Palyi's articlo

Dr.

interest and I agree!

with great

•

The

ARMSTRONG

K.

Congressman from Missouri
I

above it."

ad

of

that

it is not in

isolated nationalism that we
sit
tight or stand pat. , A

any

not,

naive, money-free theory
price level is what the Soviet
has attempted to validate; but it
has failed so often and so largely
-

rather than of power,

Pride

power?

,

Kremlin

the

hope is implicit,

such

limited

the last bastion of/Capitalism and

plicit in

falsehood

long war, but would be caught in glee upon the American delusion
disorder.
objectives in domestic
Only
then that the way to global law and Utopian service to mankind, even
into the globaloney of Point Four,
future years, might save us from could a bombing coup de grace order
is
by
such Point Four
such
a
It is plenty and "perfect" competition all of which is implicit in the
trap.
But our greatest become good Soviet tactics.
bureaucratic paternalism of the
danger would be to be lulled into in this context that we cannot as robs price of any meaning and
How can we retires a monetary-profit system UNO with its might-makes-right
complacency again in future years, afford to sit tight.
implications. That this would be
after
the present spurt, as has change the context so that the of
competitive
trading to the
no
step toward world peace was
happened before.
Then there "Voice of America" will spread limbo of a primitive past when
foreseen clearly by the "Chron¬
might be another "Pearl Harbor." itself at no expense at all just everyone was a "chiseler" and
icle" on June 7, 1945, when it said
because it is the patent truth and
science, "the endless frontier," was
Finally, the Swiss have "tried
editorially: "Neither agreements
meaningless jumble of being frustrated by
to make themselves impregnable" not a
the profit
reached
at
San
Francisco
nor
"facts" supposed .to offset Soviet motive from
for
several
hundred
years.
Is
fulfilling its self- mechanisms there devised will
,■
*»"* '
r
Switzerland a "garrison state" or lies?
appointed mission as & Sacred
have much bearing on the course
a "bankrupt state" or a "bankrupt
The danger^ of ^nttapment lies, Cow that could ne^er b£ milked
of world affairs or in the mainte¬
garrison"?
Is it not the oldest indeed, in tlib bMnent- of truth, dry (and so permit inflation)! .
nance of world peace."
It is, indeed,
true democracy—in fact, the only not in comrhtfnisnv (or socialism),
their bitter-end
It has proved worse than that;
true democracy today?
Is it not but in the hope' to - which the resistance to any and all sugges¬
defined

communistic paternalism

"Chronicle" for July 5,

or

So to the question "Are we fall¬
ing into history's greatest trap?",

The Utopian, materialism

control.
—

justification
for
cynical hopes and

created,

in

ley (specifically in the case of Dr.
Joseph Needham, original head of
the science section) is now out oi

The betrayal of truth penetrates
if not ex¬
plicit, in socialist doctrine, but it beyond our own national welfare
is implied also in the dominant and prevents the moral and intel¬
attitudes
of. American
society. lectual atmosphere necessary; to
understanding
and
'Planning' and 'Control' are the worldwide
common
coin of American poli¬ peace through law and order, i.e.,
this cultural lag in modern indus¬
tics, American business, American through what ultimately must be
trial society.
By finding an actual education and American science, a world government and not a
solution for it, through submitting
despite the concurrent emphasis nationalistic federation like UNO
it to careful, open-minded study
upon
liberty, individualism and to adjust imperialist disputes, each
devoid of traditional predilections
democracy. The bombastic phrase, by negotiations having no law but
(the writer has attempted to pro¬ 'control of nature,' is a byword of only the compromises of power
mote such study in "When and
the literature of the day,
Do we politics to govern the outcome. In
How Do
Figures Lie?" in the mean that because we have the final
analysis,
of ideology

forces attack, taking a chance (which we
libitum and so assure an adequate
on
retaliation
and. they did not-incur)
'"'capitalistic"- (but in a profit- and
which
could
not
destroy Soviet
gradually
interest-free
"capitalism"!)
in¬
lose relative advantage.
No, the discipline while her armies were
vestment solution for all problems
crisis year was not 1950; it is 1951. intact and victorious and prepared
in life by removing poverty and
If 1951 passes without USA and to prevent any large success by
inflated
prices all at one fell
USSR clashing directly, the pic¬ our bombers.
swoop of unlimited supply to sat¬
ture should be much clearer.
Our
real
problem is how to isfy all demand!
about

"In

mote

republican

There

.

.

ing

great hope for a decent standard
eco¬

personnel which organ¬

ized UNESCO under Julian Hux¬

from within and taking
advantage of the naive scientism

is always

certainty

munistic

UNO,

for social¬

more

so

point out the truth that the
"cultural lag" is a moral, not a
to

as

(which with Bishop Oxnam
puts the material cart before the
moral horse by saying that law
and order depend upon better liv¬

called

the

Utopian material¬

ism

in

safe.

Russianimobiliza-

of

this

view" for 1948

.

herself

illustrated

the

for),

can

outstrip anything that technology
can / produce.
(It is
doing so
right now,, and furnishing proof
of it in Korea.)
Gerald Wendt,
editor of "Science Illustrated," has

obvious that in economic matters

are

he ignores

population

that

going to initiate such
action, buc will reserve it for
retaliation which may never be

we

free

cure

lutely right, therefore, in assert¬
ing that we must define exactly each and every city in the nation cated; not merely, like the African
."what we will fight for,"
and. is nonsensical; for the Kremlin bushman, unable to count above
/"quit waiting for the next Rus¬ plainly does not intend to stage a five, but dogmatically convinced
that five is the sum of two and
sian
move."
But
is
Dr.
Palyi blitzkreig while the cards
are
The fact is that neither
premature in assuming that "the stacked against success for them. two."
laissez faire nor a socialist state
Soviet rulers are of the peace- They
are
not building bomb¬
has
presented any evidence of
loving kind"—partly because they shelters (or a UNO skyscraper to
in dealing with
have acted hitherto as they have serve as a Trojan Horse of diplo¬ being effective

"Why did they not

proof

plain

Control" by F. R.
deserves a quote:

billions

done?

ego

atomic technician that

theory
so

leaving

other,

ain's "Frustration of Science")

insufferable conceit material, lag in general welfare.
It is not enough that the com¬
so
inflated in the

an

an

there

The fact that revolution in
nomic

for

standards, or "belly before
brain in brotherhood")
by this
fatuous assertion in a "Harper's"

(history

and reason.

cannot

ures

will

istic

being
used
by
the So¬
viet, which
we

The winner

accomplished

proves

strategy
of

case.

remedies,
private property

fare to checkm a

be

of

necessary

and

atomic

highly

are

that side which

be

about to aban¬

plunge

systems

but it is not enough

the

out

and

Both

will

are

and

tics.

;:the system to take it out of the
sooty
category
of
inflationary

How ever,

tactics

be made to

paraaise they have prepared!
his advice went in one ear

play

black in either

Trap."
we

can

the

But

collapse into anarchy by our tac¬

that the pot should call the kettle

"History's

unless

face that

to compel us to

as

danger before their similar infla¬

susceptible;

stumble

we

quote

Russians)

(the

everything they have
when attacked (a fact which is
worth remembering.
."
with

fight

Dr.

have

taken

into

our

gates is a Trojan Horse in war!

Coleman & Fagan
Coleman & Fagan,

City, members of the
Stock Exchange, will
Jack C. Louis, Exchange

New

York

New

York

admit

Admits

2 Broadway,

member, to partnership on Feb. 1.
Mr.

Louis

individual

has been

active

as

an

broker.

floor

McCambridge Admits
Partner
(Special to The Financial

Chronicle)

MANITOWOC, Wis. —Lewis J.
McCambridge,

formerly

proprie¬

tor of First

Securities Company of

Manitowoc,

803 York Street, ha9

admitted

Edwin

rmrtnershin

in

J.

the

Scholten

firm.

to

30

(458)

The Commercial and Financial Chronicle

Continued from

jirst

in

creases

page

interest

the

government

borrowed

rates

on

funds

has

hold

nonbank investors.

automatic interest-bearing extension; and three, exchange his bond

As part of

the

a
real or genuine effect in Treasury Department's endeavor
cutting down the volume of pri¬ toward this end, the Savings Bond
vate borrowing and in retarding Program has been of outstanding
inflationary pressures. The delu¬ value. It has been both dramatic

And the Interest Rate
American

our

ment and

form

of

aid of the most able financial and

govern¬

American system of

our

economic

free enterprise. It is in the spirit
embodied in these principles that
I should

today

like

of

some

in

in

fense.

ficult

of

Trade

our

tion

grateful to the Board

for

affording

this

me

now

tiny of
cided
in

the battlefield—nor

the

sometimes

ardous

and

in

the

production

and

in

keystone

and

is

emer¬

upon

factories

fields—and

of

depends

the

tiveness

national

any

much

gency,

equally haz¬
paths
of

difficult

diplomacy. In
work

even

of

economic

the

financial

Today

most

emergency.
For
within less than

the

on

Be

is

President

Disastrous

most serious threats

which

threat

a

The

and

of

essence

could

is

gram/today

state of

a

decade,

we

are

the

which

the
need

the

presents

to

same

the

and specific

The effects of pronounced price
are

directions.

One of

diffused

in

many

sacrifices.,

the most

dan¬

price

there

a

is

and

portance available to

itself is

handicapped through both

ing inflationary forces under

the

direct

and

forces

seek

to

days

are

of

aggression

which

destroy us. Very serious
ahead of us. The varnish

Soviet

pretense

off.

Soviet

to

has

peace

imperialism

is

threatening the structure of world
security.
We have no time for
illusions.
must be

and

We

fully

must

alert—we

of the peril—

aware

know

must

we

be

wherein

face

we

menacing

more

is

all

the hands of nonbank investors—

enough

groups and communities by
tion.
We
lose
productive

viets

have

gems of

their

individuals, insurance companies,

years

very

us

keep inflation in check, then,

of Federal securities held by com¬
mercial
banks and Federal Re¬

ciency.

Inflation

feeds

the

is

own.

the

first

in

need

infla¬
effi¬

the

defense

our

This

consumers.

substantial

part

means

both

of

that

a

business

The
Moscow
plan is one of and personal incomes must be di¬
arousing hatreds — nationality verted from the consumer mar¬
against nationality, class against kets. The alternative of allowing
class,
creed
against
creed —to prices to move higher and higher
bring about mutual destruction of would vitally damage the defense
those peoples on whom they can¬ effort.
not

count

to

play

Here

game.

the

Moscow

Without question

in

effec¬

most

a

America,
the tive overall fiscal
measure
for
aggressors,
through
avoiding the evils of deficit fi¬
their
agents and
propagandists, nancing, and
thereby combating
seek to stir up suspicion and strife
an
inflationary spiral in prices is
Communist

us—and

among

to

so

dis¬

create

unity.
It

is

their

theory

that

if

a

democracy is subjected to enough
of their propaganda of
confusion,
its people will be unable to act
swiftly
and
confidently Mf
attacked.

A

first

must take in defense

strategy,
through

the

is

to

see

smokescreen

to

and

their

meet

we

against such

obviously,

propaganda,
to

which

step

of

threats

revenue

in

tional

itary.
trated

energy

this goal.
we

needed

are

Yet, at the

must

concen¬

maintain

to gain

time,

same

the

basic

bility and productivity of

our

sta¬

do¬

economy.
Public policies

today, in every

area

of domestic

endeavor—fiscal

and

otherwise

must

signed
ews

as

of

to

—

be

strengthen

so

the

de¬

sin¬

our

productive power. We
plan in such a way as to

must

avoid

..any

measures

well adapted

specific

they

purpose

undermine
American

—

may

—

however

seem

which

ability
of
economy to meet
demands

being made

upon

a

would

the

tremendous

to

which

Revenues Alone Insufficient

policy

financing needs of

government.

sponsibilities

To

While adequate

fulfill

these

adequately,

it

our
re¬

is

necessary to have the counsel and




revenues

are

an

essential safeguard against the de¬
velopment of inflationary tend¬

encies,
alone.

they cannot do the job
Measures for allocating es¬

sential

materials

adopted in order to

have

been

curbing
such

inflationary
price and

as

under

You

creases

be

will
in

ernment

vinced

use

that

will

and

soon.

securities

rates
as

on

there

that

rationing by

Treasury
a

is

no

policy

means

of

is

cities

On the contrary,

of

small

in¬

Almost

-

at the annual

year ago,

a

of 'tiyes with respect to the refunding

there > cussed

representatives

by

the

of

war

scar-

Treasury.

were

over,

ence,

as

restrictions

Following that confer-

of the Treasury and to give time
and
thought to the
refunding

standing of what the Treasury has

tion

during the

by volunteers in bringing the
merits of the Savings Bond in-

measures which would be in .the
best interests of both the. govern-

should; be

vestment

ment

achieved

in

postwar

period.

this

lack of suffi-

a

area

It

pointed

out, therefore, that
of specific Treasury

result

management

public.

a

debt

As

by private

dollars,
that

peak

been

cline

in

accompanied
the

commercial

reached

of the
This activity

1950.

it is

a

de¬

of

the

the

security holdings of the commer¬
cial banking system have dropped
nearly $10 billion; and approxi¬
mately $4 billion of this reduction
took place during 1950.
The

importance

this

of

This

be

kept

minimum.

:

at

which have

in

the

and

cent months.

of

savings

ment

financing

actions

that

the/govern¬

be

and
taken

refund maturing "E" bonds.

the
to

The

is the rate of interest that

the

and
,

new

borrowing

I want to take up each

of these? ,tv/o questions in turn.
A moment ago, I stated that an

important anti-inflationary action
could be accomplished by placing
the largest possible proportion of

have

we

So

it

iong-term Treasury bonds is
and equitable rate—to our

the

this last fact that led

was

conclusion

on

our

many

to

part, after
individuals

ings

Bond

War

II

a

the

this

is

World

effort to enpromotion of thrift.
major

same

to

us

after

Program

as

conclusion

that

that

announce

the

Bond, in its present form, to
a Defense Bond dur-

which

ernment

popular form of savings.

"E"

ing the mobilization period. The
aim now is not only to promote
thrift,

but

act

to

inflationary

force

;as

an

and

ship of the public debt.

anti-

to

further distribution of the

financial

picture;

will

com-

the public as

,

The first is the place

in

less

was

Treasury will continue to offer the

a

re¬

the

as

good program,

a

to

help

owner-

the

As you

know, beginning in May
this year,
a
portion of the
Savings Bonds bought during the
war
years
will mature.
While
of

of the holders of these bonds

some

may

desire to cash them
it is our belief

turity,

will

desire

to

upon ma-

that

the

continue

their investment in United States

Bonds.

Therefore,

the

Treasury is adopting the following
plan

for

bonds.
choice

he

so

handling

the

The holder may
of:

one,

maturing

have his

accepting cash if

desires; two, continuing to

fair

a

gov-

borrowing ;the
of

purchaser
to

and

money,

who has to pay

the

The

2V2%

taxpayer

the interest on the

borrowed.

money

;«

rate

H

interest

of

long-term .government
is

an

on

securities

integral part of the financial

structure of our country.

the

past

which

we

made

and

war

During
10 years—a period in
fought our most costly

ties—the 2M>%
most

extensive

peacetime activirate has become

a

important influencing factor

in financial

jt

most

a

reconversion to

policy in the country,

dominates

the

government,

bond

markets—

corporate

and

mu-

nicipal.Moreover, it dominates
the operations of financial institutions.,

already

,

is

government bonds who is lending

.

elsewhere in

bonds

—

m0ney,

leads

-

community

soon

that

believe

I

becomes readily apparent that the
Savings Bond is, in fact, a very

It

been given extensive

consideration

outstanding

courage

wellbeing of the economy that the
inflationary potential of commer¬
assets

As

Congressional : legislation is completed, full details of
the
extension
'
Savings
Bonds
Program will be released to the

It

and business groups, ;that the
Treasury should continue the Sav-

nificance at the present time when
it
is
vitally important
to
the

bank

operative effort.

.

the

reduction in the money supply i of
the country holds particular sig¬

cial

re-

scare-

The

necessary

adopted

consulting with

can¬

not beoverestimated.

you

public.

It

anti-

inflationary accomplishment

in

result of the

percentagewise than other
parable forms of savings.

same

But the government

now.

increases

were

as a

bondholders,'

the

which I have outlined to
today is the result of this co-

outbreak of the Korean crisis.

amount

Three years
was

billion

a

and

program

.interesting to observe in this • Now let us go on to the subject
connection that the redemption of
-of interest rates.
It is my view
"E"
Bonds—in
relation
to
the
that a 2%% rate of interest'on

banking system, which
postwar lows during

public debt

fact, in
just ended, the

buying immediately following the
is

new

the last half of 1950.
ago the

by

holdings

of

matter

a

the

of

notwithstanding the fact

there

demptions

the last half

during

calendar year

has

all-time

an

attention

by three-quarters of

rose

substantially since the end of the
and have reached

the

volume of "E" Bonds outstanding

nonbank investors have increased

war,

to

the calendar year

policies, holdings of
securities

government

as

programs,

credit

.

however, the "E"

to be

seems

Savings

tangible

.

Bond total has gone up every year
because of the organized promo-

There

refunding

con¬

gram's entire history.

of

Most hf ^kxf iSavmgs Bonds were fully dis-

that

1945

soon

as

powerful

the

effectively controlling

The

System,

heavy cashing of Sav- Federal Reserve System and ;the

a

and

end

in',the. total

in

sure

inflation.

gov¬

in¬

Reserve

hostilities that five. Fiscal; Agency Conference held in
would be a : $A-Sah» ^raftcisco, -various'alternaT

a

Treasury is going to pay on
long-term government bonds in

of

one

were

majority

not

Federal

cifent public knowledge or under¬

in

weapon

second

have

I

of fractional

interest

that

evidence

adopted

note

measures of

inflation.

tendencies,
controls,

wage

consideration

the

there

increase

ings Bonds
is

reached- after long
deliberation
and
extensive
consultation,
Among those who have given- us
the benefit of their thought and
judgment are representatives of

other groups and individuals
continued to meet with officials

.

priority
There are two other important
military needs without in¬ matters
relating to debt manage¬
creasing the strain on the price ment
policy which hold particular
structure.
Selective credit con¬
interest at the present time and
trols such as
by the Congress last July are also
of definite help.
Other measures
of demonstrated
effectiveness in

predict at the

later

would be

assure

those embodied in
the Defense Production Act
passed

to

combating

program

eral securities structure have been

v.'

outstanding "E" Bonds.

our

included the

in the formulation of fiscal
to meet the

present, I

necessary defense measure.

assuredly

it.

the

na¬

higher
taxes — for
themselves, as well as for others

the

Secretary of the Treasury
far-reaching responsibilities

But

much

very

are

The

has

danger like

the
are

taxes.

unprecedented

certain that all groups of our
population will soon realize that

for

mestic

heavy

of

am

a

spiritual, economic and mil¬

Determined efforts and

time

a

solid front of strength which is at
once

enables

This

These decisions with respect to
the refunding of Savings Bonds
and their future place in the Fed-

would have been rash

one

War II

billion

Banks.

serve

as

welcomes

one

lies,

with

which

system

the government to pay its current
bills out of current income.
No

—are a

their

expose

a

no

savings banks, and other
investors outside the banking sys¬
tem—and reducing the proportion

fires of controversy.

of

a

for

in

mutual

the

strate-

some

is

pro¬

World

the

added

toward

securities

to all outstanding
they mature, and

as

which has d™e su.ch a magrtfficent job in facilitating the smooth
functioning of the savings bond
noteworthy accomplishment— mechanism throughout the Ero-

profits. The defense burden is in¬
equitably
distributed
among

because

of

nature

debt management

Federal

of

apply

Bonds

billion total of outstanding Savings Bonds, nearly
$35 billion is in "E" Bonds.
This

placing the largest possible
portion

immediately,

will apply by right of contract to
new Series "E" Savings Bonds
that are issued.

through

...

requested

Of the $58

program which is directed

of : the undertaking.
As we transfer a
campaign great portion of our productive
which the aggressors are waging.
power from
civilian to military
This campaign is typical in most
output, and so reduce the supply
respects of all the campaigns of of civilian
goods, we must put
imperialist dictators, but the So¬ brakes on the
purchasing power
sinister

a

done

on

c'ur-

Bonds

all

sold Savings
85,000,000 pur-

over,

chasers.

con¬

Far-reaching inequities arise from

To

danger

influences.

That is

"E"

who : have
to

the inflationary process in the un¬
even
distribution of income and

hazard lies.
The

indirect

trol.

is

be

will

it

and
con-

The real volume of the

however,

E

exist-

taxes

Once the plan is placed in effect,

are

unteers

for keep¬

us

of

,

Bonds

im¬

great

will

main

the generous efforts of those vol-

rises,

wage

of

weapon

the

efforts

time, money and into
the .promotion and
Savings Bonds,

program.

work,

revenues

controls required tor

curbing

in

Series

on

The

paying

of

rently or at maturity would be
retained. Necessary Congressional
legislation to authorize this option

only about 500 paid
employees in the Savings Bond
Division of the Treasury.
These
employees plan and coordinate the

if our
willingness

necessary

due

volunteer

suffii-

that the aggre-

so

after maturity.

option

interest

in-

program

business. groups
organizations who have

There

These

economy

mutual

is

the

sales of

de¬

ing

financing.. The

selling

one-half

rate

a

return

years

in achieving this remark-

genuity

be met without

can

the

to

situation

War II

and

seven

interest at

extension would be limited to 10

billion

individuals,
all

requirements

Along with adequate

instability

pub¬

been

comment.

no

have

make

World

tremendous

tributed

defense

know

$10

I

for
the
10-year
period will be 2.9%
compounded.
The term of Ihe

Savings Bonds outstanding
today than there were at the end

to

mands

about

an

*

-

cient thereafter

more

the
only

part

revenue

inspiring to

are

record

damage

Our defense pro¬

really

there

able

gerous results is that mobilization

worn

!

noted,

as

is

volved

citizens

stability

It

that

In

'

first

the

years and

extension

largely of

Construction of many

of all countries.

our

economic

for

gate

directly necessary to the defense

requirements

this

on

approximately 25% of the/'entire

effort.

The

dra-

today, the total of outstanding Savings Bonds represents

of

disease in every period of war or
defense effort of this country and

the second time
a

has

manifestations

effec¬

result

spending,

the

of

a

requirements.

abbreviated.

the

of prices
have
been

There

the

with

Option 2, the bond would
be automatically extended, bearjng interest at the rate of 2Vz%

service
effective be-

been

bond

Under

Federal debt.

Many other activities have

inflation

has

major new public works projects
included in the Budget are those

spiraling

wages.

in

lic works projects now under way
has been substantially curtailed.

develop into disaster.
uncontrolled

defense

non-defense

prob¬

strength of our defense
economy is undoubtedly inflation.
it

new

billion

$16.5

been

sustained

present

of Series G.

cause,

legisla¬
deficit will

Federal
to

This deficit is
our

the

And

of

is

the

for-a current income savings bond

volunteer

a

It

has

It

it

because

basis.

fiscal year 1952.

domestic front.
Can

the

dis¬

be

being called upon to marshal our
great military strength to resist

of

i

tion,

of

power

important

absence

amount

to

as

hazard.

nation is in

our

and

the

must

effective.

and

minds.

our

our

country.-

our

In

of the most dif¬

one

practically

inflation

rev¬

way

productive

One of the

to

nation is not always de¬

a

on

the

Inflation

con¬

I need not tell you that the des¬

to

lems

opportunity to speak openly and
frankly about the financial and
economic problems that
front us.

of

borrowing

a

fighting

pelled from

make the most effective contribu¬

the nation is

am

and

such

matic

country.

our

merging

measures

programs

present na¬
tional task of mobilization for de¬
I

of

successful

enue

discuss with you
the issues which

to

involved

are

The

minds

sion that fractional changes in in¬
rates
can
be effective in

terest

Thursday, January 25, 1951

.

.

Federal securities in the hands of

had

Financial Mobilization

.

Most

these

of

adjusted

the 2%% rate—and after
have

than

become
ever

have

themselves

.more

so

,

to

doing,

prosperous

before,

life insurance compahies,
example, have changed'the
guaranteed interest provisions of
their new policies during the past

-

Most

f0r

decade to conform with the 2% %

rate,

the

so

new

that today about 85% of
life insurance premiums

received by insurance companies
are on

rates

policies written at interest
of

2V2%

or

less.

Mutual

savings banks also have tied their
current interest rate

on

funds of

Volume 173

Number 4980

depositors

the

to

rate.

.

.

The Commercial and Financial Chronicle

.

government
' *
\

.

'

♦

.

.

,

Rat£ Increase Would Upset

sought to undermine the structure through Regulation W.
6'f peace atid stability we nave <about the significance

'

triea

*

marked

Existing Markets

and with

patiently;

so

a

: degree

of

success,

municipal.

time

for experimentation.

sacrifice

sonal"

that

be

world. To seek tnis, we set up a
forum in whien men might work
out* their 'differences and arrange

But the Russians have tried

to
of

restore economic and financial
basis*, that
might, in some in- stability to nations suffering from
stances require a degree of profit-the
ravages of>?war, the. Soviet
mobilization

the

program

sacrifices

•

'Tin the1

firm

belief,

*

-

Continued

Department

has

concluded, after
joint conference with President

Truman and Chairman McCabe of

the

Federal

the

Reserve

refunding

and

that

Board
new

money

June/ 1946, the
less than

a

1946

Department,
&

had

ourselves from danger, without sacrifice. Any such hope runs

market

counter

save

par)

17,742 ton-miles in 1949,
improvement of over 50%.
"breakeven"

the

air transport

Convertible

carried

(Common &

point of

operations is reached,

Preferred)

as

through

indicated

Selling at a relatively depressed
price level—about 70% of *1946
high—American Airlines common
shares impress me as having spe¬
attraction

cial

in the current
market and

an

"opportune"
long-range in¬
vestment

in

the

dynamic
future growth
prospects of
air

transpor¬

tation.

Bene¬

fits of extend¬
ed

peacetime

reconversion
and
new

James

B.

Jones, Jr.

modern

passenger

fleet placed in

operation
since World War II have just be¬

months

in

to

ended

For

revenue,

favorable
the

nine

1950, net
amounted
to

Sept. 30,

income

operating

net

highly

results.

current

$14,173,365, compared with $8,404,in
corresponding period of

934

1949—a

should
is

Stock

to

Once

Co.,

1

be-

stability in the government bond

an

Airlines

Cumulative

3.50%

Convertible Preferred Stock ($100

the bulk of increased revenues are

Airlines, Inc.

came

over

largely unexploited, less than 15%
of estimated potential air travel¬
ers using the airlines in 1949.
conservative basis of par¬
ticipation in the future develop¬
ment of air transportation, Amer¬

Members New York Stock Exchange
American

financ-

war

only recently
completed. 1 felt at that time that
ing

Rouse

Steiner

.

It is but a natural reaction to
hope, in an emergency, that we
been can preserve our freedom, and

had been

war

year, and

Statistical

Manager,

AS .the economic and financial
stability of our friends and allies
ln Western Europe became more

certain—Soviet imperialism

A. W. M.

Security I Like Best

Aostty need for self-

the

2

•

-

When I came to the

,

page

JAME^ JB^ JONES, JR.

the blight
„

accompanying

comprehensive field,
indicates
the
domestic

air-travel market to be still

ican

The

bolder and laid down a
barrage of direct and indirect
Treasury in assaults on the free world.

issues will be financed within the

pattern .of that rate.

jrom

long
iSUCC6SSflll Hid to IFCG X1HX10H.S Hlld

of

officials

ury

mass

To the investor seeking a rela¬

Union has sought.to dissipate the

t esseSfl,lhf Tr^

stability
a

■

matter for consideration by Treas¬

Recent

tively

ffSSSStoSl

after
oi/

it.inA

ST

a

on

-beginning
indicated as a

was

The inclusion between now and

operation wnere civilization might
again
be made secure.
It nas

table.

industry measured against
indicated, future growth possibili¬

Secretary.

proposals to be offered

period,

in¬

as an

fant

rective.

almost every area of human co-

hesitate

we

transport still continues

survey

draft

might

can

the

ties.

make a mockery of tne vital
marshal the financial resources wor.k and procedure of the United
this country to the support of Nations.
While we have tried to
Neither

entailed.

ill

at that

^or solutions of common problems,
our
youths "for" service
on
the We tried very earnestly to win an
battlefront, regardless of the per- honorable peace across the council
have not hesitated to

We

Bonds

to the "E" Bondholders

^

no

holders of unmatured

Savings

requirements,' the Secretary
he goes along with the Re¬
serve
in interpreting the action
as
preventive rather than cor¬

.

Now'is

D

said

coupled witn a be'iucose avowal
^ Peace the naost flagrant and
with the heavy mobilization pro- m°st insidious forms of human
gramto
finance.'
We
cannot sabotage. '
-t;.
afford the questionable luxury of
Let there, be no mistake about
tinkering with a market as deli- it.
We want real peace in tnis
security market.

Series

gin

J .We cannot allow this to happen
in
a
time
of
impending crisis,

cately balanced-as the government

next May of

to

Any increase in the 2M>% rate Imperialism has taken the ofI am firmly 'convinced, fensive against the tree world in

rate and

last

extension

would,

seriously upset the existing security markets—government, corpo-

w Asked
of

so; week's hike in stock market mar¬

Red

help build in tne free world.

31

(459)

gain of 68.6%.
only
2.4%,

increased

Expenses
approxi¬

shares of

share

common

of

current

special appeal.
into

4.76

stock for each

preferred, affording
of about 80,

price

at
an

call on the common
approximately
$17
a

equivalent
stock

have

convertible

at

share, subject only to future re¬
demption of preferred <at prices
Current dividend yield
of 4.40% appears well assured and
conversion option provides in ef¬
fect substantial part of indicated

above par.

appreciation

long-term

possibili¬

ties carried by the common.

mately 75% of increased revenues

being .carried through to net oper¬

ating income.

Pre-tax income for

the

fiscal

full

1950

year

appears

exceed'; $20
million
against $8,311,237 in 1949—an in¬
crease
of approximately 150%—

likely

and

to

deficits

in

each

of

the

three

Assuming pre¬
tax earnings of $20 million and
usink 7%
Invested Capital base
preceding

for

years.

exemption
Federal tax
law, indicated net earnings for
1950 fiscal year work out to about
$1.30 a share on 6,452,835 shares
of
common
stock
outstanding.
excess

provided

profits tax

under

new

How to

Street

Make

and

a

Keep

Killing in Wall

It!—David

Mc¬

Kay Company, Department 5, 225
Park
Avenue,
New
York
17,

to be reflected in operations.
Similarly adjusted, earnings ap¬ N. Y.—$1.00.
Company now appears to be en¬
proximate $25 a share on 400,000
tering
an
intermediate
Farmers
1951 Income Tax
on
growth shares 3 M> % Convertible Preferred
riod was of vital importance.
As rience.
Readiness to sacrifice for
phase of sharply expanding earn¬ stock
1950 Income
(including filled-in
outstanding, combined bond
the economy became more stabil- freedom is the first requisite of
ings, which development, when interest and preferred dividend forms, check lists, examples)—
ized,
the
Treasury
used
more life in a free land.
more fully recognized, should lend
Samuel
M.
Monatt —Commerce
requirements being covered 4 Mi
flexibility in its debt management
i have every confidence that strong market support for its
Clearing House, Inc., 214 North
times.
program by allowing short-term whatever sacrifices are required shares. Conversion of the domes¬
Michigan Avenue, Chicago 1; : 111.
rates to increase gradually*
"Operating results' for current
: of our people to repel the ag- tic economy to a wartime basis,
1951'-'fiscal year should compare —Paper—$3.
now
rapidly
taking
form,
obvi¬
Korea Accentuated Importance of
Graphic Stocks — January issue
'
ously calls for maximum utiliza¬ favorably with 1950, based on ac¬
Market Stability
connaenuy maae.
celerated uptrend of air passenger
containing large, clear reproduc¬
r
...
•
•
What we face is obvious. What tion of air transportation in ex¬ traffic
following outbreak of Ko¬ tions of 964 charts complete with
pediting the flow of industrial
i?
?
n?
cr s s
must do is plain,
rean hostilities
last year and the
m Korea, however, the consideradividend records for the full year
production, assuring capacity op¬
tions "calling for stability in the
We shall diligently continue our erations for the foreseeable near added stimulus I of sharply ex¬ of 1950, showing monthly, highs,
panding defense activities
over
government bond market became
f°J"^ with free nations to help future.
lows, earnings, capitalizations, vol¬

during the transition pe-

all

human

of

.

•

expe-

.

.

ZfiSymaSf ear"'

•

•

gun

,

to

,

the

•

a

,

_

the

of

United

States

which

structure of the world.
in

establish peace and prosperity in
the world

keystone

Stability

securities

government

our

The

is

essential.
I

do

'h

we

can

emphasize
I think they are

when

thesev matters.
basic to

that

think

not

exaggerate

we

national survival.

our

for you the
financial mobiiization program. I believe that
with vigorous, cooperative effort
I

outlined

have

highlights of

our

.

we can

make it

a

successful

democratic

The

one.

processes

and

institutions of our cOun-

the free

us to do just that*; We
nation of strong individuals,

try enable
are

a:

united in our belief in American

principles and in our determina¬
tion to defend them.

expect and

we

We do not

do not wait to be

told whnt to think nnd whnt to do#
We

will

not

govern

our

actions

according to decrees which represent .thinking
done for us by
someone
else.
Every American
citizen today is searching his mind
and heart for answers to the challenge of aggression.
because

we

but in the meantime,

we shall face realitiesy-face tnem
restsVthe economic !n the knowledge that our pride

ernment has become the
upon

a,

Gov-

important.

tremendously
credit

„

know

We do this

that

in

a

free

^

selves.
'to The formulation of a

successful

policy of financial mobilization is
not easy.

It must, of necessity, be

that

will-require "sacrifices

one

from

one of us.
Let me
thing clear.
Even a
short! period of weakness in the
financial stability of the United
State? could mean a generation of

every

make

one

disaster to
*

The

this—and
the

us

reductions

ever

Second

regime

since

World

nonmilitary

estimated
42

0ver
,

expen-

at

$1,100,000,000 spread

separate items,
,,

,

...

,«

Asked whether he believes fur-

The Secretary manifested a
strong attitude of cooperation with,
other government agencies, as
well as with the Congress. He
asserted that in their past session
the lawmakers have performed
an unprecedently good job in'tax
legislation.
" 11 '
He

expressed'

knows
of

inflation

curbs,

reference

to

it

the restriction

the close

War,




has

virtually

every

active

the New York Stock and

emergency

relative

in

^iture, the total of which cuts-he

satisfaction

over

the Federal Reserve Board's anti-

and to the world.

Communist

on

en

^

tber cuts m nondefense spending

ours,

ume

stock

Congress and FRB

_

aref P°sslbla and advisable heanfjfted on keeping his reply "offthe-record."

as

coming months. Under all-out war,
full leverage benefits of wartime

Commends Truman,

decisions on

such

perhaps the most progres¬
sively managed major air trans¬

operations would come Curb Exchanges — single copy
into
play,
including
maximum $10; yearly (6 revised issues), $50
port system. It ranks as the "lowhourly utilization of planes, pri¬ —special offer of three editions
m America's past and present, and
cost"
operator of the industry.
our confidence in her future, per- Traffic routes* extend across the ority flight scheduling, full seat- of Graphic Stocks 1924 through
capacity loading, and the elimina¬ 1935; 1936 through 1947 and upmlt no passive acceptance of the
country from Boston and New tion of low-rate
promotional fares. to-date current edition, all for $25
dictates of a foreign aggressor.
York through the
Middle West, Seat
capacity of new postwar- —F. W. Stephens, 15 William St.,
We are going ahead with our South and Southwest to San Fran¬
military and our financial mobi- cisco and Los Angeles on the passenger transports can also be New York 5, N. Y.
increased upwards of 40% as high
lization
measures
to
whatever West
Coast, service also being ex¬
Investigation of the Economic
density carriers, and higher blockextent the unfolding disclosures of tended to Mexico
City.
to-block speeds increase potential Conditions of Mexico (in Spanish)
Communist intentions make necCompany is the only airline plane
—National University of Mexico,
miles
available.
During
essary.
In justice to ourselves
having acquired a complete new World War II pre-tax income of School
of
Economics,
Mexico,
and to all other believers in
passenger air fleet of postwar de¬ American Airlines was more than D. F., Mexico—paper.
freedom, we can follow no other
sign, retirement of old equipment doubled, increasing from $3.8 mil¬
course.
"r
Management
of
Bank Funds,
being virtually completed in 1949. lion in 1941 to $8.5 million in
-j •
"
'
v
The —Roland I. Robinson — Mc¬
Included are 49 4-engine Douglas 1944.
Graw-Hill
Book
Company,
330
"DC-6" long-range transports and
Dividends were resumed on the
West 42nd Street, New York 18,
79
Consolidated
Vultee
twincommon stock through payment of
engine "Convair" planes used for 25 cents per share on Sept. 5, N. Y.—Cloth—$5.50.
short hauls. Capacity of this new
1950,
last previous distribution
Marketing in a Defense Econ¬
In a press conference preceding
passenger
fleet on comparative
being in 1945. Whereas current omy—Arno H. Johnson—J. Walter
j^g delivery of the foregoing adhourly utilization basis is esti¬ dividend
policy
may
likely
be
Hrpss
TVTr
S n v d g r
vi^orouslv
Thompson Company, 420 Lexing¬
mated over fivefold that of planes
relatively
conservative,
due in ton Avenue, New York 17, N. Y.
COmmended
President
Truman's
operated in 1945.
Company has
part to bond indenture restrictions —Paper.
new
Budget for bringing about on order additional 14 new Doug¬

mattqrs of national import must
,be made by the citizens them-

nation

American Airlines is the largest
and

the
on

with

particular
of

effectiveness

instalment credit

las

DC-6s

of

advanced

to

Earned

Surplus

re¬

design,

Monopoly and Free Enterprise
quirements, the company's already
strong financial position was ma¬ —With a Policy Program by the
early this year, the receipt of
terially augmented last year Committee on Cartels and Monop¬
which
will
importantly further
through receipt of more than $10 oly—George W. Stocking & My¬
expand passenger fleet capacity. million from sale of 62% stock ron W. Watkins—Twentieth Cen¬
Basic
operating improvements interest
in
American
Overseas
tury Fund, 330 West 42nd Street,
underlying sharply increased earn¬ Airlines.
Dividend
distributions
ings have been accomplished de¬ in line with earnings appear a New York 18, N. Y.—Cloth— $4.
spite rising wage and price levels reasonable
prospect. During World
Stock Market, The—George L.
throughout the period following War II company paid out about
Leffler—The Ronald Press Com¬
World War II, reflecting not only
30% of available earnings.
greater efficiency of new modern
pany,
15 East 26th Street, New
With capacity operations now
planes now in use, but also mate¬
York 10, N. Y.—Cloth—$6.
virtually assured through expand¬
rially strengthened overall cost
controls. Highly significant is the ing defense activities, outlook ap¬
Wall Street Explains Its Opera¬
distinctly
favorable
and
reduction of "Breakeven" Passen¬ pears
tions—Edited by Philipp H. Lohcommon stock in a strongly situ¬
ger Load Factor (percent^of pas¬
M. Ricciardi —
ated market position is now sell¬ man and Franc
senger seat occupancy required to
ing at relatively deflated price New York Institute of Finance, 20
cover operating costs) from 82.5%
level
of
around
14.
Normally,
Broad Street, New York 5, N. Y.
in 1946 to 57.7% in 1949. Revenue
stock has tended to sell upwards
Paper — $3
(lower prices on
Traffic per Employee also was in¬ of 15 to 20 times earnings on po¬
scheduled

for

delivery beginning

—

creased

from

11,475 ton-miles

in tential

growth

factor,

and

air

quantity orders).

S2

The Commercial and Financial
Chronicle

(460)

Continued

from

13%

it is clear

currently there is

no danger

running

are

13

page

that

from this

Rising Prices Indicate

In

analyzing

pects

,the trend in this country of hav¬

time

ing

level at which LIFO is adopted.

income

years

of

years

of

higher

taxes

rising
falling

during

pricesthan in
prices.
I have

Jhere a compilation of corporate
income tax rates plus excess prof¬
its
taxes, when imposed, from
>1913

to

date

and

have

plotted

alongside of these rates the level
of wholesale

prices for the

the

income

corporate
1%

was

(1926=100)

the

and

the index

on

changes

of

in

the

tax

with

in

movements

wholesale

'

prices.
While the

,

is

history of the past 37

not

conclusive

evidence

that this correlation will continue

,in the future, it is certainly
sign

of

this

probability.
when

mean

fair

a

What

does

translated

into

the

benefits, taxwise, of LIFO as
against FIFO? Simply that under

LIFO the tax savings derived dur¬
ing periods of rising prices will

;tend to be materially higher than
the

taxes

riods of

fact

to

be

will

we

high tax rates

pe¬

1941

excess

These

the criteria I would

/are
the

for

With

these

should

time

opportune
criteria

advocate

as

to

base

a

the

adoption
of LIFO now?
First, let us ex¬
amine the negative aspects.
One
might say, sure I would have liked
to

we

haxe

adopted

it

in

January,

1941, when the Bureau of Labor
Price

tories
It

for

taking

by

it

so

that

answer

certainly would have

been better if you were one of the

pioneer spirits
nine

that considered it

(if
you
were
willing to have the headaches that
ago

years

went

along with it during

years) that is water
What

is

important

those

the dam.

over

the

saving at present trend of prices and
paying back at rates and their longer-term

tax

now

po¬

tentialities.

use a

theoretical example

the

impact

of

when

index

the

stood

at

wholesale

£. P. T.

and

was

26% with

the

cor¬
an

ranging from 25% to 50%.

All during the

rising

with steadily

war

wholesale

subject to

were

price

87.3

prices,

they

tax rate of 26%

a

with E. P. T.

ranging up to 90%.
savings under LiFO were
therefore, In the E. P. T. bracket,
ranging in the 80% to 90% level.
first

price

of

year

trend

was

downward

a

1949,

when

the

wholesale price
index averaged
about 153, or 7V2% below that of
1948.
But in that year the tax
rate

£.

38%

was

P.

T.

ford, at
caved

there

and

You

paid

was

no

back, there-

38% rate what you had
at an
80% to 90% rate.
a

Even had prices

retreated all the

way back from where they had
started, tax savings, owing to the

differences

in

the

rates,

like

to

this type of tax
savings based on
the economic law of

immediacy.

This concept holds that the finan¬
cial savings

immediately incurred

in

good times
are
worth
than
offset
costs
later on.

retailers
came

are

sharply
in

concept

when

hold

we

vested

in

more

We

aware of the

our

field

own

that

capital

in¬

fast-moving items is

good

deal

that

invested

profitable

more

in

a

than

slow-turnover

merchandise, all other factors
maining equal.

re¬

With the value of LIFO
clearly

apparent

we

questions:
an v.

now

Can

LIFO

time?

be

Should

the

to

come

adopted

LIFO

be

adopted now?
Criteria

for

the

Propitious

Time

it has

been adopted without

cpecial permission from
reau

of Internal

the

Bu¬

Revenue, and

as

it freezes the initial cost of
your

inventory there
riods

of

time
more

at

times.

certain

are

when

ently far

it

is

pe¬

appar¬

favorable from a
tax point of view to
adopt it than
other

The

conditions

that point to a propitious
time for
the adoption of LIFO are as
fol¬

lows:

(I)
will

A

rising price trend

either

On Nov. 21,

price

index

reached its all-time peak of 471.2,
which was a gain of 8.8% over
the

level

along

and

when

the

Korean

with

affected

by

in¬

left far behind

was

issued

a

in

215

cities

the

as

1950

41.6%

rose

$3,918,869,774 in the previous week.

to

'

volume of building
$5,549,694,106, from

•>

•

•

-

(

Building plans filed in the five boroughs of New York
City
last year were valued at
$656,015,407, up 24.1% over the 1949 sum

of

$528,528,184.
All

of

the

for the year,

geographical divisions reported substantial gains
with the South Central region
showing the largest
The South Atlantic region had the smallest
rise

rising prices the dollar value in¬
the

above

the

while

previous

to-mouth

of

some

buying and rapid turn¬
not

over

does

t)ffing.
to

in the

seem

imme¬

point three,

ready had
rate

we have al¬
rise in the corporate

a

from

38%

to

43%.

Ex¬

profits tax is just around the

cess

and

corner

a

further boost in the

regular rate is probable this year.

Coming to the final point, a
good level of business activity, we
in

retailing

that

high level of

a

posable
with

level

activity spells
sales.

that

LIFO

is

controlled
materials plan are being
Washington this week, according to "The Iron Age,"
metalworking weekly. A general price freeze covering
a

in

national

nearly all products and commodities will become effective about
Feb. 15. The CMP will be in effect
by June, if not sooner. Both
of these anti-inflation
weapons will be hampered in their
early
stages by a dire shortage of administrative
people.

Increasing labor and material

costs are upsetting expansion
improvement plans of some manufacturing companies.
They
are
finding money alloted to these projects in the planning stage
is no longer sufficient to cover
requirements when construction
is ready to start. One
company's estimate for custom made capital

and

equipment
this trade

was

100% off when it

over

came

time for

installation,

authority notes.

Snowballing government orders, regulations, directives, revi¬
sions, and amendments have caused some people in industry who

dislike

than

re¬

that

we

here.

say

I am

up,

only do I

valuable

a

and

plan. This ever changing pattern of DO and government directed
tonnage has upset their production schedules to the point where
they are about ready to throw up their hands in
disgust. The job
is simply not possible under the
present system.

business

good level of

a

More

readied

controls

concomitant

it is clear that not

feel

dis¬

Price

of

Adding all these things
sure

aware

consumer

income

high

a

tail

always well

are

2,000,000 Tons

and

year,

have corrected

we

this condition the return to hand-

tax

Steel Output Scheduled This Week to
Exceed

Department store stocks
of October were 21%

end

and

important accounting and income
retailer, but I strongly

tool to the

believe that the time is ripe to
seriously consider adopting LIFO
now.
v;' 7
/

War

12.9% ,pver that of a? CORPORATE TAX RATES AND
WHOLESALE PRICES
With the levels of war

and

year ago.

orders

due

during

continue

for




to

the

further

expand

government

While

steel

controls

people

order to the confused

to

feel

call

that

for

CMP

controlled

a

is

materials

to

necessary

restore

market, they also fear it.

Once the economy
is controlled to this extent it will be hard to
get the controls lifted.
They fear that CMP will drag on like a millstone long after the
emergency or war has passed, the "Iron Age" points out.
Defense

growing
of

his

orders

by leaps

for

stainless

bounds..

and

stainless sheets

on

DO

steel,

particularly sheets, are
producer who shipped 41%

One

orders

in

December

has

projected

his February delivery to 55% and March
delivery to 68%.

six

next

months
of

and

siderable

prices

are

this

which
some

machine
standard

(J!)2(i=lOfr) All

Rate

Tax

Commodities

'!p

con¬

*171.2

43

1950.

are

%

■

increases

in

1945.

105.8

36

1942.

98.8

26

1941.

87.3

26

25 to 50

78.6

24

25 to 50

will

we

during

to

prevent

then

have

fashion

same

to

namely,

1940.

as we

1936.

Second World
through the dete¬

1933.

the

rioration
of
quality
and
the
elimination of lower price-bracket
goods.
The effect as far as the
v

—

__

__

None
up

to 90

80.8

15

None

65.9

13%

None

1932.

64.9

12

None

1930.

86.4

12

None

1929.

tooling

tool

is

putting plenty of pressure on the
becoming almost impossible to buy a
today without a priority. But military people

market.

machine

now

It is

insisting

on standard machines wherever possible.
In many
they have the authority to buy standard equipment on the
without consulting Washington. Also some new plants are
expected to be kept in standby conditions after the war. Standard
cases

?

Should price

instituteH

increase in the

War,

Excess
Profits

further

rise,

had

Cor-

pora-te

indicated.

be

controls

Wholesale
»

-K* *;T-

stock¬

piling definitely in the cards,

Defense

Price Index

materially

intensification

spot

machines

desirable from that standpoint
too,

are

concludes.

,

The American Iron and
that

the

operating

steelmaking

rate

capacity

of

for

Steel

steel

the

this trade

Institute announced

companies

entire

this week

having

industry

will

93% of the
be 100.9% of

capacity for the week beginning Jan. 22, 1951, based on the in¬
dustry's increased capacity of Jan. 1, compared to a revised rate

95.3

11

None

1928.

96.7

12

None

192-3.

100.0

13V2

None

part of

1924.

98.1

I2V2

None

steel

question, namely, the possi¬
bility of prices retreating over the

1922.

None

1,991,000

longer

when

1919

and production yielded 1,930,600 tons; a year ago it stood at
and amounted to 1,790,600 tons.

first

1917

composed, January, 1941.
While
things are possible, when one

1916

...

1913

...

Let

concerned

take the

us

is the

second

B.

term

L.

S.

to

the

LIFO

level

index

was

all

considers the tremendous probable
increase in the demand for war
material

over

in

creases

ity, I for
that

one,

above

the

productive
frozen

nomic structure

in¬

in

our

eco¬

greater portion

a

of price increases that have
gone
before.
Furthermore, with the

prospects of considerable deficit-

financing likely during the next
number of years it is not too im¬
probable that the tax rate itself
will again parallel
of prices.

...

to

97.6

10

None

12

f

117.5

6

85.5

2

None

1

None

'

69.8

21,

based

00%

12

138.6

...

*Nov,
80%

96.7

...

1921.

1950—all-time
on

based

normal
on

record.

profit.

invested

fUp

to

$From 20%

capital.

the movement

CHICAGO, 111.—Barclay Invest¬
Co., 39 South La Salle Street,

ment

that Raymond F. Revell,
Dean Murphy and Clarence

announce

R.

Scholz have become associated

with their

trading department. Mr.
Revell was formerly with CornThe second negative
stock
&
factor, and
Co., Mr. Murphy with
it is a meaningful
one, is the con¬ Paine, Webber, Jackson & Curtis,
holds

of

the

that under

alwavs
under

LIFO

me

FIFO,

their
one

one

Januarv,
is

to

law

LIFO

or

which

one

costs,

one can and

the lower of cost
asmuch as

tax

must

1950.

adopt

does

market.

use

In¬

now,

we

large to offJanuary, 1950's

inventories

when the
percentage
markdown is eliminated.
For

the average store that amounted
to approximate!v 6%
during 1949
as

wholesale

was

cashier

for

price s increases

ago,

or

an

ingots

and

tons

castings
week

a

advance of 1.3 points.

rate

for

ago.

is equivalent to
the

A

entire

month

2,017,000 tons of

industry,

ago

the

compared

rate

was

to

100.1%
93.9%

Electric Output Tapers Off in Latest Week
amount

light and

power

estimated at

of electrical energy distributed by the electric
industry for the week ended Jan. 20, 1951, was

6,908,818,000 kwh., according to the Edison Electric

It was 72,027,000 kwh. lower than the
figure reported for the
previous week, 867,660,000 kwh., or 14.4% above the total output
*for the week ended Jan. 21,
1950, and 1,139,884,000 kwh. in excess
of the output reported for the corresponding period two
years ago.

Carloadings Extend Advance of Last Week
Loadings of
totaled 783,025

freight for the week ended Jan. 13, 1951,
according to the Association of American

revenue

cars,

Railroads, representing an increase of 120,581
the preceding New Year's holiday week.
The

week's

cars, or

18.2% above

total

represented an increase of 153,482 cars, or
24.4% above the corresponding week in 1950 when loadings were
reduced

by a coal strike, and an increase
above the comparable period of 1949.

Auto Output Lifted to

of 49,160 cars,

or

6.7%

Higher Level in Latest Week

Combined motor vehicle production in the United States and
Canada the past week, according to "Ward's Automotive Reports,"

William J. Sloan

totaled

Joins Fahnestock

inventory if

LIFO

Scholz

week

week's operating

The

Barclay Investment.

would have to cost

°°t the increase in

and

Mr.

a

This

whereas,

would have to make sure that the
orice increase during the
year of
1950 was sufficiently

of

and

99.6%

-Institute.

Barclay Inv. Adds
Three in Trad'g Dept.
John

of

X

capac¬

inclined to feel

am

have

we

and

our

...

paper

,,

same.

is

retailer

struction

Legally, LIFO can be adopted
at any time.
It cannot be dropped
once

rise

material

a

prices.

wholesale

started

order

on

creases.

at

war

this

additional advantage in

an

the

would

fctave been substantial.
At this point I should

inject

witnessed

in wholesale

on

already

are

•

Their

The

months

or

war

Certainly,

permits

Deliveries

merchandise

really do not have to

Without

a

now.

earnings

year in the building industry never
equalled before, according to Dun &
Bradstreet, Inc. The previous

advance—62.4%.

As

not

rising

a

their

December rounded out

peak of 1949

economy.

slower,

when

—31.6%.

diate

I

col¬

time

a

goods

100.

Am

very

a

at

creased wage and material costs.

hand becomes more valuable than

at

July.

to

j

that

on

become

stood

in

like

seems

during

war

are

quantity,

To this I must

whereas

partial

inven¬

big risk in getting in

a

late?

used

continue

of inventories, we are all
acquainted with the trend of

inventories

their

174.8

was

level
well

adiust

to

reianers

Index

it will

Coming to factor two,

we

be

and

porate tax rate

at

the

as

as¬

price trend is rising;
if

as

lapse in prices.

but

from page 5

affirmative

an

small likelihood of any major

inven¬

unit,

clarify this all-important point. orders; particularly in our econ¬
concern entered into LIFO
in omy, we have during the past six

•A

'

of

or

is

ones.

Let us

*to

during

falling prices due to the

that

lower

paid

such

taxes

Statistics

years

level

dollar

The

looks

Thursday, January 25, 1951

.

well' established

on

rise, and there

the

above

profits tax.

tax

level

rate, both upward and downward,
have almost a perfect correlation

•

lective

set

1913,

out

preferably both.
(3) A rising tax rate, particu¬
larly with the imposition of se¬

corre¬

From

wholesale prices 69.8

<

rising

adopt LIFO.

striking.

are

level

either

results
when

J

(2) A
tories,

sponding aates (see Table IV). The

rate

;

will

or

one

negative

the

have

we

basis.

it

Continued

.

course.

condition

Reconsideration of L1F0

over

.

Fahnestock & Co., 65 Broadway,
York City, members of the
New York Stock Exchange and
New

other

leading

nounces

that'William

noW'^sdclatbd
Sloan

was

Barney

exchanges,

&

Responsible

,

models

This

Sloan

as

Total

is

Smith,

controller

registered representative;

-

more

than

latter due to

and

cars

with

for

the

rise

was

increased

by General Motors and Chrysler
a

offset

strike

losses

labor disturbance at

a

at

production

of

1951

divisions, Ward's stated
Nash

and

Packard,

the

parts supplier plant.

an¬

with the firm. Mr.

i formerly
Co.

J.

158,907 units, compared with the previous week's total of
139,679 (revised) units and 158,432 units a year ago.

!

and

6,517

cars

output for the current week

29,290 trucks built in

was

made up

the United States and

of
a

120,675
total of

and-2,425 trucks built in Canada.

the VhRed States alone, total output was 149.965 units,
against last
revised total of 130,875 units, and in the like
For

week of the last year

150,800. Canadian output in the week totaled

*

Number 4980

Volume 173

the Commercial and Financial Chronicle

...

(461)
8,942
a

units compared wfth 8,804 units
"
>

dollar volume

week ago and 7,632 units

a

Failures Recbrd Moderate Drop From Last
Commercial

and

industrial

Week's

of

failures

declined

167

to

in

142.

Continuing far below the

prewar

the

appliances

level, failures

week.

Fewer businesses failed than

as numerous as

a

year ago

the sale level

Most

as

in

were

New

centered

in

Middle

the

Atlantic

a

Coast

Department store sales

Modified Rate

tered

+7 to
Northwest

when

a group of
savings bank in¬
vestment
experts in this State

.

\

;

made

as

ended, Jan.

too

close

the

near

more

was

cautious

closing sessions
to

the

ceilings that

from

rose

year

about

ago,

merger

15% above

but when

com¬

:

winter wheat

to

was

as

to raise

ideas

,

the

general undertone turned
were

Export demand for wheat and
Sales of grain futures

■'

:tV,; ;v,

by the Army. In livestock markets, lambs continued
prices.
Activity in spot cotton markets increased last week as prices
continued upward to new record highs. Sales in the ten spot mar¬
kets were reported at 223,900 bales, as compared with 136,200 the
previous week and 275,800 in the corresponding week a year ago.
Mill demand for the staple continued good while demand for ex¬
sell at all-time high

for the
Cotton
Exchange Service Bureau, totaled 735,000 bales, as against 1,009,000
in the preceding five-week period, and 734,000 in the Calendar

port account showed seme increase. Consumption of cotton
four-week December period, as estimated by the New York

year

-a

ago.

The daily rate for December

averaged 40,800 bales, compared with 36,700 in

Trade Volume Moves
But Reflects

December, 1949.

Moderately Higher for Week

Sharp Rise Over Year Ago

throughout much of the nation, combined with
anticipatory buying in scattered vicinities, helped to
increase consumer spending in the period ended on Wednesday of
last week. The total retail dollar volume was slightly above the
Mild weather

of

high level of the previous week and sharply above that for the
comparable week a year ago, Dun & Bradstreet, Inc., reports in
its current summary of trade.
■■A-nnl
b"
The dollar volume of apparel generally) nose, ila-stn week as the

J$<?f}easi#fly large in
sold,, was appreci¬
the level for the similar ,1950 w^ek. ^ men's wear,

demand for coats,,suits and dresses became
some

sections.

The volume of suits and dresses

ably above
shirts continued to be

bankers

a

have

heard

that

capital in the market. Our

about

bank capital
differ
greatly from those in vogue over

some

heavy
countries,

are

Our

of capital;

users

indeed,

would

4

capital for the protection of depositors, we are obliged to face the
increases in reserve requirements fact that a reasonable and compewould be to adopt some form of titive rate of return should be perthe British and Canadian Treasury mitted.
4
deposit receipt arrangement of the
last war. In our case, however,
Bank Stockholders on Short
deposit receipts would not be used
nations
,
(
by the Treasury as a method of
At a glance banking in I this
raising new money. Noninflatidn- country appears to have reached
ary sources, such as savings insti- a high state of well being. There
tutions, are available to meet any have been no failures for nearly
prospective demand for funds seven years. But if we look beabove tax yields. The deposit re- hind the appearances we find bank
ceipt principle, instead, might be stockholders have been on rather*
four*d useful as a means of restor- short rations. One out of every 10
mg to the banks a good part of the banks in the State is unable for
earnings that would be sacrificed one reason or another to pay divi**
*n
increase in reserve require- dends. The public rates the^ earn-

price in-

inflationary

Federal

Reserve
one of

to

turned asain

requirements.

ask

It would be

extend further
to it to impose stiffer re¬

serve

mg power of banks so low that it

ments-

is

Some Means Must Be Had to

requirements

on

If

Protect

Bank

neither

of

Earnings

•;

their

should

banks.

not

Increase in Reserve Requirements

be

prove

mean

that

abandoned

methods

these

feasible,

that

does

the

search Should

for

some

of

way

unwilling

except at

to

Congress

power

earnings from the effects of the

a

to

^ " "

buy

good

bank stocks
deal less than

liquidating value.; When

3

bank is quoted in our markets at
anything like its net worth it is
9sigmthat some peoPle think it is not going to be_£

avoiding damage to bank earnings bank much longer,
through the operation of credit , There are, as I have indicated,
increase in reserve requirements, controls.
We cannot any longer two ways of attacking this probas an instrument of credit control
take bank earnings for granted lem. The first is of the self-help
(and I do not like it very much), when the fight against inflation kind. It does not appear that th,e
it will almost certainlv be more by monetary means is raised to a Treasury Will ever consent in th©

Whatever one may think about
that rather unorthodox device, an

extensively used
I believe it to
be most important to see that increases in reserve requirements do
not bear down on bank earnings,
is neither necessary

It

fectiveness
credit

of

such

control

a

to the efmove

as

a

foreseeable future to pay approPalate rates for its borrowings, but
J"e banks can devote more effort
capital. The question is one that t0, confining
these uneconomic
is directly related to the economic ^r*es
4!,
Treasury s -• issues
context of the times.
The ade- alone, pie second approach is for
quacy of a capital return is rela- J e
f_a^ banking alike
tive, and if any large field for em- °
+?> restraining

new pitch of intensity.
,
I do not undertake to say here
what is a fair return on bank

good
for banking, to have rising reserve requirements make inroads
ploying capital shows up unfavorinto bank earnings.
This result ably in comparison with other
measure,

nor

t

£ eau witnoui at tne same time
inflicting injury on bank earnings,
could, and should, be avoided.
leading industries it can expect to
We should not allow the abOne way of avoiding this result get what is left after all the other sence of bank failures in recent
is the special reserve plan pro- demands have been satisfied. In
y
t
blind us to the fact that
posed

by

the

Federal

Reserve banking we have always counted *
,.
'
on the readiness of shareholders banking has been falling behind
to buy new stock as a reserve sup- the parade as a rewarding em-

Board after the end of World War
II.

I

do

not

know

how

the dis-

ply of capital. The substantial discounts at which bank stocks are
selling make it much more diffifor tightness in the supplies of cult to. fmd a way of pricing new
eligible government issues cind it stock thcit is cit once nttrsctive to
implants in many baskets the fear shareholders and advantageous to

advantages of the special reserve
plan can.be overcome.. It iscpmplieated; it would apparently i&ake

that it would be

long step toward governmental control over
a

the offering bank.

,

,

Private banks have become few

pi

oyer

of capital.

We have

stui.dy and efficient banking
tern

but

we are

a

sys-

not navinc enough

vVe*** *ot P*^ enough

for itf In the interest of preserve
ing

our private banking system I
believe this matter of earnings
is

one

that

deserves

the

most

large selling item. Footwear, work-clothes

and sports attire were also popular.
The over-all amount of food bought by

was

nearly

unchanged in the week despite price rise for some items.

Total




competitively

..

surprising if the system did not

:

.

tial purchases

waves

the

from

the very few quantitative controls
left to it, that is, increases in re-

prices trended lower in both the world and domes¬
by the large potential supplies of that

December

has

serve

heavy buying for domestic and export account as well as substan¬

of

Board

.

Trading in the spot coffee market was more active with prices
firmer, reflecting an active demand on the part of roasters and
importers for new supplies of green coffee from producing coun¬
tries. All lard deliveries went to new seasonal highs, reflecting

month

it

The

creases.

influenced

commodity.

sharp

and

Some replacement buying in soft wheat flours was' noted while
bookings of family flour and semolina continued small.
Spot
cocoa prices
advanced 2 cents a pound during the week. The
market finished strong, aided by dealer and manufacturer buying
and reports of heavy reselling of cocoa by United States interests

Raw sugar

own

about

My second suggestion, like my
one, deals with other ways
of extricating bank earnings from
the workings of credit
control,
Another period has arrived when
national income is high and the
supplies of consumer goods are
growing scarce. This gives rise
once more to the dangers of steady

comparing with 43,500,000 bushels the previous week.

markets,

pricing policies for
products they would

their
hear

first

recent weeksi

■

I

,

If borrowers followed

customers.

such unsound

likely to be put into effect in

are

-r':'

way

them wasteful users of capi¬
If we are to continue to
maintain these heavy cushions of

Flour prices remained steady. Trading in hard wheat varieties
slow with most buyers apparently well supplied for some time.

Europe.

its

secure.

banking stands at the very bottom
of the list if priorities in
England
of the industries that are allowed

tal.

on the Chicago Board of Trade for the week ended last Thursday
totaled 242,840,000 bushels, or a daily average of 40,500,000 bushels,

the latter

be

call

belt.

over

win

stockholders if its future is

banks

7

page

who hold their loans.

increased somewhat

were

those Of commercial banks.*<

most of the rest of the world.

Considerable liquidation resulted also from talk of peace in
Korea and reports of snow and rain in the dry sections of the
corn

promising

Bank stocks should not become

to date, volume advanced 2% from the like period of last year.

Continued

future.

Southwestern

most

must

the corresponding

the belief that current prices

on

the

stocks at this time

possibly to unseasonable weather.

last week

of the corresponding week of one

year

Following early strength which carried wheat, corn, and rye
high ground for the season, there was a sharp reaction
period and most grains finished below the
levels of a week ago.
:
^
;
V
in

that

of equity investinstitutions they

speculative

,

new

Trading

found

their

pared with the week previous the gain was less pronounced due

in New York

toward the close of the

easier

study

for

common

\

,•

a

ments

not

According to the Federal Reserve Board's index, department
store sales in New York City for the weekly period to Jan. 13, 1951,
advanced 31% from the like period of last year. In the preceding
week an increase of 30% (revised) was registered above the sim¬
ilar week of 1950.
For the four weeks ended Jan. 13, 1951, an
increase of 23% was recorded over that of a year ago, and for the

daily wholesale commodity price index
moved in a fairly narrow range or at close to record levels during
the past week. The index closed at 320.92 on Jan. 16, comparing
on

country-wide basis,

index for the week

own.

Bank stocks have been eligible
investments
for
savings
banks
throughout New England for many
years.
Yet it is of interest that

with

The Dun & Bradstreet

to

4-12, and

favorites, because o%
prospects, widely fluc¬
tuating earnings, or otherwise. At
the same time, private
banking

that

Commodity Price Level Shows Slight

earlier, and with 244.75

on a

advance of 5%.

an

Retail trade

Recession in Week

tic

to

taken from
13,
1951, advanced 31% from the like period of last year. This com¬
pared with an increase of 39% for the previous week. For the
four weeks ended Jan. 13, 1951, sales showed a rise of 25% from
the corresponding period a year ago and for the year to date regis¬

represents the sum total of the price per pound
of 31 foods in general use and its chief function is to show the
general trend of food prices at the wholesale level.

to

+8

its

the Federal Reserve Board's

The index

to

pleased with the latter's earnings
but because it is
displeased with

-f- 9; East, South, and Southwest

Pacific

attendance slightly bqjow that for the similar week in 1950.

a week earlier, and represents a gain of 22.4%
comparable 1950 index of $5.75. The current level is
still the highest since Aug. 17, 1948 when it stood at $7.07.

week

and

comparable week a year ago. There was a moderate decline
in the number of buyers attending various wholesale markets with

with $7.02

a

a

about to be merged. Often a
larger
bank makes an offer for a smaller
bank not. because it is

the

the

date of last year.

ago.

by these

Wholesale purchasing for the nation rose slightly in the week
with total dollar volume of orders noticeably above the level for

Continuing the rising movement that began in October, the

with 321.52

England +5 to

Midwest

+ 11;

wholesale food price index, compiled by Dun & Bradstreet, Inc.,
advanced slightly last week to stand at $7.04 on Jan. 16.
This

Wholesale

a year

year ago

thesfe

display of interest ;in

any

bank's shares grows out of an ex¬
pectation that the institution is

Wednesday

on

involved, but all too often

particularly

man¬

almost

Wholesale Food Price Index Continues Advance

over

a

is

days

!

percentages:

Slight increases prevailed in five regions, including the
Casualties were not as numerous as last year in
five of the nine major areas. The decline from 1950 was particu¬
larly share in the New England and South Atlantic States where
only one-third as many concerns succumbed as a year ago. Very
slight increases from 1950 occurred in the West North Central,
South Central, and Mountain States.

compares

banking if bank stocks were
finding wider favor among both
large and small investors gener¬
ally where no thought of control

unchanged from that of the previous

period ended

It would also be good

for

were plentiflly sold, while there
slackening demand for other types. The consumer purchas¬

of last week was estimated to be from 7 to 11% above

Pacific States.

-

the market.

moderately in many localities.

a

community when
family finds it
necessary to put its holdings oh

year ago.

rose

in

small group or a

a

many

'4-6 to +10.

decline

At

buying of

Regional estimates varied from the levels of

States.

v.'i-

recruited

.

the

Total retail dollar volume in the

in 1950 and commercial service continued at

week's

a

generally

was

ing of piece goods

last year.

of the

in

Some kinds of furniture

was a

involving liabilities of $5,000 or more decreased
to 127 from 150 and compared with 187 in this size
group a year
ago.
Among small failures, those having liabilities under $5,000,
there was a dip to 40 from 43 in the
previous week and 44 last year.
Retailing and wholesaling accounted for the week's'decline,
while increases, on the other hand, took place in
manufacturing
ufacturing and in trade, but construction casualties

noticeable rise

Kitchen equipment was in particularly large demand
by shop¬
pers, reflecting a possible fear of future shortages. The interest in

Casualties

and construction.

virtually steady.

was

a

above the level of

down 54% from the 367 recorded in the similar week of 1939.

twice

was

would be good for
banking in
New York State if more individual
buyers of a bank's stock could be

housefurnishings articles last week with over-all dollar sales
markedly

preceding week, Dun & Bradstreet, Inc., reports. Although casualties were lower than the com¬
parable week of last year when 231 occurred, they exceeded the
1949 tootal of

dairy products
There

week ended Jan. 18 from 193 in the

were

it
.

The dollar volume

High Level
,

moderately above last year's level. The interest

was

tresh produce and in meats decreased
somewhat, while the call
for canned and frozen foods continued to rise.
in

year ago.

sa

housewives

them.

Another way of shielding bank

we'a'great'many gSS&ffl ~ «left

whose

stock

held, us Slve ^ *his
I believe there is yet time.

is closely

especially by families.

^ J*

attention while

34

The Commercial and Financial Chronicle

(462)

Continued

spells higher markets even
interruptions inter¬
fere with the major trend.

on

if

Tomorrow's

At

Whyte

decline

O

for

J

Common

and

1

not

per

is out may

additional shares.

affected

are

well be under 240.
even some real possi¬

bility that they'll go lower —
Monday of perhaps as low as 210. On the
this week, followed by the upside the barrier is a lot
somewhere around
sleazy - market of the follow¬ closer
ing day, started a flock of 260. If you're wondering how
rumors which in turn
brought your stocks will behave just
out the fears that the "long compare their action with the
overdue"
decline was here. projected
behavior
of
the
The

*

ance

share results; the latter of course

There is

By WALTER WHYTE=

industrial

the

present

Outlook for Utilities

'r

*

.

the

by

of

issuance

Whether
be

payout of Common stock
dividends has continued to hover

we

70%,

and

piece of

any

may

affect' the

have

an

sion
■■

///:''

*

that

news

about

that
market will
news

price structure.

*

■■

The

market

immediate repercus¬

the

on

news

a

the

brought
setback

present

In

expanded

tion

of

in

proportion

continuation

lease

new

of

an

estab-

on new

shares

attuned to

a

poten¬

What

the

may

*

if

if

;•

companies have

fighting TV
It is

grosses.

that

note

since

ever

threat to theater

a

problems.

interest is the

and

Its primary petitors.
plus and minus

than

their

'

1

*

./

'

/V'//-'

*

which

V.A/- *5*',

'fi

Executed

are presented as

Kidder, Peabody & Co., 17 Wall
Street, New York City, members
Exchange,

firm

ins**

Schwabacher & Co.
vjw

wt

of

David L.

and

w«ivy«.vttWivt

New

York

Stock

York

Curb

Exchange

Francisco

San

Exchange

Stock

Chicago Board of
14 Wall

$treet

COrtlandt
Private

Mr-. McClelland

associated

San

Trade

pany

of

Principal Offices
Barbara

Monterey—Oakland—Sacramento
Fresno—Santa

as

reg-

rates,

with

years.

Bond

Club

He is
of

&

Com-

member

a

New

York

Society of Se¬

Mr.

Terwilleger has been in the

securities business since 1929.

Vice-President and

was a

tor

of

Richard

W.

securities

number

of

years,

direc¬

a

Clarke

He

Corpo¬

dealers,

for

a

later becoming

a

irnui
•

CALLS

Per 100 Shares Plus Tax

St'd Oil (NJ) @99
Int'l Paper.. @53

Exchange.

LaMorte, Maloney Co.

•

On

Apr. 28
Am. Cyanam. @ JOV4 Mar. 26
Yngstn. Sheet @54%'Mar. 15

675.00

Stock

312.50

with

Schenley Ind. @.J73A Mar. 29

275.00

Elec.

Dist.

Auto L. @ 42^ Mar. 3 750.00
Seag'ms @28
Mar. 26 212.50

Republic Steel @45y2Mar. 15 200.00
Radio Corp. .@ 17% July
9 325.00
Richfield Oil. @ 54
May 18 487.50
Subject to prior sale

or

price change

THOMAS, HAAB & BOTTS
Members Put & Calls Brokers & Dealers,
Association, Inc.

50

Broadway, N. Y. 4, TeL B0 9-8470




gas compa-

declared

raised regular rates.)

&

Feb.

1, La Morte,

Maloney

Co., members of the New

Exchange, will

be

York

formed

offices at 25 Broad
Street,
New York City. Partners will be
Daniel La Morte, E

Coyne Ma¬
loney, and Bernard E. Smith, Jr.,
all
Exchange members, general
partners,
and
Elizabeth
Coyne
Maloney,
James
S.
Smith, and
David W. Smith, limited partners;
Mr. Maloney was
formerly a part¬
ner

extras

or

operating
lovy cost

into

the

a

high

new

same

markets,

be "rolled in." That means that
the combined operation has in ef
feet a single rate schedule which is1
based
0id

on

and

rate

the average costs of the

lines.

new

The

rolled

in

must

necessarily be higher
original. Hence several'
line companies have " been'

than

the

characteristics

their

directors

vote

of

is

that

so

~

T.

,

,

.

Natural Gas P,pe L,ne Ir>dustry

under the present

prospects

the

basis
of
oasis ot

alysis, I have
the

con-

continuing
continuing an
an

a

somewhat

to

come

conclusion, subject

same

.

,

,

g*1-rtS
th?
®

/ nhfin
thaf it

f

^eg

*he management
that I

s judgment,

see a sharp reversal
of
pipe line status from that which

The year 1950 saw a continuation of the rapid expansion of natural gas pipe line mileage and

*£eva led a year or _so ago. At,

capacity, and their extension into

?^in|f

construction weather, are suffici-

^dustrv

I whnlJ ias nmhihw

as

a

JK

cinallv tn inprea^es in tavp«

prinr
in

nn

Permit and mat such excessive
£a]355 ®nfnSn
n

f

f

'from^tchfne

comMission

uo

utility

V°mmission
J?
wit^ ft. The leading Question at
tbat time was as to the amount
st|ch excessive earnings and

industry, rendering detailed dis-

how lonS theY could endure. The

continuity and therefore the predictability of

/b//;';V

On tne
un
the

.

statement bvman»n

still maintaining over-all
structures within safe limits.
-n
In

by ent to insure another increase this
impressive* year. The nature of this business
in
utilities' is such that expansion lacks the

an

confidence

ditions.

T

Jt *s ra^ ^n^ea^

f

The compa-

cussion

™Jms
s 7

not

the

electric

However

frujtful

that projects

now

/VJ

,

it

Present question

as to some

certlfi- "nes is the amount of
ov,Q

earnings

ti

the

e

amount

.

.

pipe

under-'rate"

of

under construction are earnings u-e. me amount oi ram

cated or

likely to Set the Pfoe they need rel!e* to which they are entitled).,
activilvrfsine"out of the Present under defe"se restrictions now and how long correction will take.
itSf,. m>.<2 nrSd.5o
contemplated. But there may well With respect to the latter, I am,
stantiai
increases
in
fS
Kwn
tawasM^in
kwh
sales"
sales.
be a slowing up on new Pr°jects. ndt optimisti^ because CommisThe stimulation of eeneral

ccrae

Because

manly

that

defense needs of steel grow,

as

will be

increase

pn-

year-end gas

low rate industrial

m

ffctnrs

The

which

pre

i^operatine

ated virtual stabilitv
ratio '

exefusive
of
exclusive-01

come,

in 1950 should continue in

1hp

riii'Pntinn

upnpral

enmp

Under the

orf
on

taxes
taxes

present tax

in

in
in-

1QR1

law

some

of that

gain would go to the tax
collector, but still thire should be
a larger amount available for interest

dividends.

and

^„t

yet

r

estimates

^aiS^ut S Sl

P**^wilH,owthey

action

sion

tends

to1 be

drawn out and court appeals

long

may

be necessary.

,

.Reverting

now
to pervious
have consistently in the past, that comments on the Oklahoma and
reserves are greater now than they Kansas
commission orders, > I
ever
have been, desnite the think that when and if 7 they,
hugel

increasing

Viewed
vieweu

from
num

this
una

withdrawals,

-

direction
uncuuiuii

tne
inc

spread
throw
imuw

sufficiently,
and

more

mux

they
pipe

may4

more

line

limit of "atural gas Pptipe "f
COI?Panies in the category depansl°n does "ot, yet appear to
^niediateiy - above, r It
have been reachedc.. should be understood clearly that
Attention in this review should I do not believe that all pipelines,
be focused

-

reserve

on

certain of last year's

either old

or new,

will necessarily

be subject to this condition.

regulatory developments. , tOne of
these aPPears to have been some
stiffening of Federal Power Commission requirements with respect
t0 aPPkcants for certificates as to
deliverable gas supplies and as to
caPital structure. Generally we
think this development has been

discuss common stock ; market
matters in a study such as Jthis, I
feel under some obligation -to do
so in this instance. It seems ;likely*
that the pipe lines' ability to
over-earn constituted the analy-

expenditures
for
and
for
transmission, distribution and related facilities approximated $2,100,000,000. Of the total expended
for new; construction, the utilities
themselves provided some $700,000,000 out of the depreciation and

tovorable to investors.

ticat

other

Preme

The

in

growth

kwh

sales

has

inevitatblv reauired continued

oansion^in facZtfes

estimated that

It

has

ex-

been

5 200 000

some

kw

ofSSSaSwS
the

10%

lines

in

iust short

1950

increase

that in

over

vear

of

nlace
Total

come

non-cash

expense

and

in-

deductions and by retention

Of the $1,400,000,000
raised from the publie, roundly $800,000,000 was debt,
$300,000,000 Preferred stock, and
$300,000,000 Common. Besides
money

these

which the utilities

amounts

$275,000,000 of Bond
$75,000,000
Preferred

funding, and

some

some

Court
ties.

Decisions
A

Affecting

somewhat

similar

p a n

i

distribution companies. Assuming

Forecasted

Expenditures

for

facilities

are

new

ing

result-

rates,

to

tablished in other fields and other

predominantly

total

this

capacity,
and other

expected to

run

to

generate

some

the

of

a

PiPe linesa

prices which has been going on
for the last several years. Close-

live position and/or to consumers'
demand for gas.- ■
*.
.;.xF

ly related is the fact that recent

That demand has continued to

pipe line construction has been
at substantially higher unit cost

outrun supplies, and many of the
distribution companies have ap-

than prevailed for the older lines./plications for space heating, serv-,

has

$800,000*000 for this purpose. That

gate

"
a11 probability obtain the necesri
rise would come on top* sary
rate . increases themselves
steady increase in gas field without damage to their competi^

Sas to
; Such

livered cost of gas from new lines" ity

enlarged property account, and subject to another inon

in

states; and in that event there; gate rates went up to a r point
would, be a fairly sudden and .which left the distributors with
quite sharp increase in cost of subnormal earnings, they could in

accruals

would

increased

to combina-

knowledge

$2,300,000,000. Principally
by reason of higher depreciation

itself

to', field

as

Even a few cents per M.c.f. is a
tremendous percentage of the low
field prices, but a minor percentage of the delivered price in the
consuming market. Therefore af

to about

try

both

transmission,

second-sight to visualize- all its
implications, nevertheless certain
possibilities stand out: such minimum wellhead prices may be es-

re-

electric

in

in-

costs,

and

$80,000,000 of

and

increase

prices

to

amount is still not large per M.c.f.

utility confinancing in 1951
runs somewhat higher.
It is. expected that 5,800,000 kw. of new
capacity will be placed in operation, making another approximate
10%

higher

le-

any

terpret this situation and also the

electric, and they exclude financing by gas companies.- '
struction

poses

re-

and
e s

sufficient

threat

which

order

Disclaiming

Court.

real

Utili-

stock

companies. As a
minder— these figures apply
m

the

gal

holding

utilities

rt

refunding,

Common stocks sold to the public

by

much

;

.

Supreme

was

for

In
December
the U.
S.
Su- Removal of the analytical basis,
Court upheld the right then, would have a compounded
°f the State Corporation Com- effect in the opposite direction, j
mission of Oklahoma to fix miniNatural Gas Distribution
mum well-head prices for gas in
Industries
that state, as summarized in our
I see nothing in the foregoing
bulletin dated Jan. 5, 1951 on

has been approved by the Kansas

there

basis

^

tion

purposes,

Although I would rathqr not

Certainly of more importance glamour which was attached to
immediately and perhaps also their stocks through part ot 1950.
over the longer term, have been Further I believe that probably
decisions
affecting
pipe
line the analytical basis was pyracosts
and
therefore
profits, mided by market, reaction to it.

raised in the market for construe-

Block, Maloney Co., as was crease in taxes as limiting retained
Elizabeth Maloney. Other
partners earnings, it looks as if the indus-

members of La Morte &
Co.,
which is being dissolved Jan.
3L-

line

vWbile

varied enough as

are

in

were

cost

of the market. Fortunately capital

important new markets. Projects
already under construction, or aplocation, nature of business and proved and awaiting favorable

general partner when the firm,
electric
became
a
member
of the
New
tion c o
York Stock

Mar. 26 $287.50
387.50

either

new

Shields

the New York

ration,

Rosa

(incidentally 4

nies

of earnings.

was previously

curity Analysts.

Teletype NY 1-928

Francisco—Santa

for 11

the

and

New York 5, N. Y.

7-4150
Wires to

v

(Associate)
Exchange

Terwilleger

istered representatives.

Members

New

the association with the
Frederick M. McClelland

announce

_

12

this

of the New York Stock

company

relatively

constructed

rt is clear that the latter, and par- what amounts to a
continuing
ticularly the; Common stock por- FPq scrutiny of earnings and retion, will depend upon the state -turn.js instituted/
v *

o/extra

be increases in regular

to

the

at the beginning of the

Kidder, Peabody Co.

Pacific Coast Exchanges

remaining

form

I deem

on

Two Join Staff of

on

the

of

and

a

Orders

took

alone,

dividends

revenue

A few weeks ago
mended lightening

They

Securities

6

companies

ATiSleTS'ttS;

those of the author only.]

Pacific Coast

general . financing pattern
which has prevailed since the war,

same

com¬

I recom¬
holdings.
Should the "anticipated'* re*
Whether or not the market
action come about you'll have
is on the verge of a new break
cash to buy stocks and among
is secondary to
the future
them should be one or both
trend. With margins now up
of the picture issues.
to 75%, a shakeout shouldn't
be
[The views expressed in this
disastrous,
though I'm
article do not necessarily at any
wary of any reaction. Basic¬
time coincide with those of the
ally, the path we're traveling Chronicle.
signs.

combination

interesting to

Paramount

ket's not concerned with eth¬ marketwise
ical

,

aggregate judgment expressed

Picture

that

war

a

total of 18 such among electrie and

other

Twentieth
Century-Fox, in¬
anything that
stead of hurling names at the
may stop it is considered bear¬
new
medium, took steps to
ish. .1 might make some ob¬
It is also interesting
servation at this point about join it.
the cynical morality of the to note that both Paramount
acting better
whole situation. But the mar¬ and Fox are
tial

follow the

in

month, I have tabulated

word—Television.

it became

so

rates.

to

;•/'//,

to

structures have been so improved
regular in recent years that the industry
Counting only the last two has a considerable degree of flexincreases

and

nies involved

are

Indian

ket is

have also been a surprisingly
large number of utility extra dividends

be found in
the amusement pages of your
daily newspapers, all of which
can
be summed up in
one
reasons

Red China to the UN

by the
delegate. It brought
focus one thing: the mar¬

life.

on

has

to

which have been issued. But there

of this

past

been

into

if

few days the
picture stocks have taken a

the note transmitted from

was

the

*

months of 1950 and to the middle Ability .as between debt and equity,
if

line

the total thus paid

so

has

lished dividend rate

y

re¬

The fact is

seen.

in

are

averages.
if

grounded in fact

mains to be

that

fears

these

a

and

which would**" call - for • perhaps pipe
$850,000,000 debt-and" $650,000,GOO-forced to file applications with'
earnings. This is partly in reflec- combined Preferred and Common. the FPC for rate increaSeS, and
around

on

not

or

*1Knnnnnnnn

1

where

that the rates for the two should

would leave $1,500,000,000 to be
raised by-the sale
new money
securities.
Undoubtedly the industry would-like

The

—

will

1,

Thursday, January 25, 1951

.

old

an

averages are at 242 and a
fraction and before the week

Says—
=

*

*

.

that

11

page

minor

Markets
Walter

from

.

The result has been that the de-

beep.. w?Ural?,oye

that of old cloud

lines delivering in,the same general area — we have seen instances

100%
Power

margin was
or
more.
The
Federal
Commission, has required
where

:

the

ice beyond their near-term abilto connect. The only visible
on

this horizon is possible

curtailment
of
still

in

consumers'

the

manufacture,

appliances;; it

is^

early to know whether
this
cloud
will
actually. : form.'
There can be no question ot the
too

Number 4980

Volume 173

ability

the

of

all

absorb

to

The Commercial and Financial Chronicle

.

gas,

Continued

Public

satisfactory

throughout the natural gas dis¬
tribution
industry.
Increases in
earnings were limited to an ap¬
preciable degree by unseasonably
warm weather in the early months
and

situation

the

and

early

the

benefited

from

of

fairly

severe

Investors

would

touches

well

to

keep

in mind the extent to which wea¬
now

affect gas dis¬

earnings.

The, reason,

ther conditions

tributors'

is the relative magni¬

course,

typical space heating

tude of the

load.

;

That

.J 4 ■
" ,./ - ....
/•'
has led to expanded

.

load

underground storage
development which be¬
gan years ago but is now attain¬
ing new high levels as to both
number off sites and quantities of
gas involved.
The objective, of
course, is to maintain high pipe

emphasis
of gas,

on

a

,

line load factor and thus low cost
of

delivered

and to expand
the. amount of space heating serv¬
ice relative to a given pipe line
deliverability. No doubt more and
more gas utilities will attempt to
store greater amounts of gas un¬
derground. ; Storage
involves a
gas;

"cushion"

so-called

of!

amount

certain

which * stays
in
less indefinitely, as
compared
with
"seasonal"
gas
which is put in storage during the

place

gas

more or

Cushion

winter.
stored

is usually
cost, and so

gas

delivered

at

does not carry a

the

in

withdrawn

and

summer

true profit mar¬

gin.; Thus the storing company is
gettingthe earnings' benefit of
something less than the full avail¬
able deliveries, which
condition'
will be corrected only after the
quantity of cushion gas is in
place,
M;//;/

full

If

merely in reflection of their
increased receipts from pipe lines,
the: outlook is for continuation of
satisfactory trend in natural gas

a

distribution, subject of course to
such 'unpredictables as weather
conditions and increased taxes on

expansion is
shortages,

If pipe line

income.
hindered

steel

by

growth of distributors' customers
and sales volume would of course
limited.

be likewise

.

electric

The

utility

contains any estimates of future earnings—if
given to the SEC these are usually buried in obscure exhibits or
in the transcript of hearings.
/ '
:

remain
obscure, in other cases they are divulged in "due diligence" meet¬
ings, in conferences with Wall Street bankers, or in talks before
the New York Society of Security Analysts (or the other regional
societies). Thus in these cases the alert statistician can avoid the
trouble of attempting to forecast earnings, since official estimates
based on complete data are much better than guesses based on the
partial data which he has available.
some

New York Stock Exchange

Weekly Firm Changes

Transfer of the

of
S.

Samuel

Exchange
will

Grant

42% in 1950

also be studied in the annual reports, and it will

can

a

of
shares, to show the amount by which share earnings will be
diminished (all other factors being unchanged). Should the ana¬
lyst wish to estimate what a 50% or 55% rate might do to earnings
he could apply increases of 20% and 31% respectively (to the, 1950.
income tax figure. It is to bp hoped that all utilities will separate

.the 1950 income taxes and dividing the result by the number

Edward
on

ing them together—and that they
"charge-offs in lieu of taxes."

earnings

tant

changes, pro and

Arthur

considered

on

income only to the
taxes.

eral

extent of 53%—the other 47% going into Fed¬

M.

of/ Philip

the

1

on

to

1.

:

Wick,

•„

~

;

r

(3) Rate increases.

:

(4) Other items.'

-

Feb.

T.

(1)

•

H.

(3)

by the Exchange on Feb. 1.

">

Sorrick, general part¬
ner in Dean Witter & Co., will be¬
come
a
limited partner effective

,

John

*'

Jam

31

J.

Ryan, -Jr.;

will

Frank
retire

T.

James
Ryan

from

partner¬

ship in Baehe & Co.
Samuel S. Grant will retire from

partnership in Sutro Bros. & Co.
on

Jan.

31.




in

the

-

-

/

the rent index

in

Consumers'
whole.

a

1 :;./•

•. - r

-

as

•

'

•

•

■'

' r '"V

LrEPT, if
II. Income

III.

any.

tax

in

the

of

1949.

the

(b)

Index

latter,

as

to

and

the

will

55%.

I: Dividend

index

..

*

due- to:
(1) New issue.
(2)

♦This

*;

.

'

t

•

.

,

'

a

may

involve

interest, less tax.

a

correction "above the

line" also,

has

work

and

basis

a

for

been

completed.

analysis of existing

ployees

an

the

of

use

was

our

points

I must

Index.

Price

theMndex was
prior con¬
sultation by either party with the
Bureau; we first learned about it
use

any

from the newspapers.
■j

The idea of tying wages to the

Consumers' Price Index in
lective

a

contract

bargaining

not at all new.

was

col¬
was

Over many years,

new

and revolutionary

General

the

Motors

contract

(1) the sharp and precise re¬

wages

city

of

and

We have

good progress in this work

plan to complete this phase
project by June, 1951.

the

...

Consumer expenditure sur¬
veys—to
discover the
spending
(3)

uted by region, size, climate, com-

involving

Consumers'

without

reached

questions

patterns of consumers in a current
period for calculation of index
weights. This work is well under
way.
We have selec:ed a sample
of 91 urban places—well distrib¬

emphasize that this

agreement to

<

of

monthly releases,

agreement
the

the

cover

made

beginning
announced in

points in

for each 1.14

the

summer

of

prices

1943,

decline
Raw material and primary
a

prices fell first;

prices

soon

Consumers*

Price

was

consum¬

followed.

munity

income

population,
a

direct effect

live and

each

in

know have

we

the way people

spend their money—and
of

selected
and

on

of
and

density

level,

industrialization,

other factors which

these

cities

have

we

scientifically

a

random

representative sample of the

Altogether

population.
interview

about

ranging

from

over

York

about

65

such

to

formation

will

we

out many

New

in

small

towns

This

sur¬

with the in¬

us

need

to

carry

of the Mills Committee

recommendations.
This

600

in

Anna, Illinois.

as

will provide

vey

will
families,

we

17,000

survey

:

was

planned*

care¬

fully and the schedule and collec¬
tion

techniques

in

year

About

tested Mast

were

Memphis,

70

.well

Tennessee.

trained

survey

Index

a

slow downward

■

7.0

this

phase

the program

of

com¬

pleted by the end of April, 1951.
(4) Price surveys—to assist in
a
list of goods and

The developing

peak

of

reached in August and
movement

(See

samples and city
the" revised index.
This part of our program has: al¬
ready been in operation for over
a year and
will continue through
services,

store

samples' for

1951.

We

are

obtaining

a mass

of

••

Revision

price information under rigid sur¬

Program

These three factors—the devel¬

oping

bias,,

rent,

Motors

similar

and

the stability in

.

Conversion of senior issue.*

get

bias in the rent in¬

provide

to

and calculation methods.

under¬

an

signed with two unions of its em¬

and

,

surveys—

of the

as

This

Present

requirements on increased preferred shares.
. increased
common shares,

unit

unit samples,

population representa¬
tion, nature of the index formula

'

IL Dividend* requirements on

on

coverage,

esti¬

we

effect tb be

footnote to

1

'

the progress made

outlined below:

research

(a)
in the

through 1949 and early 1950.
chart.)

Changes Not Affected by Taxes :

the

in

The steps in the

(2) Technical
research;
and
policy determination — based on

September, 1948, after which there

rate—increase to 47%.V
or

Congress

revise rental

of

beginning in mid-1949.
In the meantime, another land¬
mark in the history of the index
had 'taken place.
In May, 1948,
the General Motors Corporation

was

•

Possible further change to 50%,

a

city samples for family
expenditure surveys. This phase

the

in

statement of about 0.6 to 0.9

174.5
.

It

rent' selecting

guess as

and

Price
the

On

mated the

er's

/

the

of 1949.

are

dex,

the degree of understatement

market

.

-•

"/ •

(No!

and

fortunate time to undertake

rection of the

the Bureau pub¬

articles

the Bureau ventured

set in.

'

Changes in Federal Taxes

C.
cm-

'

•

..

-

and

debt.

on new

v'/./

■:

opportune

information necessary for the cor¬

comparable

on

steadily larger

some

In

'

.\

most

(1) Dwelling

Furthermore, ihe

reached their peak and

Storm damage.

•

Ryan,

Korea!)

foresee

not
a

index); (2) the frequency of
supervisors are now working in
adjustment (every three months), most of the
sample cities—I have
and (3) the annual improvement
lists of these cities to give you.
factor. This new type of contract
They
are
hiring
and
training
put a strain on .the index far crews of
locally recruited inter¬
greater than it had ever before viewers who will do v the actual
endured—at least in peacetime.
investigation. We plan to have

(5) Other items.

,

Clay H.

;

not

disad¬

or

users.

did

the

^

.

advantage

that the

ing this situation; and finally in data, to aid in formulating basic
early 1949, on the basis of such policy and concepts and planning
secondary data as were available, for the revision. In general, these

in

factors: ;

(4) Rate cuts.

.

.

•

.

Wage increase.

(2.) Interest

will

1
>

index

a

sta¬

We

them

lationship of wages and prices (lc

Introduction of natural gas.

Ill/ Unfavorable

William

late

rents

1948-49

in

was

"

,

(2) New plant or process—lower costs or increased net:
(a) Electric generating plants.

the

program and

and the

dwellings

new

on

dwellings.

in

)"
'
territorial characteristics, new

;

to

price

vantage of any of its

of the dif¬

no measure

controlled

.

(b)

to

Feb.

on

rents

What

(1) Hydro operations are, affected, by water supply
(rainfall),
X '
V.'v
/'//.'. />- ■
(2) Gas house-heating sales are affected by winter
temperature.
'v
' >"•*.* '• '•/
"v

(1.) Rate of growth —
industries.
•>. •
-;

V

,.

rfd'Jh

factor—weather:

Variable

...

.

v

Jr.,

would

the

ference in level between the first' to

yzed contracts containing clauses
on
the Consumers' Price Index.

be

-

Bureau had

Changes in Pre-tax Items (Reduce by effective tax rate)
I.

mem¬

will

Betts

so

of

the Bureau of Labor Statistics has-

bership of Lewis S. Kerr, Jr., to
Strong will be considered

:

like to "soften the blow" by using average

presage

revision

summer

an

received for its files and has anal¬

Leon W.

1.

advisable to figure

to

work

proved. by

(a) the Bureau rent sam¬

IMPORTANT FORECASTING FACTORS

Transfer of the Exchange mem¬

Feb.

Most important is the change in the

shares, due to new financing or conversion of

Some companies

con¬

Beaver to Alexander J. Burns

be considered

and all stock financing, will

rates,

shares, while others are willing to use the pro forma share figures.

Transfer of the Exchange mem¬

of

tax

earnings in two ways—based on both actual and average

share

Fred G. Gurke will be considered

bership

in

Changes

II. Favorable factors:-

Exchange

Feb.

by the Exchange

data permits. Changes in pre¬

as

senior securities. In this connection'it is usually

Transfer of the Exchange mem-,

bership

far

con, so

items, such as rate increases or wage advances, will affect net

tax

bership of the late John H. Quin-.
lam to

He must build on the latest

ahead.

so

seemed

of comparative
bility for several years

a
major revision program. So a
rise in rent three-year program was drawn up
which has really taken place this by the Bureau, endorsed by the
time. The under-measurement de¬ Secretary of Labor, accepted by
veloped gradually over the years the Bureau of the Budget and ap¬

a

of the important

some

published share earnings and take account of all pending, impor¬

Feb. 1.

Transfer of the

year

a

any

take into account in trying to

factors which the forecaster should

estimate

clearly state

also

will

the attached table we have listed

In

mem¬

Viner will be

A.

profits taxes, instead of lump¬

their income taxes from the excess

that date

most

"Monthly Labor Review" explain¬

simple matter to estimate the effect of the increase in the
rate to 47% in 1951. This can be done merely by taking 12% of
be

three months.
economic outlook as

the

measure

lished

in 1949 to

importance

the

every

the Bureau's index of rent doesn't

So

being issued by many utilities.

The rise in the Federal income tax rate from 38%

;

index

seemed

kept rents down, whereas in the
1920's they could rise; and second,

index grew

the statistician direct information on this
time informal estimates are

rent

postwar building boom progressed.

beginning to appear will give
point, and in the mean¬

the annual reports which are now

the

of

combination of

a

under-measurement

Feb. 1.
Transfer of the Exchange mem¬
bership of the late Edwin G. Burns
to

to

highlighting

the

period

firs", rent control has

old

ered by the Exchange on

sidered

due

two factors:

was

of

adequate
proportion of new building with
uncontrolled rents,, and fi(b)
the

when they gave regulated industries a special dispensation
excess profits taxes.
While a few utilities will incur EPT, the
amount may not be more than a few cents a share even for the
vulnerable utilities. Since the tax is retroactive for half of 1950,

consid¬

be

is

index

level

low

relatively

was steadily accumulat¬
The General Motors contract

Armistice, Finally, the

time, the rent index is
above prewar. This

25%

about

the

by

The downward'

ing.
of

until 1925,

the

after

years

ples did not contain

following firm

Terry Morrison

H.

postwar peak

a

on

changes:

bership

reach

gress

shares.

The New York Stock Exchange

market

could rise as the
dictated.
They did not

Committee.

rent bias

uncontrolled

they

because:

Recently the forecasting business has been complicated by the'
'rapidly rising Federal taxes, which are now the most important
expense item in the utility income. statement; However, the most
difficult part of the tax problem was largely eliminated by Con¬

affect net income directly,.

:

so

quite

.

,

number of common

has' announced the

the budgeted earnings estimates

cases

comparatively

then,

the present

never

While in

were

recommended

as

Mills

by that time ;hey were some
60% above their prewar level. At

becoming customary to include statements in prospectuses as- -to.
the construction program for several years ahead, and- in some
-cases references are made to future
financing, but of course the

-

index

to

compared

as

and

growth, construction programs, new financing, and share
earnings—which are necessary to support equity financing. .It is

prospectus

time

last

seven

sales

weather.

winter
do

re¬

was

companies

gas

many

this

World War I and afterward; Ren.s

companies,, because of their generally
stable earning power, lend themselves about as well as any stock
group to the art of forecasting. Unlike industrials, they have vir¬
tually no sales problem, seldom any difficulties due io-strikes, no
credit losses in bad times, and no inventory, prof its or losses to
confuse the analyst. Moreover, most companies since the war have
found it necessary to budget at least a year or two ahead of their

by unseasonably cool
during the summer. More

recently
versed

of

FORECASTING UTILITY EARNINGS
*

again

weather

Tied to Price Index!

By OWEN ELY

1950 trend of earnings was

uniformly

9

page

Snags Ahead in Wage Contracts

Utility Securities

heating service. "
almost

jrom

35

par¬

ticularly
under
present
condi¬
tions, but such sales carry smaller
profit * margin than'^does spate
The

(463)

markef

industrial
available

..

General

agreements,

prices—con¬
staff

that

it

vinced

the

was

opportune time to start a

an

for decreased

program

Bureau

the

for

the revision of the

vey

designs to determine price re^

lationships bet ween items, between
types of stores in a city, and be¬
tween

lot

cities.

about

We

proper

are

learning

a

price collection

techniques, the writing of specifi-

Continued

on vaae

36

26

The Commercial and Financial Chronicle.

(464)

Bureau

Continued from page 35

made

ommendations

mittee

Snags Ahead in
Index!

Tied to
cations,

the

and

the calculation of

neries.
me
the

Plans

revision
revision

for

this

weu
well

are

phase

unuei
under

We have worked out

a

lu*

of

method of

was

changed from 1913 to the

somewhat

the three

in

many

tion to

on

fam-

made

progress

this

on

in

face

the

of

In

the first revision year

(July, 1949June, 1950) the special revision
budget did not become available
to us on July 1 as scheduled, but
delayed for

was

hac*

contraet> for al

•

{jrst

pre-Korean, as required by
the Congress.
Yet it would (pe two

—until
early October. Yet
Bureau1 had a deadline of April 1

years

weights

1950>

contract

copied it
the

renewed by the comthe union for a term of
five yearS) wi^ n0 reopening on
was

pany and

(^2) before our basic

Motors

contract

aim0st like it.

signing

or

one

The rush became

fiood> and hy the close of the

a

year

Bureau

had
to

revision would be completed, r ur- 195q the gureau estimates that
thermore, the international out- possjhly 2 million workers in the
stay out of the field *ook was uncertain
we could not united States were either .-covered
required all Federal

while the Census
in

April and

speed

up

was

May;

so

being taken
we had to

planning

our

work

in

^rdprto
PPt into thefipld nrnmntlv
oraei
to get
into tne iieid prompuy.

This

done

was

field work

was

Then

schedule.

on

Korea!

came

Immediately

the staff of the Bureau

f.nto

,

tion

was

drawn

by such contracts

^

'.*

«°m

develonment

lflls

that the hest thing to
undertake

limited

a

,was t°
interim ad-

staff

of

the

Price Division, every obstacle and

delay

every

As

of

this

schedule.

expect
meet

has
day,

And

that

been
we

we

are

still

shall

we

overcome,

still

on

hope and

be

able

to

timetable for the final
revision in the autumn of 1952.
our

th
The

fricie

jfnrpon

Korean

Crisis

tlon weiShts
census,

bas^. on1 the 1950

some

additional

u?ed commodities, and some

tate the post-Korea and pre-Korea
comparisons, it would be necesward

Consequences

some

month prior to Korea.

Hav-

When the outbreak occurred in
Korea in the latter days of June,

jug decided on this step, a^er
haying cleared it with our laboi,.

1950,

management and statistical advi-

we

in the Bureau knew that

we

were up against a new situa(ion of unknown dimensions. Bus-

sory committees, we ^ssucd

nouncement

of

an anJ

the

forthcoming
mess
recovery had been underway interim revision. Some readers of
fiince early in the year prices had this announcement have told me
begun to firm
sumers

Price

up,

and the

Index

Con-

it was not at all well done

a

slowly tney were nice enough to say that
advancing from its low point of "it was not up to your usual standFebruary, 1950. The Bureau was ard of brevity and clarity." It is
putting the final touches on its'for this reason that I have made
first year's work of revision. Yet the effort here to explain the need
was

of the senior staff had to be
drawn off for special tasks
aome

from the

emergency.

Congress

was

for

the

interim

adjustment, the
arising reasons we decided to undertake
it, and the methods we plan to

then working on

We

or

more

became

more

these

field often

in

some ex-

by our revjsion program.

iong^

firms

(and

involved.

had

A

un-

Furtherin

newcomers

the

linle understand-

of the index#

items

to

services

Some of them,

autumn
not

a
th

to

0f

revisi0n

th/

Others

1950.

seemed

know that the Bureau has
program

faile/to
t

underway,

insert

a

clause

snecifvini?

t

r a c

so

in

what

sb0uld be done to adjust when the
Bureau's revision is made

of West Coast

^ons

sjgned

A erouo

employers' and
three

for

up

un-

years

without any escape clause for revision

Yet

thp

hotb

interim

and

the

final revision may be com_
pieted during the life of that con¬
tract

For

example,

hopefully

1951,
index

issued

in

in

This will make

the

January

late

a

February.
revised in¬

new

1950,

stitute

1950,

and

factor.

rent

these corrections

carry
into

backward

least

earlier

This

the

at

will

Bureau's

for

the

then

con¬

official

ad¬

justed index through 1951 and
the

til

final

revision

is

to

...

„

in

the latter half of 1952.

build into the index further read¬

panel of

whom

We

developing

are

consumer

shall

as

full

to

progresses

mobilization.
a

families from

obtain

periodic
reports on their expenditures. In
this way, we shall be able to dis¬
the changes in family living

cover

that

we

are

caused

distortions of

by the stresses and
economy. We

war

a

setting up statistical controls
that will guide our actions sys¬
tematically in keeping the index
structure up to date; The Bureau

CITIES

1935-39*100

ITEMS

f-mterim adjusted index and
Ifttll]S the unadjusted index die,
.urea,d1. ?S4.u

.?•

to Publ^^oW unadjusted

But those contract¬

ing parties who fail to find

a

adjusted

unad¬

justed

ISO

no

need

and

one

will

do

everything

this

useful

as

possible

the

to

index," because it was used pri¬
marily to evaluate changes in the
"cost of living." The Mills Com¬
mittee

recommended

be

to

avoid

whether
the

measured

The

costs.

tended

that

changed (which

to

the
not

or

was

done

confusion
it

change

index

the

was

actually
living

in

in¬

never

do

old

the

influence of

the

cost

of

of any

price change on
living—and approxi¬

industrial dispute
mates what is happening to con¬
arising from escalation clauses in
sumer living costs.
The index can
contracts.
be

Next
In

Steps

tures.

surveys

i

completed two months ago.




1935
Estimates

1940
of

«oMLt> «m uo i

1945

1950

that

the

amounts to 1.3
as

the

a

whole.

Bureau's

rent

These

correction

points in the index

This

is

the

there

are

index

can't

do,

expected to do.

hope

this

way,

we

the Bureau

number

a

committees.

avoid

to

index.

Some years ago,

tablished

of

Early in

es¬

advisory

1947, there

set up a Labor Research Ad¬

was

visory

Committee,

research

consisting

representatives

of
the

of

American Federation of

Labor, the
Congress of Industrial Organiza¬
tions, and the Railway Labor Ex¬
ecutives Association. Later in 1947,
there

also created

was

Research

Advisory

Business

a

Committee,

consisting of about two dozen

rep¬

resentatives of business nominated

by

the

National

Manufacturers
Chamber

of

Association

and

the

Commerce.

committees

meet

of

U.

S.

These

several

times

each year to

consider matters pre¬
sented to them by the Bureau or
to

present other matters
motion.

own

These

their

on

committees

are strictly advisory; final respon¬
sibility for all decisions rests with

the Bureau.
More

;\

!V.;

recently, the Bureau

quested

the

American

re¬

Statistical

Association to appoint a technical
committee to advise and assist the
Bureau

the revision of the Con¬

on

Price

sumers'

Index.

This

com¬

mittee of eminent statisticians has
been

of great help to the Bureau
during the past year.

Yet, with all this outside help,
it is the staff of the Bureau which
bear the final

the

for

index.
this

success

responsibility

staff

is

failure

or

And I can

assure

worthy

sponsibility.

the

of

that

you

that

of

re¬

In four years of

as¬

sociation with them, I have come
to

them well, and I wish I

know

could

adequately

to

convey

you

confidence in their abil¬
ity, integrity, and industry. This
my own

index

is

one

of

the

the

by
competent work of the staff.

the
I

in

best

world, and it is kept that
want to

assure

will

sumers'

Price Index

issue

way

all that the

you

Bureau

sibly

the

best

that

Con¬

we

pos¬

We hope that it will
serve a
useful public purpose in
the dark days that are ahead of us.
can.

into

a

larger than

original estimate of

as

nation

At

moves

forward

the

annual meeting of the
Division, Association of
Stock Exchange Firms, the fol¬
lowing slate of officers was elect¬
ed for the ensuing year:
Richard
M.
Trickey of Henry Clews &
Co., President; D. Lionel Howedel
of Jas. H. Oliphant & Co., VicePresident;
James J. Duddy
of
Carlisle & Jacquelin, Second VicePresident;
T.
Alvah Cowen
of
Peter P. McDermott & Co., Treas¬
urer; George J. Miller of Hallgarten & Co., Secretary; and Myrvan
P. Burns of Bear Stearns & Co.,
Recording Secretary.

Cashier's

Daniel Reeves & Co. to
Admit Harold C. Strotz
BEVERLY

HILLS, Calif.—Dan¬

iel Reeves & Co., 398 South Bev¬

erly Drive, members of the New
York and Los Angeles Stock Ex¬

changes,
Strotz

to

has

some

will admit
partnership

been

with

Harold C„
of Feb. 1.

the

firm

for

time.

mobilization the index will

under

it did in

increasing'strain, just

Work} War II.

the Bureau. do
cape

Exchange Cashiers Elect

He

"

the

come

Although the computa¬
tions were delayed somewhat by
the Korean crisis, the work was
showed

As

cor¬

rection.

1930

power

the consumers'

future prospects of the index. The

the data to calculate the rent

1925

of

briefly the most recent de¬
velopments and the immediate
in late 1949
and early 1950 furnished us with

*920

with great confidence in

dollar; in esti¬
mating real wages; and in deflat¬
ing or inflating family expendi¬

sum¬

marize

1913 1915

used

evaluating the purchasing

closing, I should like to

dwelling unit

that

economic

an

way

Thus there should be

one.

shall try to

we

all

to

,,

this, and the revi¬
sions we are making will not make
of
converting to the adjusted in- it more of a
"cost-of-living in¬
dex will have the old index pub¬
dex."
However, in measuring as
lished and made available for their
well as possible the changes in
use.
So for a period of time there
prices of goods and services that
will be two indexes—the official
the consumer buys, it measures

200

and

are

1945)

INDEX

We

is good,

.

The interim adjustment will give
us a better base on which we can

economy

uses

In

must

£° C°P® ^th som® °f .thesue Sit" tool as it can be made.
unions the Bureau had to change
The Consumers' Price Index was
!*f Pla^s-. Instead of inaugurating formerly called "the cost-of-living

the ing contracts.

things

un¬

made

'(

near

and should not be

introduced into the index in early

to

AU.

importance of fuel
weight of ice.

adjustments, plus
correction, will all be

rent

in

IN LARGE

are

These various

as

MODERATE INCOME FAMILIES

we

to increase the

on

FOR

and

oil and decrease the

name

.CONSUMERS' PRICE

new

goods

planning to
include among the items to be
priced frozen foods, television sets
and group health
payments; also,

make

m

» a^tmenfjusted indeV wilTbe used by
he Consrefs!aplLCe"
Se the government by the general
especially in the confideraUon of history of this index. While the
^parties to° colleriive" baralin
the amendment by Senator Ful1940
in progress,

of

the index,
and
adjusting
the
importance
given to some items we now price.

^.Defense Production Act At-

was

important

list

our

that make up

though that has no logical connec- justments that will be
required
^on with contracts signed in the the

Jf* in introducing it into the in,

revision

adding

are

June,

was

ffor exampie> got themselves mixed
re-1
with the rent correction, al-

^vei^s
various items in
jhe index. To improve and iacili-

are

unions being affected to

widely-

sary tofrom
project
the revision backthe revision date to

j*
Its

*na
and

the re"t correction and of several
ather factors such as new popula-

We

shall

the introduction into the index of

the

data.

revising the index population
weights to the 1950 census figures.

figure for January, 1951. Then

ministrative problems. Yet, thanks
to the devoted and wholehearted

of

additional

Board,
where

spots

we

hundred

cooperation

It

the

dex

tent

single adjustment

a

need

we

Reserve

out

ionger a case of a COuple of
large experienced companies and
no

combine

m

interim

adjustment of the index.

Justment of the index. This would

into

created

the

for

program

emergency work and into new ad-

Congressional hearings,

has

aeyeiopmeni nas created

many problems.

reau's

So the staff took stock of the
whole situation and we decided

fill

to

the

For one thing it
suiveys has
seriously complicated the Bu.
survevs

Federal

etc.,

about to sign

or

them

postwar buying habits de-

on

successfully, the
completed, and by

the end of the fiscal year we were

practically

Jjf su£e
c
?-i carry
through to 19o2. Meanwhile, we
''.lcl '1ave a good deal pf informa-

merce,

But

clear

some

misuse of the

partment of Agriculture and Com¬

the

bargaining and in public pol¬

make

adjusting the index

Motors

General

that the index

icy-making.

peo¬

xhen in

other

no

tive

in

points have not been

we are

in

•

v

that, properly used, it can be an
extremely valuable tool in collec¬

in late Novem¬

some

issue

to

the

of

some

careful statement of

a

know

index,

on the basis of the family
expenditure surveys we made in
seven cities in 1947, 1948 and 1949.
We are using pertinent informa¬
tion from many other sources, De¬

ln

chalmers Co

15

index, as
ple mistakenly think.

t the entire
was

Oct.

are

have taken:

limitations of the index.

and

this

released

were

the

Here
we

plan

future

new

on

We

i

high

on

facts

to the

Next,

for its field work, since the Budget

agencies

added

rents

issued

These

ber.

existence,

"ni<3"e; there
^

(1949), which

The

to

was

Mo-

T.

three months

over

General1

The

the correction for the rent in- wages< it was still almost unique,
de*\ When determined, this cor- But then came Korea! And within
rection was to be introduced into a few weeks there was a dramatic
*..} ?x. a
earrie.s
change in the situation. Compaticable date. It was obvious that nies an(} unions> at first by dozens
^his. would complicate the com- ancj |ater by hundreds, joined the
Prison ot post-Korean price tcveis pr0cession by copying the General

difficulties

great

■.

this

by

nfaf.ly completed its calculation

re-

unexpected developments.

-

^

^

Bureau

which

deVelopment

one

program.

May>

vision program has been achieved
and

anticipate

steps that

higher than the origi¬

footnote

a

did

we

last time.

housing turned out to be

correction

rent

which has immensely complicated

am

Jure^ ere to be plated to a base

for wide distribu- June
our data.
The

of

nQt

adjustment

reasons:

includes

extremely

between

estimate.

nal

£ice a^'

both pricesand wages in the fu-

be made available

ways

users

The

will have

we

can

bnUl

F"tche

av¬

as the poet says, "the bestp]ans of
men gang
a-gley." When we decided upon

interim

two

building activity; and (b) the dif¬

1923-1925.

years

of

year

and old

Production
Act was
; ".7 "vour

final£ passed t contained no el

.

information

'

a

weights, and the base period

thj[g

«ct reference to the Consumers'

processing the expenditure data
on
IBM machines, which means
that in the long run the detailed
ily living

p.

Defense

way.

was

and

aft

to Senate and House Committees

revised index

a

in¬

Alas!

the con-; Consumers Prwe Index. The Bqweights, and rea u stait Save technica 1 service

index

of

This

for

calculation

new

additional year

an

com¬

points

the

(a)

rec¬

ferential

laid

processing:

(5) Data
ntruction

efficient bright 'which related price and
price data.
wage, controls to the height of the

special

a

0.6-0.9

adjust¬

terim
adjustment made certain
improvements in the techniques

most

our

of

statisticians.

of

erage of

methods of using

interim

an

ment in 1935 to conform with

Thursday, January 25, 1951

.

not

We in

expect to

Shields

es¬

pany,

criticism and misunderstand¬

Stock

ing from time to time. But
hope that
tremes of

we

can

avoid

we

the

controversy which

do

ex¬

arose

Opens Branch

TUCSON, Ariz.—Shields & Com¬
members of the New York

Exchange,

have

opened

branch office at 1075 North
bell

Avenue.

Roland

with the new office.

J.

a

Camp¬

Hicks
r

1

is

Number 4980

yolume 173

,.

The following statistical tabulations

Indications of Current
Business
AMERICAN

(percent of capacity)

Indicated steel operations

week

Activity

INSTITUTE:

STEEL

AND

IRON

latest week
or

month ended

Previous

Month

Year

Week

Week

Ago

Ago

.Jan. 28

100.9

99.6

Jan. 28

2,017,000

1,991,000

100.1

ingots

(net tons)

castings

and

—.—

Steel

IRON

of

Crude

Crude

output

condensate

and

daily

—

(bbls; of 42
.w——.——Jan.
Jan.
Jan.
Jan.
Jan.
Jan.

average

—_—

——.

stills

to

runs

Gasoline

INSTITUTE:

PETROLEUM

oil

gallons each)

daily

—

(bbls.)

average

(bbls.)
Kerosene output (bbls.)_
output

,

fuel oil output (bbls.)
(bbls.)
Stocks at refineries, at bull: terminals, in transit and in pipe lines—
oil,

and

distillate

Residual

fuel

oil

Gas,

Finished

output

unfinished

and

(bbls.)

Kerosene

(bbls.)

gasoline

Residual

5,761,510
116,370,000

5,787,810

13

20,815,000

20,254,000

13
13

2,652,000

2,267,000

2,679,000

10,062,000

21,050,000
2,657,000
9,528,000

4,924,800
5,487,000
18,422,000

13

9,786,000

9,452,000

8,567,000

5,723,320
5,925,000

6,347,000

8,864,000

steel

121,209,000

119,308,000

110,943,000

18,027,000

19,510,000

..Jan. 13

64,557,000

68,198,000

23,152,000
76,913,000

Jan. 13

41,675,000

41,914,000

41,598,000

at

.

7,596,000

BANK

DEBITS—BOARD

THE

118,844,000
19,217,000

71,075,000

STANDING
OF

60,003,000

Jan. 13
Jan. 13

783,025

662,444

772,902

629,543

692,543

617,322

680,044

543,941

3,296,800

Dec.

of

*298

*29»

*4,456,319

3,277,08*

BANK

30:

1

$244,939,000

$233,972,000

$183,801,000

87,019,000
10,101,000

88,356,000

48,909,000

10,225,000

8,967,000

18,222,000

19,060,000

21,307,000

1,697,000

2,281,000

—

,

1—_

;

•

exchange
goods

on

shipped

and

stored

$118,207,000

OUT¬

-

shipments

298

4,039,433
OF

between

31,544,000

29,483,000

8,932,000

$393,522,000

$383,377,000

$271,916,000

$2,235

foreign countries

ENGINEERING NEWS-

7,728,22*

6,503,531

$139,542,000

Domestic warehouse credits

Based
—

*8,011,851

[SYSTEM—

!

Dollar

8,359,798
6,051,145

.

RESERVE

FEDERAL

—

Ago

,

ACCEPTANCES

YORK—As

NEW

Year

Month

(tons)—-

(in thousands)

DOLLAR

BANKERS

Previous

alloy

of Nov.—

GOVERNORS

OF

RESERVE

December

Domestic

(number of

CONSTRUCTION

ENGINEERING

CIVIL

FEDERAL

of

Latest
Month

reporting—

transported

Exports

freight loaded

Revenue

of

^

AMERICAN RAILROADS:

OF

including

f

Volume

8,059,000

of that date:

ASSOCI/tlON—

November:

of motor carriers

freight

are as

produced

December

of

Imports

cars)
freight received from connections (number of cars)

Revenue

of

castings

products,

either for the

are

INSTITUTE:

(net tons)—Month

TRUCKING

Month

i

ASSOCIATION

for

Number

Month

Jan. 13
Jan. 13

at

and distillate fuel oil (bbls.) at
fuel oil (bbls.) at

Gas, oil,

AMERICAN

13
i3

STEEL

steel

tons)—Month

Shipments

of quotations,

cases

AN,D

and

and stainless

AMERICAN

in

or,

ingots

(net

1,790,000

1,930,600

Dates shown in first column

AMERICAN

93.9

production and other figures for the

cover

that date,

on

Latest

Equivalent to—
Bteel

month available.

or

37

(465)

l

The Commercial and Financial Chronicle

.

RECORD:

Total

construction

S.

U.

construction

Private

_

construction

Public
State

and

municipal

—

Total

$182.177,00n

Jan. 18

$391,606,000

$415,811,000

$692,041,000

Jan. 18

242,146,000

78,275,000

149,460,000

141,639,000
274,172,000

112,439,000

Jan. 18

579,602,000

103,902,000

Jan. 18

50,495.000

121,131,000

70,304,000

55,613,000

98,965,000

153,041,000

509,298,000

22,662,000

————_

CONSTRUCTION—U.

BUILDING

Bituminous

BUREAU OF MINES):

S.

(U.

lignite (tons)—;
Pennsylvania anthracite (tons)
Beehive coke (tons)
;

DEPARTMENT

STORE

.

INDEX—FEDERAL

SALES

11,860,000

"10,025,000

952,000

785,000

158,400

"144,000

.<

12,005,000

7,420,000

853,000

660,000

158,500

28,500

Nonhousekeeping

Electric

r

STREET

18

18

392

*401

125

*119

C—-

138

*147

buildings

47

*46

91

101

53

135

•'--130

40

.''Si

—

and

office

loft

and

nonresidential

garages—.

129

building

Jan. 20

6,980,845

6,903,818

7,032,740

Educational

6,041,158

AND

INDUSTRIAL)

DUN

BRAD-

&

Jan.18

INC.

193

167

Public
PRICES:

COMPOSITE

Finished steel (per ib.)_

f

pig iron

)

Bcrap steel (per gross ton)

(per gross

Jan. 16

:

v

ton)
1

Jan. 16

4.131c

4.131c

4.131c

3.837c

$52.69

$52.69

$52.69

$46.05

$46.75

$45.09

$45.13

Telephone and telegraph
Other
other

All

$26.42

Residential

METAL PRICES

Electrolytic
'

Export
Btraits
Lead
■'!

refinery

tin

277

246

28

-.23

..

Jan.
Jan.
.Jan.
Jan.
Jan.
Jan.

at
at

;

at
at

(East St. Louis)

at

:

24.200c

24.200c

24.200c

18.200c

Educational

24.425c

24.425c

24.425c

18.425c

17

176,000c

170.000c

146.000c

76.250c

Hospital and institutional
Other nonresidential building

17
17
17

17.000c

17.000c

17.000c

12.000c

16.800c

16.300c

16.800c

17.500c

17.500c

17.500c

T 9.755c

".I

.

U. S.

Government

y■

.

DAILY

public-service

Bonds
4

■

Aa

'

——

A

'

—„——

—

_—

Group

U.

S.

Aaa

115.63

116.41

119.82

121.67

118.60

120.02

Jan. 23

115.24

114.85

116.02

Jan. 23

109.97

109.97

109.60

108.88

Jan. 23
Jan. 23
Jan. 23

112.75

112.56

112.00

111.81

116.02

116.02

115.82

117.20

119.20

119.20

119.00

120.43

Jan. 23

2.39

2.39

2.39

2.21

Jan. 23

2.86

2.86

2.87

2.83

2.66

2.66

2.66

2.57

2.71

2.70

2.72

2.65
2.85

corporate

Jan. 23
;
;

Railroad

MOODY'S

Group..—.

COMMODITY

NATIONAL

received

2.88

2.89'

Jan. 23

3.17

3.17

3.19

3.23

3.02

3.03

3.06

3.07

(tons)-

—

.

figure.

Wholesale

2.79

ERAL

As of Dec.

262,530

319,609

204,724

198,135

241,472

207,870

239,164

207,624

106

91

105

94

746,287

727,579

681,676

388,173

Jan. 13

Unfilled orders (tons) at

112

37

*40

34

*0

y

ao

,v
.

-40

.Vf

'

39

25

*26

.155

*240

55

59

20

'
"

12
*

1W

;■

>40

*17

50

*67

.

V

G

8

$32,900

"$31,600
*10,200

9,100

1/.800

*17,300

14,300

$61,200

'*$59,100

$52,100

,

'

$28,700

■

—

$189,600

$232,000

PAPER OUTSTANDING—FED¬
RESERVE BANK OF NEW YORK—

2.63

Jan. 13

110

:

COMMERCIAL

2.86

Jan. 13
.

——

•

PUBLICLY REPORTED
BY
U.
S. CORPORATIONS — U.
S. .DE¬
PARTMENT OF
COMMERCE — Month of
November 1000's omitted)—
———■
DIVIDENDS

2.70

—.Jan. 13

(tons)

30

—~

—

Retail

2.85

352.5

29

451

?

Manufacturing

2.69

507.3

209

(millions of dollars):

CASH

-

•-

''y is*

DEPT. OF COM¬
SERIES—Month of November

MERCE NEW

2.69

523.1

*31
*221

INVENTORIES,

BUSINESS

—

$333,000

month of December:
Copper production in U. S. A.—
Crude (tons of 2,000 pounds)
Refined (tons of 2,000 pounds)

90,643
109,464

(000's omitted)

30

$325,000

$257,000

COPPER INSTITUTE—For

ASSOCIATION:

Percentage of activity
y

"Revised

•;(4

*669

GO

public—

2.85

532.3

Jan. 23

INDEX

PAPERBOARD

..Production

Jan. 23

2.91

Jan. 23
Jan. 23
—Jan. 23

Group

Utilities

Industrials Group

other

All

7

28

11

enterprises—

development

and

Total

Bonds

Baa

'.Orders

115.82

YIELD DAILY AVERAGES:

BOND

'V' A

;>

115.82

119.82

—„

Public

Jan. 23

119.00

Group

Government

Average

103.92

119.82

Industrials Group

MOODY'S

101.40

115.43

.

Utilities

101.40

118.80

*

Public

101.45

Jan. 23

Baa

Railroad

Jan. 23

——-Jan. 23

Aaa

•

Conservation

AVERAGES:

corporate

Average

\

'

.L.

PRICES

BOND

-

——

Miscellaneous
•

MOOD IT'S

3/
186

209

7.

'

water—.,

and

Sewer

-■

33

Military and naval facilities

'

*

\

'

Highways

73

-

——

17
17

11.800c

y

5

..

...

40

34
185

building—

Nonresidential

,

at

York)

(New

(St. Louis)

Zinc

QUOTATIONS):

J.

M

Hi

24

Industrial

refinery

(New York)

Lead

-

M.

&

copper—

Domestic

;

(E.

21
'

243

549

building

24

30

74

construction

Public

20

66

,—

public utilities
private
——

83
—

13

Railroad

IRON AGE

10

03

—

11

——

utilities

6t

26/

22
V

29
—

Farm construction

730
•-

30

20

—

institutional

and

Miscellaneous

231

174

30

————

recreational

and

-

39

—.—

Hospital
(COMMERCIAL

*73

(nonfarm)— _4—

restaurants,

Social
FAILURES

62

Religious

INSTITUTE:

(in 00q kwh.)

output

*1,035

-

building

Warehouses,

233

638

Other

ELECTRIC

803

900

Commercial

285

206

Jan. 13

Stores,
EDISON

1,401

*1,126

building

Nonresidential

SYS¬

RESERVE

TEM—1935-39 AVERAGE—100

$1,050

*1,885

980

(nonfarm)
New dwelling units———
—-—•
Additions, and alterations————

y,

Jan. 13
Jan. 13
Jan. 13

and

coal

*$2,554

1,686

-———-

construction

Residential
OUTPUT

OF

(in millions)

construction-

new

Private

COAL

DEPT.

S.

LABOR—Month of December
Total

U.

In

S.

(tons of 2,000

A.

Refined

stocks

copper

(tons of

80,390

101,410

94,947

121,954

113,715

107,662

49,040

51,505

116,027

288,756

265,310

265,513

127.1

125.5

lli.a

£14,969,000

£8,446,000

$1,300,366
127,265

$884:290

customers—

to

Deliveries

*90.148

at

pounds)—
end o4' period

2.000 pounds)

'(J< >.)!!•:

CLEANERS — STAND¬
ARD
SIZE
(VACUUM CLEANER MANU¬
FACTURERS ASSN.)—Month oi December:
Factory sales (number of units)
VACUUM

HOUSEHOLD

OIL,

PAINT

AND

DRUG

REPORTER

PRICE

INDEX—1926-36

STOCK TRANSACTIONS FOR THE
LOT

DEALERS

AND

SPECIALISTS

EXCHANGE—SECURITIES
Odd-lot sales by dealers
Number of orders
t

ODD-LOT
ON

EXCHANGE

OF

ACCOUNT
THE

N.

Y,

Number

<

of

Dollar

Odd-lot

total

,

}

sales

value

;

34,021

27,570

Jan.

6

1,271,860

1,047,204

1,013,326

833,663

Jan.

6

$52,861,134

$42,913,062

$41,167,123

$31,554,124

34,771

31,742

28,152

Jan.

G

Jan.

6

415

480

319

Jan.

6

36,480

34,291

31,423

27,985

Customers'

other

Short

6

1.075,006

1,057,454

945,517

Jan.

6

15,981

17,875

11,716

5,892

1,039,579
$37,917,733

933,801

785,885

$36,398,654

$27,165,478

Jan.

6

1.059.025

—Jan.

6

$41,367,877

sales.

■

Jan.

6

Jan.

6

>

*
—

339,690

298,860
298,860

.

.

291,120

Number of

WHOLESALE

NEW

to customers—
in banks in
Total of customers' free credit

'2*91*120

238450

SERIES—U.

S.

DEPT.

OF

6

469,420

326,840

396,690

291,480

Cash on hand and

commodities

Farm

products

Livestock
Meats

All commodities other than farm and foods
Textile

Fuel

products

and

Metals

lighting materials

and

metal

products

Building Materials
Chemical and
"Revised

silted products

figure.

(Includes 527,000 barrels




•

value of

Month

120,670
299,013
890,80J
93,80/,269

210,921

178.7

"176.1

174.7

20,226,000

(barrels)

Jan. 16

191.5

*191.9

188.5

153.7

.—Jan. 16

183.9

*187.8

184.7

159.8

249.5

243.3

231.3

190.7

Jan. 16

182.1

*183.0

180.8

154.8

Jan.16

261.6

259.7

253.1

2100

Jan.16

1G8.9

167.8

165.2

145.9

Jan.16

179.7

*173.4

170.2

138.5

..Jan. 16

136.1

.Jan. 16

188.3

136.1

135.9

131.4

187.9

184.3

168.5

221.8

191.5

138.6

115.9

Jan.16

223.9

-*223.4

Jan.16

144.0

*142.3

of foreign crude runs.

Capacity used

151.4

RECT

f.

AND

purchases
v

UNITED

220,168

132,003

703,301

542,-200

22,488,000

18,040.000

24,172,000

17,269,000

*5,945,000

9,352.000
86 'U

TRANSACTIONS IN DI¬
SECURITIES

of December:
—

$131,450

$5,848, <50

$6,956,400

*—

>

—
1

EXPORTS AND IMPORTSOF CENSUS — Month of
Nov.:

STATES

BUREAU

ExDWtsS °mitted):

import!
t

76.291,953

128,463,510

GUARANTEED

OF U. S. A.—Month

Net

89,505,642

102(o

95/0

—

—

TREASURY MARKET

,

636,490

(BUREAU OF MINES)—

of November:

Production

307,200

795,755

--

6J8,22b

60,623

370.333

118,507,393

oiaqoi

Shipment from mills (barrels)—i9, <91,000
Stocks (at end of month—barrels)—
6,380.000

Jan. 16

Foods

,

listed shares
——■
listed bonds
Member borrowings on U. S. Govt, issues
Member borrowings on other collaterals

LABOBr-

Jan.16

Grains

U. S
balances—

Market value of

1926=100:
All

„

$1,357#124

Credit extended

PORTLAND CEMENT
Jan.

shares...

PRICES

firms carrying margin accounts-rcustomers' net debit balances

of

Total

238,150

339,690

Round-lot purchases by dealers—

£13,524,000

EXCHANGE—As of Dec.

(000's omitted):

Member

Market

—_

BANK!'LTD.-^onth^f^e^Z

STOCK

YORK

30

167

Jan.

sales

Other sales

36,895

791,777

sales

Round-lot sales by dealers—
Number of shares—Total sales

NEWMIDLAND
NEW

Dollar value

.

39,149

41,954

6

of

average=100)

(1935-39

December

total sales

short

Railway

of

Index

purchases by dealers (customers' sales)

Customers'

COMMERCE COMMISSION—
Employment at middle

INTERSTATE

Customers' short sales
Customers' other sales
—.
Number of shares—Customers' total sales

•

>■

122.3

STOCK

Jan.

shares—Customers'

it',

ODD-

(customers' purchases)—

Number of orders—Customers'

J

146.6Ifc

COMMISSION:

1

>

150.7

151.5

-Jan. 19

AVERAGE—J 00

"Revised.

—-1

$978,000

.

SSI.GOO

.

$903,000

$841,000

922,000

592,000

38

(466)

The Commercial and Financial Chronicle

Continued

from

page

15

Continued

from

page

.

.

Thursday, January 25, 1951

.

Co., 10 Post Office Square, Bo»-

5

ton 9, Mass.

Also

How Wage and Price
Controls Feed Inflation

Observations..

dum
•

Carondelet

12, La.

market trend

past

only 18% of the national produc¬

in the

trend.
This situation is the converse of past de-flation
periods—as in 1932 and 1938—when the public assumed that the

on

not

too

hard

to

in the great baking in¬
dustry, and I pledge you that we

top of

a normal civilian de¬
That proper credit con¬
tight government spending,

mand.

trols,
and

distributed

evenly

There is

taxation

stop inflation.
Second—That much of the pres¬
for

sure

small,

controls

from

comes

power-loving

bureaucrats

who would like to be big bureau¬
crats, and they take advantage of
a very popular wish to see every¬

body

controlled but one's self!
Many say, "Oh, well, they are in¬
evitable!" It is encouraging, how¬
ever,
that men high in govern¬

thing

one

factory
nized

production,

these

have recog¬
and put up

dangers

democracy.

the "go slow" sign.
reach for

we

system,
when

point,

my

the totalitarian

that

not

democracy,

of

make slaves of free

we

purpose

should

•i;v

.

men

deny that there is such

spiritual strength.
talked

about

broadcast.

The

thing

a

his

recent

"New

Yorker"

magazine points out the weakness

prices,

of

that price

controls

sap

strength.

We

and

wage

productive
thus defeat

our

could

the

Russians

in

their

guile and might—to

aim—by
the

conquer

world,

opportunity.
of

So

Purpose!

for

much

Unity

This

work,

di¬

war pro¬

decisions

and

or¬

ders from the Armed Forces.
these

have

beginning to

are

been

'*

too, for Unity
Our

rectly and indirectly, in
awaits

critical

of

But

We

come.

Washington

—that Washington has fiddled and

plays politics while Rome burns
—but our performance as citizens
should make

us

Politicians

humble.

play

politics

for

the boys all home in
1945;. we
'wanted to get back to peace in a

the

scrap

war

and in
peace

Let

strength

plants,

get

rid of controls and cut taxes. Poli¬
ticians are still

playing

and

adopted.

made

helpful.

It's your second vote and
don't have to wait for elec¬

you

tion.
Civilian

Defense

starting to tell
an

atomic

must

us

bomb

leaders
This

more

impor¬

our

crisis

ened.

Daniel
he

as

worked

his

But

as

an

atomic bomb.

used

every faculty
for
self protection and
kept going. It
is highly important in our
democ¬
racy that we each try to under¬
stand

the

military situation,

intelligently
our

as

citizens

and

act

give
;

are

jobs

of

make in the conduct of
I

am

sure

/

leadership

you

our

busi¬

will be doing




their

favorable

Faith?

clear

Our

and

our

purpose

will keep

the faith and take your
honorable • part
in
this
mighty

Liberty.

You have
Torch of

Bradley Higbie

(Special to The Financial Chronicle)

r

...

DETROIT, Mich.—Raymond H.
Layer is with Bradley Higbie &
Co., Guardian Building, members

Exchange.

*

.

LOUIS,

Smith

Co.,

with

is

t

Mo. —Ralph

be

may

members

of

Exchange.

R.

North

the

Broadway,

Midwest

He

Stock

previously

was

with Fusz-Schmelzle & Co.
,

'j

doubt

some

..

OMAHA,
Central

Building.

is

,

Neb.;—William
now

Republic

associated

Co.,

*

-

.

Investing

Wall

Street

reports

Investing Corpora¬
that net assets on

31, 1950 amounted to $2,345,with $1,499,830 a
earlier, an increase of 56%.

compared

year

Net asset value per share on Dec.

31, last,

was $12.25 on the 191,506
outstanding on that date,
compared with $10.43 a share on
143,772
shares
outstanding
on

shares

Dec.

31, 1949.

The

fund

80.1%

of

stocks

and

Dec.

on

net

31,

assets

19.9%

1950 had

invested

in

cash

in

and

U.

S. Government securities.

Pell, de Vegh Reports
Net
de

asset

Vegh

value

Mutual

of

the1

Fund,

Pell,

Inc.

on

Dec. 30, 1950 was $31.01 per

whether

the

above-exemplified

timing; in lieu of using the realistic
investment approach based on quantitative
value-analysis.
'

share,
compared to $28.71 on Sept. 30,
1950 and an original subscription
price of $25 per share, on April 5,
as

1950.

Total net

amounted

to

assets

Dec.

on

30

$467,661.67,

which
$370,337.84
on

with

compared

Sept. 30, and $120,000.00
On

on April 5.
15, 1951, per share net

Jan.

value

asset

reached

$32.26

and

total net assets were $564,219.94.

No

single

stockholder
owns
of the total stock

than 8.6%

more

outstanding.

Continued from page 8

Dividends paid
months

American Airlines Inc.—Special
review—John H.
Lewis
&
Co.,
63 Wall

and

St.

Regis

Street, New York 5, N. Y.

Black, Sivalls & Bryson, Inc.—
reexamination—H. M. Byllesby
& Company,
Inc., 1500 Chestnut

Hutton &

Company, 61 Broadway,
New York 6, N. Y. •
Products and

let

describing

Street, Philadelphia 2, Pa."

bide's

alloys,

gases

and

Consolidated

Processes—Book¬

of Union Car¬

uses

chemicals, carbons,
plastics—Booklet
A,

Union Carbide

and

Carbon

Grocers

—

Outlook

for

*

&

Co.,

Michigan Trust Bldg., Grand Rap¬
2, Mich.

Laclede

1951—

Hickey, 49 Wall Street,
New York 5, N. Y.

&

Production

and

rious

Investment

—Tabulation

for

Taussig, Day &
Company, Inc., 316 North Eighth
—

a

re¬

share

Anal¬

increase

with

the

of

assets

million

shares.

of

Fund

$10.60

This

repre¬

16.4%

of

in

Total

net

reached./$19

the

as

year-end, a $2V2
million rise during the year.
The report showed one-third of
of

assets

Fund

ferred
mon

Diversified

invested

stocks,

stocks

in

Investment

bonds

and .pre¬

one-third in

of

"raw

com¬
material in¬

dustries" like

metal, oil and steel,
remaining third in com¬

the

such

stocks

of

other

industries,

retail trade public utility
and motion picture.
y
y
as

.

&

Maine. Central

vs.

Nickel

Wall.

Plate

—Analysis—Raymond & Co.,
State Street, Boston 9, Mass.

Va¬
1950

Stocks,

compared

an

value

win, 265 Montgomery Street, San
Francisco 4, Calif.

Hickey, .49
Street, New York 5, N. Y.

Rico—Lamborn

Funds

York

.

Fund,

net asset value per

months, earlier.

mon

tin—Vilas

Company, Inc., 99 Wall Street,
5, N. Y.
*
on

—-

New

of
a

year-end,

and

New York

Taxability of Dividends

Company

Investment

Lehigh Valley Railroad—Bulle¬

sugar production for

Puerto

Series
vealed

ysis—Walston, Hoffman & Good¬

Indated

—

Gas

amounted

Fund

Diversified

12

Noble

30

Reports Net Asset Gain

sented

&
Stern,
30
Street, New York 4, N. Y.

ids

&

raw

Diversified

randum—Herzfeld

orandum—White,

during the nine

Dec.

share.

per

Broad

Douglas & Lomason Co.—Mem¬

Cor-

ended

of $12.34 at Nov. 3, 1950, the fiscal

Memo¬

Puts & Calls—Explanatory pamElectric Bond & Share—Analphlet—Thomas, Haab & Botts, 50 ysis—Abraham & Co., 120 BroadBroadway, New York 4, N. Y.
way, New York 5, N. Y.
Railroad

$1

the

poratiori^30 East 42nd Street, New
York 17, N. Y.

Vilas

to

A

Paper—E. F.

•

Also available is

148

analysis of

an

Verney Corp.^.

Street, St. Louis 1, Mo.

Richardson

Managed Funds Files

Managed Funds, Inc., St. Louis
filed a regis¬

investment company,

tration
the

statement

SEC

on

seeking

Jan.

ton

&

22 with

registration

2,000,000 shares of 1-cent

capital stock.

Co.—Analysis—May

v

par

of

value

Underwriter: Slay-

Co., Inc., St. Louis.

&

Central Republic Adds

Dannefer

*

event, it should be clear that these foibles are bound
the public's
habitual preoccupation with short-term

with

up

Cuba

Stifel, Nicolaus &

314

Inc.,

and

market movements and their

rates of

(Special to The Financial Chronicle)

Wall Street

is only 8% higher and the utility average is about 4% lower.)

Sugar

Stifel, Nicolaus Adds
ST.

position

market groups.
(The Dow-Jones railroad average is 48%
its pre-Korean high of last year, while the industrial aver¬

Hold it high!

Joins

tax

perform¬

clean, as God would have
us,
to be invincible.
That's the
price of peace. Surely you each

issue

Shellmar

on

Mutual Funds

In any

ance

struggle for freedom.
been
bequeathed' the

profits

excess

activity outlook have completely supplanted the erst¬
and are supporting the carriers'
outrunning., of i

•"

bach

in this hour of crisis,

that
be

freedom, as our sons
living and dying this

Wall

(Special to The Financial Chronicle)

which you and I must
exercise in
addition to the contribution- we
ness.

"

Will you,

*»,

leaders the best we've
got, but

keep going.
These

are

morning.

through
wilds,
the

that country.
in his back was

hand,

ment Recommendations

in Korea

commentary

Street,

same

Assets Increase 56%

Prodigal Son

arguments

and died for

at

stress

in

man

deadly

he

life.

way

other

Dealer-Broker Invest¬

way

Kentucky

white

as

under

was

An Indian arrow

just

of

new

of the Detroit Stock

Boone

unknown
first

and

Products Corporation.

167

Valley Forge and at
Gettysburg men lived as heroes

Here

we

thinking about this
be cool, calm and
clear. There is no use
being fright¬
whole

a

Pitt

at

how to act under
attack.

face, but it is

tant that

are

secure

Fort

defended

Mason

the

a

Dec.

Here William

Here

Digest"—Loewi

East

follows the respective states
1929 speculation it was

same, external event, and selected
emphasis of attention on*;particular elements, constitute the moti¬
vations of the market's behavior; or whether
they demonstrate
the illogical interpretation of
previous market action through
fallaciously rationalizing it in terms of external events. Perhaps
they do both.

glorious

Corp.—

the

contradictory reactions to the

colony of free
signed the Decla¬

was

forefathers

must

urgent about remobilization.

a

225

is

During the long past period of the railroad shares' doldrum market

There

spiritual
who made

men

of

Co.,

Milwaukee 2, Wis.
Also available in the

action, irrespective of the attractiveness of their price-earnings
ratios, the industry's negative long-term economic influences re¬
mained exclusively implanted in. the investor's mind.
Now, on

,

ration of Independence. Here, too,
the Constitution was worked out

keep

as

Here

men.

•necessarily responsive to our
wishes, and now you and I must
be

the

tradition to uphold.
Penn established a

politics,

A well written letter to
your Sen¬
ators and Congressmen is
always

of

height

Bankshares

and Financial

the

The utility stocks,
conversely, whose market prices have been
acting so badly, in the public mind have apparently lost all their
formerly attractive elements. No longer is weight given to their
"growth stock" position, their low pay-out of dividends, their"necessity" value, and their status of an anti-deflation hedge.

the

Pennsylvania. You have

Wisconsin

ness

The Utilities—From Riches to Rags

.V:..'.'.

for

their supply

the

Corporation—

Analysis in current issue of "Busi¬

tion

age

you

/; -A., y.f.. ;

strive

us

At

Match

E.

New York.

The process of selective emphasis is also
applied to industries,
a
confusion of the short-term with the
long-term status.

other

individual effort to win

A

market influence.

Jones, 219
New Orleans

Unterberg & Com¬
pany, 61 Broadway, New York 6,

with

over

if necessary, to whxjh*-'

or,

a

Street,

counsellors. Mr. Templeton is also
President of Growth Companies.

conduct of business

our

our

war.

our

votes, and we voters have little
justification to kick. We wanted

hurry,

as

as

Ine>—Mem¬
&

stock market declines occurring between 1937 and 1938 and sub¬
sequently until 1942, and between 1946 and 1949, both monetary
expansion (swelling the demand factor), along with long-term,;'
dollar depreciation were
apparently forgotten by the market com¬
munity...

armament

and
individuals, should strive to

repair, in

is the time,

Performance.

duction

I,

.v-

Time for Unity of Performance

of

in this crisis which

racy

Machine

Continued from page 15

while

expediency, let's recognize tion. Americans have gradually
fact, try to see that they are become less and less religious and
fair to all groups, and that we,,
consequently less and less moral,
continue our fight for a peaceful
—certainly a weakness for democ¬
and

memoran¬

argued

the

that

freedom

market.

The Rails—The New

litical

individual

equities

.

whereas our strength lies
ourselves over a long period of in our struggles, past and
present,
cold war.
to keep men free.
Of course we
Therefore, the time has come must spare no effort to keep our
to be crystal clear in our thinking powder dry and do the best with
—to recognize that price and wage what we have.
controls are not part of our pur¬
But this is a time of moral as
pose in this great effort.
well as material testing, for us as
If we get them because of po¬ individuals as well as
for the na¬

world of

in

is centering its bull market attention.
As with
threat, the public's impression of the relation of

as

with government fixed wages and
and

the

Mr. Hoover

in

it

decline

the

and

that there would never be enough "good" stocks to go
around, and that their "scarcity value" justified the 200-1 priceearnings ratios of the time. On the other hand, during the drastic

Outside of communism few will

But, third, and this is
that

as our

dollar

SuppIy-and-Demand Chameleon

demand for stocks and
of

distinguishes us from our
godless enemy.
Let us be clearthis,

the

ing public
inflation

that

be clear in understanding the dif¬
ference between communism and

and

a

Sugars,

Universal

Study—C.

&

truth, justice and right—all of

about

both farm

of

The "enormous" institutional funds,
including those of pension
funds and trusts, constitute another element on which the invest¬

which the Communists deny. It is
another
fundamental
difference

skilled

in

The

run some

ing people. We believe that God
exists, that there are such things
as

value

40% rise in commodity prices was ignored

we

being misunderstood; but,
large, we are a God-fear¬

by and

the

in

would continue uninterrupted.
During the post-OPA decontrol¬
ling period of 1946-1948 while stock prices fell by 10% net, the

ment, like General Marshall, and
leaders

uptrend

not par¬

are

ticularly religious, and I
risk of

that

more

all do. Americans

can

half, the public has become increasingly in-flation
confident of the uninterrupted continuation of its

a

conscious—and

Keep Up Spiritual Strength

can

and

year

Southern

orandum—Scharff

past

corn

products industry will
do our best to supply
you fairly
and lully.

supply

is

Grinding

\\

attending economic elements the few that explain the bull
of the time, and completely neglecting the bearish
influences.
Thus it is that during the market's 50% rise over the

many

your best

and

Gear

Co.

which, God forbid! That the Pres¬
ident's $40 billion war budget is
tion

available

on

Street

Explains Its Oper¬

ations—Edited by Phillip H. LohE.

with

Farnam

man

York

and Franc M. Ricciardi—New

Institute

of

Finance,
20
Broad Street, New York
5, N. Y.—
Paper—$3.00
(lower
prices
on
quantity orders).'

Gannon, Inc., 161 Devonshire
Street, Boston 10, Mass.
Also

available is

analysis of

an

American Research and Develop¬
ment Corp.

Riverside
Card

Group Securities Files
Group

City

2,

Securities,
N.

J.,

Jan.

Inc.,

Jersey

19

offered

500,000 shares of 1-cent
Cement

memorandum

Company—

Lerner

capital

stock.

par

Underwriter:

value
Dis¬

tributors Group, Inc., New York.

Volume 173

Number 4980

'

..

The Commercial and Financial Chronicle

.

(467)

Securities Now in Registration
Aihambra

Nov.

1

filed

($1

per

Gold

Mines

Corp.,

80,000 shares of

Hollywood,

common

stock.

Calif.

Halsey, Stuart & Co. Inc.; Morgan Stanley & Co.; The First
Boston Corp. Proceeds—To repay bank loans. Bids—Ex¬

Price—At

share). Underwriter—None. Proceeds—For
further development of mine and for
working capital. par

•

American

Jan/18

<

convertible

•

debentures due March

pected to be in

19, 1963

(amount

Jan. 15

to-expire

for

each

March 19, 1951.

on

vertible into capital stock

.share, payable

per

and payment of

J.

/

con¬

advances

purposes.

1

Ampal-American Palestine Trading Corp., N. Y.
Dec. 8 filed $5,000,000 of 15-year 4%
sinking fund bonds,
series A, due 1966. Price—At 100. Underwriter—Direc¬

and gas

n®

Audio

:-/f;.;/;////y'/

///•

•'V/'//■;.'//.'
^

Devices, Inc., New York

stock (par 10 cents).

Price—$2

share.

per

r—Peter Morgan

1

i;

& Co., New York.
selling stockholders.
Automatic

Dec. 7
stock

Baseball

common

Underwriter

the

account

of

the

Underwriter—Mitchell-Hoffman

and

25,000 shares
Price—$1 per share.
Co., Inc., Baltimore,

company
&

Md.

Proceeds—To promote sale of Foster pitching arms
(.. with automatic feeds for use in baseball batting ranges.
>

Tf

Avildsen

Tools

&

Machines,

B. &
Jan. 8

lative

H.

Inc.

cumu¬

stock (par $10) and 58,940 shares of
(par 50 cents) to be sold in units of one

stock

/ preferred and

one common

share.

Price—$10.50

and 50 cents per share for common stock.

Woolfolk

per

unit

Underwriter—

&

Shober, Inc., New Orleans, La. Proceeds—
/ For working capital. Office—513 Carondelet
Bldg., New
Orleans

La.

12.

Boston

Herald-Traveler Corp., Boston, Mass.
(letter of notification) 1,300 shares of common
stock (no par).
Price—At market (approximately $14
per share).
Underwriter — Paine, Webber, Jackson &

Dec.

14

'/ Curtis, Boston, Mass. Proceeds—To selling stockholder.

/ V

Brilhart

Plastics Corp., Mineola,

L. I.
100,000 shares of

Jan. 4 (letter of notification)

stock

*

(2/14)
common

(par 5c), to be sold to highest bidder at public-;

/ auction by Adrian H. Muller & Son, 39 Broadway, New
<fYork.
Price—It is not anticipated that the aggregate
/ sale
>

•

price will exceed

$100,000.

Proceeds—To

General

Acceptance Corp., of Allentown, Pa.
Capitol Hill Associates, Inc., Washington, D. C.
Jan. 10 filed 25,000 shares of non-voting common stock,
to

-

be offered

None.

,

to

members

Price—At

vothers.

par

of the

($50

Proceeds—To erect

Republican party and
share).

per

new

Underwriter—

building for Republican

headquarters and club house. Statement effective Jan. 19.

-

;

Power & Light Co.
(2/6)
$15,000,000 first mortgage bonds due Feb. 1,
-1981.
Underwriters—To be determined by competitive
;
bidding. Probable bidders: Halsey, Stuart & Co. Inc.;
*

.

Carolina

/ Jan. 4 filed

W.

C. Langley &

Co. and First Boston Corp.

(jointly);

Kidder, Peabody & Co. and Merrill Lynch, Pierce, Fenner & Beane (jointly); Lehman Brothers; Equitable Se¬
curities

Corp.;

Smith, Barney

&

Co.

Proceeds

—

construction program.
*

to

noon

(EST)

Central

Bids—Expected to be received
Feb. 6.

on

For
up

,

Illinois

Public

Service

Corp.

18 at rate of

share for each

one

tq expire Jan. 31.
writers—The

10

First Boston

shares

held; rights
share. Under¬
Corp. and Blyth & Co., Inc.

Price—$15.87 V2

General

Price

by amendment.

Realty & Securities Corp.,

Corp.. New York. Proceeds—To four selling stockholders.
Edison

Co.

of

New

York,

Inc.

Jan. 24 filed $60,000,000 of first and
refunding mortgage

bonds, series F, due Feb. 1, 1981.
Underwriter—To be
determined by competitive bidding.
Probable bidders:




to
•

to

able

on

Jan.

29,

with

offering

28

subsidiaries

stock

under

market

(approximately $25
period of six years.

a

filed

Distilleries

purchase

per

share),

plan.
pay¬

Co.

of class B common stock
Price —To be filed by amendment. Under¬

159,142

shares

For working

•

Group Securities Corp., jersey City, N. J.
19 filed 500,000 shares of capital stock
(par one
cent). Underwriter—Distributors Group, Inc., New York.

Jan.

///

Bldg., Dallas 2, Texas.

Proceeds—For investment.

Gulf
Jan.

wages

on

a

share.

capital.

share.
ital.

by employees up to 10% of
payroll deduction plan. Both

15.

Duggan's Distillers Products Corp.
>
27 (letter of notification) 340,000 shares of com¬
stock (par 10c). Price—75 cents per share. Under¬
writer—Olds & Co., Jersey City, N. J. Proceeds—To pay
balance of purchase price for building ($20,000) and for
working capital.
Electric

series

57,846

Manufacturing Co.
shares of cumulative

preferred

(par $50), convertible into common
prior to Jan. 1, 1961, to be offered initially for
subscription by common stockholders of record Jan. 31 '
at rate of one share of preferred for each eight common
shares held; rights expected to expire about Feb. 14.
Price—To be supplied by amendment.
Underwriters—
Smith, Barney & Co. and Van Alstyne Noel Corp., of New
York; and Newhard, Cook & Co.*,fit. Louis. Mo. Proceeds
—$1,015,565 to be used to retire presently outstanding 7%
preferred stock; $450,000 to cover, the cost of a new
plant in Bedford, Ind.; approximately $350,000 to reim¬

R.

Drilling Co.,

'/

(letter

Insurance

Fire

Co.,

Philadelphia

of

Helio

Aircraft

Jan. 16 (letter of

Proceeds—To

derwriter—None.

develop four-passenger

Office—•

Holeproof Hosiery Co., Milwaukee, Wis.
7 (letter of notification) 20,000 shares of common
stock (par $5). Price—$14 per share. Underwriter—None.
Proceeds—For working capital. Office—404 West Fowler
Dec.

company's treasury for cash funds used in the
purchase of its St. Louis plant from the U. S. Govern¬

&

2

"Helioplane" and to pursue military business.
Boston Metropjolitan Airport, Norwood, Mass.

burse the

St., Milwaukee, Wis.

provide

Hooper, Neb.
(letter of notification) $30,000 of 33/4% bonds
1970.
Price—In excess of 102%. .Underwriter—

Hooper Telephone Co.,

■„

Aug. 18
iue

Brownwood, Tex.

Jan. 15 (letter of notification)

'/

Corp., Norwood, Mass.
? '
notification) 3,000 shares of non-cumu¬
lative preferred stock (par $20) and 3,000 shares of com¬
mon stock
(par $1) to be offered in units of one pre¬
ferred and one common share. Price—$25 per unit. Un¬
•

A'

stock

September* 1950; and the balance to
additional working capital.

Proceeds—For working cap¬

1771, Dallas, Tex.

notification) 64,000 shares of capital
stock (par $5).
Price—$4.50 per share. Underwriter—
Jenks, Kirkland & Co., Philadelphia, Pa. Proceeds—To
increase capital and surplus in order to offer additional
lines of insurance, including automobile casualty and
liability coverage. Financing indefinitely delayed.
',■#

(1/31)

in

Underwriter—None.

Address—P.O. Box

Hamilton

Oct.

mon

filed

15 shares held; un¬

partial financing of anticipated military contracts and to
acquire manufacturing facilities. Office—80 Wall Street,
New York 5, N. Y.

*

Oct.

29

share for each

Gyrodyne Co. of America, Inc.
Jan. 16 (letter of notification) 42.800 shares of class A
common
stock (par $1).
Price—$3 per share.
Under¬
writer—Jackson & Co., Boston, Mask
Proceeds—For

Jan. 29, 1951. Price—$57.50
Underwriter—None. Proceeds—For working

Emerson

new

•

on

Statement—Effective Dec.

one

subscribed shares to be offered to public., Price—$30. per

stockholders of record Dec. 21, 1950 at rate of 1
share for each 50 shares held, the remaining 75,000 shares
annual

$10), to be offered to present stockholders on

the basis of

;

Nov. 10 filed 200,000 shares of common stock.(par $15),
of which a maximum of 125,000 shares are offered to

offerings will terminate

Insurance Co., Dallas, Tex.
(letter of notification) 10,000 shares of common

10

stock (par

...

common

F.

effective

writer—Glore, Forgan & Co., New York. Proceeds—
working capital and general corporate purposes.
Offering—Deferred indefinitely.

Southwestern Securities Co., Houston, Texas. Proceeds—
For expansion and working capital. Office—Commercial

•

for

The

For

Dayton Pop-up Sprinkler Corp., Dallas, Tex.
9 (letter of notification) 19,000 shares of common
(par $10).
Price—$12.50 per share. Underwriter

ment

its

and
over

Dec.

stock

stock,

stock¬

share

one

Underwriter—Hirsch & Co., New York.
Registration—Ex¬

become

(par $1).

capital.

Dec.

common

expand plant facilities.

Glenmora
*■

tion for resale to public. There will be reserved for con¬
version of the preferred stock 1,300,000 shares of class B
common stock. Price—$6 per unit. Underwriter—Dansker

per

of

Safety Razor Co.
(letter of notification) not over 10,000 shares of
common stock (par $1)
to be sold to employees of com¬

one preferred and one
basis." An additional 25,000 shares of each class of stock
are to be issued to underwriters as additional
compensa¬

Jan.

rate

16

pany

—

the

at

Gillette

Price—At

York. Proceeds

29

from 15 to 20 days-thereafter.

run

Jan.

N. Y. City

Wachob Bender Corp., Omaha, Neb.

100,000 shares of common

temporary

stock.

Price—$1 per share. Underwriter—None. Proceeds
—To complete a test well in Mills County, Tex. Address
—P. O. Box 786, Brownwood, Tex.

Proceeds—To retire

loans.

Indianapolis Power & Light Co. (2/7)
$6,000,000 of first mortgage bonds due Feb.
1, 1981. Underwriters—To be determined by competitive
bidding. Probable bidders: Halsey, Stuart & Co. Inc.;
Jan. 9 filed

Facsimile & Electronics Corp. (2/14)
shares of class A convertible stock
(par $1) and 1,000,000 shares of common stock (par 25
cents) to be reserved for conversion.
Price—$2.50 per
>

Dec. 29 filed 400,000

share for class A stock, with an

underwriting commission
Underwriter—Graham, Ross & Co.,
Inc., New York.
Proceeds—To repay indebtedness to
RFC, and the balance to develop and produce fascimile
transmission equipment and for materials.
.

Jan.

Farmers Syndicate, Inc., Cortland, N. Y. (2/1)
10 (letter of notification) $250,000 of 30-year 5%

real

Corp.

shares of common stock (par $5).
share. Underwriter—Van Alstyne Noel

Consolidated

pected

and

Pfice—$15

per

Proceeds—To

300,000 shares of class B
cents) to be offered in units of
class B share "on a best-efforts

(par 35

Jan.

remaining 100,000 shares are
to be offered to certain executives and key employees
of company and its subsidiaries.
Price—To be supplied

filed

stock

record

each four shares held.

construction of hotel.

registered debentures due Jan. 1, 1981.
Price—At par
in units of $50, $100, $500 and $1,000.
Underwriter—
None.
Proceeds—To improve and modernize plant and

& Cable

holders of

Co., Inc., which com¬

Nov. 27 filed 200,000

Circle Wire

which 121,715 shares are to be offered to

Corp., Chicago, III.

(par $5)

Instrument

Corp. (1/29)
221,715 shares of common stock (par $1) of

Jan. 2 filed

Proceeds—To pur¬

preferred stock

per

Proceeds—For construction program.
*

machinery and working
O. Box 2427, Denver, Colo.

of 50 cents per share.

Dec. 26 filed

267,600 shares of common stock (par $10)
."offered initially to common stockholders of record Jan.

uj

(letter of

Nov. 20 filed 300,000 shares of 6% cumulative convertible

their

19,397 shares of 6%

preferred

common

secure

15

stock

to be offered for subscription

Incorporated, New Orleans, La.

(letter of notification)

Underwriter—None.

Dow Chemical Co.

| of bonuses under profit sharing plan.
V
.

23

Office—2439 N. Charles St., Baltimore 18, Md.

,:; Jan. 15 (letter of notification) 50,000 shares of prior pre¬
ferred stock (par $5) to be offered employees in
payment

Mines,

capital. Address

Bros. & Co., Inc., New

Equipment Corp.

(letter of notification) 300,000 shares of common
(par 25 cents), of which 275,000 shares are to be

sold for

*

•

V/

4-H

Proceeds—For

common

Proceeds—To three

j for the account of the underwriter.

•

Jan.

Underwriter—None.

Dansker

Jan. 17 (letter of notification) 50,000 shares, of

1

common

per

—P.

Corp., Tulsa, Okla.

properties.

(letter of notification) 28,000 shares of

(par 50

cents).
Price—At market (estimated at
share).
Underwriter—De Pasquale Co., New
York, and J. Howard O'Connor, Pelham; N. Y, Proceeds
—To selling stockholders.

$1.25

132,182 shares of common stock (par $5),
of which 4,818 shares are to be offered to stockholders
and 127,364 shares to public. Price — To stockholders at
$5 per share and to public at $6.25 per share. Under¬
writer—None. Proceeds—For investments.

(letter of notification) 48,046 shares of capital
Price—At par ($5 per share). Underwriter—Con¬
tinental Corp., Tulsa, Okla.
Proceeds—To purchase oil

with¬

amendment.

Oct.

13

Statement

Inc., Denver, Colo.
notification) 30,000 shares of capital
Price—$5 per share. Underwriter—None.

Culver

stock.

capital.

(par $1).

Commerce to

Building, Denver, Colo.

Nov.

stock

will construct Dallas hotel. Business—A non-profit
corporation under sponsorship of Dallas Chamber of

& Co., New York, Proceeds—To A. E.
Johnson, Presi¬
dent, the selling stockholder. Office—1100 First National

working

Fleetwood-Airflow, Inc., Wilkes-Barre, Pa.

Jan. 22

pany

Statement effective Jan. 9.

.

Atlantic Oil

(total

27

chase debentures of Statler Dallas

Argo Oil Corp., Denver, Colo.
18 (letter of notification) 5,750 shares of
capital
stock (par $5).
Price—At the market (approximately
$17.37V2 per share). Underwriter—Carl H. Pforzheimer

'

share

additional

Manufacturing Co.
(Consolidated
now
owns
51,400
shares, or approximately 13% of the 391,500 outstanding
Bates
shares).
Exchange Rate — To be supplied by

Dec.

Bank

per

Proceeds—For working capital.

—At face value.

and employees may be salesmen.
Proceeds—To
develop and expand agricultural, industrial and commer¬

in Israel.

$5

Cosmopolitan Hotel Co. of-Dallas, Tex.
Dec. 13 filed $1,500,000 of 2% debentures due 1965.

tors

cial enterprises

•

exercise of option by Alfred

100/115ths of

filed a maximum of 500,000 shares of capital
(par 10 cents), to be offered in exchange for an
unspecified number of shares of common stock of Bates

subsidiary and associated companies and for general

corporate

upon

Price—At

for

drawn Jan. 17.

stock

stock

$100 of debentures
Price—At 100% of principal
Proceeds—For

and
common

Consolidated Textile Co., Inc., New York

Dec.

by surrender of

$38 in cash.

Proffitt.

$1,000).

beginning June 1, 1951, at $138

Underwriter—None.

amount.
to

The debentures will be

Pasadena,

(letter of notification) 230 shares of

(par $1) to be issued

ex¬

of

stockholders of record Jan.

debentures

Engineering Corp.,

12 shares

held.
Price—To be filed by amendment
along with dividend rate.
Underwriter—Smith, Barney
& Co., New York.
Proceeds—To pay promissory note,
to complete purchase of a new
plant at El Monte, Calif.,

California

$410,000,000) to be offered to
29, 1951 on basis of $100 of
seven
shares of stock held; rights

excess

Consolidated

ADDITIONS

SINCE PREVIOUS ISSUE

each

pected to be opened week of Feb. 19.

Telephone & Telegraph Co. (2/13)
not exceeding $420,000,000 12-year 3%%

filed

INDICATES

39

estate,

Office—41
\

to

retire

Elm Street,

and for working
Cortland, N. Y.

loans

,

capital.

Fedders-Quigan Corp.

June 21 filed 103,402 shares of series A cumulative con¬
vertible preferred stock (par $50) to be offered to com¬
mon
stockholders on basis of one preferred share for

New York

Boston

Philadelphia

.

Pittsburgh

San Francisco

Private Wires to all

offices

Chicago

Cleveland

.

40

.(468)

The Commercial and Financial Chronicle

Blyth & Co., Inc.; W. C. Langley & Co., Shields & Co.
White, Weld & Co. (jointly); Lehman Brothers,

North

NEW ISSUE CALENDAR

Corp.;

(jointly).

Proceeds—For

January 25, 1951

program.

Kansas-Nebraska Nat Gas Co., Inc

Indianapolis Power & Light Co. (2/1)
Jan. 9 filed 196,580 shares of common stock
(no par) to
be offered to common stockholders of record
Feb. 1,
3.951 on basis of one share for each six shares
held, with

General

oversubscription privilege; rights to expire Feb. 15,
Price—To be supplied by amendment
(not less
than $25 per share).
Underwriters—Lehman Brothers;

Instrument

Corp

stock.

&

Co.;

and

The

First

Boston

Industrial

Fermentation

Denver,

Emerson

Colo.

Electric

Underwriter—Robert D. Bowers & Co., Den¬
Proceeds—From the sale of the wheat to be
a plant and for
working capital.

Farmers

Jan. 3

,«3tock
None.

Motor

ment.

Debentures

_

For

—

Jan.

(EST)

Price—At par ($10 per share).
Underwriter—
Proceeds—For corporate purposes and the
pur¬
chase of merchandise
(steel) for resale. Office—Care of
*Efrein & Metrick, 320

York,

N.

Bonds

1.

Brilhart

Plastics

Corp._

__

_

Debs.

Facsimile & Electronics Corp

on

Steel

Corp

West

Penn

Electric

7, 1951

Co.

Common

1951

ienden

&

new

Co., Chicago, UL# and associates.

Proceeds—

construction.

lative preferred stock. Price—At
Underwriter—None.
■4

Offering has been

-:0

La

par

Proceeds—For

deferred.

-

of

Middlecreek

Valley Telephone Co.
Jan. 5 (letter of notification) 1,500 shares of common
stock being offered to common stockholders of record
Jan. 6, 1951, on basis of one new share for each share
held, with an oversubscription privilege; rights to expire
on Feb.
15, 1951. Pri$e—At par ($50 per share). Under¬
writer—None.

Proceeds—For

conversion

phones and for expansion program.
Street, Selinsgrove, Pa.
•

to

dial

tele¬

Office—21 S. Market

Pointe-Piasccmold Corp.,

Windsor Locks,

16

(letter of notification) 16,093 shares of
^tock (par $1).
Price—$2 per share.

common

Underwriter—None.

Proceeds—For corporate purposes.
and Bridge, Windsor
Locks, Conn.

Office—Canal Bank

Lincoln Service Corp., Washington, D. C.
..^Dec. 12 filed 80,000 shares of $1.50 cumulative
preferred
'

Jan.
of

15

stock

(no par—with stated value of
$22.50 per share),
With warrants attached
entitling the holder to purchase
at $12 per share in the
ratio of two com¬
mon shares for each five
preferred shares held. Of said
60,000 shares, 46,950 shares are offered in
exchange up to
4 p.m. (EST) Jan. 31 for
outstanding 7% prior preferred
stock (par $50) and 6%
participating preferred stock (par
$25) on the following basis: (1) For each
7% prior pre¬
common stock

ferred share two

new preferred shares; and (2) For each

6% participating preferred share

share of new pre¬
accrued and
unpaid div¬
premiums, in cash. The remain¬

ferred stock—plus in each
idends and

redemption

ing 33,050 shares

were

one

case

publicly offered

on

Jan. 11.

Price

V^$2u-per ?,hare' Underwriter—Johnston,

Lemon & Co.,
Washington, D. C and associates. Proceeds—For
work¬
ing capital and to redeem
unexchanged old preferred
.

stock.
-

f

Statement effective Jan. 10.

None.

St. Louis, Mo.
Jan
22 filed
2,000,000 shares of capital stock
cent). Price—At market.

•

Proceeds—To retire

Minnesota

Underwriter—Slayton

,,

&

Inc., St. Louis, Mo. Proceeds—For investment.

Co.

4.

ft!?sP1ot M'nesr inc.,

Oct. 27

,

Mercantile Acceptance
Corp. of California

Dec.

4

(letter of

notification) 5,000

ferred stock, 5% series.

Underwriter—Guardian
cisco.

Proceeds—For

shares of first

Price—At par ($20

Securities

corporate

Corp.

of

purposes.

Montgomery Street, San Francisco, Calif.
•

Metals

per

pre¬

share).

San

Fran¬

Office—333

Milling Co., Tacoma, Wash.

5 inn(1ttter of notification) 40 shares

and 500 shares of
preferred stock.

Underwriter—None.

of

Price—$100

per

share

Proceeds—For working
capital and
equipment. Address—Box 942
A, Route 9, Tacoma, Wash.




16

cent).

Fund, Inc., Minneapolis, Minn.
filed 150,000 shares of common stock
(par one
Price—At market. Underwriter
Minneapolis
—

Associates, Inc., Minneapolis, Minn.

Proceeds—For

under

oversupscription
Price—$12.50

an

Feb.

on

which

transactions

2.

has

entered

subscriptions
be stabilized.

may

into

will

be

Dealer-

Mission Appliance Corp.,
Hawthorne, Calif.
July 24 filed 50,000 shares of 6% cumulative convertible

Price—At

($20

share). Under¬
writer—Lester & Co., Los Angeles, Calif. Proceeds—To
retire bank
In a

par

loans and install

per

machinery and equipment

proposed new planUto be located east of the Rocky
Business—Manufacturer of gas and electric

Mountains.

water and space
•

heaters.

.

Montclair

Housing Corp., Washington, D. C.
Jan. 17 (letter of notification) 246 shares of
capital stock
(no par).
Price—$500 per share.
Underwriter—None.
Proceeds—For purchase of an equity in apartment house
buildings and organizing apartments on a cooperative
Office—941

New

York

held.

Avenue, N. W.

Washing¬

1, D. C.

Morrison-Knudsen Co., Inc., Boise, Ida.
Jan. 11 (letter of notification) 30,000 shares of

shares

50,000

to

are

be

Md.

stock

common

initially

Price—At $6 per share.

(par $1),

offered

basis of three shares for each

on

to

10 shares

Underwriters—Ward and

Co.; Investing Securities, Inc., and James C. Kennedy,
Jr., of New York who have agreed to buy 20,000 shares
each of the remaining 60,000 shares (preemptive rights
to which have been waived by the stockholders) and
50%

of the

50,000 shares not subscribed for by stock¬
Augus D. Mcintosh of New York-will under¬

holders.

take to dispose of any

"best

efforts"

•

Scranton
18

stock

remaining unsubscribed shares

basis.

Proceeds

Business

—

for

construction

Manufacture

of

on

and

hygienic

Electric Co.

(letter of notification)

(par $5).

share).

3,741 shares of common
market (about $13.87V2 per

Price—At

Underwriter — None.
Proceeds
To Republic
Corp., Wilmington, Del., the selling stockholders.
—

Service
•

Shopping Bag Food Stores, Los Angeles, Calif.
(letter of notification) 10,000 shares of preferred
stock (par $25) and 10,000 shares of common stock (par
$1) to be offered in units of one preferred and one com¬
mon
share.
Price
$30 per unit. Underwriter—None.
Proceeds—For working capital.
Office—2716 San Fer¬
nando Road, Los Angeles 64, Calif.
Jan. 11

—

South

Uranium Mines Ltd.
(Canada)
560,000 shares of capital stock. Price—At

State

($1

par

share). Underwriter-Optionee—Robert Irwin

per

Martin of Toronto.
tion and

Proceeds—For commissions, explora¬
development expenses, and working capital.

Southern Discount Co., Atlanta, Ga.
Sept. 18 (letter of notification) $191,500 of 5% subordin¬

ated

debentures, series E. Price—At par. Underwriter—
of debentures, Allen & Co., Lakeland, Fla,
Proceeds—To reduce bank loans and for working capi¬
tal. Office—220 Healey Bldg., Atlanta, Ga.
For $100,000

Southern
Nov. 2
stock.

None.

Marine

Insurance, Inc., Atlanta, Ga.
30,000 shares of common
Price—At par ($10 per share).
Underwriter—•
(letter of notification)

Proceeds—To purchase stock in Southern Fire &
Insurance Co. and to reduce, debt.
Office—79

Ponce De Leon Ave., N. E.,
Southern

•

Statement

company.

Corp., Taneytown,

110,000 shares of

Nov. 30 filed

preferred stock.

investment

Products

filed

stockholders

in¬

vestment.

Natural

Atlanta, Ga.
Co.

Gas

(1/30)

-

stock

—$2

San

Francisco

Underwriter
stock will be

.

common

(par $10) to be offered company's employees. Price
share less than the market price of this stock

per

the

on

—

Stock

None.

purchased

Muntz Car Co.,

Exchange

on

Proceeds—None
on

to

Jan. 22, 1951.
company,

as

the open market.

Evanston,

Jan.

11

of record

shares
will

stock

on

Southern

an

Feb.

basis of

share for each

one

10

oversubscription privilege; rights
16. Price—$33 per share. Under¬

Proceeds—To

repay bank loans and for
Statement effective Jan. 16.

Union

Gas

Co.

(1/25)

150,469 shares of common stock (par $1) to
be offered for subscription by common stockholders of
record

Jan.

shares

held,

to

25

on

with

expire Feb. 26.

None.

Jan.

12 filed

common

be
a

basis

of

one

new

share

for each

10

oversubscription privilege; rights
Price—$16 per share.
Underwriter—

an

Proceeds—For construction.

Southwestern

(par $10). Price—At not exceeding $20 per share.
Underwriter—None. Proceeds
For working capital.
Office—1750 Hennepin Ave.,
Minneapolis, Minn.
—

expire

the

on

Jan. 8 filed

Finch

Co., Minneapolis, Minn.
(letter of notification) 12,137 shares of

Jan. 30

held, with

writer—None.

III.

Price—$1 per share. Underwriter—None. Proceeds—For
operating capital, and to complete purchase of tools, dies
and inventory from
Kurtis-Kraft, Inc. Office—1000 Grey
Ave., Evanston, 111.
Nash

Dec. 18 filed 155,546 shares of common stock (par $7.50)
to be offered for subscription by common stockholders

expansion program.

Nov. 29 (letter of notification) 300,000 shares of common
stock (no par) to be sold to a
group of 20 individuals.

-•>

common stock

and

which

one

Kellogg, Ida.
(letter of notification)
400,000 shares of capital
mock. Price—37^ cents per share.
Underwriter—Stand¬
ard Securities
Corp., Spokane, Wash. Proceeds—To
pur¬
chase
controlling interest in Pine Creek Lead-Zinc
Min¬
ing Co., for development costs and
working capital.
^

Jan.

18

Jan.

to purchase

ton

(par

shares

a negotiable
promissory note
prepaid insurance policies on equipment.
Office—Suite 1605, 135 So. LaSalle St., Chicago 3, 111.

and

basis.

Managed Funds, Inc.,

with

expire

.

Midway Airlines, Inc., Chicago, III.
Jan. 5 (letter of notification) 25,000 shares of common
stock
(no par).
Price—$1 per share. Underwriter—

_

-

agreements

working capital.
products.

National

Life Insurance Co.,
Watertown, S, D.
filed voting trust certificates for 12,982
common stock (par $10).

cumu¬

share).

per

construction.

new

Midland

/

Connecticut
Jan.

($100

basis,

will

Underwriter—Company

Sanitary
Dec.

a

kingfisher Water Co., Kingfisher, Okla.
Dec. 27 (letter of
notification) 250 shares of 5%

share.

Bonds

Jan.

:For

Corp.

effective Jan. 11.

Georgia Power Co

crued dividends; and $15 per share for common.
Under¬
writers—The First Trust Co. of Lincoln. Neb., and Crut-

rights

Business—Closed-end

April 4,

North 16th Street, Phoenix, Ariz.

♦

Broadway, Cushing, Okla.

are: Stone & Webster Securities Corp.; EstaCo.; The First Boston Corp.; Kidder, Peabody &
Co.; Paine, Webber, Jackson & Curtis; Tucker, Anthony
& Co.; and Whiting, Weeks & Stubbs.
Proceeds—To
redeem $1,000,000 of outstanding collateral trust 31/2%
bonds, 12th series, and for additional capital investment.

Common

March

Office—2243

stockholders of record about Jan. 25 at rate of one
share
yfor each five shares held; unsubscribed shares
to be
offered to employees.
Rights will expire on or about
»Feb. 10. Price—$105 per share for
preferred, plus ac¬

East

brook &

—

,

Un¬

Managers

Armco

Insulite Corp.,
Phoenix, Ariz.
'Dec, 19 (letter of notification) 113,840 shares of
capital
stock (par $1). Price —
$1.25 per share. Underwriter
.None.
Proceeds—For corporate

Kansas-Nebraska Natural Gas Co., Inc.
(1/25)
5 filed 10,950 shares of
$5 cumulative preferred
stock (no par) and
122,812 shares of common stock (par
$5), the latter to be offered for subscription by common

100%.

Inc., Oklahoma City, Okla.
retire certain capital stock and for con¬

share-for-share

a

solicited

--Class A

;

,

Price—At

Edwards,

Proceeds—To Estate of David A. Schulte.

dealer

February 27, 1951

Y.

,

purposes.

J.

Okla.
$50,000 of first mortgage

1961-1971.

Office—212

privilege;

Common
.

due

(letteir of notification) 1,775 shares of common
Price—At market (estimated at about
share).
Underwriter—Ira Haupt & Co., New

per

per
_

Un¬

Railway & Light Securities Co., Boston, Mass.
Dec. 22 filed 252,552 shares of common stock (par $10)
being offered to common stockholders of record Jan. 11

v..

__

indebtedness.

machinery and equip¬
Alhambra, Calif.

(par $1).

York.

February 14, 1951

common

-

18

$56

February 13, 1951

None.

New

1951

American Telephone & Telegraph Co.

stock.

Broadway,
Expected end of January.

Jan.

United New Jersey RR. & Canal Co.
noon

bonds

Park & Tilford Distillers

stock

Proceeds—To finance the purchase of 100
^automatic coffee-roasting machines.
Office—84 State
St., Boston, Mass.

15,000 shares of

•

Indianapolis Power & Light Co.-_

writer—None.

Israel Steel Corp.
(letter of notification)

6%

struction.

February 7, 1951

February 8,

issuer's

Gas Co., Cushing,
(letter of notification)

8

Proceeds—To

Bonds

134

Roast, Inc., Boston, Mass.
Nov. 3 (letter of
notification) 207,000 shares of common
rttock to be initially offered to
stockholders; unsubscribed
yiihares to public. Price—At par ($1 per share). Under¬

Jan. 2

(EST)

noon

of

Proceeds—For

Office—709 South Palm Ave.,

derwriter—R.

February 6, 1951
Carolina Power & Light Co.

satisfaction

Pact

Common

_

Freight System

Infra

*

Syndicate, Inc

in

derwriter—None.

serial

working capital. Office
Grandville Ave., S. W., Grand
Rapids, Mich.
—

creditors

Southwestern Public Service Co

(letter of notification) 15,000 shares of common
(par $1). Price — $10 per share. Underwriter —
Proceeds

common stockholders at
par in denominations
$38.65 each and $4,500 of notes will be offered to two

of

Co.

Indianapolis Power & Light Co

used to erect

Interstate

Mfg.

February 1, 1951

share

ver, Colo.

Alhamfora, Calif.

(letter of notification) $44,500 of series A con¬
4V2% notes, of which $40,000 of notes will be

offered to

January 31, 1951

Co.,

8

Office

•

vertible

Jan. 5 filed 2,832,200 shares of common
stock (no par) to
toe offered in
exchange for wheat at rate of one
per bushel.

Pacific Rivet & Machine Co.,
Jan.

Co

Corp.

jproceeds—For construction program.

expenses.

—139 North

January 30, 1951
Southern Natural Gas

Office—4455

—

ing machinery and for other operating
Virginia St., Reno, Vev.

Common

1951.

Sachs

Price

None.

___

com¬

Underwriter

Products, Inc., Reno, Nev.
(letter of notification) 140,000 shares of common
At par ($1 per share). Underwriter —
Proceeds—To purchase refrigeration and process¬

Jan. 2

Common

January 29, 1951

en

Goldman,

(Ohio)
class B

Price—At par ($100 per

Old Fashioned Meat

.Pfd. & Com.

Southern Union Gas Co

stock.

mon

and Drexel &

construction

American

Jan. 5 (letter of

Goldman Sachs & Co. and First Boston
Corp. (jointly);
.Union Securities Corp.; Equitable Securities
Co,

Thursday, January 25, 1951

.

.

Manufacturing Co.
notification) 2,500 shares of
share).
—None.
Proceeds—For working capital. *
East 71st St., Cuyahoga
Heights, Ohio.

vend

Hemphill, Noyes, Graham, Parsons & Co.

.

offered
l-for-13

Public

Service

233,576 shares of

for subscription

basis about

Feb.

Co.

common

by

common

1, with

an

(2/1)

stock

(par $1) to

stockholders

011

oversubscription

Continued

on

page

41

Number 4980

Volume 173

The Commercial and Financial

...

Chronicle

•

Continued from page

40

privilege; rights to expire about Feb. 13. Price—To be
supplied b,y amendment. Underwriter—Dillon, Read &
Co. Inc., New York.. Proceeds—From sale of common
stock, together with funds received from sale privately
^of $12,000,000 3% first mortgage bonds and 10,000 shares
of preferred stock to be used to iepay bank loans and
for construction program.

Warehouse & Storage Co.

Spokane

$270,000 of first mortgage
shares of com¬
mon stock (par 10 cents), the bonds to be offered in units
of $100 each, or in multiples thereof, with the stock to
be issued as a bonus at the rate of one share of stock
Dec. 4 (letter of notification)

6% bonds due Dec. 31, 1960, and 270,000

At principal
amount for the bonds. Underwriter—Richard W. Bowler,
Spokane, Wash. Proceeds—To purchase building. Office
for

of bonds purchased.

each $1

—214 Paulsen

Price

—

Bldg., Spokane, Wash.

Co., Philadelphia, Pa.
Dec. 28 filed 191,762 shares of common stock

(no par).

prevailing market (approximately $63 per
Underwriter—None,-but will be sold through
.brokerage firms, without underwriting, between Jan. 15and June 30, 1951.
Proceeds—To 12 selling stockholders.
share).

19.

Pennsylvania
Dec. 8 (letter of notification) 2,950 shares of 5% pre¬
ferred stock.
Price—At par ($100 per share). Under¬
writer—None. Proceeds—For additional operating capi¬
tal. Off ice—Smedley Street, North East, Pa. Business—
•Processes and cans frozen fruits and fruit juices.
>

•

Sunshine

Packing Corp. of

Television Guide New

England, Inc.

notification) 30 shares of common and
$27,000 of 5% debenture bonds to be offered in units of
$900 of debentures and one share of stock (no par).
Price—$1,000 per unit. Underwriter—None. Proceeds—
To promote business of publishing a weekly television
program guide and magazine in Boston, Mass., and its
vicinity. Office—251 West 42nd Street, New York, N. Y.

Jan. 18 (letter of

Royalty Corp., Tulsa, Okla.
Jan. 12 (letter of notification) 37,536 shares of common
stock (par 70 cents). Price—$2.59 per share. Underwriter
—None.
Proceeds—For working capital.
Office—Ken¬
•

on

basis

rights

Wash.
Jan. 11
(letter of notification) 200,000 shares of pre¬
ferred stock and 99,999 shares of common stock. Price—
Both at par ($1 per share).
Underwriter—None. Pro¬
ceeds—For purchase of tractors, electrovators and other
equipment. Office — 309 East Birch St., Walla Walla,
Inc., Walla Walla,

Wash.

Home Fire

9

stock

Insurance Co.

to public.
public, at
market (about $27 per share). Underwriter—None. Pro¬
ceeds—For working capital. Office—47 West South Tem¬
ple, Salt Lake City 1, Utah.
subscription on or before Feb. 28, 1951; then
Price—To stockholders, $20 per share, and to

■

11

stock.

Co.

(letter of notification) 2,673 shares of common
Price—At market (not less than $15 per share).

Underwriter—None.

Stock to be sold through

Proceeds—To Wenman A. Hicks,
who is owner of

37,673 shares.

_

brokers.

the selling stockholder,

March

Underwriters

14.

expansion program, which, it is
estimated, will involve expenditures of $105,000,000.
Registration—Expected with SEC on Jan. 30.
•

Atlantic
15 it

Jan.

of about

stock

mon

Probable
will

City Electric Co.
stated tentative plans call for the raising

was

$2,250,000 through
on

l-for-10 basis held around May or June.

a

underwriter:

be used

offer of additional com¬

an

Securities Corp.

Union

which, it is estimated, will total about $5,400,000 in 1951.

Co., Panama City, Fla.

class B
5% de¬
bentures (latter in denominations of $100, $500 and $1,000
each). Price—Of stock, $2 per share; of debentures, at
100%. Underwriter—None. Proceeds—To expand busi¬
ness.
Address—P. O. Box 729, Panama City, Fla.
(letter of notification) 20,000 shares of
common stock (par $1) and $125,000 of 15-year
5

Power

&

Light Co.

SEC that it intends to issue
approximately $20,000,000 of securities in addi¬

tion to the present

$15,000,000 bond issue filed with the

Commission

on that date (see under "Securities Now in
Registration" in this issue).

•

Central

Illinois

Electric

Jan. 25 stockholders will vote

Gas

&
on

Co.

plan to issue and sell

a

publicly 25,000 shares of preferred stock. It is also pro¬
posed to sell 80,000 shares of common stock to common
stockholders on a one-for-seven basis. Early registration
expected with sale tentatively expected in March.

Prob¬

Paine, Webber, Jack¬
and Curtis and Stone & Webster Securities Corp.

able

underwriters

son

for

preferred:

Illinois

Central

Automatic Telephone Co.
shares of common
of record Dec. 9,
1950, of which total 4.434 shares will be subscribed for
by New England Telephone & Telegraph Co. Price—At
Westerly

(R. I.)

(letter of notification) 7,000
be offered to stockholders

1

to

($25 per share). Underwriter—None. Proceeds—For
general corporate purposes. Office—38 Main St., Wes¬
terly, Rhode Island.
par

Roslindale, Mass.
Jan. 5 (letter of notification) 1,343 shares of common
stock (par $100). Price—$160 per share. Proceeds—To
repay bank loan and for working capital. Underwriter—
None.
Office—35 Harrison Street, Roslindale, Mass.
Whittemore

'

•

Co.,

Prospective Offerings
Algonquin Gas Transmission Co.
Nov. 8 the FPC said it was of the opinion that certain
cf the New England markets should be served by this
company,

*

upon

showing that it has an adequate amount

probably about $40,000,000, likely to be 75% bonds and 25% stock, with com¬
mon stock to be offered first to stockholders.
Probable
gas.

Necessary financing,

underwriter: Dillon, Read &

Nov. 22 it

Light Co.
plans to issue and sell 100,000
(no par) to its common stock¬
Feb. 15 on basis of one new share for each
,

holders about

held, with an oversubscription privilege;
expire March 3. Unsubscribed shares to be
offered
to employees.
Underwriter—The Union

eight

shares

rights to
first

Securities

Registration—Expected

York.

New

Corp.,

Jan. 25.
Central Illinois Public Service Co.

•

expects to obtain $14,000,000 from
the sale, late in 1951 or in 1952, of additional securities.
Probable bidders for debentures: Halsey, Stuart & Co.
19 the

Jan.

company

and

&

Bros.

be used for construction program.

Proceeds will

;

,

Central Louisiana Electric Co.

•

,

,

•

>

\

reported that an offering of'"about $1,000,stock will be made following merger with

was

Probable underwriters—Wood¬

Co.

Gulf Public Service

cock, Hess & Co.; Rauscher, Pierce & Co.; A. C. Allyn &
Co. Registration is expected on Feb. 12.
Clinton
Jan.

common

Merrill Lynch, Pierce, Fenner
Interstate

was

it

was

announced stockholders

Inc.

securities in the Spring or early

Probable bidders for debentures: Halsey, Stuart

summer.

Inc.; Morgan, Stanley & Co.; Kuhn, Loeb & Co.;
Bros. & Hutzler; Lehman Brothers; Merrill

Lynch, Pierce, Fenner & Bearfe apd White, Weld & Co.
(jointly). Probable bidders fb^common stock, in event
of competitive bidding:

Co.

&

Proceeds will be used for

the

was

withdrawn.

it

additional

contemplates

company

financing

Neither the nature

securities.

nor

through

the

sale

of

the time of the new

bidders for
bonds or debentures: Halsey, Stuart & Co. Inc.; The
First Boston Corp.; Glore, Forgan & Co.; Morgan Stanley
financing

has

Proceeds

9

it

are

debentures.

Probable

to be used for construction program.

Natural

will vote Dec. 18

$50,000,000

and

$60,000,000

Underwriters—To

of

convertible

determined

be

through

Probable bidders: Halsey, Stuart
& Co. Inc.; White, Weld & Co. and Paine, Webber, Jack¬
son Curtis
(jointly); Dillon, Read & Co. Inc.: The First
Boston Corp.; Blyth & Co., Inc.; Morgan Stanley & Co.
Proceeds—To finance construction program.
Offering—
competitive bidding.

Previous

appli¬

;

—

bidding.

Probable

bidders: Halsey, Stuart & Co. Inc.;
Morgan Stanley & Co.;*Drexel & Co.; Lehman Brothers;
Harriman Ripley & Co. Inc.; Shields & Co. and Salomon^/
Hutzler (jointly); Blyth & Co., Inc.; The First
Corp.; Kuhn, Loeb & Co.; Union Securities Corp.
and Equitable Securities Corp. (jointly). Proceeds—For
construction program. Bids—Expected to be opened om
April 3. Registration—Tentatively scheduled for Mar. 2. '
&

Gulf Oil

Corp.

Jan. 2 the company, together with four other companies,
filed plans with Petroleum Defense Authorities in Wash¬

ington for the construction of a 26-inch crude oil piph
line extending from the West Texas producing area to
refineries on the Gulf Coast. Associated with Gulf, are
Cities Service Co., Pure

Oil Co., Sun Oil Co. and Stand¬

Construction is contemplated to be¬

ard Oil Co. of Ohio.

gin in late summer or early fall of this year with com¬
pletion early in 1952.
Houston
Dec. 19 it
;

Lighting & Power Co.
reported company plans to issue and sell

was

$15,000,000 of new first mortgage bonds. Underwriters*
—To be determined by competitive bidding.
Probable
bidders: Halsey, Stuart & Co. Inc.; Dillon, Read & Co»
Inc.; Kidder, Peabody & Co.; Equitable Securities Corp.;
Union Securities Corp.
and Salomon Bros & Hutzler

(jointly); Harriman Ripley & Co. Inc.; Smith, Barney &
Proceeds—For construction program.
Offering—

Co.

Expected in January or February.,

.

,

Central RR.

Illinois

'

,

$14,611,000 of 4%% series "C" and $4,201,000 of 4% series
"D" bonds). It is expected that $20,000,000 of new con¬
solidated mortgage bonds

announced that com¬

has

A, due Jan. 1,

Rio

Denver &

Jan. 18 it

was

19 it

Dec.

securities

will be issued. Probable under¬

was

in

Light Co.

said company expects to issue

1951

finance

to

its

additional

construction

prograrrU'

expected to cost between $6,500,000 to $7,500,000. Form of financing will depend on market condi¬
tions at the time. Probable bidders: Halsey, Stuart & C6»
(for bonds); W. C. Langley &

Grande Western

Jersey Central Power & Light Co.
V * ,
12 it was reported that company may soon be in
the market with an offering of 40,000 shares of new
Jan.

(par $100),

preferred stock

Underwriters—To be de¬

by competitive bidding. Probable bidders in¬
Glore, Forgan & Co.; Kidder, Peabody & Co.;
Merrill Lynch, Pierce, Fenner & Beane and White, Welct

termined
clude

(jointly); The First Boston Corp.; Salomon Bros.
Proceeds—For new construction.
Early regis¬

& Co.

Bids—Tentatively scheduled for March.

Jersey Central Power & Light Co.
Jan. 22 it was stated that early registration is expected
•

of

$1,500,000 first mortgage bonds.

determined by

Underwriters—To bo
Probable bidders—*

competitive bidding.

Halsey, Stuart & Co. Inc.; White, Weld & Co. and Shields
& Co. (jointly); Equitable Securities Corp.; The First
Boston

Corp.; Otis & Co.; Salomon Bros. & Hutzler; Har¬
Ripley & Co., Inc.; Kidder, Peabody & Co.; Glore,

Forgan & Co. Proceeds—For expansion program.
—Tentatively scheduled to be received in March.
•

Bi&>

Lilly (Eli) & Co., Indianapolis, Ind.
18, J. K. Lilly, President, announced company may
the near future publicly offer about $10,000,000 o£

Jan.

in

non-voting common stock.
Underwriter — Hemphill,
Noyes, Graham, Parsons & Co., New York. Proceeds-To construct additional manufacturing facilities.
;,'v
Star

Steel

Co.

E. B. Germany, President, announced that com¬
pany will raise $5,000,000 through a common stock offer¬
ing within the next 120 days to be first made to common
stockholders. Underwriters—Probably Straus & Blosser;

reported company may later this year re¬
first mortgage 3%-4% bonds, series

($35,062,000 at Dec. 31, 1949)

Estabrook
For

RR.

fund its outstanding

1993

Co., Union Securities Corp.

Glore, Forgan & Co. (jointly), for bonds or stock.

and

Lone

authorized $15,000,000 for new construction
during 1951 as part of the system's $60,000,000 postwar
expansion program.
•

stock.

Jan. 16,

Light Co.

2, Stuart Cooper, President,

Jan.

common

Georgia Power Co. (4/3)
<Y;i;
was reported company may issue and sell from
$18,000,000 to $20,000,000 of new first mortgage bonds.
Underwriters
To
be
determined
by competitive

riman

Gas Co.

reported company contemplates issuance

was

between

determined.

been

Consolidated

of

of

Jan. 8 it

tration expected.

Co.
the

announced

was

$181,000,000

Jan.

sale

Hutzler.

expansion program.

Edison

Commonwealth
10

(jointly); Mer¬

Pierce, Fenner & Beane; Lehman Brothers;
and R. W. Pressprich & Co. (jointly).

rill Lynch,

Delaware Power &

issue of 40,000 shares of 5%




Morgan'&tanley & Co.; Goldman,

Co. and Union Securities Corp.

Sachs &

ferred stock.

a new

and

cation

Iowa Power &

reported that corporation may issue and

sell $35,000,000 of new

Jan.

underwriter

which is

Columbia Gas System,

pany

creating

bonds

Gas Co.

reported company plans to obtain a loan

was

Texas to Colorado.

Shields

Traditional

writer—Kuhn, Loeb & Co., New York.

& Beane.

$12,000,000 to finance construction of a pipeline from

& Co.

&

to plan for the refunding of Illinois Central RR. and
Chicago, St. Louis & New Orleans RR. joint $18,812,000
of first refunding mortgage bonds due 1963 (including

Colorado

7

March
1, 1951.
Co., New York.

on

stock (par $1) from 1,500,000 to 2,000,000 shares,
shares to provide "substantial funds for

writers:

Dec.

,

Jan. 22 the directors authorized the executive committee

the

increase

capital additions and working capital," and "to provide
for the conversion of 100,000 shares of unissued and un¬
reserved 4J/2% cumulative convertible preferred stock."
No immediate financing imminent.
Probable Under¬

of

Co.,

authorized

to

voted

additional

the

stock.

&

Georgia Natural Gas Co., Albany, Ga.
Aug. 2 filed new application with FPC for authority to
a
335-mile pipeline system in Georgia and
Florida to cost about $5,100,000, which would be fi¬
nanced
through issuance of first mortgage pipe-lint)

•

Foods, Inc.

stockholders

15

Weld

construct

Stearns & Co. (jointly); Salomon
First Boston Corp. and Central Re¬

public Co. (jointly); Glore, Forgan & Co.

common

Foote Mineral Co.

Bear,

Hutzler;

White,

are

Nov. 20 company said it may sell during 1951 some addi¬
tional common stock following proposed 200% stock dis¬

Blyth & Co., Inc., Kidder, Peabody & Co. and
Merrill Lynch, Pierce, Fenner & Beane (jointly); Kuhn,
Loeb & Co. and A. C. Allyn & Co. (jointly); Lehman
Brothers

underwriters

York.

Boston

cumula¬
tive preferred stock (par $100), to be issued in series. Of
this issue, it is proposed to place privately with a group
of insurance companies 16,500 shares of series A pre¬
ferred, the proceeds to be used to redeem all of the pres¬
ently outstanding 16,336 shares of 5% cumulative pre¬
on

New

Expected late in April.

Co. Inc.

American Bosch Corp.

preferred stock and $5,000,000 of

Traditional

Bros.

& Co.

of

4.25%

shares of

stock

J

plans to increase the

capacity of its pipeline system by 400 million cubic feet
of natural gas per day as part of its
$83,000,000 construc¬
tion program. It is planned to issue and sell $62,500,000
of 15-year 3V4% first mortgage bonds,
$15,000,000 of

Jan. 12 company announced
common

Gas Co.

announced company

was

Estabrook

Salomon

stock

El Paso Natural

Jan. 9 it

tribution

Carolina

Dec. 15 it

West Florida Gas & Fuel

Dec.

competitive bidding. Probable bid¬
ders—Halsey, Stuart & Co. Inc.; Morgan Stanley & Co.;
Kuhn, Loeb & Co.

Proceeds

in part, construction expenditures,

to pay,

To be determined by

—

Proceeds—For

ciates.

Office—Corliss Station,

Pittsburgh 4, Pa.

Jan.

about

expire

to

000 common

(letter of notification) 10,000 shares of capital
(par $10), to be first offered to stockholders for

Vitro Manufacturing

one

Smith, Barney & Co. and W. E. Hutton & Co. and asso¬

Jan. 22 it

Utah

Jan.

of

stockholders of record Feb. 20, 1951
new
share for each five shares held;

Denver & Salt Lake income mortgage 3%-4% bonds, duo
Jan. 1, 1993 ($8,666,900 at Dec. 31, 1949). Underwriters—

Inc.;

Tri-State Contractors,

Jan.

was

tion by its common

Toklan

nedy Bldg., Tulsa 3, Okla.
•

(2/27)

Corp.

reported company plans to offer about
850,000 shares of common stock (par $10) for subscrip¬

and sell

Price—At

Statement effective Jan.

Steel

it

22

Jan. 4 company informed the

Oil

Sun

Armco

Jan.

(469) -:4i

and

&

Co., and Dallas Rupe & Son.

Proceeds—

expansion program.
Marion

Power

Shovel Co.

the company announced it plans the sale of addi¬
tional common stock (par $5) so as to add approximately
Dec. 8,

42

The Commercial and Financial Chronicle

(470)

$500,000 to equity capital, such shares to be

first offered

stockholders on a pro rata basis
Registration—Expected to be effected in February, 1951
Proceeds—The net proceeds from the sale of the stock
together with proceeds from a proposed term loan of ap¬
proximately $2,500,000 with banks and an insurance com¬
pany, will be used to refund $1,175,000 bank loans, pay¬
ment of preferred dividend arrearages of $1,501,500, and

to

present

common

the balance for working

capital.

.

Michigan Consolidated Gas Co.

A

hearing

$35,000,000 of notes will be held by the New York P. S.
Commission today (Jan. 25).
Oklahoma
Dec. 20 D.

&

Gas

Electric

Co.

and

Kennedy, President, said company is con¬
sidering refunaing outstanding $6,500,000 5Vi% cumu¬
lative preferred stock (par $100) with an equal arttcfUht
of preferred Stock with a lower dividend rate and may
issue additional common stock (par $10) provided mar¬
ket conditions warrant such action, to finance construc¬
tion program.

$8,000,000

Smith, Barney & Co.; Harriman Ripley & Co. Inc.

disclosed that the company is planning an
pipe line construction program to increase
natural gas deliveries to the Detroit (Mich.) area b}
150,000,000 cubic feet a day next winter. The present line
has a daily capacity of 325,000,000 cubic feet a day.

Michigan-Wisconsin Pipe Line Co.
July 25 company received SEC authority to borrow noi
more than $20,000,000 from banks.
A permanent financ¬
ing program provides for the elimination of these banh
loans prior to their maturity, July 1, 1951, and such pro¬
gram will include the issuance and sale of $12,000,001
additional bonds and $3,000,000 of additional commot
stock (latter to American Natural Gas Co., the parent)
Previous debt financing was placed privately. If com¬
petitive probable bidders may include The First Boston
Corp.; Harriman Ripley & Co., Inc.; Glore, Forgan & Co
Middle

South

Inc.
Jan. 23 it was reported that this company is expected
to sell up to 600,000 shares of additional common stock
(no par) in the near future. Underwriters—To be deter¬
mined by competitive bidding. Probable bidders—Union
Securities Corp. and Equitable Securities Corp. (jointly);
Blyth & Co. Inc.; Lehman Brothers; Kidder, Peabody &
Co. and Merrill Lynch, Pierce, Fenner & Beane (jointly);
The First Boston Corp.
Proceeds — To finance part of
•

Utilities,

construction program.

1951

Minnesota

Power

&

Light Co.

that thf

6, Clay C. Boswell, President, announced

Dec.

expects to raise about $10,000,000 through the
sale of new securities within the next year or so. The
company

financing may be either in the form of bonds or preferred
stock. The proceeds will be used for the company's ex¬

pansion program. Probable bidders for bonds may in¬
clude Halsey, Stuart & Co. Inc.; Shields & Co.; The Firs:
Boston Corp. and Glore, Forgan & Co. (jointly); Otis &

&
(jointly); Union Securities Corp.; Kidder, Peabodj

Co.; White, Weld & Co.; Lehman Brothers and Drexel
Co.

&

Co.; Coffin & Burr, Inc.

-

/•;.

*

Monongahela Power Co.
Dec.

it

1

was

announced

company

sale of $10,000,000 of new bonds.

plans issuance

and

Underwriters U* To be

Probable bidders:
Halsey, Stuart & Co. Inc.; Equitable Securities Corp.; W
C. Langley & Co. and The First Boston Corp. (jointly);
Union Securities Corp.; Salomon Bros. & Hutzler; Leh¬
man Brothers; Kidder, Peabody & Co. and White, Weld
& Co. (jointly); Merrill Lynch, Pierce, Fenner & Beane;
Glore, Forgan & Co. Proceeds—For expansion program.
Offering—Expected in March, 1951.
determined

by competitive bidding.

Montana-Dakota

Utilities Co.

Oct.

11 company asked FPC for authority to issue $2,800,000 of 2lk % promissory notes to banks to provide
funds for its expansion program. These notes, together

with $3,000,000 of notes authorized by FPC last May, are
to be refunded by permanent

financing before April 1,
1951. Traditional underwriters are Blyth & Co., Inc. and
Merrill Lynch, Pierce, Fenner & Beane.
Stockholders on
Nov. 27 will vote on increasing authorized preferred
stock from 100,000 to 150,000 shares and common stock
from 1,500,000 to 2,500,000 shares.
R. M. Heskett, Presi¬
dent, stated that about $10,000,000 will be raised within
the next six months.
•

Mountain States Power Co.

Jan.

18 FPC

approved application of company to split
up the present common stock on a three-for-one basis
to

help facilitate the sale of additional

in the

near

future

so

as

common

stock

to enable the company

to carry
Lynch,
Pierce, Fenner & Beane, New York, was the principal
underwriter of a common stock offering in April, 1949.
Stockholders will vote Jan. 30 on issuing 900,000 shares
of $7.25 par value common stock in exchange for 300,000 shares of no par value common stock.
out

its

construction

program

for

1951.

Merrill

Nevada Natural Gas Pipe Line Co.
Nov. 15 company asked FPC to authorize construction
and

tion

operation of
of

natural

a

114-mile pipeline for the transporta¬
which, it is estimated, will cost

gas,

$2,331,350.
•

asked SEC authority to issue $12,000,000

bidders:

Halsey, Stuart & Co. Inc.; Harriman Ripley &
Co.; First
Pierce, Fenner & Beane.
Proceeds—To repay bank loans and for new construction.
Offering—Expected in mid-February

Co. Inc.; Lehman Brothers; Kidder, Peabody &
Boston Corp.; Merrill Lynch,

York, Chicago & St. Louis RR.

Jan. 12 company offered 33,770 shares of common stock
at the rate of one new share for each ten common shares
held on Jan. 11 (with an oversubscription

privilege),

subject to approval of ICC. Rights expire on Jan. 30.
Price—$150 per share. Underwriter—None. Proceeds—
To reimburse company for outlays already made.

Niagara Mohawk Power Corp.
Oct. 24 the company estimated that, through
1951, it will
require not more than $35,000,000 of additional debt or
equity financing in connection with its 1951 construction
which is expected to cost $52,328,000. Probable bidders
for new bonds: Halsey, Stuart & Co. Inc.; Morgan Stan-,

ley & Co.; Kuhn, Loeb & Co.; The First Boston Corp.




-

Probable underwriters: Lehman Brothers;

Telephone & Telegraph Co.
deterred its proposed offering of 569,-

946 additional shares of common stock

stockholders

(par $100) to

1-for-10 basis.

a

on

Proceeds

com¬

were

.

Thursday, January 25, 1951

construction.

new

Texas

23 company

mon

Gas Transmission

Corp.

\

>

Jan. 3 company asked FPC permission for approval of a

$42,300,000 construction program, which will include the
building of 580 miles of pipe line to supply natural gas
in its own mid-Western service area and in Appalachian
markets.
The program would increase the capacity of
the Texas-to-Ohio pipe line system to over 900,000,000
cubic feet per day.
Tentative plans include the sale of
around $30,000,000 bonds
(which may be placed pri¬
vately with insurance firms) and about $10,000,000 of
preferred stock (depending upon market conditions).
The balance of the funds needed will be obtained

to

bank loans and to pay for extensions, additions,
and improvements to plant. A majority of the outstand¬

treasury

cash

frbm

temporary bank loans.
Traditional
underwriter is Dillon, Read & Co. Inc., New York.
•

repay

ing preferred and common stock is owned by the Ameri¬
can Telephone & Telegraph Co.

•

or

Transcontinental Gas

Jan. 20 it

Pipe Line Co.

reported that there may be a possibility
of refunding the $26,500,000 notes due May 1,1951 which
was

Pennsylvania Power & Light Co.
9 Chas. E. Oakes, Presidents-Stated the company
will require about $34,900,000 of new capital over the
next four years through the sale of securities.
It is re¬
ported that not over 75,000 shares of series preferred
stock may be sold late this year or early 1951. Traditional

recommended that SEC order Electric Bond & Share Co.

Underwriters—The

to

were

Nov.

Proceeds—To

Co.

First

Boston

Corp.

and

Drexel

finance, in part, the company's

Edison

Potomac

Dec.

it

1

$10,000,000 of

new

&

United New Jersey RR. & Canal Co. (2/8)
/
or before noon (EST)
on Feb.
8 for the purchase of $5,669,000 general mortgage bojhds l
to be dated March 1, 1951 at the office of Geo. H. Pabst,
Bids will be received at

plans to issue

company

Underwriters—To

be

deter¬

of

Jr., Vice-President of The Pennsylvania RR., Room ifcll,
Broad Street Station Bldg., Philadelphia 4, Pa. Probable
bidders: Halsey, Stuart & Co. Inc.; Kuhn, Loeb & Co.;
Morgan Stanley & Co.; Harris, Hall & Co. Inc. Proceeds
—To redeem at

of 3Vz%

be

to raise

necessary

needed

in

ders for

the

a

of

quarter

1951.

The

amount

carrier."

•

Electric &

Engineering Co.
Nov. 22 directors voted to call a special meeting of stock¬
holder^ for Jan. 18, 1951, for purpose rof increasing au-;
thorized
common
stock from
350,000 shares (209,221
shares outstanding) to 1,000,000 shares and to effect a
2-for-l stock split-up. The stockholders would then have
preemptive rights in 531,558 of the unissued new shares
while 50,000 shares would be reserved for future sale to
employees and for other corporate purposes; Traditional
underwriter; Hayden, Miller & Co.

Dec.

11 company sought Georgia P. S. Commission for
authority to issue $3,000,000 new first mortgage bonds.
May be placed privately. The proceeds will be used to
repay bank loans and for expansion program.

Southeastern - Michigan Gas Co. (Mich.)
Dec. 1 it was announced that in connection with the fi¬

nancing of the proposed pipeline, the acquisition of dis¬
tribution facilities and the conversion of the system to
natural gas, the company proposes to issue $3,300,000 of
first mortgage bonds, $500,000 of 5% prior preferred
stock, $200,000 of 6% cumulative preferred stock and
$400,000 of common stock, subject to the approval of the
Michigan P. S. Commission. The FPC authorized the
company to construct natural gas pipeline facilities to
the southeastern Michigan area.
California

Co.

Edison

Jan. 9,

W. C.
Mullendore, President, announced com¬
pany will spend $60,585,000 on new construction in 1951.
It is understood that only $30,000,000 of new bonds will
be issued and sold in the

May be

near

future.

Underwriters—

determined by competitive

bidding. Probable
bidders:
Halsey, Stuart & Co. Inc.; Blyth & Co., Inc.;
The First Boston Corp. and Harris, Hall & Co. (Inc.)
(jointly); Shields & Co.
Southern
it

18

Union

Gas

announced

Co.

bonds

(in addition to the

common

company

150,469

stock filed with SEC

on

additional

Jan. 8.—see

shares

of

preceding

columns).
Tennessee Gas Transmission Co.
Jan. 8 company sought FPC permission to construct 253
miles of pipeline to cost an estimated $36,241,000. This
would be financed in part by the sale of securities and

through bank loans.
000,000) is expected

An issue of bonds

(probably $35,time late in February. Prob-~
Halsey, Stuart & Co. Inc.; Stone & Webster
Securities Corp. and White, Weld & Co. (jointly).
some

able bidders:

Texas Electric Service Co.
Jan. 5 it was reported that this company contemplates
sale early this spring of additional first mortgage bonds
to the public and of additional common stock to parent,
Texas Utilities Co.

*

midwest
The

markets

initial

to

operate

as

a

"common *

"

financing has been arranged for

Underwriters—To be determined by
competitive bidding. Probable bidders: Halsey, Stuart
& Co. Inc.; Union Securities Corp., Glore, Forgan & Co.
and White, Weld & Co.
(jointly); Blyth & Co., Inc. and

21, the

Gas Co.

applied to the Utah P. S. Commis¬

company

sion for permission to extend the proposed natural gas
line from northeastern Utah to include additional areas
in that State.

creased

The estimated cost of the project was in¬

to $32,000,000

(from $25,000,000 in the original
application), according to John A. McGuire, President,
and the length of the proposed transmission increased

from 325 miles to 469 miles.
;

*

f

'

Utah Pipe Line Co., Dallas, Tex.

Dec.

14 company

applied to FPC for authority to build
Aztec, N. Mex. to the Salt Lake
at an estimated cost of $22,000,000.'

392-mile pipeline from

City, Utah, area,

Valley Gas Pipe Line Co., Inc., Houston, Texw
authorization to constructs
$144,500,000 pipeline project to carry natural gas from

June 27 company sought FPC
a

the

Gulf

Coast

and

off-shore fields

in Louisiana

and

Texas to markets in Indiana, Ohio ^nd Michigan.

Com¬
pany is now in process of completing negotiations -for
its major financing requirements.
; ;
>
<

•

West Penn Electric Co.

J

(3/7)

Jan. 24 company

applied to regulatory commissions !fors
authority to issue 320,000 additional shares of common
stock (no par) to be offered to its stockholders for stibscription on the basis of one additional share for each
ten shares held on or about March 9, with rights to
expire about March 26. Unsubscribed shares to be offered
to employees of companies in the West Penn Electric
System.
Underwriters—To be determined by competi¬
tive bidding.
Probable bidders: Lehman Brothers and
Goldman, Sachs & Co. (jointly); Morgan Stanley & po.;
W. C. Langley & Co. and The First Boston Corp. (joint/.
ly); Harriman Ripley & Co., Inc. Proceeds—To purchase
additional equity securities of two of its subsidiaries—'
Monongahela Power Co. and The Potomac Edison Co.
Bids—Expected to be opened on March 7.
f

Westcoast

'

plans to issue and
sell approximately 27,000 shares of preferred stock (par
$100) and approximately $4,000,000 of first mortgage
was

f

States

Utah Natural

Nov.

a

South Atlantic Gas Co.

Southern

like amount,,

privately, with no public offering expected for at least
two years. E. Holley Poe and Paul Ryan, of 70 Pine>St.,
New York, N. Y., are the principal officers of the cor¬
poration.
■''.{■//:'/'

Halsey, Stuart & Co. Inc.; Blyth & Co., Inc. and Smith,
Barney & Co. (jointly); The First Boston Corp.; Lehman
Brothers; Kidder, Peabody & Co.; Harris, Hall & Co.
(Inc.); Glore, Forgan & Co. and W. C. Langley & Co.
(jointly)..
y*.,; 'J,4'% ;>■'[.
:y'.

serve

other

and

Probable bid¬

reported issue of $15,000,000 new bonds are;

Reliance

a

<■

Pipe Line Co. (Del.)
:
*
Sept. 25, it was announced that this company had been ■
formed to build, own and operate a petroleum products
{
pipeline from the Texas Gulf Coast to St. Louis, Chicago'

additional funds for construction

second

estimated at about $7,000,000."

is

maturity (March 1, 1951)
general mortgage bonds.

United

Colorado

Nov. 1, J. E. Loiseau, President, announced that "it will
purposes

k

dispose of its holdings of 2,870,653 shares (26.95%) of
In eventof competitive
bidding* probable bidders may include Lehman Brothers.

bidding. Probable bidders: Halsey,
Stuart & Co. Inc.; W. C. Langley & Co. and The First
Boston Corp. (jointly); Kidder, Peabody & Co. and Alex.
Brown & Sons (jointly); Glore, Forgan & Co.; Salomon
Bros. & Hutzler; Harriman Ripley & Co., Inc., and Union
Securities Corp. (jointly).
Proceeds — For expansion
program.
Offering—Expected in April or May, 1951.
Co.

L

16, the Division of Public Utilities of the SEC has

•

that

bonds.

Service

'

v

-

United Gas Corp. common stock.

con¬

mined by competitive

Public

White, Weld & Co. and Stone &
;
j

United Gas Corp.
Nov.

Co.

announced

was

offered publicly by

Webster Securities Corp.

struction program.

Jan.

of first mortgage bonds, series D, due 1981. Underwriters
—To be determined by competitive bidding.
Probable

New

Pacific

•

New England Power Co.

Jan. 16 company

•

Jan.

for

S.

Jan. 3, it was

.

"Kidder, Peabody & Co. (jointly); Salomon Bros. & Hutz¬
ler; The First Boston Corp.; Harriman Ripley & Co., Ipc.;
Hemphill Noyes, Graham, Parsons & Co. and Drexel 8c
Co. (jointly).
Proceeds—To repay advances from parent

temporary financing through issuance of

on

.

Transmission

Co.,

Ltd.

10, it was announced that Westcoast Transmission
Co., Inc., its American affiliate, has filed an application
with the FPC seeking authorization to construct approx¬
Nov.

*

imately 615 miles of pipeline for the transportation of |
in the States of Washington and Oregon (this i
project is estimated to cost $25,690,000). Both companies
are
sponsored by Pacific* Petroleums, Ltd., of Calgary,
Sunray Oil Corp. and other members of the "Pacific *
Group" engaged in active oil and gas exploration and »
development in Western Canada. The completed line of i
both companies, to be about 1,400 miles, will, according
to estimates, cost about $175,000,000, to be financed
75% by bonds and the remainder by preferred and com¬
mon
stock. Underwriters—Eastman, Dillon & Co. and
natural gas

The First Boston Corp.

Worcester County Electric Co.
Jan. 22 it was stated early registration

J

•

is expected of

$12,000,000 first mortgage bonds. Underwriters—May be
determined by competitive bidding. Probable bidders:
Halsey, Stuart & Co. Inc.; Lehman Brothers; Merrill
Lynch, Pierce, Fenner & Beane; Kidder, Peabody & Co.;
The First Boston Corp.; Harriman Ripley & Co. Inc.
Proceeds—To retire bank loans.
*

Nximber4»8a^^^eCo«t3»cr«ial and Financial Chronicle

Volume 172

Middle South Utili-

of the

stock

ties,

Inc., holding

unit with *6"p-

eratir^g properties in Arkansas,

Louisiana and Mississippi.

(471)

tributors of carbonated beverages,

institutions

to

retire

$3,566,000

Steam.

The

area

43

with

served

with 10,000 retail dealers selling principal amount of 23A% first electricity contains approximately
its products to the public. In- refunding mortgage sinking fund 2,285 square miles having an esti¬
vestors

offered units consist- bonds

are

called

for

redemption

on

mated population of 1,450,000, and

ing of one $100 debenture and Jan. 3, 1951. Balance of the net the area served withVgas contains
may .place
additional
common, five shares of common stock at proceeds will be
added to the approximately 260 Square miles
possibly as much as 600,000 shares $100 per unit.
company's general funds and will with an estimated population of
on the market some time sooh;to
Incorporated in 1925, the com- be available for general corporate 1,200,000.
raise funds for financing, in part, pany produces and distributes its purposes, including proposed conits current construction budget.
own brands, "American Dry" and
struction expenditures.
DIVIDEND NOTICES
Meanwhile
groups
also ; are "Sea Breeze."
For the past sevRegular redemptions may be
being formed to bid for an ex- eral years it has been exclusive made at prices from 103.67% to
A quarterly dividend of 35c
pected Tennessee Gas Transmis^ franchisee for the bottling and 100%. Sinking fund redemption
per
share oil the Capital
offering which may in- distributing
of
Moxie - in
the prices range from 100.68% to
Stock, par value $13.50 per
volve $35,000,000 of debt secUri- metropolitan Boston area and has 100%.
share,
has
been
declared,
It is expected that the company

n

■

,

.

.

.

-Lonaitions

the

m

.

issue

new

irnJlT0^.a

'

^

1

but not enough to bring any re¬
sounding - cheers
from
under¬
writers who still find things too

slow and uncertain from

reacning market some time

While

ally endowed with
that

will

a

of the issue

13

around

to

First Boston Corp.

sinking fund

reduce the average

life

-

years,

of

have been
the

decidedly slow to

finding

their

-

associates

scope

111.—Paul

CHICAGO,
has

re-

J.
with

associated

become

Co.

Inc.

and

the

that the
2i/2% rate would continue as the

treasury for capital expenditures
for
improvements,
betterments
and
additional
property
made
within the past three years.A

pronouncement

Luckhurst & Co. Offers

basic

figure on new long-term
government borrowing.
/ *'

Cheers And Groans

Brisk

Gas

Co.'s

$17,500,000

Luckhurst

of

sentiment

gave

mo-

a

mentary fillip earlier in the week,
:

Successful

issue

with

price

~

a

bidders

2%%

100.1899

of

bought

only

10 cents per $1,000 above the next

at

100.683

to

yield
2.83%, this issue with its heavy
sinking fund, encountered good
inquiry from smaller type in¬
vestors chiefly pension funds.
Meanwhile
Electric

Consolidated

Light

funding

mortgage

this

2%s, equivalent to

a 2.74% basis
with others bidding about a 2.76%

Reoffered

100.67

at

the issue

decidedly

was

slow

to

To be held
NOTICE

,

buyers.

that

Illinois Central Plans

a

study of plans for refunding its
two series of first and refunding
1963.

bonds

:

N.

Y.

Stock

outstandingJ

its!
bonded debt was reduced by $2-.
117,200 since the time of its lastf
Exchange

that

|

report.

Big Stock Issue Looms
Underwriters

are

reported to be

organizing groups for the pur¬
bidding for an expected
offering of additional common

posej of




I

the

Directors

of

common

a

of

25

of

held

cents

per

Treasurer

may
be considered and
paid from time to time as condi¬

of

business

record
on

Secretary

January 23, 1951

COMPANY

share

Dividend Notice

at

The

Febru¬

a

quarterly

of

a

share

33 %c

and
a

has

Directors

of

Board

declared

dividend
the

on

Preferred

Cumulative

Millelt, Treasurer

At

a

tors

meeting of the Board of Direc¬
Company, held

$1.35

S t

o c

k

quarterly dividend of 15c

a

share

the

on

Stock

Common

Company, both payable

Southern

WARREN W. BELL,
President.

today,

Friday,

dividend

clared
,

Hooker Electrochemical Company

of The Gamewell

on

of

January 19,
$.25 per share

the

1951,
was

a

California

Edison

Company

de¬

Common Stock of the

Company payable on February 15,
1951, to stockholders of record at the
close of business on February 5, 1951.
W.

C.

1951.

EDWARD J. CRUMMEY,

Secretary.

CUMULATIVE
4.08%

Cumulative Preferred Stock

$4.25

Dividend

.

The Board of
*

BECK, Treasurer.

trochemical

Directors of Hooker Elec¬

Company

declared

1951

$1.0625

tive Preferred Stock,
1951

January

on

quarterly

a

business

of

payable March 29,

to stockholders of record

close of

17,

dividend

$4.25 cumula¬

share on its

per

March

1,

as

of the

STOCK

SERIES

DIVIDEND NO.

13

The Board of Directors has

authorized the payment

of the
following quarterly dividends:
25 V2 cents per

Cumulative

1951.

4

PREFERRED

CUMULATIVE

4.88%

STOCK

PREFERRED

SERIES

DIVIDEND NO.

share

Preferred

the
Stock,

on

4.08% Series;

INTERNATIONAL

Common
The Board of

HARVESTER

will not be

polls will remain open for

January 12, 1951.

-

dividends

Company,

voting between 2 P.M. and 3 P.M.

Mineola, New York,

';

(50{?) per share pay¬
12,
1951 to stock¬
holders of record on June 1, 1951.

stock divi¬

j

at

to vote at such Special Meeting,
or
any adjournment thereof, is
at the close of business on the
The

' J

share payto stock¬
March 1,

Fifty cents
able
June

TIDE WATER POWER

9, 1951.

trochemical
1951

COMPANY

closed. The record date for deter¬
mination of stockholders entitled

January,

on

Extras

January 22, 1951.

Country Road, Mineola,
York, on the 31st day of

day of

1951

the

of electing a new board
directors of the Company as

17th

'

of

of the

Old

The transfer books

v

-

DIVIDEND No. 20

Atlanta, Georgia

March 3, 1951 to

on

of

thereof.

,

per

12,
record

GIVEN

provided for in the Plan for Con¬
of Long Island Light¬
ing Company, Queens Borough
Gas and Electric Company and
Nassau & Suffolk Lighting Com¬
pany.; dated February 6, 1948' (as
I modified November 9, 1949) ,
and
for acting upon any and all other
business that may properly come
before
the
meeting or at any
.adjournmentor
adjournments

C

The road has just informed the;

of

be

of

1951; and

February 5, 1951.

L. H. jaeger,

*•-

(50(<)

March

able

holders

holders of record at the close
on

follows:

Fifty cents

March 5, 1951

on

as

* DIVIDEND No, 19

February 15, 1951, to holders of
record January 31, 1951.

solidation

4*/2s and
$4,201,000 of Series D 4s, callable
at 105 and 102 respectively.
j
f

office

of

|

is believed to;
a new issue of $20,- i
consolidated mortgage!

to replace the

the

payable

given

mdnths instead of semi-an¬

share

.V,

Common

new

will

Janu-

Com¬

stock of the

common

pany,

January 24, 1951

.

purpose

'

company

$14,611,000 of Series

Meeting

on

notice

EDWARD F. Galm,

I). II.

January, 1951, at 2 P.M., for the

contemplate
of

COMPANY

New

\

.

000,000

ING

250

bonds, totaling $18,812,000, due in*
The

HEREBY

the

The Southern Com¬

meeting held

terly dividend -of 20 cents per
on the outstanding shares

Road,

Stock of LONG ISLAND. LIGHT¬

piece of railroad re- ■
financing came into sight with the ■>
announcement by Illinois Central)
new

Railroad that it has authorized

IS

of

20

No.

with

nually, the Board of Directors has
today declared.two quarterly divi- ,t.
dends of fifty cents
(50c )"~pdr'

,]ary 22, 1951, declared a quar¬

January 31, 1951

Special

a

holders

|A

pany, at a

NEW COMMON STOCK

as

attracting

in

Directors of

of the holders of

yield

reported

and

19

accordance

three

(INCORPORATED)
*

SPECIAL MEETING

plus basis for 2%% bonds.
2.72%

close

.

York 17, N. Y.

stockholders in the annual report
of intention to pay dividends every

COMPANY

THE SOUTHERN

Corporation has de¬

COMPANY

NOTICE OF

60 E. 42nd Street, New

No.

Corporation

Board

dend

Mineola, N. Y.

The winning group
issue at 100.139991 as

CORPORATION

'''
Secretary

tions and prospects warrant.

The

NOTICE

Country

WEST INDIES SUGAR

BANGOR, MAINE

ary

Old

250

bonds

slow.

proved
took

35-year

2,

://:•;

of business

stockholders

Balt.'s $25,000,000 of new first re¬

the

In

of

ISLAND

LONG

LIGHTING

H. HANNAN,
Secretary

.

to

Eastern

KENNETH

COMMON DIVIDENDS

DIVIDEND NOTICES

payable

of

at

February

W. D. Bickham,

of

clared

Gas,

Co.

Power

&

business

of

share

Eastern

MEETING

stockholders of record

1951.

offering

common stock of $1 par value, of
the American Dry Ginger Ale Co.,
Inc., also doing business as The
Moxie Bottling Co.
The issuer is
one of New England's largest dis-

a

about

competitor.
Reoffered

are

14,975 shares

and

contingent,

the

for

coupon,
or

Co.

&

per

The Directors of International Harves¬
ter

Company have declared quarterly1
130 of one dollar and

seventy-five cents ($1.75) per share on
the preferred stock payable March 1,
1951, to stockholders of redord'at the
close of business on February 5,1951,
GERARD J.

EGER, Secretary

holders
business

Stock

a

on

January

dividend of Fifty

17,

Cents

share on its Common Stock,

February
of

Dividend

Directors of Hooker Elec¬

Company

declared

($.50)

payable

dividend No.

at

February 2,

1951.

Directors today

quarterly dividend of

a

business

of

per

close

part of the net proceeds will be
applied to the repayment of $4,200,000 borrowed from banking

$299,500 convertible sinking fund
debentures
due
April 15, 1961,
with 3% interest fixed and 3%

20-yea^ first mortgage pipe line
bonds

Dry Ginger

Ala Go. Securities

-

Southern

for

demand

Natural

American

-to

series X, 23A%, due Jan. 15, 1986,
of Consolidated Gas Electric Light

company in reimbursement of its

close

share on the outstand'
ing capital stock of this Com*
pany, payable March 10, 1951,
30^

are

Secretary Snyder's

per

5, 1951 to stockholders of record
the

1

Salle Street. He was formerly &■ P™er Co. of: Baltimore at
real estate trader for Barclay 100.67% and accrued . interest,
Investment Co. and prior thereto
Net proceeds from the sale of
was with Kidder, Peabody & Co. the bonds will be available to the

zt

1951

The Board of

of all this the Treasury
not showing any real
ability to sustain much less extend the upturn which developed
is

recent

Jan. 23,

No. 160

Bax^inS mortgage sinking fund bonds,

First Boston Corp., 231 South La

•

On top

in the wake of

Fifty cents
Share on the outstanding
capital stock of this Corporation
has been declared, payable March
(50$)

Dividend

offering
today
(Jan< 25) $25,000,000 first refund-

(Special to The Financial Chronicle)

_

requirements.

Halsey, Stuart &

Paul J. Bax

ar¬

effects of the current, hike in

A cash dividend of

OIL COMPANY

Offers Consol. G., E. L.
& Pr. Co. of Ball. Bds.

by
consideration
of
Impending higher taxes and the

market

SOCONY-VACUUM

directly or through

INCORPORATED

shortened

serve

Union Carbide
UEC

declared

it is

THE UNITED GAS IMPROVEMENT CO.
JOHNS HOPKINS, Treasurer
January 23, 1951
Philadelphia, Pa.

plans

,

banks,

record

February 28, 7951.

AND CAJRBOAT CORPORATION

DIVIDEND NOTICES

Halsey, Stuart Group

They find that
the insurance companies,
major
outlet for new securities, are still
interested chiefly in private deals
and in placing money in mort¬

are

However,

franchises.

is "a very difficult market to at¬

Meanwhile the

1951,

of

have been made for wider distri¬

tempt to work in."

gued,

England.

bution either

:

31,

of

concentrated in Massachusetts and

The plaint of new issue distrib¬
utors at the amount is that this

.

land Where all of its properties are
located
Other business of the

March

stockholders

to

the

about

New

say

payable

is primarily

purchasing,, produring and selling of electricity
and gas within the State of Mary-

Sales efforts have heretofore been

least.

gages.

company.

in

engaged

company

company includes the sale of gas
Chicago, with a capacity and electrical appliances and al2,000,000 cases per year lied merchandise and the sale of
the basis of an eight-hour day.

east

on

rapidly, another with a
maturity
joined
the
earlier offerings which

year

ranks

Pureoxia

pany's plant in Boston is thought
to be the largest bottling plant
of

moved out
35

the

Moxie

on

The utility

the

Moxie has been sold for 75 years
and Pureoxia for 57.
The com-

Paul J. Bax Joins

utility issue, short in
years, and addition¬

one

maturity, 20

country
products of the

stand¬

a

exclusive right for

entire

late in February.

point' of distribtuion.

had the

record

February

23,
as

1,

1951
of

the

to

stock¬

close

of

30V2 cents per share on the
Cumulative Preferred Stock,
4.88% Series.
The above dividends

ANSLEY WILCOX, 2nd,
Secretary.

pay¬

February 28,1951, to stockholders of record February 5,
1951.. Checks

1951.

are

able

will be mailed

from the Company's office in
Los Angeles,February 28,1951.
p. c.

January 19,1951

hale,

Treasurer

r

44

The Commercial and Financial Chronicle

(472)

BUSINESS BUZZ

.

Thursday, January 25, 1951

.

.

FIG Banks Place Debs.
A successful

on.

•

of

•

mediate
Jan.

Behind-the-Scene Interpretations
from the Nation's

V#b If

/■ 1^1 £~v

JljL tl/lm/

Capital

Credit

Banks

issue

an

Federal

of

Inter¬
made

was

17

by M. G. Newcomb, New
fiscal agent for the banks.

York

JL fJ li/

offering of

debentures

The

financing consisted

455,000

of

1.85%

of

$85,-

consolidated

debentures dated Feb. 1,
1951, and
due Nov. 1, 1951.
The issue was
In

WASHINGTON, D. C. —How¬
imposing the "wage stabili¬
sation" order may sound, when it
is issued in the near future, there
will

be

tween

distinction

marked

a

the

handling

ion

and

of informed

They

be¬

In

of

a

of

and
what he
control, in his
Economic Report to Congress.
"In
the
case
of
prices," the

price control
thought of wage

said

''the

in

that

message,

vigor,

the

big

As

wage

increases under "wage sta¬

bilization."

it

"But

and

for

labor

more

But

in

labor

outset

of

World

are

that

time

controlled in

While prices were

alleged wage control was

until well over a

was

summer

of

Steel"

"Little

The

formula

Whatever

promulgated in the
to be followed

1942,

1942 by an Executive
Order which many at the time
deemed
inadequate to inflation
in October,

it

because
loopholes.

control,

allowed

so

*

a

*

results

Board's

the

actions

in

indeed

rais-

the Administrato
stabilize

wants
*

*

was

publication
President

the

the

Federal

Reserve

yearl
J

f

his

this.

about

excited

member

.

his

plethora

President

should

,

the

for

of messages, the
register himself

record

favoring

as

the

100% pure
"Fair Deal."
*

Strangely enough, the Budget
message is the poorest place the
President

have

could

included

.

its

™n f„ifv C
f
ments.
,

'

ble

have

™

been

called

nlacp

,

the

drums for
to

education,

proper

Brannan

plan, aid
FEPC, etc. In
the President

the

being.

his Annual Message

ailment at the age of 68.

of

the

needs

however,

of

...

during

the

boost in the 1-year government "rate and in raising the
a

rediscount rate,

even

The

in

curtailing

though
lending

any

has

market

Q^irement<f was^mft

{Julrements was not expected to
ba™ any
011 „th® ™ar"

followed

in

April,

Line" order,

the

"Hold

however,

effectively modified by deci¬

was

War Labor Board
which allowed almost every kind
of

sions

of

the

"fringe"

a

increasing

benefit

manufacturers' labor costs
as no

direct

involved.

was

which
crease

wasn't
was

so

long

increase as such
Almost anything

wage

direct

a

wage

in¬

approved.
if

if

^fycamekfSledhg? ^
Mr.
both

the

Truman
know

"Fair

because

gress.

his

and

that

Deal"

of the

servative

general

coming

perjod 0f intensive mobilization."
CEA tedded that reliance should
be placed upon a greater applica-

war

character

Both

Mr.

little

get

Silver Bell
A. M.

Blair F.

are

many

underlying

differences between the labor sit¬
uation
puny
was

now

and

attempt

in

at

1942, when a
wage

begun.




control

don>t

CHICAGO,

111.

—

Preston

C.

I., Inc.

Claybaugh & Co.
Stock

N.

Y.

Security

Exchange

Dealers

has

joined

the

staff

of

52 Will

Street, New York 5, N. Y.

For

Large Appreciation Potential
WE

A

leading

(common)
producer

the

Truman

fast-growing

stood

that

bound

somewhere

to

re-state

the

his

President

4olns C. H. Wagner

(special to the financial chronicle)
NEW ORLEANS, La.-Louis E.

Analysis of this Company and
review

of

the

available

on

'

con¬

HAnover 2-0050

his
was

along the line
political faith in

Selling about

ties

of

the

$12.50

LERNER & CO.
Securities

10 Post Office Square, Boston

9, Mass.

Tel. HUbbard 2-1990

Teletype—NY 1-971

,

Allied Electric Products*
Baker
A. S.

FOREIGN SECURITIES

Raulang

Campbell

Gisholt Machine Co.

All Issues
*Prospectus

nothing has been changed.
hand; the disposi¬
always cast¬
a longing eye
at the "Fair
ownership

request.

;

Firm Trading Markets

minori¬

vote, to paly up the FEPC,
might cause the President as he

on

lequest

r.ARL MARKS & pp. Inc.

tion of Republicans,
Deal"

Cement Indus¬

Tulsa, Okla.

these programs.

ing

cement

Southern

n,

n

Con¬

and

STOCK

of

California.

try
«

SUGGEST

RIVERSIDE CEMENT CO.

a

Street.

raise c. H. Wagner . Investment Co. of

whenever

Association

Tel.: HAnover 2-7064 Tele: NY 1-2177

in

Beard

Hankeyis now affiliated with the

you

Mines.

of

On the other

There

«why

requirements"

inc.

Members Philadelphia-Baltimore

CLASS B

(Special to The Financial Chronicle)

enacted
the

and
of

margin

New

'

(This column is intended to reflect the "behind the scene" interpretation from the nation's Capital

opponents

very

will

objected

Co.,

f selective credit controls.

opponents also knew and under¬

So

if

reforms,

second

partner

a

Industries,

Investment

1943
which
theoretically
barred
wage
in¬
creases
unless justified by most
exceptional
circumstances.
This
There

the "Hold the Line" order

heart

debt

Goodbody & Co., 105 West Adams

present high stock

a

Prior to

Kimberiy Corp

after
a
sympathetic
the proposal, turned
Noting the large rise
credit, the CEA ob-

did not and may or may not coincide with
}vant }° face Coi]gress again and the "Chronicle's" own views.}
have
*°
ans»ar this criticism. It
can
also point to its action
in
Joins Goodbody Staff

forcing

Maule

Economic

Board

VTte,
nroDaianda has not been sParked by bank

was
the

beat

to

the

into

^

ih.e, reserve

been hard to find.

Message

George F. Vietor died of

on

instrument

g. requi e-

Vl

■» T

of

to be a major anti-inflationary

be

Now, except for two points

hoping and expecting to get
where with
Congress. The
nual

the

credit P°licy cannot be exPected

requirements be

effect

An-

■ ••

-

George F. Vietor
that

it alone if

follow

Council

management,

protect

reauirements

these proposals, if he were really
any-

;

in bank
served:
/

.

.

the

comment
it down.

They were little excited aboufc%f requirments at New York and
because it was foreordained 'Chicago, all legal reserves possi-

of

go

A possible ally for higher rerequirements vanished

"Because

oSssed

has

resmwe

a

;

that somewhere during the course

does

Advisers,

ff?/!
statutory limits, the
^??/ bas af^a.ySibf^n answered
•

it

to

77.

higher

-

Jact

the

will have

when

banks.

wllonmm„

fact

in

Truman

of

for

serve

hollering

some

"Post" and

sired by
Board.

of

about

and
advertising
Bridgeport, Connec¬

news

the

reserve
requirements
and
margin requirements may have
in preventing inflation, they have
one
very
important result de-

legislative project very much desired by the Board — legislation
raising above present statutory
limits the required legal reserves

course,

view

Board

great deal less difficulty—pro-

really

Board has asked
reserve requirements.

Federal

That result is to clear some
political obstacles away from a

wage

of

the

In

ing

-

for

the

office, 120 Broadway.
Coleman,
formerly

through his retirement he was
with a request for higher margin in
Charles W. Hill &
requirements, it was desirable to York City.
placate as much Congressional
opposition as possible.

uni-

Budget message called for the
complete "Fair Deal" repertoire
of proposals, the mill run of practical politicians were privately

it,

Reserve

circumvent
now

*

r

II. First

War

to

asso¬

in

Sidney Freeman Ward, partner
in W. E. Burnet & Co., New York
City, died suddenly at the age

Who?"

,

has indicated to give the thing
try by one means or another.

control
have it with

that

dis¬

and those which shall ap¬
ply to prices recalls a 'little of the
story of "wage stabilization" dur¬
ing World War II.

"Guess

un-

now

Sidney F. Ward

the

Now

few "sub-

control, they are

little

President

later.

now

is

agency

Doremus & Company.

in existence.

World

until

While there

wages

an

II.

that

previous to that
Chicago office of Dancer
Fitzgerald Sample Inc., has also
joined the New York office of

"substandard
condiused during
World
justify numerous wage

to

at

for

tinguishes between the degree of
controls
which
shall
apply to

attempted

War

of

with the

un¬

at

*f

*

the

That

were

contracts

formerly

S.

the

ticut

be

were

*

to be stabilized," the
if

big

wages.

said.

President

with

fringe

or

that

announces

WHN)

with

staffs of

numerous.

are

tion

wage

if prices are

Act,

Co.

Slyke,

York

Robert

peace—unless

clauses

known

vided, of

stabilization
difficult part of the
it must be undertaken

makes

many

rewards

a

are

wages

of millions of families.

livelihood

year

with big wage

and the country can

that

follow

not

does

precisely
fjmilar, or can be treated iden¬
tically. Prices are only one factor
in the incomes of business, which
paay rise or fall independently of
prices. But wages are the yery

1941

resolved

fundamentally

prices

not

Taft-Hartley

So, in the net, the labor experts
conclude, the situation is ripe

clared:

the

the

versal.

de¬

President

Van

New

no

disputes do not have to

wage

prices and wages are connected,
decisions on both must be
the

war

labor

known

that

reconciled,

the

of

With

used

$556,800,000.

Buchanan & Co. Inc. and prior to
that with radio station WMGM

existence

Fringe benefits were almost

Defense

the

(as

Dirk

big labor disputes.

over

is

business

of

Two With Doremus

the

at

in

was

beginning

awards. There

,

saying

There

$40,720,000

close

Doremus &

Taft-Hartley Act

no

standard wages

Production Act has required) that

task.

the

War II

of wage increases.
fact, he did not
door at all to further

the

This

at

tions"

of

close

After

1942.

Alleged

wave

matter

a

in

for

the

(formerliy
was

and

like

a

maturing

1, 1951, the total amount
debentures
outstanding will

about

"wage
stabilization"
policy
is
theoretically
demanded
of
the

they

"utmost vigor,"
and he did not hint a roll-back in
call

not

did

of

amount to

the

stabilization" policy only
casually and incidentally. Now a

Escalator

President

the

however,

of

"wage

Administration

$44,735,000

retire

each

on

brought

They

1951,

1,

to

debentures

Feb.

via

II,

Feb.

con¬

himself of the act.

"wage stabili¬

respect to

War

of decisions

of

As

the President chooses not to avail

price adjustments, after stabiliza¬
tion, will not be only in an up¬
With

dispute.

restraints

ward direction."

sation,"

World

proceeds,

used

amount

ciated

confident belief that

my

in

method

There

adjustments subsequent to stabili¬
sation may become necessary to
stimulate vital production.
is

long-term

with

be

"new money."

outset.

instances are rare
indeed where further price in¬
creases
are
needed,
either
to
stimulate production or to pro¬
vide
adequate profit incentives.
Jn these rare cases, some price

"It

labor,

case

the

as

problem

primary

par.

the

will

tracts, is relatively peaceful.

Truman

general policy must be to
the price line with utmost

hold

the

1942

meal

sharp dis¬
tinction between what he thought

President

Of

of

simul¬

come

Wage controls developed piece¬

President

the

placed at

came

show

some

must

settlement of labor disputes;

was
now

labor experts.

established

controls

DPA

control

taneously.

price

that

say

Jiimself

price

Under

wage

"wage
controls
in actual operation, it is the opin¬

stabilization"

1942

first.

ever

FOREIGN SECURITIES

Hill, Thompson & Co., Inc.

SPECIALISTS

Trading

50 Broad Street

New York 4, N. Y.

Department

70 WALL STREET, N. Y. 5
Tel. WHitehall 4-4540