The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
iuS. ADM.
JAN
Lfl
brary
ESTABLISHED 1S39
Reg. U. S. Pat. Office
Volume
New
Number 4772
169
Municipal bond expert reviews investment position of State and
on
Statistics
downward turn in
stood
purchasing
appreciated, and expresses view prospective large volume
does not mean forcing down their prices. Lists
heavy financial demands on State governments, but concludes
States will not be inclined to assume obligations they can't meet.
of
power
the consumer's dollar. Sees wage
demands directed toward health
and welfare
not under¬
are
or
of tax exempt issues
these developments in¬
dicate better
Senate
exemption benefits of these securities generally
tax
prices, Labor Department statis¬
tician says
Blasting President's "reckless, spendthrift, and socialistic platform,"
municipal bonds and notes increasing volume of these issues. Says
By EWAN CLAGUE*
Commenting
U. S. Senator from Nebraska
Vice-President, Chase National Bank
Labor
A discussion in
January of
government, municipal
plans.
any
••
The
form of securities whether it be
me
corporate issues, almost without exception
or
this
is
last
at
beginning
in
total
municipal
of
amount,
postwar read-
Buyer"
reporting the
$2,983,427,653.
This compares with
justment
totals
of
the
major
which
has
been expected
of
end
the
since
the
In
war.
-
evaluat¬
ing
the pres¬
situation,
ent
it is important
Ewan
Clague
maintain
to
view.
long
is
a
It
to relate the current
necessary,
happenings to the economic base
from which they spring.
Wholesale
have
been
prices, for example,
declining since
the
-
(Continued
on page
46)
.
of an address by
Commissioner Clague before the
•Summary
The
1943" of
for
$507,566,466;
-
that
.
For two
special
for this large volume, the
reasons
the
the first
at
place, it was "his day,"
tim^s upon the bizarre, but
one
important
Turnpike
volume,
one
Bonds
a
growing
well, of bonds in sup¬
as
of Federal,
port
and
business.
inaugural
In
analysis.
festive occasion bordering
one upon which in the cir¬
a
In the
second,, what the President had to say was for the most part
couched in such
State
aided housing projects
locally
or
We
contributed
importantly to the total. In regard
(Continued
meanwhile
techniques.
appears
on page
50)
'
which
that
are,
in
to
the
international affairs
havd become a part
controls, allo¬
regi-
cations,
mentation, '
and
other po- k
lice
state
out
im
Note
one
i
K. S. Wherry
Sen.
protest or
effective
re-.
sistance, then, that kind of
a pro¬
is exactly what you are go¬
ing to get.
You Wholesale Dry Goods mer¬
gram
know
chants
existence
was
how
very
your
threatened
under
(Continued on page 39)
a
Dry
luncheon
Senator Wherry
of
the
Institute,
Goods
Wholesale
New
York
City, Jan. 17, 1949.
for that matter like most if not
address
by Mr. Linen be¬
Philadelphia Security
The
all of the postwar utterances
(Continued
of good New Dealers every40)
on page
State and
17, 1949.
Corporation
Municipal
consisting of 6^ Inter¬
principal amount) and
each
Units,
with¬
submits
*An address by
our
Association, Philadelphia, Pa., Jan.
Pipe Line
and
methods,
at
readers will not lose to sight. It is
this address, like virtually all of the President's
hope
we
of
imposition
of accepted
however, again impressed with one fact
utterances of late—and
*An
realm of
to
the
rate
e
*
If
is
business
feels reluctant to throw cold water.
unheard-of behavior
can
from
expect
highly generalized terms that it is not easy
to determine what he really has in mind, if anything of a
nature different from the various current programs.
Of
course, he took occasion officially to denounce Russia and
of public revenue financing which
all her doings in somewhat the manner of President Roose¬
included an issue well and favor¬
velt when he paid his respects to Hitler and Mussolini in
ably known to your, local market,
his much publicized "quarantine" address, but such formerly
the
$134,000,000 Pennsylvania
being bonus
financing by some of;our large
States, notably New York, Illinois
and Ohio.
An increasing volume
most
the* 81st
Congress
1
is;
from
,
upon
what
o
expect
can
Con-
will de¬
pend
t
question
that
to
business
81st
gress
hesitates to subject the
one
given
be
can
^What
address of the President last week to realistic
cumstances
} There were, of course,
reasons
fore
Transcontinental
Congress?
only answer
—
A Look at Our Own Record
;
the
1946, $1,203,557,909? 1947, $2,353,-
Manufacturers Association,
York City, Jan. 18, 1949.
Gas
"Bond
figure at
sold,
771,562.
Radio
New
principal question that many of your members are asking
we go from here? What can business expect from
gyAsWe See It
bonds
pro¬
is—Where do
the 81st
calls for a review, brief or otherwise, of the preceding year and some
full of re¬ observations or possible prognostications for the year ahead.
Because the year
ports concerning a down-turn in
1948 estab-^
business.
Prices are falling, lay¬ lished some noteworthy records in
EDITORIAL
the experience of municipal fi¬
offs are occurring, some businesses
are
closing nance, it is appropriate, I believe,
down.
Con¬ that we review just a few of the
cern has been
most interesting events.
.
; '
expressed that
An all time high was reached
Republican Floor Leader attacks Federal budget and
posals for heavier taxes. Says country "is suffering from Big Gov¬
ernment, Big Labor and Big Business," and warns decline in national
income under rising taxation would threaten nation's solvency.
Scores Truman's spending proposals, and calls for scrutinization
of every proposition submitted by. President.
The papers today are
the
Copy
By HON. KENNETH S. WHERRY*
1
By JOHN S. LINEN *
In 1949
of
a
What Can Business
Municipal Bond
Market Prospects Expect from Congress?
Wages, Prices
Commissioner
Cents
30
Price
York, N. Y., Thursday, January 27, 1949
$50
share
only
as
October
Bought
3tock,
Common
of
fcrable
1,
v Sold
trans-,
units until
R.H. Johnson & Co.
'
Bonds
„
1949
Established, 1927
.
Quoted
;
INVESTMENT SECURITIES
.
Prospectus available on request.
Bond Department
64 Wall Street, New York 5
THE NATIONAL CITY BANK
BOSTON
Members New York Stock
40 Wall
Borton
PHILADELPHIA
Albany
Buffalo
Syracuse
Scranton
'
Wilkes-Barre
Philadelphia Providence
Amsterdam
Troy
Harrisburg
Street, New York 5
Chicago
London
Exchange
Washington, D.C.
the
Teletype: NY 1-708
Branches
1
Government
REPUBLIC
REPUBLIC
Underwriters and
26, Bishopsgate,
London, E. C.
in
Distributors of
India, Burma, Ceylon, Kenya
Kericho, Kenya, and Aden
and
Zanzibar
Subscribed Capital--—£4,000,000
Paid-Up
Reserve
The
Bank
Capital
Fund
conducts'
.
->■
NATIONAL BANK
Connect
Montreal
THE
OF
Toronto
CITY OF NEW YORK
every
also undertaken
*.
"
"""
and
Dollar
UTILITIES
OF
BONDS & STOCKS
MEXICO
External
MISSOURI
CANADIAN
COMMON
Bonds
Prospectus and analysis
Circulars
upon
request
I
Available
upon
request
Corporate Securities
£2,500,000
description
banking and exchange business
r-f
.
Municipal
OTIS & CO.
—£2,000,000
Trusteeships and Executorships
"
1-395
OF
ITALY
in
Office:
Colony,
New York
Wires
THE CHASE
HAnovcr 2-0980
Teletype NY
Buenos Aires
Kenya Colony and Uganda
Head
Bell
Private
Bond Dept.
of INDIA, LIMITED
to
53 WILLIAM ST., N. Y. 5
OF NEW YORK
Springfield
Woonsocket
NATIONAL BANK
Bankers
HART SMITH & CO.
Established
1899
(Incorporated)
of
CLEVELAND
New York
Cincinnati
Chicago
Denver
Columbus' Toledo Buffalo
SUTR0 BROS. & CO.
Est.
1896
Dominion Securities
Grporation
IRA HAUPT & CO.
Members
York Stock Exchange
Principal Exchangee
New
and other
Members New York Stock Exchange
40
Exchange Place, New York 5,N. Y.
120 Broadway, New York 5
Telephone
REctor
3-7340-
111
Broadway, N. Y. 6
WOrth 4-6000
-
-
Bell
System Teletype NY 1-702-3
•
Boston
Teletype NY 1-2706
"Telephone : Enterprise 1820
2
Leading Banks and
Trust
Thursday, January 27, 1949
FINANCIAL CHRONICLE
&
COMMERCIAL
THE
(430)
Let the Government Not
Alabama &
Upset the Stock Market!
Companies
of New York
Louisiana Securities
By FRANKLIN COLE
If
Fraiiklin Cole & Co.
Quarterly
Comparison
67th Consecutive
.
Available
*
market economist believes Congress
should and will limit government spending by cutting down President's new social welfare proposals;
and will "wait and see" before granting his tax recjmmendations. Concludes it safe to purchase com¬
mon stocks if confined to industry leaders
well-entrenched and with low costs. ,
request
on
New York Hanseatic
Corporation
Teletype NY 1-583
BArclay 7-5660
Union
dent's
of
feeling and to go
t
o r
lion and
reference
eral
with
y
national resources by
on
$245 million,
his-
in
down
•
and despite a gen¬
to the wisdom of
of viewpoint.
in¬ "Economic
President
the
general
administration
has
stead
as
which
in
one
political
ftfC PONNELL & CO.
Members
New
York
New
REctor 2-7815
Tel.
,
TRADING MARKETS IN
Mining
Goldfield Deep Mines
medical care, for which a
million is provided.
Cole
Franklin
days of,his administra¬
road
to
statism
inflation
or
deflation,
low income groups
disastrous
or
or
are
we
stability? Security values over the
If it were
General Tin Invest.
next
will be determined- in
great measure
by the policies
which we shall discuss in 1- this
these
STEIN & COMPANY
Members Nat'l Ass'n of Securities
Dealers, Inc.
ing ' the
87
C. 5, N. Y.
William St., N. Y.
pity 2, N. J.
Montgomery St., Jersey
Tel. DIgby
Tele.: NY 1-1055
4 -2190
Ashland Oil & Refining
Co.
Stock
Common
Bought and Sold V
Standard Oil Ky.
Bought and Sold
™I BANKERS BOND £°i
year
Floor, Kentucky Home Life Bldg.
LOUISVILLE
2,
KENTUCKY
Bell Tele. LS 18fi
Long Distance 238-9
LAMB0RN & CO., Inc.
STREET
WALL
NEW YORK 5, N. Y.
reconciled
thoroughly recognized that
budget for fiscal 1950 is large¬
the
Savings,
ly fixed by the war and its after¬
math, and our determination to
avoid the errors following World
War I.
The core of the expendi¬
ture
side
New York 5
BArclay 7-7835
for
housing
and in modify¬
this
in
in
day.
the' future,
desirable.
contractual
quarterly report on savings by
individuals in the United States,
items
or
matters
minor
impressive figure is the increase
in holdings of corporate securi¬
ties of only $200 million.
This
they
1950
or
be called the fringe
differences
of
exist.
If inflation im¬
pends, is this the time to increase
expenditures on social welfare,
health
and
security
by
to
fund
the
of
business
funneling their savings
into other forms, mainly United
States Savings Bonds and insur-
approxi¬
general research by $329 mil-
H. Hentz & Co.
to
add
capital
mately $400 million, on education
and
able to furnish additional own¬
ership capital to provide business
with new tools and equipment or
sharp
where
Individuals willing
fifteen years.
$41.9 billion.
opinion
1856
just been published
the
of policy,
fiscal
What might
Established
Economic
if any. For
aggregate merely bears out what govern¬
approximately $32 billion out of ment prepared data have shown
the
proposed
expenditures
of to be true over a period of some
is
4-2727
of
particularly
bear
system
Philadelphia,
are
ance.
For:
.
York
York
New
York
New
Commodity
Curb
ties
and
nism
seems
to be
this
when
tal
an
more"
the
for capi¬
to make
cheaply.
more
of
New Orleans Cotton
trouble,
tions at
As to
one
Y.
iest on
field
NEW
CHICAGO
YORK 4,
DETROIT
GENEVA.
PITTSBURGH
SWITZERLAND
OILS
or
of
Execution of Orders
115
Exchange
A.M.,
Std.
Pac,
Telephone
in the market.
rates
This is hardly the
to encourage small and me¬
dium size business.
With compe¬
tition and a "fair deal" to owner¬
way
Revenues
Chief
Executive's
«
) ■'
■:
i
i
the
v.
•
I
-
the
mistakes
of
estimates
refusal
to
made
Federal rev¬
r x
which
STANDARD SECURITIES
CORPORATION
Brokers
i
Stock Exchange
Spokane
Dealers
-
-
Underwriters
Building, Spokane
Peyton
Branches
at
Kellogg, Idaho and Yakima, Wn.
BUY
SAVINGS
S.
U.
BONDS
J.
W
Royal Bank of Scotland
Incorporated by Royal Charter 1727
i'
OFFICE—Edinburgh
HEAD
Branches throughout
:,3
I
Bishopsgate, E. C. 2
8 West
49
Scotland
OFFICES:
Smithfield, E. C. 1
Charing Cross, S. W, 1
Burlington Gardens, W. 1
64 New Bond Street,
W. 1
have
(Continued on page 33)
'
Time:
other hours.
3
the
opinion,
our
be in balance
Teletype NY 1-672
BArclav 7-0100
10:45 to
from
worst
sumption that the budget will not
this year or in fiscal
NEW YORK 6, N. Y.
BROADWAY
Floor
11:30
Sp-82 at
Quotes call TWX Sp-43 on
enterprise in the growth
or
thereby
bringing into question
the validity of the
requests for
additional taxes and the entire as¬
Other Principal Exchanges
Members TV. Y. Stock Exchange and
PH 73
SECURITIES
For Immediate
profits, present tax rates,
bear heav¬
new business entering the
occurred re¬
peatedly. Doubt is cast on the ac¬
curacy
of the current forecasts,
Goodbody & Co.
Bldg.
N. Y.
Teletype
NORTHWEST MINING
come.
in all direc¬
stage. Really big business at
can
obtain funds at going
enues,
CANADIAN
Phila. 2
Telephone
RIttenhouse 6-3717
let alone higher rates,
in
MINING
CANADIAN
OFFICE
Stock Exchange Bldg.,
and the same time.
acknowledge
INDUSTRIALS
CANADIAN
Exchange
Cotton Exchange
Byllesby & Company
PHILADELPHIA
we
trying to move
are
can
gather, is
President and his advisers
real
that the
business
in
vestment
The
H. M.
of
most dis¬
turbing feature of the budget is
Inc.
And other Exchanges
N.
Stromberg-Carlson Co.
Members Standard
squaring the circle
to express concern over debt fi¬
nancing by business and at the
same time propose increased taxes
on
business and the incomes of
those individuals who are the only
ones from
whom savings for in¬
the
Trade
-
Haskelite Manufacturing
things
It is akin to
In
Exchange
Exchange,
Dayton Malleable Iron
anachro¬
country and
goods
/
SCOPHONY, LTD.
Exchange
Cotton
Board
Chicago
Exchange
Stock
American La France
.
Members
New
Angeles
tion in taxes becomes possible, the
LONDON
British Securities
Los
on
ship capital, profits will take care
of themselves.
•
We Maintain American Markets
and
York
New
our
When a reduc¬
equity financing.
between
Private Wire System
undoubtedly
is
It
.
.
certain features
that
true
tax
.
PEnnypacker 5-5976
not be
investment would
equity
entire world are calling
debt, prepared by the Securities and
It shows
provision for national defense and Exchange Commission.
international affairs, and veter¬ liquid saving of $3.1 billion in the
ans' services and benefits.
These third quarter of 1948, but the most
the
DIgby
number.
Profits and
has
There
budget is made
the
of
Members New. York Stock Exchange
and Other Principal Exchanges
120 Broadway
of interest on the public
differences
Exports—Imports—Futures
;
Philadelphia 2
Progress
about which there are only
Raw—Refined—Liquid
BUCKLEY BROTHERS
late
yV.'".;;..'y;yy;y
epdr, that financial resources will
be adequate for all types of busi¬
ness, or
that a higher share of
proposed to inaugurate
the greater
of
Quoted
—
1420 Walnut St.
to
programs
.V '•
Sold
—
"It should not be assumed, how-:
large aggregates of capital and do
not further the long-term interests
It is
are
SUGAR
Bought
when
Spending
up
99
UTILITIES
less than full employment tax system should be reviewed to
prevailed or commitments for de-, strike the best balance between
fense and international aid were the
study.
The sputter of the stock
objectives of maintaining ade-^
ticker responds to hourly devel¬ less
demanding,- one would be quate consumer markets and of
opments and reports that are often willing to go along with the main providing capital of the needed
forgotten in the; next 48 hours. objectives, at the same time scru¬ character in adequate amounts.
Values founded on such matters tinizing details, for in the setting
(Emphasis supplied) as
fiscal and national economic up and actual administration of
Possibly, because of the commit¬
policy on the other hand are of such measures, experience tills us ment of the President on
taxes,
a more enduring nature.
>.4"- much of the good may be lost or
however, the Council adds its in¬
Nothing is gained by impugning costs ballooned beyond reason.
fluence to the recommendation of
the motives of the President or
larger.. taxes.
Yet,
it carefully
The Liberal's Dilemma
those who share his views. Sin¬
avoids a recommendation of ex¬
Here the liberal's dilemma be¬ cess
cerity of purpose rather than mere
profits taxes but plumbs for
window dressing, we prefer to be¬ comes clear. It rests on two points increases in taxes on personal in¬
lieve,
was
responsible for the —their inability to appreciate the comes in the middle and upper
closing words in the President's need for a large volume of sav¬ brackets,
after
indicating else¬
Economic Report to the Congress: ing if the objective of the Full where that the bulk of the sav¬
"We are committed to the work¬ Employment Act of 1946 is to be
ing is in the middle income brack¬
ing out of our economic problems attained; and a distrust of profits. ets where concern with the safety
in a way that combines economic They close their minds to the fact of investment rather than gains is
and
social progress with demo¬ that their policies tend to freeze
primary. The fear of excess sav¬
cratic
thfe
self-responsibility."
advantages, of bigness and ing is a carry-over from the thir¬
Incorporated
1st
have
the
of
prosperity
>
twenties."'
.
I
to
appear
large, compared with earlier
experience,
has
been
outside
equity capital.
Total new money
of un¬
employment, the nation must be¬
come
AND OIL STOCKS
KENTUCKY
capital
of
source
not
been
ing the impact of illness, as
moving in the direction of greater
MINING
ex¬
bare $15
adequate
providing
has awakened new fears. Are we on
the
only
does
branch offices
our
government in
of
interest
The
President, he
elected
an
as
s"*"
Gaspe Oil Ventures
Regent Oil Corp.
"The
panied by improved services and
facilities for. public health and
tion
Standard Gas & Elec. Com.
of * business
'
which
to
referring
in
Review"
financing
the
envisaged as a national system of, raised in the stock market has
medical
case
insurance
accom¬ been somewhat smaller than dur¬
of.
w a
Mobile, Ala.
wires
Direct
understanding
current Annual
pansion states in part:
insurance
extraordinari¬
first few
Copper Canyon
disability
the
ly
moderate.
Instead, in the
BROADWAY, NEW YORK 5
120
ami-
a
urged, or "the comprehensive na¬
tional health program" which is
cably and di-
opinion
Exchange
Curb
resolved
vision
Stock Exchange
York
were
effecting
of
for
sion
dif¬
ficulties
to
reduction?
The budget, be it noted, does not
include more than nominal provi¬
been
stamped
government,
this item by $37 million in¬ to
crease
The
-
NY 1-1557
HAmvw 2-0709
i
more
a
St., New York 4, N. Y.
New O leans, to.-Birmingham, Ala
time, the Council
of Economic Advisers seems to be
first
adopting
York Stock Exchange
New
Members
25 Broad
for the advent of an era
the
For
keeping down the expenditures
Monroe, whose
SCRIP
Steiner,Rouse&Co
and report of the Presi¬
Message and the policies defined more closely in the budget
Council of Economic Advisers. The President is said to long
good
Bought—Sold—Quoted
of the
of the President set forth in the State
study centers around the program
This
York 5
120 Broadway, New
readjustments already occurring, stock;
In view of drastic healthy
1
t
■
j
TOTAL ASSETS
£153,656,759
Associated
Glyn
Williams
Mills
Banks:
&
Co.
Deacon's Bank, Ltd.
,
Volume
169
Number
4772.
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
(431)
3
"What About the
INDEX
B. S.
Articles and News
What Can
Business
Chairman of the Board, New York Stock
Exchange
Expect From Congress?
Wherry
'
—Sen. Kenneth S.
By ROBERT P. BOYEAN*
Page:
/
.
.
.
!"■
Holding despite decline in stock exchange activity, "we can look
forward to good new days, if we recover our confidence in America
and its way of life," N. Y. Stock Exchange executive
urges invest-
•
ment
..7. Cover
.
Municipal Bond Market Prospects—John S. Linen..........i.... .Cover
Wages, Prices and Employment in 1949—Eivait Clagiie..........
Let the Government Not
"What About the Market?"—Robert P.
Campaign
.
2
.
Boylun.
\
7
,
Goodbody
k
r 4
>.............
Why This Pessimism?—Thomas W. Phelps..
4
Spread the True Story of American Business!—Irving S. Olds
7
U. S. and Canadian
Exchanges Bulwarks of Free Markets—Emil Schram
1949 Bank
Whenever investment
12'
13
Earnings—M. A. Schapiro
Capital Market—Edmond M. Hanrahan.
"One-Way" Economic Theories—Edward H. Collins.
houses take aggressive action in interesting
13
13
:
j
Counsellor—Benjamin Graham
15
and
16
Reports Be Made Realistic?—Ralph Coughenor Jones
1 9 4
17
The Outlook for World Trade—Thomas C. Blaisdell, Jr.............
19
Dorsey..........
The Investment Portfolio As Bank'Income—F. Brum
Prospects of Railway Equipment Industry—/oftn I.
Budget—Beardsley RiimV. ic.
i..
,
'27"
Conflicting Forces in 1949—C. A. Sienkiewicz......................
29:
Rocking the Boat of Prosperity—Charles E. Wilson
30
'"7VV7:'7 7• 7;-.
32
certain
realities.
realities
is
'•;> V-..
:
'.7.-7
v
* kt.-
,;
a:7
7.,.
',f
•'
.
.
1949
on
Chase National Bank
Let's Get Down
Reports
Earth
to
on
Exchange
Mid-West Stock
Higher Commissions..
on
;
Cleveland Trust Co. Sees Ratio of Slock Sales and Prices
Income at Lowest Level
.;
Edward J. W. Proffitt Alters Resolution
Bidding
-
31;
•
31
.
V. G7.-.
.
.
v
.'V^.7
>8
\
15 7
;7
.7.."
48
Business
7:77'"7V'7
—Harry J. Simonson, Jr
..........1
14
Observations—A. Wilfred May
Reporter's Report
Our Reporter on Governments
Prospective Security Offerings
21
Railroad Securities
The
COMMERCIAL
FINANCIAL
U. S.
Reg.
WILLIAM B.
Park
25
Weekly
1
-
and
to
WILLIAM
DANA
D.
SEIBERT,
1942,
N. Y.,
8, 1879.
President
RIGGS, Business Manager
$25.00
state
corporation
and
Other
Chicago
bank
city news, etc.).
Offices:
3,
111.
135
S.
(Telephone:
Salle
State
St.,
0613);
Eng-
;
a' result
as
if people^ as
,
of
Southern Production1
the
evident
became
to
SIEGEL & CO.
consumers
not
was
business
then
trans¬
Broadway, N. Y. 6
Now, what of the condition of
our
capital markets? 7
Exchange
amounted
to
of the 1,000,000,000 shares
119%
'
Bought—Sold—Quoted
''
turnover
In 1948 the
on
the
'
'
:
<
available for trading.
*
1
COMMON
the New York
on
"
UTILITIES
In 1929 the shares of stock that
Stock
4-2370;
'
KENTUCKY
Capital Markets:
changed hands
DIgby
Teletype NY 1-1842
\'£|
7
■.
The
39
"
,
*
•
was
Young & Gersten
Exchange list. The amount
40
of credit involved in"' stock trans¬
actions today is so small as to be
almost' negligible. Brokers' loans
Exchange Place, New York 5
Telephone WHitehall 4^2250
United States not only
•
re¬
particularly saw pros¬
rise
to
undreamed-of
1929.77
in
Yet
1873, but those who
fear
we
hear
occasionally
expressed, that
we
through another 1929.
High Yield Bond Value
the
may
Indicated Yield to
go
That fear
Okla.
effort
to
replace unfounded
with confidence.
N.
have built
an
Maturity 13%
City Ada-Atoka Ry.
6% 1st Mtgei. Bonds due 1/1/94
1948 EARNINGS OVER 15%
Send
fear
for
Description
our
The presence of
which
economy
Y., Jan. 20, 1949.
(Continued
on
page
40 Exchange
Place, New York 5
WHitehall 4-8957
Tele. NY 1-1404
44)
made
interested in offerings of
a
full yearV
subscription to the Monday
-
yeaii&
per
$38.00
per
New
York
will
give
you
in
Record—Monthly,
Record
of
"Chronicle"
ideas
galore and
liberal
pay
per yqar.
(Foreign
account
PREFERRED STOCKS
year.
.(Foreign postage extra.)
Earningsyear.
Thursday issues of the
S.
of
the
Monthly,
postage extra.)
—.
fluctuations
funds.
dividends.
Spencer Trask & Co.
Members New
York
Stock Exchange
25 Broad Street, New York 4
135 S. La Salle St., Chicago 3
TeL: HAnover 2-4300
.
Commercial & Financial
Tel.: Financial 6-2330
25
Teletype—NY
Park Place
1-5
REctor
Albany
-
Boston
-
Glens Falls
.
7
Members-New- York Curb Exchange
in
of
in
$35 invested in
and
U.
Members
exchange, remittances for for¬
eign subscriptions and advertisements must
be
are
7
States,
$35.00
Quotation
per.year,
per
We
New
March
Other Publications
and
rate
at
of
Rates
and
Countries, $42.00
Note—On
the
La
that
could
it
.
Territories
of
Monthly
clearings,
news,
Act
United
Canada,
Other
office
post
the
Dominion
$25.00
records,
the
under"
Union
plete
quotation
all
But
7
'
second-class matter Febru¬
at
Pan-American
77,7
market
C.,
.
Possessions,
Every Thursday (general news and ad¬
vertising Issue) and every Monday (com¬
—
E.
56
Smith.
Subscription
Bank
issue
London,
&
Subscriptions, jn
Thursday, January 27, 1949
statistical
as
25,
York,
9576
HERBERT D. SEIBERT, Editor & Publisher
WILLIAM
c/o Edwards
Reentered
ary
Place, New York 8, N. Y.
2-9570
Gardens,
rise
duction.
Corp.
Copyright 1949 by William B. Dana
/
Company.
CHRONICLE
Patent Office
DANA COMPANY, Publishers
REctor
Drapers'
and,
46
.
of
War,
in comparison to the
;
Maxson Foods
out of production
and that,
therefore, wages and profits can
together by increasing pro¬
but
the fear
is so widespread that
capital is needlessly timid, growth
:;:An address by Mr. Boylan at is retarded and government pol¬
a
dinner given by the financial icies are shaped unwisely. I have
community of Buffalo, Buffalo, in mind in this reference to gov-
5
".......
7 7.......
.'
Lithium
heights/ There have been other is in the minds of some govern¬
holders,panics andv.depressions and na>- ment. office
bankers,
tionair disasters, and after each farmers and other workers. Men
one
our
people
have
resumed in every Wcilk of life hold it large¬
their progress as a nation;
The ly because no. one has' made the
we
52
•
.
7
Tomorrow's Markets (Walter
Whyte Says)
Washington and You...1.,........;....
Twice
7
...
Kentucky Utilities
industrialists,- notably
the late Henry Ford, proved to
us
in
the
early twenties that
wages are not paid out of profit,
1873.< share
has happened- since
1929.
Following the American tradition,
22
;
of
same
25
Corner.
Securities Now in Registration.
Published
v
20
•
have
3
acted, than that of 1929. We allrealize, however, that the after¬ reported by New York Stock Ex¬
math and the consequences of 1929
change firms are less than $450were of greater significance. v
:v
000,000 compared to $8,500,000;000
perity
54
Utility Securities
we
ACTIVE MARKETS
-
;55
Industry..
Historians
Teletype NY 1-2846
1929,
experience
largely
magnitude in
panic
the
severe
suffered
5
Our
that
covered from
g
News About Banks and Bankers
1929.
INC.
Street, New York 5, N. Y.
HAnover 2-8244
only 15% of
which marked the culmination of
approximately* 2,000,000,000 shares
7 The
:
10
NSTA Notes
us.;
volume
■
.........107
The State of Trade and
resulted
of comparable
more
7 8
Mutual Funds
Salesman's
crash
the boom after the Civil
16:
Recommendations.
Einzig—"Higher Price of Gold"
From Washington'Ahead of the News—Carlisle
Bargeron.
Indications of Business Activity
.-
Securities
v
* 38
;....; ^ j'
the
panic and fear; and the de¬
pression which followed was; ag¬
gravated and prolonged by un¬
sound experiments and by ven¬
tures into forms of socialism .-7-
tell
yl2
.
.
;.
Coming Events in the Investment* Field.
Public
After
events.
relation to their times.
\. .7
leaders
Many previous financial panics
.Cover
Fund
and apolitical-
the
were
Securities
Mutual
that
54
Regular Features
Bank and Insurance Stocks..........
Business Man's Bookshelf.
indus¬
since
20 Pine
Certain
from
26
Restoring Gold Standard.
on
<
All
on
(Editorial)........
in
some
accept—
and
bankers
economic
WM. E. POLLOCK & CO.,
increasingly buy the
j.929 ( crash- the
whereabouts
of
products of their own labor, the
these men was eagerly sought in
economy could not be sustained in
New
York, in Washington, and vigor and strength. This is a les¬
elsewhere,
but
they
were ; not son which may prove to be worth
found, and the intelligent public all the agony of 1929 and of its
eventually reached the conclusion aftermath.
V.'v
24
•
still
influence, control the course
of
23
.;....
Commodity Exchanges.*
Attractive, Says Halle & Steiglitz
Personalities
in the
which
one
people
certain
and
23
Common Shares Still
Prominent
twenties—and
the
more.
could/ by their combined efforts depression
Personal
to
,
Spahr Opposes Increase in Gold Price.,
A. F. Whitney,
Urges Compulsory Competitive
-Corporate Issues.
Dealer-Broker—Investment
people
Our
1949.
learned
trialists
22
Walter E.
Canadian
in
Authority
Na¬
.
prior to
much
but after that
that
22
Eric Johnston Offers Plan for American Investment Abroad
See It
these
"every¬
thoughtless
22
Philadelphia-Baltimore Exchange Merger Nears Completion
We
national .welfare
learned
labored under the delusion
20
.'
Exchange Merger Parleys Resumed
As
the
We
that
YORK
U. S. Housing
a
Among
NEW
Bonds
tire
fact
STREET,
Telephone: WHitehall 4-6551
•
20
Industry.
Benjamin M. Anderson, Noted Economist, Is Dead.......
Ullman Defends
the
WALL
99
income, about $87 billion in
$200
20
New York Curb
ouettes.
since
recovery
remarkable.
been
tional
countT.y,
come
office,
our
impov¬
an
that year, is now well overbillion. 7 Improvements
in
of
So
securities.
and
out turning pir?
by
world.
industrial
has
18
(Boxed)
Vote
1929
17
1948 Operations
Clifford S. Strike Discusses Outlook for Construction
to
Boylau
applicable
6
11
Exchange Celebrates 75th Anniversary
lesson
a
7
Prospects).
Transcript of Mutual Fund Lectures.
Montreal Stock
Our
marks
bigger than anybody"—
of lasting interest still
is
body
5
Speaks After the Turn of the Year ( Additional
Forecasts From Business Leaders
P.
Robert
;y-.'y,
Ebbott Named President of Chase National Bank..................
Business and Finance
erished
and to the eri-
Recovery—John J. McCloy...
you'll
yeai* American well-being since that
which brought time have enabled us to meet the
home pain¬ challenge of Communism and So¬
fully, to the cialism. I doubt if' it. could have
f i n a n c i a 1 done this so effectively if such
c o m m unity
advances had- not been made in
;.....
Problems of International Economic
year,
9,
1929',
25
...
The Business Prospects for 1949—Mqlcolm P. McNair...
just glide
down"
weighed
obsolete
strong as to support our peo¬
ing and rehabilitating
convulsion
i
24
.V...v.;
so
you're
if
ly
harder
even
ice-rink—especial¬
an
ple in comparative luxury and to
help greatly in feeding and cloth¬
Anniversary
23
..
Snydert-jr
i.
is
on
with
are
of the market
Renter)...,2L
1949 Business Outlook and Retail Problems—A.W. Zelomek
.y.....
look.
Twentieth
the
18
The Future of the Securities Business—Harold B.
how
see
This
16
Prospects for Corporate Financing—Dean Langmuir.
Taxation and the
the
on
they
Bleak
other businessmen
14
-
Managing the Bank Portfolio in 1949—Walter L. Rehfeld...........
How Can Profit
and
table, face-up
The Commercial Banker As Investment
than
gathered
together these days the state of the market is a principal topic of
discussion.
"What about the market?" someone asks, and that's the
question I'd like to discuss tonight without pulling any punches. Permit
me to put the^cards
Use of Institutional Investment Funds in 1949—Earl B. Schwulst
men
FIGURE
Street is
Wall
on
,
8
Government Bond Outlook and Interest Rates—Marcus Nadler
The SEC and the
CUTTING A
FINE
50,000,000 new
potential investors in usefulness of our financial markets. Deplores
propaganda of fear and depression regarding equities market, and
calls upon investors to exert powerful influence on government.
Says common stocks are good today, and securities business should
aid NYSE in campaign to restore confidence in American enterprise^.
3
•
Increase Confidence in Equity Capital
to
—Harold P.
-
.Cover
.
Upset the Stock Market!—Franklin Cole..
AND COMPANY
V
^
!:.vi........
Schenectady
-
Wo"co,rter
Chronicle
New York 8, N. Y.
2-9570
4
(432)
THE
COMMERCIAL
Increase
Confidence in
&
FINANCIAL
i
CHRONICLE
■*'r
Thursday, January 27, 1949
Why This Pessimism?
By THOMAS W. PHELPS*
Equity Capital
/
Partner, Francis I. du Pont & Co.
Members, New York Stock Exchange
By HAROLD P. GOODBODY*
Holding we are suffering from vast overdoses of
pessimism, Mr.
Phelps traces origins to ideas and practices of collectivism fostered
by the Administration. Blames financial advertising for
stressing
nsks and casualties without
giving advantages gained in investment.
Says over-emphasis is placed on investment timing and
price fluctua¬
tions, while too little attention is given to gains from
Partner, Goodbody & Co., President Association of Stock Exchange Firms
V
I
.
i
.
J Mr. Goodbody holds the problem today is to restoie confidence in American methods
i
of assembling !
be done only by improved public
understanding of the role of securities markets in the national economy. Says it is matter for serious
attention at top management level and urges financial industry aid in N. Y. Stock Exchange's campaign
to popularize investment in equity securities.
private capital for development and expansion of industry, and this
j
p
You
and
Street
that Wall
know
can
permanent
investment. Concludes
generation is willing to take
new
is
chance.
a
quite accustomed to a good deal more than
Uninhibited as I am by either training or experience
merely frigid receptions. That little thoroughfare which happens to be located in New York tising, I propose today to tell
you simply how your work
City is blamed by the politicians and demagogues for just about everything. And now layman—myself—and to ask you a few questions about it.
we
in adver¬
.
xtussia
the
this is
has<«>-
picked
;
up
When
tunas.
"Pravda"
lam-
ants- to
w
bast
their
10
one
some
peo¬
entirely remiss in its
in this direction.
obligations1
intensive
Stock
efforts.
New
The
York
iiiy him with
Street.
The latest
their
was
attempt
to
disparage
His Eminence,
the
omy.'-
serious
a
of the adverse
because
is having
effect it
the flow of risk capital from
upon
functions
to
of
produce
on
they
For
do.
■*
;
enough
affairs
act
We know it is
policies
our
are
public, which
to
time the industry has
the problems of
inters
preting those principles of busi+
conduct and business
ness
a
distributing,
and
which has been viewed by almost
the
public,
going to do
of
Our
two million people.
so
policies
and now we are
with all the public
media-available
industry
to
been
has
us.
some¬
what slow to recognize the
its
and
chang¬
ing concept of public relations and
mem¬
in a pro¬ the improved methods which have
industry and
developed so strikingly in recent
gram which is preliminary to an
commerce of the nation.
It is de¬
The
really
important
enlarged campaign.
It has been years.
stroying confidence in machinery
change which is taking place in
our
purpose
to
integrate
the
Which for 156 years has proved
public relations is the realization
thinking of our own industry with
so effective in financing the progthat the problem is one which
respect to this major problem. We
gress of our great democracy.
It
have held regional meetings of must have serious attention at the
is serious to >ou!
It is serious to
various kinds and on various sub¬ top management level. *
its
to
source
us!
tne
But that would
it
if
tant
welfare
the
not
were
be
so
and
bers have been engaged
unimpor¬
serious
progress
to
of
America.
jects,
backdrop for
Our
today is to restore
of those citizens
confidence
who
made
once
ican
use
of the Amer¬
methods
of assembling pri¬
capital for the development
and expansion of industry and to
gain the confidence of those new
vate
owners
of
risk
used
never
capital who have
those facilities.
doing
These
quarterly
of
record will show that
come
been
hesitant
available to
unfounded
us
to
use
media
the
to correct the many
criticisms which
have
been leveled against our industry,
to
and whoever they are.
only one alternative to
private financing.
And
we
do not
believe that the American people
want that alternative.
A
i
I
am
frank
to
admit
that
our
industry has been rather timid in
recent
the
about encouraging
of its facilities. We have
years
use
been somewhat prone to be satis¬
of
financial
most of them
of
communities
have be¬
bodies
problems
It consists
other
than
other
communities
tion,
would
realize
again utilize
our
our
functions
and
facilities for the
•|
■
:
I certainly do not want to leave
the
impression
Stock
however
that
the
Exchange industry has been
throughout
including
Buffalo,
the
na¬
ably
so
Community of Buffalo,
"N. Y., Jan. 20, 1949.
Buffalo,
ap¬
before
whole
a
the
the
organizations.
management of
firms and branch
member
scattered
country.
success
be
forthcoming.
is based
the fact that
on
officers
and
ernors
That confidence
our
in
gov¬
their
re¬
that
I
do
not
time
same
I
understand.
do
of
Accordingly, it
have
They
knowledge
effort
has
contributed
that
this
meant
the
to
cooperative
larger
payrolls
for these communities and greater
>
our
Public
Understanding
No, our industry has
It has made
toward
an
some
not been
progress
improved public under¬
standing of its functions as a part
of the national economy.
But we
forthcoming.
believe that
industry has evolved the be¬
ginning of
direction.
the
a
program
I
Board
ficials
am
Governors
of
the
of
Exchange and
spect
this
to
along
the
headed
in
New
York
same
of¬
Stock
with
has
lines.
same
the
and
our group
problem
respective
our
in the right
glad to say that
development the thinking of
re¬
been
We
are
direction and
thor¬
programs are
oughly correlated.
Our nation-wide organization is
not unlike your own.
Our 1.600
member
the
firm
offices
constitute
goes
vice
to
the
public
country.
They
Those
Buffalo
in
ample.
units
There
By
our ser¬
over
small
are
the
units.
are
are
here—ten
all
a
ten
distributing
outlets
themselves,
good
for
even
ex¬
our
as
group, it is not possible to de¬
vote sufficient time or effort to
a
public relations.
and as many
deplore
speak off
would
If
yours.
What is the State of the Union?
know
give
do not expect me to
political and economic
Mr. Truman and his
you
you
a
roundup.
Council
have
of
Economic
just done that.
Advisors
It
seems
to
however, that they omitted
a few important
things.
For one,
they omitted to tell us that the
me,
dominant
mood
the
of
nation
is
pessimism.
celebrate the unconditional
We
surrender
of
all
enemies
our
in
the
greatest war in history by
shivering in our boots because we
is about to be¬
war
gin and
we probably shall lose it.
rejoice over the greatest
harvest in our history by lament¬
We
the
soil and
our
inevitability of starvation
We
that
fore,^
we as the national trade
organization of the -industry are
on
page
37)
to
Ultimate¬
more temperate
"nothing in ex¬
answer, not only
the
and
record
on
we
are
highest
employ¬
proof positive
as
at the
the
In
top of
boom,
a
^
v
stock
give
factories and their equip¬
ment, daily selling their shares at
prices below applicable net cur¬
we
away
rent
assets
though they are sell¬
five times earnings to
only
dividends
on
three times
ered
does
cov¬
over.
laziness.
uses,
Much
of
just
our
in science and industry
undoubtedly is due to a desire on
progress
someone's
part to avoid work.
Similarly, pessimism has contrib¬
uted to man's well-being by act¬
ing
as a
the
ups
both
I
shock-absorber to cushion
and
can
of life.
downs
But
be overdone.
simist.
my
He worked hard all
storing
shelter
for
up
sum¬
food and making
himself
never
a
thought
for
When winter came,
grasshopper
the
future.
the optimistic
knocked in vain at
pessimist ant. As
the door
of the
children
we
were
left
with
the
growing
our
endorsement
all
of
know
the
about the Irishman who
if
he
favored
sharing
He gave the idea his
endorsement except
to
as
pigs, because, as he put it, "Hell,
pigs." When most of
us
have two pigs, the only hope
for
selling
that
scare
shortly
You
the idea
us
tivism is to
of collec¬
into believing
us
shall
we
suit
can
whether I
have
yourselves.
suggesting
none.
to
as
politi¬
but I think you
am
cal
a
consequence,
will agree that fear of the future
has
played
American
an important part in
politics in the last 20
.;."
"V
think I am
impractical, philosoph¬
years.
I
hope
fiddling
ical
don't
you
on
themes
offices
while
back
clients
in
your
burning
because; .you are not there.
The
slogan of our Research Depart¬
is
your
"so what?"
are
derivative
three
what?" of
pessimism
collectivism
its
and
is
that
of record peacetime
find us with equity
years
markets
Pont & Co.
The "so
national
our
weak
so
to
as
provide
considerable justification for those
who contend that the solution of
larger number of national
ever
an
problems is to let the government
do it.
Not in 30 years have stocks
sold
low
as
they
as
in
relation
selling
are
to
earn¬
Only
now.
in 1932 and in 1942 have
lead¬
our
ing industrial shares failed to sell
higher in relation to book values
than
Not in the last quartet
now.
century have stock earnings been
valued lower in relation to yields
highest grade corporate bonds
on
than
the
All this at
now.
SEC
the
risk
reports
record
trillion
a
time whem
net savings
our
figure of a quarter
Our shortage of
dollars.
capital
vious
that
is
acute
so
Eleanor
and
ob¬
Roosevelt
re¬
devoted her entire daily
newspaper column to it.
I do not
cently
want to
get into the argument, as
our
steel capacity is
adequate, but it is fair to say that
if
with
to
I've got two
and
summer
only failed
You
wealth.
hearty
to
all
America is
pessimism, but
is,
and
asked
was
against the
possibility that some day he might
need both.
The grasshopper sang
danced
That
collectivism.
at
quarrel with pes¬
simism began with the fable of
the ant and the grasshopper. The
ant, you remember, was a pes¬
guess
not
national
acceptance
ings
Now pessimism has its
that
vast overdose of
a
Truman
our
prosperity
market
Over-pessimism
me
ment at Francis I. du
accept the greatest national
about to bust.
,•
the
he likewise omitted any comment
on one of its most important de¬
the
As you may
do
businesses do, there¬
(Continued
seems
I
as
responsibility will be
as
Mr.
note
old story
record.
mer
distributing points for
service.
Improved
be
to
to
suffering from
pessimism.
anything I say here
beyond these four walls the
I
in its
These meetings have,
will
it
I am encouraged to
first
where
propaganda
From
seems
rivatives.
practice
economy.
C.
larger
.ig¬
hurt
my
subject
much
yield 6 to 8%
a
right
to
the
the
that
me
the
the
At
want
anyone.
that
to
by
not
norance
Trubee, Jr. The public
extent has come to
realize that the Stock Exchange
industry is a nation-wide one and
an
integral part of the national
Frank
board
our
to the
came
It
frankly because
by a number of
things about financial advertising
ment
therefore,
program,
' The
was
was
that
,
troubled
am
ing
on
■■
■
income
depends the cooperation of the
top management of all of those
units.
I am very confident it will
story
Suffering
Thomas W. Phelps
-
our
of
the
talking is,
the
through
Upon the
nation-wide
,
two
of the
to
spent
for the lazy man but for the pes¬
simistic one.
excuse
1 want to speak
I
one
starved
,ant
asked
cess" is the
that you asked
me.
I
I
conclusion
My
same.'
only
for
ly I
The prin¬
is
still
ciple
a
way
grasshopper
and
the
m2ke small boys work.
great many of
you.
a
grasshoppers came from the fol¬
lowing spring. By the time I was
ten, I was
convinced
that
the
Q.
Public, to
the
multiplying.
question
me,
John
one
while
winter
they
think,
have sum¬
you
gional contacts have been assured
represented
idle.
\
*An address by Mr. Goodbody
| at a dinner given by the Financial
1,600
our
hand,
prosperity.
benefit of progress.
of
offices
the
"what
moned
froze
death
ing the destruction of
We
communities
Publics
that
thereupon
great
John Q.
think another
familiar with the
one.
'members
of
impression
a
many
In
rep¬
firms, it is not a sim¬
ple problem to formulate public
relations plans.1 Top management
is not confined to the governing
own.
On
organization
and member
on occa¬
our
doing. We have believed that
we had no apologies to make and
that sooner or
later the public
own
trade
We have
I am sure,
fied in the knowledge that we contributed to the knowledge that,
have contributed
vitally to our working together, labor, manage¬
1 country's welfare in the past. The ment and, if you please, Wall
Stock Exchange industry, a part Street, have made possible the
.: pf an extremely highly organized fine schools, churches, parks, fac¬
market place for securities, oper¬ tories
and
the
other
splendid
ates under rigid rules and strict things which make communities
regulations of good business con¬ throughout the nation like Buf¬
duct—all designed in the public
falo fine places in which to live.
interest and
therefore
are
Exchange at the organizational
top and the Association as the
comprised
is
Wall Streets.
of many
come
nation's
the com¬
munities have come to recognize
ties of the Stock Exchange indus¬ to a
larger extent that we, reptry and the facilities of the in¬ resenting so-called Wall Street,
vestment banking industry by the actually represent the Wall Streets
owners
of risk capital wherever of a
large number of financial
are
is
in complete agreement.
am
We
know the business lead¬
sions like this
are now setting out to en¬
courage greater use of the facili¬
they
and I
a
the
and
many
ers
j. We
There
relations program must stem
from the management level. That
is the contention of the experts
great deal toward
understanding of Wall
better
a
Street
job thoroughly. We have
lic
the
ask
I
to set myself up as a public
relations expert.
I am not.
But
I am convinced that any good pub¬
con¬
of
do
word
,
community—which
our
visits
the
approaching
Board
of
Governors
to
various our problem with that premise in
financial communities—of which mind.
In the set-up of our in¬
this visit to Buffalo is one—have dustry, however, with the Stock
do.
That is our job
the national economy—financ¬
ing industry and commerce. The
done
of
great deal
a
of
sense
no
mean
particularly within the
industry, gathering ideas and dis¬
cussing
the problem
from the
front line point of view.
in
have not
In
a
enlarged effort.
an
ting out to
we
as
tact work,
accomplished
That is exactly what we are set¬
serve
Governors and officers have
been
The problem
the
„
designed to
all
your
pear
-
giving thought and consid-f
eration
relations
Association
"
:
.
not
clear conception of the
a
some
motion picture, "Money at Work,"
which the Association has had the
The
we
are.
to
privilege
resentatives to
our
enough that
based
been
Time"
of
is
best interests of the
people
V
"March
situation
the
not
potential
a
of
is
.
conduct
we
ples, which
part of that campaign, the
Exchange
commissioned
Stock
aside
told
■ •
a
of
jnunist propaganda mill, however,
is
As
as
Quite
to
million
37
been
years
the industry in our national econ¬
>
from the grist furnished the Com-
of
has
wnich
Bishop
Wall Street.
P. Goodbody
three
campaign
tising
audience
Cardinal
Spellman,.
than
more
only
a
looks to
poll, with the minor variation that instead of
sending
have
cording to sound business princi¬
engaged in an institutional adver¬
Wall
it
that
a
There
we
surface.
We know that it
Exchange, for example, has
for
that
the
long way to go.
The groundwork has been laid for
ple., they iden-
!Harold
touched
great deal has already been done.
a
know
do
On the contrary,
•
whether
under
current
steel
the
expand
equity
by
market
industry
raising
capital
it
conditions
wanted
to
additional
would, have
to
invite that additional equity capi¬
tal into the business on a basis
representing a drastic write-down
equity capital already there.
of the
*Address
luncheon
by
Mr.
Phelps
at
meeting of the New
York
Financial Advertisers,
York
City, Jan. 25, 1949.
New
We
have
seen
the
practical ef¬
fect of pessimism and collectivism
in
housing.
Governmental
(Continued
on page
inter-
51)
Volume
169
Number
THE
4772
COMMERCIAL
&
CHRONICLE
FINANCIAL
5
(433)
Percy J. Ebbott Named
*
The.Y:;:
.■V
Steel Production
,
Electric Output
President of Chase
S
Carloadings
Staie of Trade
By A. WILFRED MAY
Retail Trade
,
National Bank
Commodity Price Index
Food Price Index
The
Auto Production
and
STOCKHOLDER PROBLEMS HIGHLIGHTED
Industry
tional
BY THE MEETING SEASON
Unfortunately, however^ the public's Yinterest gets aroused
chiefly by press accounts of superficial - controversies raised at the
more turbulent gatherings, and by eccentricities
displayed by a handful of recalcitrant "specialists"
harping on a few "pet" procedural abuses in their
many one-meeting stands.
Thus these activities
and their news treatment may merely be serving
/
as a "red herring" in diverting serious attention
from the much more fundamental problems aris¬
ing from the separation of corporate ownership
sun.
Y YA slight increase
was reported in total industrial output for the
country at large last week and moderately exceeded that of the sim¬
ilar week
YY':
Y'Y Y. Y
What
Price
a
year ago.
show
insurance
-
.
in
25, while initial claims
the
latest week
ended
than
for
8%
.'
Aldrich, Chairman,
after a meeting of the Board of
Directors on Wednesday.
Percey J. Ebbott, Senior VicePresident,
has
been
appointed
President
the
endeo
week
in the period ended
sis
-
an
ff
»•
si!
:
".»•••
has been Pres-:
ident, becomes
Vice-Chair-
!
•
"
American
v
of
man
industry will invest a total of about $55 billion in new
''YY'-Y Y. -YvY Y plants and equipment between now and the end of 1953 if present
plans of business leaders across the nation are carried out. Y Y'Y
Management?
W.
who
McCain,
....
'
'
of
bank, and
Arthur
precipitately to approximately 20%
advance of about 2% in the period
YrY, V
rose
against
as
the
by
announced
were
W.
continued claims for unemployment
"
.
Y
■
more
Dec. 25.
on
»
of
Jan. 1, 1949 compared with a rise of almost 3%
Dec.
1
v
on
increase
an
Y
•
-
Latest reports available
*
from control.
Bank
Winthrop
Y' 'At this annual-meeting season the question of stockholdermanagement relations enjoys one of its sporadic appearances in the
•
following changes in the
of the Chase Na¬
management
Business 'Failures
board
th6
of, di*
Carl
rectors.
Schmidt
J.
This is the conclusion of the most recent survey of the McGraw-
lapp, senior
Publishing Company's Department of Economics.-Plans for 1949
Vic e-PresiY
are large enough to be consistent with con¬
dent, has beeijt
tinuing prosperity. ,If industry can get the money to carry them
named
Vicethrough, it will keep purchases of new plants and equipment at a
Chairman of
high level.Y
:Y';: Y
Y
'Y"Y. • Y .;;Y.
The survey shows that industry, as represented by manufactur¬
the Executive
the community:—for the official himself, for the
C o mmittedi.
A. Wilfred May
director seeking to do the best for his company, ing, mining, transportation, and utilities, is now planning to invest
Percy J. Ebbott
The Chairman
.Y
:
for the banker, for the SEC,, for the courts, $14.1 billion in 1949. That is only 5% less than the record-breakine
total actually spent in 1948Y If these plans are carried through, 1949 and President are the chief execui
and for the occasionally interested stockholder. How is a scientific
Actual expenditures tive officers of the bank.' Y' Y yI
gauge, a statistical yardstick, or the market rate, to be found for expenditures'might well exceed those of 1948.
have been larger than planned in the years since the war.
Eugene R. Black and George
objectively "pricing" an executive?
,_;Y
YY •
Industry now has plans to invest more than $40,000,000,000 in Champion have been appointed
Surely .these formidable basic difficulties, in fixing officials'
the four years 1950-53. Plans taper off as they are pushed further senior Vice-Presidents.
Edward
p'ay' cannot be constructively resolved either by statute, by the
into the uncertain future, the report points out, but the decline is
L. Love and Hugo E. Scheuer-t
glandular Jammergeschrei of social reformers, or by antics (even
remarkably small.
mann, who were appointed senior
when provoking the gavel and/or fisticuffs) at the annual stock¬
The survey provides for the first time information on which to Vice-Presidents in
1947, will con¬
holders meeting.
,■
"Y'Y ' 4<Y*
' •. /•-/■
v.—'
judge the level of capital investment in relation both to total present tinue in that capacity.
; ;
Dividend policy, decision whether a company should be liqui¬ value and needs. It shows the total value of
existing facilities in
Mr. Black, formerly Vice-Presi¬
dated
under
certain
conditions, a recap plan, and directorate manufacturing is $96 billion and the cost of replacing them com¬ dent in
charge of the Bond De¬
change (as now proposed for the Illinois Zinc Co.) typify some of pletely with the most modern plants and equipment available would
partment of the Chase, has been
the situations where the interests of the management and the stock¬ be at least
$136 billion.
United States executive director
holders may be in opposition.
"American industry," the report concludes, "is prepared with a
An example of a long-standing and complex
question is the determination of management's
compensation. Y Sound and; equitable fixing of
salaries
persistently remains a most- difficult
problem for the various interested members of
•
•
Hill
the
report points out,
.
..
<
,
.
.
of the International Bank for Re¬
In
such
practice, little if any constructive aid toward working out
is furnished by the presently existing techniques,
problems
such
informative
the
as
meeting
(with
and
elaborate
without sandwiches
annual report,
the "modern"
soft drinks),
the company
company), the
law, or government agencies.
To throw the above-cited types of
issues into the lap of the Securities and Exchange Commission, as is
frequently suggested, would completely distort the principles and
stockholder
or
officer
relations
(inside
or
outside
or
which
the existing stockholder leagues,
by
by the financial
"trade"
or by the investment funds. Nor,
of course, does the frequent f'sell your stock if you're worried"-repl,v
constitute a legitimate solution, even if convenient to management.
J
-
"How's the Management?"
v
,
Appraisal
constitutes
holder,
his
of
company's
nettlesome
a
during
enigma
and its performance
confronting, the share¬
management
constantly
conditions.
Although cognizant of
available logical standards such
as
intra-industry comparisons of
income'statistically related to various criteria, and other more elab¬
orate attempts at methodical
appraisal, even the securities profes¬
sional seems unable to do a satisfying job in this regard.
He too is
often sidetracked by a tendency to conform his
appraisal to the mere
course
of income, and to glamorize and fictionalize "blue chip"
management, particularly in certain industries.
How much more
bewildering, then, is the task of the lay shareholder, who is hence
even
prosperous
for
industrial
new
plant
and equipment
American standard of
continuation of high-level
key contribution to
a
a
C
:
.
national
not
policy makers in Washington,arid
elsewhere are prepared to let American industry have that oppor¬
tunity-remains to be determined.
The policy makers have what
may well be a decisive role still to perform."
of that body.
Nor does responsibility for internal
abuse which is contributed by the very important hiatus
disorganization and disfranchisement of stockholders, get rem¬
organizations, by brokerage firms,
expenditures
increase national security, raise the
"But whether
the
effectiveness
edied
can
living, and make
prosperity.
Y'"-:
•company
of
of
program
YY
'
YY
or
Y'";
sv
,
*
'/YY
'''.YvYr Y
*
Business failures rose 15% in December to 531.
annual
total
ualties
in
increase
to
increased
well
51%
below the
December liabilities
Although cas¬
from the preceding year, the rate of
1946-1947
rise of 208%.
the smallest rise
of
$100,000
or
YY'Y
more^ryyi
'
:•/•»'•■
December
Y
was
7%
building
YhY
:
j
Y.;YYf?;.--/-
'
.
YY&v Y •••''•' *.•
'
-
permit
failures involving liabilities
among
valuations
•
showed
in
to
serve
*->Y
Y; '/'v.
-
further
a
mild
seasonal
decline, totalling $275,540,434 for 215 cities reporting to Dun
This represented a drop of 2.6% from $282,974,572
in November, while the decrease from the December 1947 figure of
$307,945,958 was 10.5%.
& Bradstreet, Inc.
In New York
City, building plans filed during December fell to
$46,214,077, from $60,794,688 a year ago, a drop of 24.0%. Compared
with $49,415,458 in November, the decrease was 6.5%.
•
his
until
Mr.
the
in
successor
Inter¬
'
appointed.
to duck this as well as his other responsibilities in a
gen¬
feeling of helplessness and "what's-the-use?"
YYYYYY'
Continued mark-down sales in many areas
buying
Y.Y'Y
YYY;;Y:Y'Y:
'
/
.
- ;
Conclusions
the
week.
Total
dollar
retail
stimulated
volume
slightly
Vice-President
sincb
Chase
'
charge
has
1939,
of
the
of
Mr.
Ebbott, the
bank's
.
new
of the bank,
has a background of
experience in commercial
banking and in trade and indus¬
broad
For
try.
he has beeh
many years
director of the Nash-Kelvihator
a
Corporation, Allied Stores Cor¬
poration, and Moore-McCormack
Lines, Inc.
Y
In
Chase
the
Ebbott has
lending
charge
organization, Mr.
been
of
the
of the
one
officers
and
bank's
seniof
ha^
business in
has
Middle Western and Southwestern
(Continued
exceeded
Shoppers,
ago.
it
was
noted,
sought
reduced-price
soft
a
year
goods
of
Trading Markets
American Furniture Co.
The dollar volume of wholesale orders increased fractionally
But this observer has corrie to the strong conviction
last week,
holding close to the high level of a year ago. Commit¬
long and,fundamental step in the right direction lies in re¬
ments for Spring merchandise were made in an increased volume.
vamping our director system..
i
Y
YY
.■•V'Y'Y.V Y':Y'Y'.
Collections, however, continued to be slightly slower than last year.
The solution does not lie in the guise of the professional paid
director, namely a director who is neither part of management STEEL OUTPUT SCHEDULED TO BREAK ANOTHER HIGH
nor
RECORD IN
amount.
into
the
does
simple but decisive snag that the element of remuneration
not
make
shareholders,
servience
Such
the
nor
for
director
work
for
the
interests
of
the
minority
particular class; nor does it prevent his sub¬
which designates him for engagement.
any
There
way
to
a
result has
been
confirmed^by the actual experience
in England, where the
professional director system has been in oper¬
ation for many years—as related in the
testimony
1929 and 1947 revisions of the British
are
does not
yYY
.'./:■
YY Y/
in
the
enterprise.
his
To
the
extent
that
fellow-stockholders
Directors'
dian knots.
actual
YY
While there
ownership,
stock
too
stock,
Scott, Horner &.
Mason, Inc.
(Continued
on page
on
Lynchburg, Va.
35) Y:YYY/YYY /YYYY Y
Tele. LY
such
even
stock-HOLDING
difficult
_•-* Y>
•
-
a
Time Inc.
Since 1932
Kingan & Co.
as
though
ensure
his
they
McGraw (F. H.) &
-'Y"r^
in the case
?
V.Y'.
Y-'
"bugs" in the mechanics of effecting such
high income:taxation, the technique should not
accomplish—possibly through remuneration in
in the case of - management directors
of the outside directors.
•
Y
•
and
wholly
Specialists in
NORTH and SOUTH
Co.
X
arc
CAROLINA
MUNICIPAL
BONDS
Bought—Sold—Quoted
as
partially
33
VIRGINIA—WEST VIRGINIA5
Continental Airlines
direct material
are some
to
LD
83
lllllllllllllflllllllllllllllllllllllllllilli
supplement to
stockholder-MINDEDNESS would cut many of the above cited Gor-
;t
from customers is
taken before the
automatically
for
"absentees."
be
pressure
of
solicitude
-t
its
mean
stake is important to the self-interest of the
management director as
Well
as
to the
outside
director, will it
*
on
;VY
the interests of realism, and of
meeting the normal
perfectly ethical human nature, a comparatively simple
and direct remedy lies in linking the material interests of the di¬
rectors with those of the shareholders—via the joint ownership of
stock
—★—
the wane. This
that the "great day" has arrived when the steel buyer
Instead—in
'/
signs this week that the steel industry is
higher and the unusual
••
Dan River Mills
CURRENT WEEK
more
Companies Act.
dictates
Moore-Handley Hdwe. Co.
normal market/ Scrap is more plentiful, pig iron output is
to the management
abortive
;
.
shareholder, or who is perhaps a shareholder in nominal
This technique, studied here and abroad
b,y the writer, runs
a
Y
55)
page
acceptable quality.
a
,
on
mimiiiiiiiiiimiiiiiiiiiiiiiiiiimiiiii
corporate system.
that
.Y?
President
consumer
:;-;>Y\ that of both the preceding week and the corresponding week
Y'v
there is no overall panacea for the effects of honest
self-interests functioning within the framework of our
Surely
differing
in
-F; W.-
FREDERIC N. HATCH t CO., INC.
'■-V-YYYY YY
63 Wall
Establiahe«l"vlM8♦ Yf-Y aY.•
CRAIGIE&CO.
RICHMOND, VIRGINIA
MEMBERS N. Y. SECURITY DEALERS ASSOCIATION
Street, New York 5, N. Y.
]
Y
>
>
:
Bell Teletype NY 1-897
J
Champion, who has been h
inclined
eral
in
position,
that
addition to his duties at the Chase,
up
the
group;
continue
to
temporarily
business in the South.
nearly 30% to $31,731,000 bringing
yearly total to $310,566,000, the largest volume since 1935. The
sharpest increase in 1948 was the 69% rise in the $5,000 to $25,000
were
consented
brought the
5,252, the highest number since 1942.
1948
was
and
during the past two years.
national Bank is
Y
This
Developmeiit
At the
request of the Secretary of the
Treasury, John W. Snyder, he has
construction
"
Bell System Teletype:' RH 83 4 84
Telephone* 3-9137
?
a
THE
(434)
COMMERCIAL
Business and finance
[EDITOR'S NOTE: The accompanying stateon the outlook for trade, industry and
finance
during 1949 were received too late,
publication in our ANNUAL REVIEW
ISSUE of Thursday, Jan. 20, in which issue
there appeared, starting on page 18, several
hundred of equivalent comments.]
for
<
•
CROSLEY, JR.
President, Crosley
With
the
its
cents
extend
The
Taft-Hartley
1949 should bring the lightweight, car industry
year
must
Act
be
volume in history. That, I believe, is more
than just a projection of a trend that
became clearly defined in 1948.. The
year just closed, of course, was the
biggest year in IT. S. lightweight car
history, with out company producing
34,000 units during the calendar year.
There is every reason to believe that
these figures, which are far above
those of any preceding year, will be
;
'
,
to
repealed,, dock,
the President call
see
Labor
and
and
secure
a
conference
its
lightweight Crosley car has been
engineered and styled to meet or ex¬
ceed the standards demanded by the
">
•Traditionally, Americans have always wanted power
under the hood.
Because the average family wants its
ear for fairly long trips as well as for intra-urban driv¬
ing, the factors of speed and power will always be of
importance in the buyer's opinion, and therefore must
be reckoned with by the manufacturer. In our own case,
we have met this demand with a 26.5 horsepower engine
which is an outgrowth of wartime research and produc¬
tion we carried on for the Navy.
This rugged engine
combines power with lightweight to such an extent that
it now is being used to fly lightweight airplanes and to
power factory fork lifts. It is also being used as an airconditioning power plant for large buses,, and is being
ordered in quantity for racing speedboats by the motorboat industry.
1948
to
close, figures were released from
Washington which showed that. contrary to the case in
1947, Americans bought more E bonds than were pre¬
sented for redemption. This seems.to be further evidence
that the public's purchasing power is still intact. On the
other hand, becoming increasingly budget conscious and
came
a
,
there
is
little
the
car
doubt
that
this
is
another
population increases—and
increase another 30%
and
streets become
in the
smaller
will be, I am sure, an equitable one in which abil¬
pay will be the prime consideration.
Small busi¬
ness
concerns
and persons, with lower incomes should
bear a lower burden than they now have.
|
in
factor
crowded.
I think
it
for
forms
time
the
towns.
The
The
record.
of
a
will
as
Crosley have
always taken a realistic view of our
However, we do believe there is a potential
market for at least 150,000 new lightweight cars a year.
1%
of
the
and
used
purchased
annually in this country. In 1949, Crosley Motors expects
to produce and sell at least one-third of this 150,000
potential.
new
cars
U. S. Senator from Florida
We must expand and
enlarge our education, health and
social security programs.
Nearly every county in the
nation requires new school buildings
equipment.
Teachers'
sal¬
aries and teaching standards must be
raised.
The present funds allocated
to the states
ment
grams
by the Federal Govern¬
for state and
local health
our
for
a
and
that
every
man,
dentists,
nurses
and
more
hospitals.
We,
therefore, must make provisions for
more
1943
on
not release
doctors,
medical schools where American
in the prewar years.
in
tubing employed
wells.
the
resumed
the
-vital
equipment.
the
chemical
components of coal cutting and
Many of the steel, works in Italy
production
and
oil
nickel
of
steels
for
use
industries.
Cupro-Nickel Alloys
The
cupro-nickel and rolled nickel silver producers
are consuming nickel at a
record peacetime rate.
The
cupro-nickel alloys continue to be employed in ; the
United
States, Canada and the United Kingdom in in¬
creasing quantities in ;the industrial and
shipbuilding
fields for heat exchangers and salt water lines.
The 70 copper-30%
suitable
most
service.
Tubes
of
successfully used this year in the British!
industry, where they show distinct advantage over'
brass- tubes'.
The
-
"
-
-
cupro-nickel
the United
90%
nickel type retains its position as
tube material for arduous
88%
copper-10%
nickel-2%
iron
condenser
been
sugar
'
•
alloys
States and
copper-10%
have
been
the United
nickel alloy.
supplemented
Kingdom with
It
is
a
in
new
expected that this
alloy will find many applications in marine and indus-Y
fields, where a moderately priced yet
highly cor-
'
Steels
and
oil
trial
Following the pattern of previous years, the steel
industry in the United Kingdom, Canada and the United
States continued to be the largest consumer of nickel
during 1948.
Production during the year of chromium-
dustry
boys and girls can go
pressure
field.
of
most
have
infor¬
stainless
steels, which accounted for a major
the steel industry's nickel consumption, is
to exceed any previous year.
It is estimated
of
diversified
with
use
interests
of stainless steels.
as
well
as
continue
There is
a
to
ex¬
growth in
these steels in the field of industrial
appliances, such
as
cooking utensils, refrigerators
dish washers; also in restaurant equipment and
galleys, soda fountains, deep freezers, vending machines,
barrels, drums, shipping pails and surgical, hospital and
and
photographic
rosion-resistant, material is desired.
The large demand for
high grade silver-plated ware
using nickel silver-for the base metal continues and the
established markets for zippers, keys,
springs and archi¬
tectural" applications are expanding both in the United
States and the United Kingdom. In Australia
the nickel
silver
industry
has been particularly active
production of this alloy for tableware.
Nickel
;
silvers
apparatus.
The transportation industries,
nickel
and
bronzes
with
continued
in¬
to
be
widely used for fittings and architectural metalwork
for
marine
way
,
purposes.
The
heavy
building
program
in British shipyards demands increased
the beverage and canning, dairy, pack¬
ing house and other food processing industries. Appli¬
steels expanded this year in house¬
hold
,
creased
cations of stainless
Pepper
high
metal
equipment and machinery required by the chemical in¬
Claude
deep,
conveyor
tinue
the employment of
to complete their training in the field of medicine, den¬
tistry, nursing and related professions.
for
the
.mine lower grade underground ore bodies to con¬
a large and steady supply.
These increases brought
the price level of nickel to well above that
prevailing
recently
Kingdom considerable attention is now
being given to mechanization in the coal industry, and
various types of nickel alloys are
extensively employed
have
Industries
Hon.
.
In the United
the
Stainless
and
of
petroleum
which
to
useful by manufacturers and
equipment in which the reduction in
maintenance and operating costs are
Various" other,
engineering nickel alloy steels are employed
casings, drill stems and other components in the
During the latter half of the year prices quoted by
International Nickel for electrolytic nickel were raised
pand their
woman
can receive good
medical
through a typical American
principle of insurance rather than
charity.
need
from
these
for
total
approximately 15% above that of 1947.
child
We
worked
have
particularly
mobile
being ordered for ''sucker rods"
types
production, it is not
feasible to estimate that country's
Robert C. Stanley
1948 nickeT output.
The production of the Canadian
nickel industry, in common with that of other industries
in Ontario, has been hampered in recent months by
electric power shortage brought about the lack^of rain¬
fall during the summer and autumn.
Power restrictions
may continue throughout the winter months.
expected
attention
-
year's
which
steels
as highly resistant to the corrosion
of con¬
densate wells, and an appreciable volume of these
steels
is
the
ingot output of chromium-nickel stainless steels will be
an
so
this
These
demonstrated
in
production
mines in that country,
been
mation
portion
overwhelming demand
National System of health in¬
surance
in
Since Russia does
nickel
A National
Public Health
Services is imperative.
There is
figure
makes ^possible.
'ine 9% nickel and 5% nickel steels have been
.
early part of 1947, remained closed.
pro¬
do not go very far.
Program of aid to
that of
must
The 81st Congress must pass legislation which would
solve many challenging and complex problems.
.
new
the
had
under
Cuban
,of
by reason of increased production costs, including sup¬
plies, services and labor, and the fact that the company
HON. CLAUDE PEPPER
and
not
well
year.
expanding
skips and cages.
in
high levels dur¬
however, is reported to have been
relatively small, with 1948 output
at
nickel-containing V
steadily
factors.. Examples of successful applications
include railway rolling
stock, Diesel locomotives, trucks,
trailers, tractors, earth moving machinery, and mine
cars,
The French production from
the New Caledonian nickel deposits,
preceding
the
are
important
to supply the unprece¬
peacetime demand for the
estimated
employment
found
deadweight
all
in
metal.
prob¬
lightweight
market.
nickel
for
steels
growing appreciation of the economies
users
year
dented
application
structural
been
The principal nickel companies
ing the
of
the
their
will set a new high peace¬
previous peacetime peak years
Canada operated at
will,
;
These facts and figures do not mean that
w§ believe
the lightweight car will Supplant other types of cars. We
two
fields
strength
with
1937.
1947 and
were
even now a
owner
The
high
1948
year
gears,
the aircraft, automotive,
Y
Canadian
and
years,
shafts, heavy springs and structural tubing, in
railroad, machine tool, tractor, v
mining, petroleum, agricultural machinery, and many
other alloy steel
consuming industries.
as
Chairman and President, International Nickel Company
of
Steels
alloying element in engineering
molybdenum, were again, as in the past
produced in greater tonnages than any>
■Vother single class of engineering alloy steels. - These steels
are employed for art infinite
variety of vital parts such :
ROBERT C. STANLEY
Parking has become
cities, and is
chromium
and establish an equilibrium to make it everlasting.
of Canada, Limited
as an
continues to
.several
therefore, the obligation of the 81st
deliveries
of nickel
be one of the. main outlets for the
-consumption of this metal. While practically, all .grades I
of nickel alloy steels were in
heavy demand during-.the
year, the so-called triple alloy steels/ containing
nickel,
Congress to help build the greatest foundation ;for world
world
use
steels
The 81st Congress must find a way-to adjust
requirements with those of the rest of the
Every nation knows the devastating effect of the
atomic bomb. They are all awftre that this machine of
destruction can render the world uninhabitable for genera¬
Total
Italy for
the production of stainless steels
Nickel Alloy
The
needs and
peace
Kingdom and on the Continent, as in the "
Canada, there is a growing interest
and
expanded, particularly to meet the
security.
It is,
of
requirements in the chemical and oil industries.
world.
come.
use
j.946.
The whole world looks to America for prosperity and
tions to
States
the soap industry, and
in that country has
1948'
the
day's marketing, are particularly aware that their
neighbors with smaller cars get their shopping done more
"quickly and conveniently.
only
United
restore the
our
bi-metals, and the growth in the
in stainless steels and .expectations are their
production,
will continue to increase in these countries.
Stainlessclad steel plates are now being produced in
,
Congress will, under the leadership of the
the principles of free inter¬
national trade and to this end, wewill try tp
Reciprocal Trade Agreement as it existed .in
and
steel
In the United
81st
the
is
Considerable interest is being manifested in stainlessclad
these materials has continued.
Democratic Party, return to
in this respect has a tremendous advantage over the
driver of the conventional car. Women shoppers, out for
This
gas turbine engines such as tail pipes, tail
firewalls, exhaust systems, heating and ventilating
systems, fuel tanks and hydraulic equipment.
ity to
The
jet and
cones,
gram
car
at
of
.
the next five years—the roads
over
more
all but impossible in most
lem
in many
This pro¬
Our foreign aid program must permit greatejr partici¬
pation by small business concerns. The loopholes in our
anti-trust statutes must be plugged and great monopolies
,
heat
for
resisting purposes have shown expansion
applications, primarily in the field of the new
type of locomotion and propulsion.
The aircraft indus¬
try employs substantial quantities in various components
This conference should work
closely with the Committees of the House and Senate in
improving the Wagner Act so that Labor relations will
be stable for many years to come.
1
Our tax program must be revised to balance the budget
growing popularity of the lightweight car. The public
already is aware of the economy made possible by the
Crosley.
As
used
amending the Wagner Act.
in line with the President's recommendations.
1
,
for
Naturally, as the President promised the people in the
campaign, the 81st Congress will, I hope!, approve
the various aspects of the Civil Rights program. The
Federal Government should be limited tq tho?e aspects
qf Civil Rights upon which it is empowered to act by
the Constitution. We have no intention of intruding uponStates' Rights in this field.
American motoring public.
As
belts, fish canning machinery, picnic coolers,! shower
nozzles, tire mold jackets and coal chutes.
i
^Certain standard types; of stainless steels which are
I would'
of; Manage¬
recommendations
use
gutters, spouts and drainage pipes.
Other recent appli¬
cations of stainless steels included curtain
walls, endless
must be broken up.
ern
;
of various types of stainless steels for components
are
exposed to the elements, such as door and
window trimmings, decorative
panels, window screens,
stock
in favor of the smaller car. The mod¬
Crosley, Jr.
its
•which
.
.
substantially exceeded in 1949.
In addition to the pressure of gen¬
eral economic conditions, which are
making people conscious not only of
original cost but of the cost of main¬
tenance, there is another influence
Powel
Y Ne^ uses'^are continually being found for the stainless
steels.
The heme building industry, this year increased
-
We must start once again with the Wagner
basis and pass any necessary amendments which
a
railroads, aircraft and trailers, continue their
chromium-nickel " stainless steels.
I;.-..
of
use
and" barrel.
would be acceptable to management and labor,
Motors, Inc.
including
;
an
pendent'child in the United States who needs it.
like
growing public realization that high-style auto¬
transportation can now be bought, economically,
biggest
our
national minimum wages at least
hour and raise Social Security benefits and
these .payments to -every man, woman and de-
make
people,
75
Thursday, January 27, 1949
Jfceaks^
cost of
ment
mobile
CHRONICLE
power
Act as
POWEL
FINANCIAL
Something must be done about raising the.purchasing
of our people in this time of a tremendous high
living. We must, if we are to take care of our
<
ments
&
under
quantities.
Nickel-Plating
The
the
United
largest
States
consumer
automotive
of
nickel
industry continued as
for plating purposes.
Bright nickel under chromium still accounts for the
ma¬
jor portion of sales in the plating industry in the United
States, being almost universal on automobiles and elec(Continued
on. page
42)
.
Volume
169
Number 4772
From
Republicans
doned for
an
the
on
of the News
Senate
By IRVING S. OLDS*
be
can
campaign of education to bring out true facts.
par¬
.ridiculing the contortions of the Committee Democrats in
effort to meet organized labor's demand for
Taft-Hartley
Act' first,
then
outright repeal of the
kJl the
consideration
golden
strategical
labor has
ever since the election that the
repeal and changes be in two separate packages.
Once they got outright repeal of existing legisla¬
tion they would be in a better position to control
4he changes, if they didn't prevent any changes
of
*■
reasons,
Carlisle
Bargeron
the
the
committee's
Senate
that "body
in
as
so
of
I
will
report
still
go
Manifestly, before any action
called
the
this basis
they have collected millions of dollars from their members
to bring about the measure's repgal and to increase their personal
political power.
will
of
agree
largely
re¬
The
Act, for example, prevents violence on
labor leaders insist upon the right of violence?
publicly.
picket lines.
Board
has
the
Do
They unquestionably
v
Y\Y/.
These leaders should be confronted with the case
Relations
histories where
moved' under
the
Taft-
Hartley Act, and required to say whether they wanted the conditions
against which the Board moved to be continued.
Here is
at random and there
one
hundreds in the files of the
are
Board and the Joint Congressional Committee which kept
up a con¬
tinual study of the operations of the act.
!
.
,
Out
three
California three
in
bartenders.
The
contract with the
GI
GI's
opened
worked
s
on
up
the
a
tavern and employed
They had
job, too.
union, but two of the bartenders did belong.
no
One
day the union business agent stalked in and demanded that the non¬
union worker be fired, else a picket line would be thrown around
the tavern until it
called
the
problem.
put out of business.
was
nonunion
bartender
and
over
The GI's demurred and
presented
with
him
The business agent
"How much does it
told him the union didn't want
him, he simply had to get out.
business, the GI's fired him.
the
Taft-Hartley Act he brought charges of an unfair labor
practice with the NLRB. Under the Act, either the employer or the
union and maybe both, are liable in such a case and can be forced
restitution.
to make
1
1
they object
They should not be permitted to get away with
'
this provision.
generalities.
of those
off the
.
jurisdictional disputes and the machinist boss pulled his men
job, bringing it to a halt.. There was nothing the employing
contractor could
Under
the
do, nothing the other workers could do.;
Taft-Hartley
Act,
the
NLRB
can
take
over
these
jurisdictional squabbles and adjudicate them if the involved parties
fail to get together themselves.
The Board began to move in this
instance, and the aggressive labor boss quickly put his men back
to work.
Y .Y'
''"YY.
;;Y Y
'
Y' YY Y'/Y.' " YY'<;. ■ Y/Y YYY^YYy'/
Do the labor leaders object to this
provision?
If
so
why?
Y Y
Regardless of what the committee does, the big battle over the
Taft-Hartley Act will take place on the floor. And undoubtedly there
be a full airing of these case histories.
But the labor leaders
can't be questioned and cross-questioned on the Senate floor. Limi¬
tation of .the committee bearings will preclude their being thoroughly
will
examined
there.
Republicans
have
given notice they
will seek to
extend the hearings in order that the new labor legislation may be
thoroughly gone over/ Certainly the whole labor-management situa¬
tion
was
explored
only argument
so
before
the
Taft-Hartley
Act
was
enacted.The
far advanced for its repeal is that the labor leaders
way +o meet any prob¬
Through education and sound
argument a convincing case can
and
the
must
be
fallacies
establish
established
of
a
who
those
when it gets down to brass tacks most of them want this
repeal by way of showing tneir power over the government/ This
gives them
olent"
a
greater hold
collecting
cause
after another.
these hapless fellows for
"benev¬
one
These collections for "causes" in the labor
movement, incidentally, have
the
the workers and also permits them to
over
money from
come
to be
as
much of
a
nuisance
as
ever-present collectors for charities and inescapable testimonial
dinners.
In
,
,
'
.
the recent Presidential
and
money
they don't
of
equalled
S.
lrving
Olds
any¬
where outside
'Y Yv.Y
Y:
un¬
°f this nation.
anticipate
constant change in conditions over
■,
Y
Undoubtedly
the
world.
must
we
has
Tnat
been
going
since the beginning of civiliza¬
on
tion.
such
But
tion
of
gradual altera¬
a
surroundings
marches
does
on
time
as
not
require
American
vation
fundamental
tljese
of
the
and
prin¬
freedoms
calls for
principles
lance
of
freedoms
In my judg¬
manufacturers'
eternal
that
How
I
can
this
only give
can
particular
this be
to
way
group
and
monopolistic
privilege, only
with'reactionary pol¬
concerned
icies and with the selfish interests
of their members.
my
for whatever they may
Probably something of a construc¬
tive
character
along the educa¬
tional lines I have suggested can
be
done
this
by
of
association
manufacturers at Hartford and by
similar
embraces
ness
arate
ized
throughout
Unfortunately, busi¬
organizations
the country.
concerns
or
of
thousands
is
and
not
sep¬
organ¬
capable of speaking as an
entity, although
commenta¬
some
tors often talk of American indus¬
try
a
as
if it thought and acted
single unit.
not
be
their
uoing
Unfair and
criticism
founded
of
this
permitted to deter
associations
duty
as
business
of
groups
Each of
I
us
as
an
individual has
distinct
lic
the
true
story
of
session,
the public
facts.
Otherwise, how can
effectively the false
swer
tions
which
are
hurled at us?
meet
we
constantly
the
threat
(Continued
on
in
page
T
told
and
truth
again
about
pos¬
be
told,
must
again,
and
American
our
the
eco¬
We
.
nomic system and its accomplish¬
ments.
Men
of
standing and
re¬
are
the
pleased to
announce
following appointments:
sponsibility throughout the nation
be* vocal
must
behalf
on
of
our
Mr. Glenn R. Miller
American institutions.
Today
in
Executive Vice
number of individuals
a
this land appear to want more
They
opinion that the
in
government
interest
public
will
be
better
Mr.
throwing overboard the
determinations
place
of
the
law
John A. Kruse
Vice President in
market
economic
the
and
President
Director
business.
to be of the
served by
and
charge of
Syndicates and Sales
of
and
stituting therefor mandatory
tutes
and
arbitrary
sta¬
Mr.
regulations
promulgated by governmental bu¬
Director
under it.'
Harry Irwin
Vice President in charge of
New
York
and
Office
Director
better qualified than businessmen
to
decide
what
should
be
the
products of American industry, to
whom they should be sold, and at
what
profit, if
Mr.
Cyril H. Weagle
Vice President in
any.
of
Some
of
tablished
der
may
whose
others
be
economic
idealistic
are
sincere.
Mr. Robert L. Kaiser
Secretary and Director
or¬
theorists,
Others
Mr.
simply
may
grind.
seeming advo¬
change in our es¬
American
aims
be
may
/
these
basic
ignorant.
Still
have sinister axes to
Whatever
Director
With Facts of
Business
cates
charge of
Municipal Department
and
Acquaint People
may
John E. Dwyer
Director
be their in¬
ward motives, expressed or un¬
expressed, since or insincere, the
effect on the country will be the
Mr.
Harvey L. Hawkins
Director
should their views prevail.
men
and
women
are
now
distinctly in the minority, I should
say. I firmly believe that the pri¬
mary
task facing American busi¬
nessmen
people
OTIS Sl CO.
today is to acquaint the
of our country with the
Established 1899
facts about business and with the
CLEVELAND
great achievements and virtues of
American system.
Telling the
*An address by Mr.
Olds at din¬
our
New York
of the Manufacturers Associa¬
tion of Hartford
County, Hartford,
Conn., Jan. 20, 1949.
Cincinnati
Denver
Chicago
Columbus
Toledo
we an¬
accusa¬
being
Otherwise, how
and
their
is
American
business. Somehow people at large
must be made familiar with the
of fairness
sense
certain
am
sound
I
responsibility to do his
part in bringing home to the pub¬
a
Business organiza-
vigi¬
be
can
leaders and sincere statesmen.
part
ent wisaom and
from
and
In
which
un¬
kind
acting in
thoughts,- such a way as they believe to be
in the public interest.
The heads
be worth.
accomplished?
you
associations
citadels of concentrated wealth
as
of our people.
fact, it calls for much more
than1 that.
To permit the Ameri¬
can people to exercise that inher¬
on
Y
campaign the Big Four Brotherhoods
from their subjects to defeat the Taft-Hartley Act
even come
would
order of things
new
assail
manufacturers'
insure
a
living
ner
collected
show
to
should
re¬
in
standard
These
continue
—
past. Irresponsible critics unjustly
con-
remain in the minority.
and
sulted
same,
want it.
And
—
lem.
Their
conviction
Baltimore, only recently, the labor bosses of the plumbers reaucrats.
ap¬
machinists working on a public health project, got into one parently is that government is far
the
long tried-out system of
our
structive
Over in
and
,
supply and demand, and by sub¬
The labor leaders should be made to say if and why
to
't
.
of unsound advocates will forever
which has
seem
Confronted with the ruin of their
Under
■
States
the
He readily agreed to join the union.
cost?" he asked.
-
ment, this is the effective
ciples. What I should like to em¬
phasize tonight is that the preser¬
.
,
Labor
•
strength
of the United
abandonment
National
v.
tions have not always been too influential with the public in the
always the most
in the United States.
growth
Why should they not be made to discuss each provision and
explain just wherein the particular provision has hindered legitimate
the
•
—
j.ull truth is
so
labor?
do but will any of them say so
Y
not pessimistic about the future of this
am
the
niece and be acted upon by
niece. Naturallv. tbp RepubHBut they are overlooking a far
on
before
all
and
to
the Taft-Hartley Act is taken,
committee, confronted with
each provision and required to explain just what is objectionable
about it. This the labor leaders definitely do not want to do. They
simply want to label it a "slave labor act" and let it go at that. On
be
think
is
important accomplishment of labor in this first round of what
promises to be a knock-down and drag out fight. They have suc¬
ceeded, at last temporarily, in limiting ihe hearings.
critics-should
that I
sponsible for
more
its
way
a
—
life, which
you
words
many
enter-
prise
one
one
get a hearty cackle out of this.
cans
This is just
Wagner Act.
because
■
1
say
foreign importation to replace
anv
competitive^
being the case, the committee would
to consider amendments to the re¬
proceed
'
I should like to
free
sought to solve their dilemma by blandly passing
a
resolution saying the Taft-Hartley Act* was
now
warns
industry nationalization.
•
readily to permit
as
sense
•YfY So the pro-labor members of the committee
vived
excessive and
are
country. I cannot make myself believe that the American people are so lacking in common
For.'. obvicus
been demanding
.
dead and this
Deiies corporation profits
urges
of
Points out further increases in wages without offsetting price increases, will
Sees proposal of government entering steel business an opening gun in program
goose.
At the outset,
Taft-Hartley Act but with certain changes ih
the Wagner Act.
! ;V
'
dangers of socialization.
of amendments to the
restored Wagner Act. Mr. Truman, himself, never
promised any such thing. He promised repeal oi
'the
7
Chairman, Board of Directors, U. S. Steel Corporation
.Deploring misconceptions and propaganda against American business, U. S. Steel Corp. Chairman
Committee
Labor
(435)
Of American Business!
By CARLISLE BARGERON
The
CHRONICLE
Spread the True Story
Washington
Ahead
FINANCIAL
&
COMMERCIAL
THE
*
Buffalo
days
40)
can
of
8
(436)
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
B.S.,CanadianExchanges-BuIwarks oi Free Markets
Dealer-Broker Investment
By EMIL SCHRAM*
President of the New York Stock Exchange
At 75th
Recommendations and Literature
Anniversary of Montreal Stock Exchange, Mr. Schram lauds unity of U. S. and Canada
in ad¬
It is understood that the
hering to North American system of democratic capitalism. Holds Canada will not abandon free enter¬
prise in favor of nationalization of industries, and d ifends securities exchanges as free markets.
Says
(exchanges are a catalyst between investor and manigement and, if not badly handicapped by unneces¬
regulation, they direct
sary
I
savings through
now of
greater^
idea
freedom
of
the
is
idea
unof a ship or an engine running
cterstanding,1 free—not running wild. In Nortti
good will and ! America the very idea of ireedom
unity of ideals has
always
meant
a
certain
mutual
than
Canada1 amount
andthe United
As
oiates.
material
trol
a
flection
that
so
t
>/. the
United
States
has
invested
that is why
system
amount
Canada
it
nation;
in
b^s
in
any
is
the
any
two
between
regarded
in
the
one
derogatory
of
regard to a Canadian.
good
for
reason
liietf in
that,
each
like
(
other lies
good
foaye shared together—the
dhiips
of
war—the
blessings
tribute
connection
to
Canada's
contribution to the
World
second
■cable
Navy,
the
as
the
third largest in the
world; to
the Royal Canadian Air Force and
lible
training of
aar
crew
dian
than
more
131,000
personnel; to the
Eapopean countries
joshed
and
painful
jobs
that
to
British
pehdent
war
now,
ideas
of
war
a
Canada
and
is
our ally.
The field of batis the economic system under
which both nations live, and our
anfltagonists,
socialism
and
faaye asked
fiociety for
for
Britain
compulsory
communism
to exchange
in which
form
free
would
the
except
75
it
that
there
Canada
reason.
roads.
The
why
or
is
is
in
favor
of
good
the
at
Canadian
cross-
people
being
prise
am
may
very
a
urged
by the
socialists to abandon
I
you
are
doctrinaire
free
enter-
bureaucratic
controls and the nationalization oi
major industries. In common with
the
United States,
Canada has
adopted
some
socialistic
principles, but as a unit she remains
free
a
enterprise
certain
are
customs
and
nation.
socialistic
well
There
concepts
etsablished
fortified
in
in peace
war
under
we
do
not
a
say
have
capitalistic system' which
known
in
not
operated
demo-
United
States,
but
they
national formation
are
do
and
general national polCanada shares this type of
icy.
free society,
These
foresaw
North
private
American
system is
but it is not
capitalism nor *■ cartel
capitalism,
iraononoly
capitalism.
The fact that
lawed
x~ "
monopoly both
~
—V*
a*kd
the
began
United
in
we' out¬
States
shaped
our
of
freedom
has.
It is
that Canada would
between
Great Britain
VUUUUU
form
and our way of
that- has
of | government
life.
The Amer-
T——
States,
on
unthinkable
ever
have
American
to
A.
7
—
— W
—
v.
V.,
the
both
free
of
our
enterprise
nations
remarkable
;
sys¬
have
progress
address
75th
by. Mr. Schram at throughout the past 75 years. Our
Anniversary Dinner of lives today revolve * around the
Montreal
Stock
Exchange,- inventions
Montreal, Can., Jan. 26,-1949..
-I during
and
that
discoveries
dime.
Those
.
-
made
years
years
however,
previously revealed confi¬
dence of high order.
In 1870, the
first $50 received as a
—
List
with
of
25
50-year
records—Amott,
Board
promptly
spent
the
for
pagne
Brokers
cham¬
on
members.
In
inspired by the
there
pagne,
Stock
of
cham¬
undoubtedly
the future, but
rosy dreams of
what actually transpired
was,
Broadway,
sure,
beyond
the
best
of
them.
First came the
telephone,
invented
by Alexander Graham
in 1876; then the
phonograph
Bell
born in the brain
soon
joined by
babies, the electric
his other brain
York
New
York
Comparative
Arkansas
City
Bank
the
farm
into
came
the
City
First
1948—The
Stocks—
Bank
figures
existence
about
1879
revolutionized the harvesting
of grain.
It was succeeded by the
"combine"
which
increased
the
in
turn
greatly
of farm
efficiency
Outlook
at
Boston
invention
of
altered
since
us
has
which
the
lives
1874
ol
that
was
of the internal combustion
engine.
It was not until 1876 that the
pro¬
duction
of
launched
silent
the
engine
gas
Also
1949
available
nadian
Forecast
—
data
are
Bay
Can.
EVENTS
Jan. 28, 1949
first
mortgage bonds—Goodbody
Co., 115 Broadway, New York
&
Security
leaflets
are
Foundry
Jan.
31, 1949
Pittsburgh
Electric Power.
Association
Refined
Sugar
born's chart of
War I
Prices
—
Meeting
Lam-
then
Period—Lamborn
and
Postwar
Feb.
&
Company, 99
Wall Street, New York 5, N. Y.
airplane.
*.
It
these
around
developments,
more
than
so
anything else, with the
possible
exception
of
electric
in
power
stands
In
which
of
Eastern
of
principal
science,
Pasteur's
supply.
medical
discovery of "germ diseases"
followed
shortly
by
that
1 9 4 8
—
showing
dends
of
the
year
the
Dinner Dance
Feb.
Banting
and
Professor
' .-V/ w-i •••
Seventy-five
of magnifi¬
accomplishment!
During
cent
been
the
of
century,
a
American
freed
space;
years
As¬
at
the
at the Hotel Penn¬
(New York, N. Y.)
Curb
York
Exchange
Election.
Annual
Feb. 15, 1949
(Detroit, Mich.)
Detroit Stock Exchange Annual
Dinner at the Hotel Statler.
♦
*
of
61
Dinner
Franklin
Pa.)
AssociaUon
the
at
Benjamin'
Hotel.
*
March
16-17, 1949
(Chicago, 111.)
States
Central
Group of IBA.
Spring Meeting at Drake Hotel.
Oct.
&
(Philadelphia.
1949
Philadelphia Annual Mid-Win¬
ter
Air Reduction Company—Anal¬
ysis—G. H. Walker & Co., 1 Wall
Street, New York 5, N. Y.
Amalgamated
21,
1 Investment Traders
5-9,
1949
(Colorado Springs,
Colo.)
Sugar : Company
National
analysis—Edward L. Bur¬
sociation
Company, 160 South Main
Security
Annual
As¬
Traders
Convention
at
The Broadmoor Hotel.
Street, Salt Lake City 1, Utah./
Dec. 4-9, 1949 (Hollywood, Fla.)
American
Investment Bankers Association
Airlines—Analysis—
Townsend, Graff & Co., 15 Broad
Street, New York 5, N. Y.
Annual
Convention
at
the
Holly¬
wood Beach Hotel.
has
man
limitations
his health has been
14, 1949
New
—
T^ata—Charts
King
&
Co.,
Broadway, New York 6, N. Y.
ton
Dr.
Traders
Dinner
sylvania.
1948—Taussig,
Western Canada Oil Industry—
the
scien¬
Securities
Annual
investment
Feb.
—New
Canadian
(Boston, Mass.)
1949
Street, Chicago 3, 111.
insulin
your
Athletic
Friday Night Bond Club Annual
divi¬
Day & Company, Inc., 316 North
Eighth Street, St. Louis 1, Mo.
X-ray; later by the preparation of
by
and
Dinner
Pittsburgh
Feb. 12, 1949 (New York City)
memorandum
status
various
on
for
trust
Detailed
tax
was
of
11,
Boston
Canada
the
one
as
sources
Annual
Hotel Somerset.
three
around
(Pittsburgh, Pa.)
Securities
Traders
at
sociation
that human activities
center
now
the
St.
of
Association.
comparative prices
and II
—
and
Club
Party at the Chase
on
Wisconsin
and
this
seems to me
(St. Louis, Mo.)
Hotel.
available
Central
World
Field
Traders
Winter
Louis
6, N. Y.
Also
Investment
of
railroad
in
page 51)
COMING
In
Switches—Bulletin
switches
on
Ca¬
on
Breweries, Bell Telephone,
Railroad
Building,
—
Algoma Central Railway.
suggested
Commerce
Cleveland 14, Ohio.
revolutionary dis¬
covery on its amazing commercial
Television
Memorandum
career, during which it was ap¬ Television
Shares
Management
plied
to
the
automobile,
the Company,
135" South La Salle
truck,
Union
Inc.,
(Continued
for
Corp.-^Cir-,
Co.', Broad and
&
Streets, Philadelphia 7, Pa.
Bingham-Herbrand Corp.—Bul¬
J.
Mericka &
Co.,
31,
Corpora¬
Taxability of Dividends Paid in
the
Cir¬
letin— Wm.
Dec.
Milner,
Ross
&
Co., 330
Street, Toronto 1, Ontario,
work.
But
Bingham-Herbrand
cular—Hecker
Arch
tion, 100 Broadway, New York 5,
self-binder
and
—
Stocks—
light and the motion picture.
On
Gas
Western
cular—Comstock & Co., 231 South
New York.
of Thomas Edi¬
about 1877 and
son
—
Calif.
New
Laird, Bissell & Meeds, 120 Broad¬
way, New York 5, N. Y.
3
am
Company
La, Salle Street, Chicago 4, 111.
the
were
Trust
Baker
Annual analysis and comparison—
listing fee
the
by
was
of
mate¬
rially improved; his work on the
factory has been
farm and in the
taken
by powerful and effi¬
over
NSTANotes
cient
machines; his standard" of
living has steadily increased; he
is able to buy more,
enjoy more
less and work less.
pay
and
any great funda¬
■—
Under
tem
made
*An
actions,
North
Britain
them
of
prosperous
Their
three-quarters of
to
idea
the
ahead.
the
choose
o±
un¬
of Stock
had
the
develop at the turn of, her, I believe her decision would
tfoe century, is the
accord
with
key to our be thoroughly in
whole economic system.
It is the American ideals, and when I say
•oaae
thing that makes the system American I mean the entire con¬
.American.
It springs from the tinent and not just
the United
same
was
anyone
of
Canada mental question of policy, but if
when
it'such a choice were forced upon
*li.J
that
this
its doing the greatest
;
T do not believe Canada will go
good for the greatest number.
j socialistic in the sense that Great
the
record
no
cry
prevented
issues
Co., Inc., 150
7, N. Y.
New
wa^
Brokers"
became
the
Montreal
Stock Exchange in 1874.
There is
and
Our
America
far
from the nationalization
British
steel
industry
that
alter the mode
North
MacLeod.
In Europe, both car- ! which, as Winston Churchill demonopoly were not only
j scribes it, "is not a plan to help
permitted but encouraged by gov- our
patient, struggling people, but
emments and they sapped much a
burglar's jimmy to crack the
<©£ the,vitality of
capitalism and capitalistic crib."
?
1
:
^
the
in
events
acceptances of
enlightened socialism in the
United States and Canada are a
ciratically.
tteils
completely
life
tists.
isolated
of
progress
folding when the "Board
in
control
States
A
any
Crossroads
things,
not
well
was
in
Records
York
to
York.
Analysis — Elworthy & Co., Ill
Sutter
Street, San Francisco 4,
Beginnings of Montreal Exchange
completely
wonder
of
United
Europe and
which fell in disrepute there be-
■cause
matter
a
sense,
may
not
because
been
as
not
these
the
capitalistic system, I
same
has
United
dividend
&
exchange.-
Co., 1 Wall Street, New York 5,
American
New York 5, N. Y.
Dividend
being
&
Hanseatic Corporation, 120 Broad¬
investment
most
the
prosperous
of
we
of
passage
and
been
tfiosrm
who
a
inde¬
longer tied to
no
certainly
celebrating tonight,
are
Canada
have
the
we
of
purveyors
<
of our liberties in reminimum of security,
a
During
us
one
lose many
years
the
have
an
"the
as
realize
dike
itibe
nation
choice,
much
as
saying
Canada Allied in
again
a
just
She is
You
S. and
^ideologies,
asmd
is
Canada at
new
tuarn
American, ideals
be
The United States is
engaged in
a
to
Canada
Great
New War
and
a
otfso consistently that today
gone
done.
U.
New
and
be¬
.
of
to
The ties
fundamental policy she is usually
American.
These changes from
in five
had
ab-
to
many
British
forms, but when it
decision
involving
and
comes
accom-1
and
of the most difficult
some
slowly
strong, and Can-
are
adheres
customs
Cana-j States.
Army which fought
rule,
developed, and
Canada
of tradition
winning of the
ranks
British
under
States,
| ada
outstanding
now
Canada
ago
sorbed American ideals.
pay
terly comparison of leading banks
trust companies—New York
Companies of
mutual
our
well
and
Trust
firms mentioned will be pleased
parties the following literature:
American
Telephone
&
Tele¬
graph— Circular — A. M. Kidder
the most courageous expec¬
tations of the founders of your
convenience
optimism
years
especially after the Civil War in
War; to her invin-
which
a
as
dissolution
ties that bound her to Eu-
As North America
of
I
may
gradual
largely
was
hard-
.
this
In
a
we
peace.
i
sense.
Canada
to
come
Seventy-five
in the fact
companions,
evening
rope.
in
Perhaps
this
development of this
the
of
the
of
steadfast be-
our
has
it
result
United
remark
throughout
democratic
capitalism has come
within the past 75 years and much
States where I cannot recall hear-
ing
rest,
our government is a
and
balances,
Most of the
A citizen of Canada is
highly
free,
checks
of
to
yond
group may
the word "free" in that
use
that
trade
our
largest of that
nations.
or
man
j and when I talk of free enter-
four times the; prise
other
one
no
contributed
con-
achieve- 1
m e n
Schram
enough
of, That has always been our idea of
a
free forrh-of government, and
this
£mil
control,
end the freedom of the
ever
re-
of
that each man may be
so
have
interested
New York—67th consecutive quar¬
way,
ican
of
and
Banks
highly honored to have this opportunity to share your 75th Anniversary. There
is something about
coming to Montreal that warms the heart. It is like visiting an old friend
with whom one has endured much and
enjoyed much. No two nations have ever achieved
am
measure
send
to
channels.
proper
Thursday, January 27, 1949
this
In
unparalleled
-human
progress,
first neglected.
the
century,
economic
rights
were
at
however,
and
par¬
ticularly in recent years, industry
has
to
shown
its
responsibilities to
employees and to operate in the
public interest. ,; As a result social
as
has caught
I look
posals
by
In fact,
the socialistic proT
are
our
up.
awaiting con¬
nations, I
two
inclined to say there is immi¬
nent
are
over
which
sideration
am
The
danger that if many- of them
social progress will
enacted,
(Continued
on page
49)
.,
v
SECURITY
Boston
TRADERS
Securities
ASSOCIATION
Traders
Association
has
it will hold its annual dinner at the Hotel Somerset
announced
on
that
Friday, Feb.
11, 1949.
increasing willingness
shoulder
progress
BOSTON
Since the turn of
Carl
V.
Wells, of Paine,-Webber Jackson & Curtis is handling
Darling, of du Pont Homsey Com¬
is in charge of room reservations. Other members of the com¬
ticket reservations and Rodney M.
pany
mittee
T. Edmund Williams, Chairman, Hooper-Kimball, Inc.;
Bates,» Draper, Sears & Co.; Hubert N.-Bernard, Jr.,
Schirmer, Atherton & Co.; Fred.R. Carr, Tucker, Anthony & Co.;
Arthur H. Reilly,,Josephthal & Co.
/
•
are:
Curtis. S.
.
INVESTMENT TRADERS ASSOCIATION OF PHILADELPHIA
"
-■■■■*
The Investment Traders Association of
"
Philadelphia will hold-its
25th annual- mid-winter dinner on ITeb. 21■..-atthe
Benjamin Franklin
Hotel at 7:30 p.m. Newton H. Parkes, Jr., Bioren &
Co., is Chairman.
Volume
Number 4772
169
THE
Albert W. Baker Joins ;
Paul R.
Flynn Go.
Formed in Los Angeles
; LOS
R.
has
formed
Paul
(special
.
R.
Lyons
&
Street.
trader
Flynn
The
BOSTON,
Flynn Co. with offices at 411 West
Mr.
to
CHhomcLE)
Financial
•„
was
& Cor
formerly partner in the dissolved
Mr.
for
him
in
,
the
firm
new
and
A.
Lynn
to
the
staff
&
Co.,
453
with Fewel & Co., 453
Spring Street, members of
the Los Angeles Stock Exchange.
Mr. NiccoliJ was previously with
Hoffman
,
(Special
to
The
Financial
members of the Los
Exchange.
Goodwin.
&
MEDFORD,
OREG.
LOS
Chronicle)
—
ANGELES,
Rhoade
is
previously with Flynn & Levitt.
engaging
Street,
Owens is with M. N. Hogan &
to.the staff of Akin-Lambert Co.,
City,
Inc., 639 South Spring Street.
wright Company.
under
CALIF.—Hill
association with their firm of Wal¬
lace
A.
the
New
been
of
as
Chairman
elected
Fen-
Mr. Marshall
ner
.
was
formerly part¬
State of Louisiana
World War II Veterans' Bonus Bonds
Series "A"
Dated
January 15, 1949
Bonds
maturing January 15, 1954, and thereafter, are redeemable in whole or in part, in inverse order of maturity, by the State of Louisianaoption of the Board of Liquidation of the State Debt on January 15, 1953, or on any interest payment date thereafter upon payment
of the par value thereof plus a premium of 2% and accrued interest to the date fixed for redemption of the bonds.
at
the
January 15,
as
shown below
■
Principal and semi-annual interest (July 15 and January 15). payable at the office of the Treasurer of the State of Louisiana, Baton Rouge,. Louisiana,
State's fiscal
agency in the City of New York, N/ Y. Coupon bonds in the denomination of $1,000, registerable as to principal, only
or as to both
principal and interest. Fully registered bonds may be reconverted into coupon bonds.. /■ .
-
or at
the
j
-
Interest exempt, in the opinion
Legal investment, in
and
of Counsel, from all present Federal Income Taxes A/?
opinion, for Savings Banks and Trust Funds in New York, Connecticut
certain other states and for Savings Banks in Massachusetts
our
THESE BONDS, to be issued to provide funds
an authorized issue of
#60,(XX),000 authorized by
for the payment of bonuses to World War II Veterans' of the State of Louisiana, are part of
Constitutional Amendment.at an election held November 2, 1948. Said bonds will constitute,
in the opinion of counsel, valid general obligations of the State of Louisiana tor the
payment of the principal and interest of which the full faith
and credit of said State will be pledged. In the opinion of counsel also,: these bonds will be
payable primarily from the avails and proceeds of
the tax levied on beer, authorized by Act No. 8 of the Regular Session of 1948 of the Legislature of Louisiana.
AMOUNTS, MATURITIES AND PRICES
•;Y
'
Yield to
Coupon
Amou
n
Rate
t
Due
Yield to
Coupon
Amount
Rate
Due
$3,939,000
Maturity
Yield to
Coupon;
Maturity
Amount
Rate
$4,433,000
Due
Maturity
3.00%
$3,500,000
4
1953
2.00%
3.10%
1957
2.60%
3.10%
1961
3,605,000
4
1954
2.20
4,058,000
3.10
1958
2.70
4,567,000
3.10
1962
3.00
3,713,000
31/4
1955
2.40
4,179,000
3.10
1959
2.80
4,704,000
3.10
1963
3.00
3,824,000 '
3.10
1956
2.50
4,305,000
3.10
I960
2.90
5,173,000
3.10
1964
3.00
%
:
(accrued interest to be added)
These bonds
bonds
offered when, as and if issued and received by us, subject to affirmation by the Supreme Court of the State of Louisiana that the
general obligations of the State of Louisiana for the payment of the principal and interest of which thefullfaith and nedit of the
are
irrevocably pledged; and subject to approval of legality by Messrs. IVood, King & Dawson, Attorneys, New York, N. Y.
are
Blyth & Co., Inc.
-
Lehman Brothers
'
are
State
Halsey, Stuart & Co. Inc.
;
;
Chemical Bank & Trust Company
Equitable Securities Corporation
Blair & Co., Inc.
The First Boston Corporation * Kidder, Peabody & Co.
Merrill Lynch, Pierce, Fenner & Beane
Smith, Barney & Co.
Phelps, Fenn & Co.
Union Securities Corporation
Paine, Webber, Jackson & Curtis
Stone & Webster Securities Corporation
The Hibernia National Bank
'
.
White, Hattier & Sanford
Scharff & Jones
Y.
;
.
New Orleans
Newman, Brown & Co.
Barrow, Leary & Co.
Nusloch, Baudean & Smith
Incorporated
E. H. Rollins & Sons
Incorporated
B. J. Van Ingen & Co. Inc.
'
■
1
•
•.
Estabrook & Co.
Braun, Bosworth & Co.
John Nuveen & Co.
■"
,•
\
Stranahan, Harris & Co.
Incorporated
/
Graham, Parsons & Co.
;
.
Incorporated
•
.
•
■'
^
'
•
.
-
Hornblower & Weeks
Chas. E. Weigold 8c Co.
~
Weil & Arnold
'
^
* '
N
'
•
'•
■
A. C. Allyn and Company
Incorporated
•
Stroud & Company
Coffin & Burr
Otis & Co.
Incorporated
Incorporated
(Incorporated)
First of Michigan Corporation
..
Schoellkopf, Hutton & Pomeroy, Inc.
January 26, 1949
Trust Company of Georgia
'
Company
Hannahs, Ballin & Lee
<
R. W. Pressprich & Co.
:
Incorporated
Bacon, Stevenson & Co.
R. S. Dickson &
Hemphill, Noyes & Co.
t
Ira Haupt & Co.
Kean, Taylor & Co.
,
Eldredge 8c Co.
Incorporated
Weil 8c Company, Inc.
Roosevelt & Cross
C. F. Childs and Company
Incorporated
Howard, Labouisse, Friedrichs 8c Co.
the
in Maxwell, Marshall & Co.
$50,000,000
Due
of
of
New Issue
-
Executive
Carey S. Hill has
Directors, and Murray
.Ward, President.
York
name
Marshall
Vice-President.
in a
Board
William
110
ANGELES,
Street, members of the Los Ange¬
les Stock Exchange, announce the
■
securities business from offices at
CALIF.—
Richard B. Ensign has been added
William
Co.,
4
LOS
Richards & Co., 621 South Spring
Angeles Stock
Fenwright Co. Formed
v
With Akin-Lambert Co.
.
38 South Central Avenue.
all
Hill Richards & Co.
of Bateman, Eichler
South Spring Street,
Gross, Rogers & Co. and Walston,
>
With M. N. Hogan & Co.
are
Hart,
ANGELES,
CALIF.—
Stanley H. Lack has been added
South
9
Wallace Marshall With
LOS
as¬
Kennedy
was
Brittain
(437)
Bateman, Eichler Adds
i
CALIF.—
Max
Clarence F. Anderson, Thomas F.
Ardman,
ANGELES,*
sociated
firm of Flynn & Levitt. Associated
with
CHRONICLE
79 Milk
formerly
Inc.,
Baker
F.
FINANCIAL
Michael C. Niccoli has become
.
W.
MASS. —Albert
Shafto,
&
Niccoli With Fewel & Co.
LOS
Baker has become associated with
Seventh
Street.
;
Lyons & Shafto Staff
ANGELES, CALIF—Paul
Flynn
COMMERCIAL
Incorporated
R. S. Hecht & Co.
10
THE
(438)
COMMERCIAL
FINANCIAL
&
1'
li.''
'
CHRONICLE
;
Prominent Personalities
ly
Oi
'
IAT10NAL
.*
Prospectus
upon
By HENRY HUNT
or
from
RESEARCH
SECURITIES
&
CORPORATION
120 BROADWAY, NEW YORK 5, N. Y.
people accept it pretty generally as a
price trends. The market "advances" or
"declines" according to what the Dow-Jones average does.
One might think, therefore, from glancing at the following table
widely publicized
standard
that for
the past
fact that
3-31-47
177.20
fffte
two years the
177.20
if
.6-30-47
177.30
from
9-30-47
177.49
His
market had "done nothing," and in
stable.
12-31-47
181.16
6-30-48
3-31-48
177.20
table that
Mr.
declined
A
more
than .50% in value.
$77,000 loss
■
'Prospectus upon request
50 State Street, Boston
that
declined in the last two
declined
over
years
including, of
course,
\
such
an
And at best it can, by careful selection and broad diversifica¬
tion, offer the strongest possible assurance of relatively good rather
than relatively poor investment results.—Quoted from Vance, Sanders'
able.
"Brevits."
''U
V;
In
1930,
However, it
was
H. J.
Simonson, Jr.
until
not
of
"National,"
as
current
ana
past
economic trends
in the United
States and
foreign countries whenever he has the time. Harry enjoys'
a
good story and is an occasional weekend golfer. On his
vacations, he prefers to fish but can't decide which he'd
rather do, catch a mess of brook trout or eat them. We
agree,
that's a tough choice.
•
Conditions change and the fortunes of individual
companies
change accordingly. No one can anticipate every adverse develop¬
ment affecting individual stock values but simple common sense tells
us that an organization of trained and
experienced men devoting full
acting on tips, hunches or guesswork. At least
organization will avoid the kind of mistakes that are avoid¬
during the late '20s.
a wide range of investment objec¬
although Hugh Long and Distributors
Group are close runners-up. Including First Mutual Trust
Fund, "National" sponsors and manages some $50 million of
investors'funds today.
r
Harry Simonson is an inveterate reader and seldom misses
any important item in financial publications. He also studies
only the stocks
always go up. But we are emphatically convinced that the only
way to avoid such losses as represented by the above facts and cir¬
cumstances and to obtain relatively good results on a dependable
basis is to diversify investments broadly among carefully and in¬
telligently selected issues and then to watch them and keep watch¬
ing them and still keep watching them.
individual
accordian-like
an
be stretched to almost any
other sponsor covers such
tives
that
average
It
they launched National Securities Series, now com¬
21 different series including 10 industry group
funds, two bond funds, one preferred stock fund and several
other income type as weli as appreciation type funds.
No
We don't think anyone is smart enough to pick
time to "weeding out" doubtful situations and substituting healthier
and more promising ones is bound to produce better results than the
this:
1940 that
prized
the 94 stocks
50%.
_
;
has
for
for his Board of
Simonson spent his early business
Corporation.
on a
a long
time, viz., that market averages don't reflect the
experience of investors. Investors owned all these 676 stocks that
have
v
4
reason
slightly
Station.
with "Doug" Laird, he organ¬
ized the National Securities and Research
have held for
Putnam Fund Distributors, Inc.
a
room
a
Harry
can
eral years
$100,000 investment is pretty stiff in a period
when the market was supposed to have been "doing nothing." And
$50,000 and $60,000 losses are distinctly not ho hum matters in
any period, let alone one of seeming price stability.
These figures
rather dramatically illustrate a contention we
oj! -iton
o
as
"only-
together
V
V
,
■
.
learning selling, advertising and
printing techniques.
He was also en¬
gaged in the mortgage business for sev¬
94 issues
or
Corp.
career
v''-.-
,
Finally, of those stocks which went down, about 14%
Research
desired length. When fully extended and
surrounded by occupied chairs, his office
doesn't look quite so large.
Actually of all the nearly 1,000 common stocks quoted on the
York Stock Exchange, only 13 registered no net change for
period.
^
Only 25% of all these stocks showed any net gain, 1% no change
the remaining 74% showed net losses ranging up to more than
77%.
FUND
Centr al'
also doubles
the two year
and
his ye^t.;
is
Directors.
these
off
Grand
However, there is
New
PUTNAM
took
-office
12-31-48
178.30
he
than "'
smaller
figures one gains the impression that' stock
prices are almost exactly where they were two years ago, he is
probably in for a surprise.
/jeotyfi
if
private
(
177.30
9-30-48
189.46
&
.
comfortable
'
it had been remarkably
12-31-46
But
that
of stock
measure
Series)
a
SIMONSON, Jr.
President, National Securities
The Dow-Jones average of .30 industrial stocks has been so long
„
and
NATIONAL
J.
Harry Simonson is.a hard worker. He has to be/ Like
most good Catholics, he has a
large family which keeps his
nose to the grindstone from, 9 to 6 or even
latqr. Harry is
-handsome, dapper and an immaculate dresser, although
sometimes he looks as if he'd be more
V-
25% Up; 1% Unchanged; 74% Down
request from
investment dealer,
your
(Third of
HARRY
StCURITlES SHIES
.
Thursday, January 27, 1949
.
proved to be an almost sure cure for some of the most devastating
diseases. First commercial production got underway in 1943. Pneu¬
monia no longer terrifies, because with the use of
penicillin less
than 5% of the patients die.
Deadly infections, once called "blood
poisoning"
be quickly stopped.
It may be possible to stamp out
discovery opened a whole new medical horizon,
now a variety of molds make a
variety of "antibiotics" for dif¬
ferent uses.
■'
'
'
U
''
-Vv"
can
venereal disease.
The
and
:■■■
The Case
/
History of Penicillin
Penicillin,
stands
as
one of the greatest discoveries benefiting
major milestone in medical history.
a
mankind,
The observation of
growing in
creation of
a
a
a British scientist, back in
1928, that a mold
glass plate destroyed disease bacteria finally led to the
brand new line of products, sales of which are estimated
at the rate of
The
$170 million for 1948.
product
the
of
mold
out
to
be
drug
new
a
that
is
produced from a mold similar to the humble and
annoying growth found on cheese or spoiled fruit. However, it took
the war and the ingenuity of the chemical
industry to turn the pro¬
duction of the drug into a major
industry. Molds are temperamental
"plants" and only make a little of the magic drugs. At first penicillin
made
was
in
glass bottles on a small scale, and it sold for $20 a
Now it is produced in huge tanks as
those used to make beer, and it sells in bulk for only about
dose of 100,000 "Oxford units."
big
turned
Penicillin
as
10 cents
dose.
a
Last
production
year
125,000 pounds.
orchids by
was
over
billion
a
The accomplishment is
more
doses totaling about
striking than growing
the ton.—Quoted from Chemical Fund's "Test Tube."
.
...
j'-
•.
i
American Business.
Assets of
Television Fund Cross $1,000,000
Operations of Television Fund, Inc. started Sept. 8, 1948.
Shares, Inc.
K
e
Prospectus
first four months the Fund has declared
a
an
As of Jan.
upon request
Net
Asset Value
INVESTMENT
762
No. of States Cleared
COMPANIES
a
29
The initial dividend of 10 cents
Lord, Abbett & Co.
Funds
'
Certificates of Participation
to holders of record Feb. 5,
INCORPORATED
New York
Chicago
—
—
New Orleans
A
Los
—
Angeles
in
ured
SHARES OF CAPITAL STOCK OF
15, 1949,
1949.
Calvin Bullock
by physical volume
Forecast
stringency.
show
be any danger of a
Also business activity as meas¬
moderate decline, but should
The principal danger is a recession
the profit margin. With
rigid and
slight decline in price or volume could have a
may
a
remain at relatively high levels.
not of general business, but of
rising costs, even
in
share is payable Feb.
a
view 1949, there does not appear to
we
crisis arising from credit
investment funds
investing tlieir capital
"As
12, 1949
$1,010,384
No. of Shareholders
C ustodian
In the
initial dividend of 10 cents
share and compiled this growth record:
a
bonds
(Series B1-B2-B3-B4)
preferred stocks
(Series K1-K2)
common
New England
^
stocks'
AMERICAN
(Series S1-S2-SS-S4)
%
Fund
121V MDV7I2
ORGANIZED
1931
your
local investment dealer or
.
Tlie
■
imc..
hM
Prospectus
of .Boston
may
Coffin & Burr
Prospectus
be obtained from
Incorporated
may be obtained
Congress Street
Boston 9,
jMassacIiusetts
your
THE
local investment dealer,
PARKER
or
CORPORATION
CHICAGO 3, ILLINOIS
,,iu
<
•Att,#.„v
NEW
YORK
PORTLAND
135 South La Salle Street
ONE COURT STREET. BOSTON 8. MASS.
i
Founded 1898
from authorized dealers, or
SELECTED INVESTMENTS COMPANY
%
*'.*■ t. »■ r
tt"«
i.
General Distributor
Keystone Company
50
ji
i
Prospectus from
BOSTON
HARTFORD
CHICAGO
BANGOR
I
'
'
'
"
■
.
t
'
'
.
'
1
-
i
v
Volume
:
169; Number 4772
THE COMMERCIAL & FINANCIAL CHRONICLE
1
(439)
profit margins, particularly in the early stages
readjustment. Such a condition would however be spotty rather
general since some industries have already made their read¬
justments to 'normal' and some others will unquestionably continue
to show high earnings during 1949.
y
"In the light of these conditions and the prospect of a general
decline of corporate earnings, what of the stock market? Is it rea¬
sonable not to expect the market to decline if this occurs?
Obvi¬
ously. there is no categorical answer to this question, but one
might well have posed the query in 1946 as to whether the market
could decline, as it did, when the postwar boom was just getting
underway. Stocks are reasonably priced in relation to book values
of their assets, which are incidentally largely valued in 1939 dollars,
and the. market has exhibited caution and foresight—possibly to an
exaggerated degree—in appraising current earnings. In view of the
sobriety and the caution exercised b,y the market, the market cannot
on
of
than
be
said
in
be
to
vulnerable
position. As a matter of fact, the
market appears prepared for almost every contingency except good
news.
Again, as in the past two years, the prospective economic en¬
vironment suggests that selection should prove of paramount im¬
portance in shaping investment policy."—An excerpt from Calvin
Bullock's "Perspective."
a
Co.jr Inc.; Kimball Valentine
Partner, Vance Sanders & Co.'
in "Retail Salesman-1
ship of Mutual Investment
Funds'
to be
given by the New York In¬
stitute
of
Finance,
20
Broad
Street, resulted in an over-sub¬
scription of the available seats in
the Institute's
largest classroom.
New
York
and
the
many
quests received from all
re¬
Sales
and
Corp.
Manager
He will
of
be
Louis
(Special
E.
Stone, formerly VicePresident of Montgomery; Stone
& Peyser, has become a registered
representative in the investment
sales department of Goodbody &
The list
115
Broadway,
Bullock; Frank L. Valenta,
Vice-President, Distributors
Group, Inc.: Louis H. Whitehead,
Chronicle)
Financial
State
with
Estabrook
Street,
York
changes.
Stock Exchange.
and
&
Co.,
of the
members
Boston
Mr. Long
Stock
Ex¬
formerly
partner in Long & Nash.
a
was
A
and balanced economy
farm and factory, and Otis
gether. ;
When
Otis
&
ness
Ohio
Co.
up
had
entered
in
has
1899,
Hugh
Boston;
Bullock,
Vice-President,
Vernon
Hugh
■
!
sinking fund- 5% gold bonds
1957, are being noti¬
principal amount
•
Vivian,
W.
Total
Sherwin-Williams
Akron
1891
Cleveland-Cliffs
Iron
-Cleveland
Firestone Tire & Rubber
Akron
National Acme.—
Cleveland
Timken Roller
Canton
1904
1906
-
,
Bearing
j
internationally known in¬
organizations and the
productivity of its agriculture
1912
Mansfield Tire & Rubber
1919
Fisher
ranks with the best of Amer¬
1946
'
'
1919
Service
;
Manufacturing ___!
;
(2)
i
Cleveland!
Mansfield!
Body Ohio—
Cleveland
Murray Ohio Manufacturing-Cleveland
Portsmouth Steel
great
73,.950,000.
.
TOTAL
of
south,
on
the
on
north
the
v
and
east
the
and
(2*)
labor
well
as
rich
Now part of General Motors.
.
„.
.,
v"
In
constant
and
agriculture, as
industry,
of
half-cen¬
a
leadership
available
established enterprises
they
of
Ohio
may
but
wherever
be located.
In the year
just closed. Otis
principal under¬
writer
of
high-grade bond
issues totaling approximately
& Co.
•
was
a
OTIS & CO.
(Incorporated)
New York
Chicago
Denver
1899
CLEVELAND
Cincinnati
and
business and
two billion dollars.
Established
the
promising new under¬
takings, not only in its home
-
.-V.
in
and
,
.
.
throughout
experience of
State
Serving Alliance, Lorain, Warren, Mansfield, Elyria, Sandusky,
Marion, etc.
: 1
; % •'
;j- '
(3)
abroad.
both to
6,540,000
23,147,000
Serving Canton, Lima, Zanesville, Steubenville, Newark, Ports•
-1
mouth, etc.
headquarters
cities
;
tury
mented
(1)
Many of them,
Co., had their be¬
Otis & Co. is able to make the
•
$3,602,676,000
—
the
been
close contact with the leaders
ica's fertile farm belt. Its net¬
supple¬
has
position in its field at home
93,435,000
50,154,000
14,593,000
'(3)
.
Portsmouth
-
and
which
State and the Nation, Otis &
Co. today occupies a
leading
209,326,000 '
—
of
With
8,452,000
(1)
en¬
to count¬
Cleveland and offices in other
78,358,000
—Columbus
-
—
associated,
outstanding.
and
Columbus
of Ohio
as
ginnings at the turn of the
324,394,000
,
well
ren¬
other
century.
X 18,761,000
•
and
scores
as
like Otis &
I
Columbus & Southern Ohio
Electric
•
Not Available
92,743,000
V 407,845,000
" 455,060.000
1901
,
Building.
few of the Ohio compa¬
we have thus
a
been
r
i
Akron
are
18,614,000
11,661,000 >
,
|
1900
dustrial
by the magnificent
transportation facili¬
^afforded by- the a Great
Chronicle)
OREG. —William
Bank
financial/
growth
292,169,000
-
Cleveland
Goodyear Tire & Rubber.
Republic Steel—--.,
1899
water
Financial
nies with which
,
—Mansfield!
Brass.-
Akron Beacon Journal
>
8,870,000736,913,000
324,590,000
99,638,000
-
—Sandusky
1898
from
The
proud to' have
are
,
Louis R. R, (Nickel Plate)—Cleveland
Ohio
1889
.
to
or in the later
phases of their
development. Listed herewith
243,168,0.00
'
i
Hinde & Dauch_
of
River
Kemp &
less corporations outside of
Ohio, either at their inception
$10,295,000
-Cleveland
—
Eaton
Ohio
Thomas
of
E. Wetmore has been added to the
staff of Foster & Marshall, U. S.'
terprises,
Not Available
J
York, Chicago & St.
1911
Lakes
head
(Special
services to
Assets
Cincinnati
—
towns"
ties
Chronicle)
Pasadena.
PORTLAND,
dered
'
New
.
1888
populous
is
in
National
•
Headquarters
Ohio Public
railroads
Financial
Foster & Marshall Adds
Long Street, New York.
.
1908
of
The
618
was
The bonds will be redeemed
par.
>
-
Ohio Power
work
to
1899-1949
Jaeger Machine
"home
of
Edgerton, Wykoff &
South
Spring
Street,
members of the Los Angeles Stock
Exchange.
Mr.
Kemp
has
re¬
cently been with Paine, Webber,
Jackson & Curtis and prior there¬
Co.,
City Bank of New York, 55 Wall
of
1907
the
Davis
ANGELES,
C A L I F.—
F. Thomas Kemp has become as¬
Co.
1906
are
Mr.
Vice-President
LOS
Co.
Akron
»;
.
cities
(Special
Broac
to
Strouss-Hirshberg
Youngstown
Chesapeake and Ohio R.R.—Cleveland
Ohio Bell Telephone
——Cleveland
1888
agricultural
products from $200,000,000
to more than $1,000,000,000.
of
Street.
Kemp Joins
*.
Edgerton, Wykoff & Co.
due March 1,
B. F. Goodrich,-
1887
nual value of its
*
Seventh
formerly
F. Thomas
the
fied that $93,000
Portsmouth
1884
Ohio,; with
increased
score
ir
week
Holders of City of Brisbane 30year
Selby Shoe——
1880
$748,000,0.00 to more than
$15,000,000,000 and the an¬
Ohio's
M.
associated
Wagenseller & Durst, Inc.
Drawn for Redemption
Shillito's
a
metropolis exceeding the
1,250,000 figure, is a leader
among the States of the Na¬
tion. Similarly the annual val¬
ue of manufactured
products
Ohio
John
and
become
sociated with
1874
7,000,000 people and with its
in
Corp.;
Company
1878
Today
Davis
Dempsey-Tegeler & Co., 210
was
City of Brisbane Bonds
1851
population of
4,000,000 and Cleveland some
380,000.
change
building
at
20
Street, New York City.
1830
to¬
banking busi¬
Cleveland
in
with
West
Institute located in the Stock Ex¬
Business, '
:
the investment
have
Chronicle)
C A L I F.—
Industry
first
February in the classrooms of
1870
grown
the
W.
Archer
at the head office of The National
•
Established
financial and industrial devel¬
have
Television
start
Financial
Half-Century of Leadership
Year
&
pioneer in the State's
opment,
Donald
We
of
OHIO, with its prosperous
a
the
on
Classes
The
ANGELES,
lec¬
two
President, Dividend Shares; James
Bridges, Partner, The Keystone
SSHS1SS
Co.,
includes
to
(Special
LOS
Whitehead Co.; Douglas lof the bonds has been drawn by
Laird, Vice-President and Secre¬ {lot for redemption on March 1,
tary, National Securities & Re¬ .1949, throtigh the sinking fund at
search
New
City,, members of the New York
Dempsey-Tegeler Co.
iti
Lcuis H.
sociated
York
New
The
BOSTON, MASS. —Edward B.
Long, Daniel M. Harrington, and
Robert L. Daley have become as¬
15
Co.,
to
-in
Currerr
the
Calvin
With Estabrook & Go.
Goodbody Co. Staff
in
assisted
Arthur
Wiesenberger
Partner, Arthur Wiesenberger &
Co.; Harold
E. Aul, Economist;,
Long, Others
open
course
tures
parts of
includes:
Edward
latter
Douglas K. Porteous, Vice-Presi¬
Cohu
still
courses
%l
i————pmmm
Donald Davis With
Securities, and Current Develop¬
ments in Selected Industries. The
country the Institute plans to
publish transcripts of the lectures.
The course will be conducted by
dent
is
lecture
'
thaJ
announces
Developments in Utilities, CurrerV
Economic Developments Affectinf
Security Values, Analysis of Pub¬
lic
Utility Operating Company
Securities, Analysis of Railroac
the
by nine guest lecturers.
Louis E. Stone With
other
To meet this unsatisfied demand
in
Institute
registration
The announcement last week of
a new course
The
;
Fund Lectures
.
...
and
Transcripts of Mutual
'
1
111111
substantial effect
Columbus
Toledo
*
*
I
12
(440)
THE
COMMERCIAL
CHRONICLE
Thursday, January 27, 1949
And Interest Rates
JOHNSON
E.
H.
FINANCIAL
Government Bond Outlook
Bank and Insurance Stocks
By
&
-
By MARCUS NADLER*
This Week—Insurance Stocks
*
!•'
The
Professor
two
prncipal companies of the "America Fore" insurance
group, The Continental Insurance Company and Fidelity-Phenix Fire
Insurance Company, are the first of the major insurance companies
to issue their annual report to stockholders for the year 1948.
will make
'
',
"
,
'
Fidelity-Phenix
,i.Premiums
written
Increase in
.
premium
maint
1947
1947
S
51,267,982
51,674,484
42,094,392
10,423,730
reserve
1948
8,970,216
7,746,780
8,008,264
of
53,149,595
42,297,766
43,927,704
24,864,487
23,857,302
18,410,261
18,409,073
govern-
bond
market."
15,216,836
profit
loss
or
2,032,020
The
1,661,330 —2,051,392
—976,981
Investment—
Interest^ dividends
Expenses
and
"
6,640,132
rents___i_.
'j.
of
bank
stability of the economy. An important factor in
of
same
deposits
from
The
1948.
volume
of
materially dif¬
level, at the
end
applies to the
same
loans.
of
end
While
there
is
a
other
the
the
at
1949 should not be
ferent
Eco¬
possibility that certain types of
commercial
loans may
decrease,
loans
6,108,635
5,289,870
5,088,652
nomic Review"
crease.
195,525
173,136
155,045
of the Council
that
219,700
widening spread between corporate
—
"Annual
Underwriting
Looks for possible
changes that will take place dur¬
ing 1949 will also not be radical
or
far-reaching. The total volume
idea is repeated
in
the
"
/
stability in
the
20,920,684
22,657,480
e n a n c e
ment
34,086,128
28.460.095
*
the
be
—Fire Insurance Co.—
63,573,325
______
unearned
continue
to
1948
deficit.
a
this program i
will
S
'
Underwriting—
warns
maximum contribution to the
a
results of the subsidiary companies are not yet available.
——Insurance Co.
o
f
Economic
The only
one
witness
may
an
in¬
important change
in the banking
see
can
structure
Advisers,
6,420,431
5,913,110
5,116,735
income
4,936.129
6,778,065
which
2.882,215
1,485,110
364,285
998,191!
150,464
tax
during 1949 is the prob¬
ability that if the volume of com¬
mercial
4,933,607
8.452,451
Federal
Nadler
Marcus
Or.
states:
"It would be
serious
..
fl
j
Net operating income
6,967,341
6,967,341
i.
4,571,844
5,779,873
2,731,751
^'
■'
Possibly the most significant change in the above figures is the
gain in underwriting profits. After a number of years of generally
Unsatisfactory results,
period of profitable underwriting was reached
The increase in premiums earned of approximately 26% in
of Continental and 29% for Fidelity-Phenix was sufficient
in 1948.
the
case
a
to offset the somewhat larger
losses and
Investment income also showed
nental
the
increase
1947
expenses.
For Conti¬
to
the improved
this change.
V
■'
In order that
to
introduce
certainty
comparison of the per share results for 1948 and
previous two years may be shown, the following tabulation, on
parent company basis, has'been made. It shows the statutory Tindera
and
a
possible
which
un¬
financial
|
would
follow
change of the policy with
spect
the
to
a
error
elements of
new
disturbance
bond
of
support
re¬
prices."
I
these
two
statements
statistical
clearly than any
analysis what the out¬
look
the
more
for
government
market will be
President
bond
during 1949.
stated
The
without
any
equivocation that stability of the
bond
government
the
important
a
market
is;, an
maintaining
oiir
writing earnings, the estimated equity of the shareholder in the
increase in the unearned premium reserve, and the adjusted' net
underwriting earnings. Also shown is the investment income, total
earnings before taxes, Federal income taxes and the net operating
earnings.
CONTINENTAL
INSURANCE
COMPANY //
Net
Under-
Unearned
Under¬
Invest¬
writing
Premium
writing
ment
Total
Earnings
Earnings
Reserve
1948__.
$1.02
$2.08
1947:__
—0.49
0.49
1946
-.
Income
Net
Income
Earnings
Taxes
Earnings
$3.10
$3.21
$6.31
$0.74
$5.58
1.79
1.30
2.95
4.25
0.18
4.07
0.95
1.44
2.60
4,04
0.49
•";= 3.55
i!<
FIRE
INSURANCE
Invest¬
Premium
writing
ment
Federal
Total
:
Net
Income
Earnings
Reserve
Earnings
income
Earnings
Taxes
Earnings
1948.
$1.11
$2.07
$3.18
$3.41
$6.59
$0.67
$5.92
1947.
—1.37
2.14
0.77
3.29
4.06
0.10
3.96
1946.
0.32
1.06
1.38
2.92
4.30
0.37
3.93
is
banker
average
new
considered very satisfactory and show that
the two companies had one of the most profitable years in their
history. When the reports are available from the subsidiary com¬
panies, it is expected that on a consolidated basis, the per share
equally favorable.
If the statements of these two
companies
indication of
reports to be issued by other insurance concerns—and it is believed
are
any
stockholders of insurance companies should have
pleasant reading material.
these
statements
indicate
chance that the government
no
its
on
also
feet.
own
that
permitted to
the
believes that
They in¬
Administra¬
break
in the
market
bond
far-reaching repercussions,
adversely affecting economic con¬
ditions and employment.
In en¬
deavoring to ascertain the outlook
for government bonds, therefore,
one can for all
practical purposes
eliminate the danger of a break
the
below
government
On
par.
1949
the
those
bond
government
bringing
the
question
interested
in
market
obligations
contrary, in
confronting
government
securities may be that of how high
government bonds will go before
the
Federal Reserve
authorities
step in and keep the market or¬
derly not only on the downswing
on the upswing. To
judge
from recent actions of the Reserve
With Weinress & Co.
With Fairman & Co.
'(Special to The Financial Chronicle)
LOS
ANGELES,
CALIF.—
U.
Walker
has
been
added
to the staff of Fairman &
Co., 210
West Seventh Street, members of
the
>
Los Angeles Stock
Exchange.
(SpecU"!
to
The
CHICAGO,
,
ILL. —Charles
ANALYSIS
*
&
COMPARISON
of
19
4
Weinress
idly.
&
Co.,
the
Mr.
has held
Bank Stocks
Will
be
sent
cn
request
South
Strick
for
La
many
membership
Chicago Exchange.
a
on
i•
si
With Herrick, Waddeil
(Special
City
231
■
to
The
Financial
Chronicle)
CHICAGO,!
ILL.
Robert
L.
Langdale has been added to the
staff of
Herrick, Waddeil & Reed,
Inc., 332 South Michigan Avenue.
Members New York
Stock Exchange
120 BROADWAY, NEW YORK 5, N, Y*
Telephone:
Bell
BArclay
7-3500
Teletype—NY 1-1248-49
(L. A. Gibbs, Manager Trading Dept.)
to
may assume
advance
too
the
conclusion
would
throughout
bond
of
Outlook
that
one
therefore
1949
market
degree
rap¬
'
-
reach
the
should
stability.
be
could
that
government
enjoy a fair
That,
of
coursp, does not mean that fluc¬
tuations will not take place. What
it does indicate is that any change
that
in the government
bond market will be of only minor
may occur
importance.
One may go a step further and
also
Open in Shreveport
bonds
The
.
Laird, Bisseil & Meeds
one
Stability
Salle Street, members of the New
York
and
Chicago
Stock
Ex¬
.
New York
A.
ment
years
ANNUAL
Chronicle)
with
a fair degree of
accuracy that they
will not permit long-term govern¬
Strick has become associated with
changes.
OUR
Financial
authorities,
state
that
the
mem¬
in
the
It
will
lengthen their ma¬
also possible that
is
clearer
make
case
to
up
than
now
has
what the
refunding policies of the Treasury
will be; specifically, whether the
Treasury will continue to refund
maturing obligations into certif¬
icates
whether
or
notes
and
operations
the
will
medium-J.erm
large
a
it
extent
offer
bonds}.
the
refunding
Treasury will
business activity and
the
of
upon
of ; commodity
and employment.
movement
wages
With
these
remarks
as
an
in¬
troduction, it is now possible to
analyze the factors operating in
the
market which have a
bearing
on
government
bonds, namely, the demand for
and the supply of capital, the po¬
sition
of
the
Treasury and the
the
banking
a
in
bonds
policies
of
Federal
the
authorities.
Reserve
Supply
supply
Capital
capital
seeking
outlet in the form of bonds and
during
1949
should
a
high level. Savings
people tend to increase.
Liquid savings of individuals dur¬
continue at
the
ing the third quarter of 1948, as
reported by the Securities and
Exchange Commission, amounted
to $3.1 billion as compared with
$0.6
billion
during the second
A
quarter.
the
moderate
decline
in
of
cost
living should further
savings by individuals.
stimulate
Moreover, the savings of many
people have become institution¬
alized
through
insurance
com¬
panies and pension plans.
volume
The
life
of
insurance
sold
during 1949 is bound to be
large. Not only has the standard
of living of many families in the
United
States
increased, ' thus
leading to larger sales of life in¬
surance, but the continuing high
cost
of
living has also induced
individuals to increase their
insurance protection.
Group in¬
many
surance
by
plans have been adopted
large
a
tions
in
and
number
there
is
of
no
material
this
crease.
Pension'
■
mortgages
recent
ac-
by
years
increase.
Almost
in¬
all
cently .acquired mortgages,
carry
amortization
This in turn means
stant
repayment
debt, which will
of
securities and
same
a
re¬
how¬
provi¬
a
con¬
outstanding
seek
new
The
outlet in
an
new
mortgages.
applies to bonds offered
during the past few years, prac¬
tically all of which carry sinking
fund
provisions.
Many preferred
stocks also carry
sinking fund pro¬
visions. As a result of this policy
there will be
of debt
larger repayment
a
arising out of
obligations
the
and
contractual
sums
real¬
so
ized will have to be
reinvested.
Another
important source of
funds to business concerns will be
the increased depreciation
and equipment erected
on plant
during and
since the war, which will be much
greater than that obtained from
plant
and
equipment
acquired
prior to 1941. This again will put
substantial sums at the disposal of
corporations and reduce the neces¬
sity for obtaining new funds to
replace
obsolete machinery and
equipment.
It may therefore be
concluded that the supply of capi¬
tal seeking an outlet in
bonds and
mortgages is bound to be consid¬
erable.
The
The
Demand for
Capital
demand for capital in the
of
bonds
and
mortgages
form
should also be substantial.
During
1949, however, one may expect
certain changes in the
composition
<
of the sources of the
for
new
is
over, should Congress vote a sub¬
stantial increase in
corporate
taxes one may expect an even
greater decline in capital
expen¬
ditures by corporations. The de¬
mand for
mortgage money for the
financing private con¬
purpose of
struction, housing and commercial,
is
also
the
expected
high level
to
of
decline
1948.
teracted by
for
mand
financed
Whether
an
as
be
de¬
coun¬
increase in the de¬
mortgages on publicly
subsidized housing.
or
not
or
the
tax-exempt securities
be
from
This
crease, however, should
large
as was
the
demand
in
for
1949 will
case
in ,1948
is not easy to say.
On the basis of the above
analy¬
sis of demand and
supply factors,
therefore be concluded that, ]
eliminating the great influ¬
it may
even
that will be exercised
by the
authorities, there will
no material
change in
ence
monetary
be
j
money
rates
during
1949/
The Fiscal Position of the
to
de¬
plant and equipment
expected to be somewhat
than during 1948. More¬
smaller
corpora¬
reason
will
plans /are
tendency
of
ever,
sions.
.
believe
outlet
an
mortgages.
stitutional investors has shown
demand
mortgages
of
volume
quired
seek
in
demand.. The
capital by corpora¬
tions for modernization and
acqui¬
\
of
of
rule
and
sition of
The
The
an
<•
general
The
money
Treasury
-
The
position
of
^
the
nomically sound and socially de¬
sirable and it may be expected
Treasuryhas an important
bearing on the
demand and supply of capital, and
that
hence
an
legislative accounts
eco¬
they will be established by
increasing number of corpora¬
tions, which
means
further insti¬
,;!An address by Dr. Nadler at tutionalizing the savings of indi¬
SHREVEPORT, LA.—Hardy B.
viduals.
Funds accruing to
in¬
Carroll, Sr. and Hardy B. Carroll, the 21st annual Mid-Winter Meet¬
surance
companies from the sale
Jr., are engaging in a securities ing of the New York State Bank¬
business from offices at 1529 Cres- ers Association, New York City, of life insurance or to trustees
from the adoption of pension plans
Jan. 24, 1949.
well Street,
•
■
/
,
as
direct
could
a
but also
John
1949
prices,
.
understands
bond market will be
in
that they are—the
introduce
a
decline
A
banks to
been the
Translated into language which
government
Net
Under¬
writing
results will be
to
be
in
increase in the
an
banks.
turities.
error
would
reduction
a
volume of loans might also induce
have
Net
Unearned
are
the
serious
it
elements of uncertainty.
dicate
CO.
by
depend
that
decrease
anticipated,
now
holding of government obligations
out
stand
Equity
Change in
Under¬
The above results
in
be
banks and
pointed
tion
FIDELITY-PHENIX
factor
that the peg on government bonds
will be maintained and that there
Federal
ber
should
is.
requirements of the
reserve
To
better,
Net
will
economy
at a
high level,
while
the
economic
advisers
the
Equity
...Change in
there
loans
than
waster
some
believe
indicate
improvement.
some
amounted
approximately 9% and
Fidelity-Phenix, 4%. Federal taxes were higher^as a result of
underwriting and net operating earnings also reflected
for
over
University
The Economic Report of the President, submitted to
Congress on Jan. 7, 1949, contains
following statement: "The public debt will continue to be managed in a manner that
the
Continental
York
and government bonds.
shown below. These as well as the following
share figures, have been presented on a parent company basis as
per
Administration, New
decline in price of long-term issues. Sees both
supply
this condition may be changed should business
or
levels, but
decline and government revenues show
For this reason the income accounts of both,companies for the
years 1948 and 1947 are
School of Business
stepping in to prevent either too rapid advance
prominent position within the industry, the re¬
sults of these two companies are particularly interesting at this time.
They serve as an indication of the general forces at work and give
some idea as what to expect in the way of results from other com¬
panies.
,,
Finance, Graduate
and demand for loan capita] at high
Because of their
...
of
Dr. Nadler, holding statements of President Truman and his Economic Advisers
indicate there is no
chance government bond market will be permitted to stand on its own
feet, foresees Federal Reserve
..
ury
on
money rates.
When the
of the Treas¬
are
balanced, the agencies of
the Treasury are in a position to
their surplus of revenues over
expenditures
to
buy long-term
use
-
government
obligations
(Continued
on
page
held
41)
by
•
Volume
THE
Number 4772
169
COMMERCIAL & FINANCIAL
Chairman Hanrahan maintains
new
money is being pumped into capital markets at a high rate and
buyer is still factor in growth and development of American business. Says as long as com¬
mercial banks remain conservative,
private investor must furnish market for equities, and stresses
importance of having substantial equity capital. Points out over-regulation which impedes financing
without protecting investor is disservice, and holds aim of .SEC is to
substantially facilitate securities
securities
It is apparent
that the New York City banks must hustle to get
compensation for their services and higher interest rates
loans just to maintain their 1948 earning rate of 6% on
capital accounts, even if tax rates remain the same. Their tax credits
are now rapidly running out and in certain banks, tax savings result¬
ing from the deductions taken under the Treasury formula for bad
debt reserves are included in net earnings.
In 1948 net operating income subject to income taxes is esti¬
mated at around $185 million, with'a net of $135 million after taxes.
An increase in corporation surtax rates in 1949 of seven percentage
points, raising the total corporation rate from 38% to 45%, means
that the New York City banks as a group would have added income
tax liability of 7% on $185 million or around $13 million, based on
1948 figures.
This would result in a reduction of net earnings after
taxes from $135 million to $122 million, a decline of 10%. The pros¬
pect of higher taxes is sufficiently compelling to result in far more
realistic decisions on the part of banks in their quest for higher rates.
It is clear that the New York City member banks are completing
I
their
major phases of postwar readjustments. The restrictive and defla¬
tionary weather which overtook these banks after the Eighth War
Loan Drive in December, 1945, has about run its course. Today after
glad to be invited to talk to
was
ation I
am
waters.
I
not
accepted
not have much
to
do
proved the contrary. Investments
running the gamut from triple A,
with
the three successive increases of 2% each in
requirements is evident in 1949 in the reduced total
of loans and investments.
However, the loss of interest income is
direct¬
to
never¬
cerned,
1949 at around 1948
as you
the Act.
general
1949.
unchanged in
selling
truth
be
kets.
many
You will
tor
ume
of
with
reckoned
in
the
registration
Commission
1947,
26%
\\
before
New
York
over
was
In
contrast,
you
subject
the
week
because this
allegedly strengthens
propensity to consume. By the
same token it would be logical to
the
with
new
money.
Of
these figures relate only
financing registered with us,
to
advocate in
shift
of
inflationary periods a
labor
income
to
the
en¬
trepreneur through a lowering of
Instead, it is suddenly dis¬
covered at such times that prices
are
not dependent upon demand
wages.
and
but are deliberately
('administered')
by
monopolistic corporations."
supply,
determined
There is
no
doubt that part, at
least, of the skepticism with which
many persons regard the under¬
consumption theory lies in this
fact that it is invoked frequently
fdr the purpose of justifying po¬
litically popular actions by
tunist
Svatesmen
and
oppor¬
economists
$6V2
the President's fact-find¬
SEC
ing
now
board
decided
that
railroad
on which the wage in¬
had been justified, were no
earnings,
crease
longer determining in the case. It
would be unthinkable, it said, to
suspend the wage increase. Why?
Because
that
would
reduce
pur¬
chasing power and intensify the
depression.
Closely related to the undercon¬
sumption and over-saving theorier
is the idea of the Compensated
Economy. Advocates of this par¬
ticular brand of Utopianism vis¬
ualize the federal budget as a soyt
of huge balance wheel. The way
to stabilize the economy,
they
say,
is to reduce taxes and permit the
granted railway la-
budget to become unbalanced
things are bad; then, when
business begins to hum again, sur¬
plus income would be siphoned
off through higher taxes. Not only
would the budget be balanced, but
lpor pack around 1937., Business
all the debt contracted in the de¬
had
pressed year would be paid off by
a whopping surplus.
who do so, in a manner of speak¬
ing,
with their fingers crossed.
A typical
comes
to
situation of this kind
mind
wage increase
was
1937.
was
in
the
case
of
a
started
upward in 1936 and
gaining momentum in early
On
the
decided
strength of this it
that
the
railroads
when
They will tell
whert
times
are
you
that
our
national
plant
Integrated Capital Market
why I make this
which con¬
sists of people whose job it is to
find
a
this, that is,
bad.
But
But the truth remains that in*
group
investment
outlets
for
very
of
de¬
important
The
the
investment community ;,dO
and must complement each other.
I
is,
answer
own
is
billion went through
of registration with
the
the
pursuant to
prospectuses distributed under the
requirements of the Securities Act.
That Act, requires that
certain
public offerings of securities be
registered with the Commission
by the filing of a statement which
process
and
contains
was
sold
information
the
an
in¬
source
requires also that
securities
receive
in
every
such
in
capital
providing
the growth
a
and
and main¬
far from hav¬
are
on page
47)
another
capital.
sition of American
healthy economy,
we
continues,
become
But a
healthy economy needs very sufyf
stantial amounts of equity invest¬
ment.
I have long been an advo¬
cate of improving the equity
po¬
munity in fact constitute an in¬
tegrated body; all in fact partici¬
credit for
the trend
(Continued
industriy.
on page
As
43)
-i;
This is under
no
bb-construed
circumstances to
offer to buy,
an
as an
offering of these securities for sale,
solicitation of an offer to buy, any of such securities.
offer is made only by means of the Prospectus.
ids
or
f:
or as a
The
NEW ISSUE '
r>v
26,194$
January
.
•
; s:
$50,000,000
Consolidated Edison
Company
of New York, Inc.
:
First and
Refunding Mortgage Bonds, 3 %
c
Series''£
Due January h 1979
:
Price 102.399%
plus accrued interest from January 1,1949
Copies of the Prospectus may be obtained from any of the several under¬
writers only in States in which such underwriters are qualified to act as
Prospectus may legally be distributed.
dealers in securities and in which such
The First Boston Corporation
Harris. Hall &
E. H. Rollins & Sons
Eastman, Dillon & Co.
Incorporated
Hemphill, Noyes & Co.
buyer of
prospectus which sum¬
that;t information.
These
marizes
requirements,
now on our
statute
books for fifteen years, were once
branded
as a
sure
bottle-neck and
stumbling block in American fi¬
nancing.
I wonder if you recall
some of the arguments that have
been made against the registration
and prospectus requirements ad¬
ministered by the SEC. It was said
that the Commission would
over¬
step its limited authority to re¬
quire the disclosure of full and
truthful
censor
information
the
process
selling and buying.
Company
(Incorporated)
•
Stroud &
Blair & Co., Inc.
Company
Incorporated
The Milwaukee
Francis I. duPont & Co.
Tucker, Anthony & Co.
Company
distribution
a
a
and
of
Ira Haupt &
Ball, Burge & Kraus
securities
Fifteen
years
McLeod, Youn?. Weir
Incorporated
The Ohio Company
DeHaven & Townsend, Crouter & Bodine
Crowell, Weedon & Co.
Courts & Co.
Grimm & Co,
Moore, Leonard & Lynch
Granbery, Marache & Co.
A. E. Masten &
Laird, Bissell & Meeds
Co.
The First Cleveland Corporation
J. Barth & Co.
Still man,
Company
Maynard & Co.
C. C. Codings and Company, Ine*
...
First California Company
Robert C. Jones & Co.
Wurts, Dulles & Co.
Stockton Broome & Co.
| i1
.
Rotan, Mosle and Morelamt
: >
Brush, Siocumb & Co.
Hallojvell, Sulzberger & Co.
H. L. Emerson & Co.
Chace, Whiteside, Warren & Sears
Incorporated
Incorporated
H
would
Lester & Co.
Townsend, Dabney & Tyson;
D. A. Lomasney & Co.
Ferris &
Cunningham & Cq.
Richard W. Clarke Corporation
Company*,
of administration of this Act have
Irving Liindborg & Co.
Jenks, Kirkland & Co.
what
) State Bankers Association; New
(Continued
loans
debt
of
gen¬
are,
as
vestor needs to know, and the law
financially capable of
weight. Now it. was'the turn
banks
And,
,
segements of the investment com¬
pate
a
all segments
sense
think, Institutions and
obvious.
While in a sense, all in¬
erally, lenders.
vestors compete with each other
toward
term
for investments, I believe that all
banks tend
to
posits.
:
•
now
all who
.
You may ask
recitation to
de¬
becomes of these one-way theor¬
*An address by Commissioner
ists % in
time ^ of economic- fair iH^nraban.
before
21st
Annual
raising wages; But just about their
weather is one of life's great mys¬
Mid-.\^intgr Meetiftg of New York
the biisihess boom, collapsed of its
teries. If any of theim during these
were
and
have assets that must be invested
watch with interest the trends in
.
operating in the red, with the rest
heading rapidly in that direction.
But
complains, of
internal
financing
of
industry
through surplus and depreciation
funds.
<•
An
tributed profits tax and the
...
banker
course,
adding phenomenally to its
velopment, and second,, that
.
investment
the
merit of any security.
fiscal year for public offering 81%
was for the purpose of providing
first,
,
free to increase investments. The
at
may
the
under discussion here was the undis¬ channels of securities distribution
economic theory to which it is related, to direct investors are still
being
namely, the underconsumption theory. Since then a correspondent
substantially used in the course of
has been good enough to contribute a footnote.
He writes:'
this development.
Don't discount
"Perhaps a further' argument^———
——t~—:—
the private investor, he still kicks
against
the
underconsumption
the railroads to seek relief in the billions to keep the econ¬
Tlieir representatives asked that
theory is the fact that it is a one¬
the wage increase be set aside, for omy working and growing.
way proposition.
In deflationary
That is where the Commission
the time being at least.
Most of
periods a shift of entrepreneur in¬
the carriers, they
come to labor income is advocated
shojwed, were comes in. Every penny of this
;iOiiiLast
die
deals
private placements,
with
this
the years 1934 to tenance of
fpr new money know that
do
not
include
financing
through private placements, small
issues, term loans, railroad issues
and other" exempt methods.
But
this comparison makes it obvious,
By EDWARD H. COLLINS
(Reprinted from the New York"Times," of Jan. 24, 1949)
credit while other segments of the
investment community have been
the
and
One-Way'7 Economic Theories
ers and of their
complaints at be¬
ing restricted in the extension of
registration
prospectus* While
and
true integration
among the various
of the investment com¬
promoters fear
disclosure, the Commission itself
does not pass on the investment
the
be
to
in
any
functions
munity. I know something of the
problems of the commercial bank¬
only condition
the entire
questionable
birth because
re¬
with
which
the
under
that
is
told
statement
call the tersen ess
sold
For the
upon
business
remarks by Mr. Schapiro
Society of Security Analysts, Jan. 18, 1949.
from
"Excerpts
been
func¬
tioning of the
capital
mar¬
purposes.
figures, provided the income tax factor remains
have
High grade investments
pure speculations have been
been registered and sold under
with the
are,
Z
and
con¬
investments mature and are be interested in
knqtaing that, out
vUY'/.'. -v::
i
'
of about $6% billion of securities
Although it is much too soon for definite 1949 forecasts, it seems
registered with us during our last
that the current day to day situation is shaping earning power in
being offset as loans and
renewed at the higher going rates.
of
this law.
is
reserve
gradually
elements
banks
theless
ican business. Out of the total vol¬
The full impact of
cash
ing achieved
ly,
million, or 6% on total capital accounts of $2J/4 billion. This
growth and development of Amer¬
possible because of the improvement in interest rates and the
marked increase in total loans.
•
no
invitation because the Securities and Exchange Commission, al-
your
the loss in deposits and the higher cash reserves which
President,
in
these banks are now required to maintain, have resulted in a con¬
E. M. Hanrahan
his recent
traction of $6 billion or 24% in the total of loans and investments.
message said
\
In 1945 this total averaged
$24.7 billion; today the figure is $18.7 that the state of the Union was
billion. Current indications are that deposits and the total of loans
"good." I hesitate to use any single
and investments are likely to show only minor changes in 1949.
adjective to characterize our cap¬
Concurrently, operating costs other than income taxes of these ital markets.
But from where I
35 member banks in New York City increased from $216 million in
sit, the figures seem to show that
1945 to $280 million in 1948, a rise of $64 million or 30%.
In 1948
these markets are still pumping
the increase in operating expenses was only slight. The cost of doing
new money into industry at a high
business is now stabilizing.
rate and that the private Ameri¬
Despite these adverse factors, the New York City member bank
can securities buyer is still a fac¬
had estimated net
current
operations in 1948
today. Unlike other speakers before the Associ¬
disposition to leave my depth for dangerous
you
economist; and I have
an
though it does
three years,
earnings from
:
distribution.
increased
♦was
Capital Market
Chairman, Securities & Exchange Commission
M, A. Schapira & Co.
analyst says banks must "hustle" to get increased com¬
pensation for their services and higher interest rates. Points to
three-year .rise of 30% in operating expenses and a further possible
levy on earnings of 10% if the corporate tax rate is raised to 45%,
Concludes without tax factor 1949 earnings will about equal 1948.
group
of $135
JL3
By EDMOND M. HANRAHAN*
„
Bank stock
on
(441)
The SEC and the
1949 Bank Earnings
By M. A. SCHAPIRO*
CHRONICLE
York
City, Jan. 24, 1949.
Perrin,Wesfr JcWinsW, Inc.
;
Ridgway, Newsome it Co.
-;•.^Stttdertf TaylordeCo;, he?
-
»
''
1
Mackall &
*
'
CoJ
'
\
Sheridan Bogan Paul & Co., Irtc
Thayer, Bake* & Co.
i
14
(442)
THE
COMMERCIAL
In
\
.
Bankers
and
NEW OFFICERS, ETC.
REVISED
.
Thursday", January 27, 1949
the
Continental
Use of Institutional Investment
Mr.
Trust
Company had been
administering a total of 703 cor¬
porate
and
personal
trusts,
amounting in the aggregate to ap¬
By EARL B. SCHWULST**
proximately $475 million.
In ad¬
Executive Vice-President, Bowery
Savings Bank, New York
dition, 504 corporate agencies had
Mr. Schwulst, predicting total
been handled.
We are proceed¬
savings collected by private financial V
ing as rapidly as possible to ac¬
institutions in 1949 will vary little from the 1948
amount of $7
count in all of the trusts, both per¬
billion, foresees larger use by savings institutions in effecting new
sonal and corporate, in whieh ac¬
countings are .necessary, and ac¬ V mortgage loans, while life insurance companies will continue to
favor corporate bonds. Holds sale of
counts
have
been
prepared and
government bonds by insur- ,
filed,, or are. about to be filed, in
ance
companies and savings banks has tapered off.
the greater number of these trusts.
There are three major
The balance will be brought into
groups of savings institutions—banks in¬
court as expeditiously as possible. surance companies and building and loan associations.
These three
.The
New' York
State
Banking groups of institutions together accounted for about half of the sav¬
ings of the American people in 1947. Almost another quarter of the
Department
now
informs
your
savings went
<♦—
r
management that it will require
to
Govern¬
the setting
commercial banks has slowed up
up of
a general re¬
serve
of
$6,500,000, pending tne ment insur¬
markedly over the past year fur¬
determination of certain litigation ance and sav¬
ther lessens their interest in
longand
the
term industrial bonds and
accounting proceedings ings funds,
longer-
Funds in 1949
'<*
;
CONSOLIDATIONS
CAPITALIZATIONS
»
of
VThe
•
,
CHRONICLE
Seaman says:
News About Banks
'
FINANCIAL
his Jan. 14 letter to the stock¬
holders
NEW BRANCHES
&
'
At the annual meeting of stock¬
holders of Guaranty
dent; James A. McBain, Treasurer
Chase Safe Deposit Co., as
of the
Trust Co. of
19, presided
Second
Cleveland,
Chairman of the Board, directors,
elected
New York, held
whose
Jan.
Luther
J.
by
over
had
terms
for
re-elected
expired,
of
term
a
and re¬
Secretary
'Vice-President,
the office of
to
pending the selection of a succes¬
sor.
John F. Gunn, Treasurer of
were
three
of Manhattan
Bank
the
Safe De¬
was re-elected Treas¬
Elected to
the Executive
posit
The directors of the com¬
pany made the following official
appointments: Alan C. Abeel and
Harold
M.
Sherman, Jr., Viceyears.
Co.,
urer.
Committee
Harold
were:
V. Gus-
tafson, Manager, Safe Deposit De¬
partment,
Seamen's
Bank
for
and
the
into
National
taries;
and
Douglas
L.
Fairweather, Assistant Insurance Man¬
tendered
York
New
associated with the
became
com¬
Trust
and
Jam
on
9,
of
Co.
Mr.
1929,
was
dinner by the directors
a
jts income by $98,637.41."
Seaman j also
"your directors
are
that the reserve
bank at the, Ritz-Carlton
in commemoration of the jgreatly in excess
Mr, Abeel, Vice-President, of the
ager.
Bank
Hotel
'
that:
..
says
of the opinion
referred to - 4s
rest
term
in 1919 and since
been
with
Fifth
the
1928 has
Of¬
Avenue
anniversary.
He also
of
a
honor
at
Mutual
porate securi¬
ties
savings banks reported
a
gain in deposits during 1948
about equal to the rise in time
deposits of all commercial banks.
directly.
At the pres-
'ent
time,
mmercial
co
banks
This
hold
t.
dinner
•
\
of
At that time
latter
$137,900,000 and
$115,415;000.
On
Co. of New York oh Jan. 19 it was Dec.. 31, 1948 they, were; $554,200,4
voted to increase the authorized 000 and $515,990,000 respectively.
At the annual
holders
of
meeting of stock¬
Manufacturers
capital stock of the
by
2,250,000
additional
shares.
187,500
so
authorized will be issued to stock¬
holders of record Dec.
a
stock
dividend
at
1
share
for
11
each
rate
shares
made
was
on
Jan. 22.
tificates to be issued
bined
on
with
held.
titling
be
Aug.
fractions
the
Scrip
can
before
or
other
holder
cer¬
com¬
1,
1949
thereby
thereof
en¬
to
a
full share.
*
'
Dec. 31/48
resources
Cash and due from
,
banks
S.
Loans
secu-
and
8,215,700
11.708,200
11,585,945
12,403,800
1,710.998
❖
'
*
1,685,600
*
annual
*
*
to
increased
the
Lincoln
Brooklyn, retired
was
succeeded
Middleton,
Treasurer
President. He
as
by
Richard
Vice-President
of
the
of
L.
Colonial
by
Trust Co.
of New
it is announced by Arthur
York,
S, Kleeman," President.
The series
is
being mailed to more than 350
banks in the port cities
of the
list of "im¬
a
interested
others
and
international
trade.
In
in
conjunc¬
tion with publication of the mon¬
placed
the trust company has
display in the windows
principal offices on the
on
its
of
Street
of
the
Americas
at
48th
exhibition of Portuguese
an
products furnished by the Casa de
Portugal, Information Bureau of
as
•
H.
Coogan,
Treasurer
Deposit
of.
Co.,
were
Thom¬
Secretary
the
as
dent
and
Bankers
Safe
First Vice-Presi-
in
Government. The
charge
of- Colonial's In¬
ternational Division.
;/.•'/■
.■;
Corn
Other officers elected
,
The
*
*
WANTED:
I-
First National
Bank,
Superior, Wise.
National Insurance Co.,
Denver, Colo.
Western Life Ins.
Helena,
At the same
Schwarz
Mont.
Grace
New
York
that
National
Robert
announced
been elected
C.
F.
Vice-President
and
NEW YORK
Jan. 19.
on
elected
director
a
annual
of
the
President
bank.
Mr.
Smith became associated with the
in
bank
1930
Assistant "Trust
as
After
advancing to
va¬
was
Mr.
since
1937
and
made
was
Vice-
President in 1946.
--
-
•
SjS
a
of
on
Jan.
17
the: bank
Director.
a
has
-
.
ant
Officer
Trust
of
the
"•
*
'
The
stockholders
of
nental Bank & Trust
the
Conti¬
Company of
vested
in
productive enterprise
anct
the financing of home con¬
struction.
It is highly important
to the business community, there¬
fore, to know the likely volume
each
funds
investing
in
the
of
made
institutions
course
of the coming year,;
how these funds may
vested.
and
an
holders
meeting of stock¬
of
Savings
New
of
York,
Eugene
A.
Banks
held
Trust
Jan.
19,
Vice-Presi¬
Colligan,
dent of Long Island City Savings
Bank,
dent
George M. Penney, Presi¬
Oswego
City
Savings
of
to
Bank, and William
deceased
President
gust
S.
of
Savings Bank. Re-elected
were
Ihlefeld,
John
Adikes, Au¬
Albert
O.
Johnson
and Clarence G. Michalis.
'.
admitted
Co.
of
new
members
were
the
Brooklyn
Trust
to
Brooklyn,
N.
Club at its second
tinued during 1949, we are likely
1945, commercial banks will prob¬
ably be more reluctant to reduce
these holdings further, since they
are
desirable investments from
the
viewpoints
quality.
of
Y.,
25-Year
annual
dinner,
creased
only
a
to
-
be
ted
States
tions.
Government
There is
no
86.
Silver
Continental
.'by
Bank & Trust
the
over
of the
Chemical
Company last May.
reason
obliga¬
•and
sandwich
presented to the
Present
Towers
A.
of
new
officers
of
-r
members
plates
to
were
members by
Barnewall,
of
and
Executive
the
company.
the
Club
are:
C. Conner, President;
Britton,
Vice-President^
C. Rowley, Secretary.
attitude
towards
.
the
change materi¬
Preferring relatively short
maturities and enjoying an ample
demand
for
loans,
commercial
banks have not been finding the
corporate bond market particu¬
larly attractive at the moment.
The
ings
fact
and
that
other
the
time
rise
in
sav¬
deposits
at
Mollie
The Executive Committee consists
Thomas J.
in
payment
mortgages and other maturing
investments partly in real estate
mortgages and partly in corporate
and miscellaneous bonds.
first
three
able for
of
quarters
roughly 60%
year,
funds avail¬
investment went into
new
additional
of the
For the
the
mortgages,
.and
40%
Into bonds.
Generally speaking, real estate
a higher net re¬
turn than do high
quality corpo¬
mortgages give
bonds.
rate
On
the
other hand,
marketability.
Mutual savings banks will adjust
the ratio of mortgage to bond in¬
bonds enjoy greater
vestments for available funds
shift
any
comparative
in
continue to go
in
with
yields.
into mortgages,
as
1948.
Insurance
*Excerpts from
Conference
Clarence W. Bonner.
^mer^an
on page
46)
The
life
gained
Company
Funds
insurance
$3.6
companies
of additional
billion
assets
during 1948, acording to the
Life
Insurance
America.
Association
Since
the
bulk
of
the
of
Mr.
Schwulst
on
discussion by
given before the
a
Finance
Man^ffement
of
the
Associa¬
tion, New York City, Jan. 21, 1949.
received
by
life
insurance
miums
is not
year
on old policies, the amount
greatly affected by year-tochanges in sales of new life
insurance.
gain
It is probable that the
in
assets for 1949 will be
close to the 1948 figure, therefore.
Life
insurance
stituted
companies
con¬
the backbone of the
cor¬
porate Pond market in 1948. They
increased their holdings of corpo¬
bonds by almost $3.2 billion,
rate
which
the
nearly
was
total
of
two-thirds
of
corporate
bond
financing consummated last
year.
In
new
addition, the life companies
increased their mortgage
last year
holdings
which
by
was
over
$2.1
billion,,
approximately 40% of
whole rise
the
in
mortgages out¬
standing.
The
life
provided
so
insurance
companies
much capital for new
corporate and mortgage financing,
because, as is well known, they
their
cut
ment
$4.2
-
United
States
Govern¬
security holdings by over
pillion last year.
Sales of
Governments
by life insurance
companies have tapered off in the
past two months. If the life in¬
surance
to
Parker, Joseph M.
O'Neill,' Edward L. Payqter and
(Continued
received
money
of
to think
market will
of:
paid since the taking
in¬
extent
ally.
at
Sherwood
first
small
their holdings of other than Uni¬
bond
,
number
Eugene
the
and
have
banks
to
total
ment of the first
is
liquidity
vVVV-/v:.M
,
their
20,
invested
companies represent renewal pre¬
that
.
year
received, funds
derived from accretions to surplus
funds
Hotel,
Brooklyn. These admissions bring
.
an¬
dividend
Savings banks last
additional deposits
During 1948, commercial banks
expanded their loans and reduced
their Government security hold¬
ings. Assuming that a mildly re¬
strictive credit policy will be con¬
Jan.
Jan. 14 that the directors had
-
posits of the nation's commercial
banks.
ments.
on
George
dend at the; rate of $13 per share.
invest¬
loans and
Commercial
Fourteen
Vice-President
liquidating divi¬
under pressure
are
expand
Bank, and Horace Reed, President
J. to see a smaller rise in loans durof
Buffalo
Savings Bank, were
At the
elected directors to succeed Jo¬ ; ing the forthcoming year.
same
time, having reduced their
seph Upton, President of Queens
Government security portfolios by
County Savings Bank, Herbert C.
over
a
quarter since the end of
Wing, President of The Elmira
directors
of
their
deposits is little
than half the total time de¬
more
existing conditions, it is
probable that the larger part will
Savings and other time deposits
not
Co.
lo¬
are
Under
Commercial Banks
mercial banks
At the annual
b,y
T.
be in¬
considering
mutuals
invested in large measure like the
of the company
on
were
John
of
will collect
groups
demaijd deposits by these institu¬
employee of Lawyers tions. In a period when restrictive
York has been credit
policies' are being pursued
Assistant Trust Officer
by the banking authorities, com¬
Seaman
York
these
the
part of the country, and that the
years an
advised
New
President
the
through which the
liquid
personal
savings
of
the
American people are being
in¬
the
National.
provide
They
channel
received by commercial banks are
*
#
-
Grace
cap¬
Trust Co. of New
Buffalo
Benkiser,,
chief
present-day
our
market.
noteworthy,
that
mainly in the northeastern
total
Herbert O. Pfister, for the past
21
of
Bank
of
core
ital
of
rious executive positions, he
President
in
1946.
elected
Rogers,
Robert S. Clarke, formerly As¬
sistant Trust Officer of the First
The
Kenney & Powell
the
at
meeting, Theodore R
was
nounced the declaration .and pay¬
Co.,
York
meeting of the directors
'*
/ '
First National
Bank,
Minneapolis, Minn.
New
Savings
*
.
Bank and Trust Company of Utica,
N. Y., has been appointed Assist¬
OFFERINGS
of
ographs,
and
Exchange
Safe Deposit Co., New York City.
Co.
tution since it opened in 1929. He
has been an officer of the bank
meeting
Bank
Executive Officer of Clinton Trust
Schwarz has been with the insti¬
the Portuguese
Savings
elected
was
imports
encourage
of the series, entitled, "World Recovery
New York State Safe Deposit As¬
through Imports; Trade with Por¬
sociation held Jan. 21, at the Hotel
tugal," is a result of visits to Por¬
New Yorker, New York, John A.
tugal last summer by Mr. Klee¬
Elbe, Vice-President and Cashier man and Mario Diez, Vice-Presi¬
of
Smith
from Portugal has been published
Avenue
■
14,194,028
profits
the
<
undi¬
..
At
(
___
discounts
&
vided
"
9,187,302
Govt,
rity holdings
Surplus
June 30/48
$40,453,460 $37,976,100
37,615,482
35,174,600
—
Deposits
U.
*
W.
Chairman of the Board and Chief
Officer.
A series of monographs designed
porters
5(:
UNDERWRITERS TRUST CO., NEW YORK
Total
sociation.
United States and to
*
.
ciation
the New York State Bankers As¬
as
of
Distribution of this stock dividend
the
of
Clearing House Asso¬
and a past President of
*
22,, 1948
the
member
a
York
New
The
shares
is
Clearing House Committee of .the*
$41,250,000, represented by 2,062,500 shares, to $45,000,000, repre¬
sented
were
Gersten
Mr.
from
company
Edward
were
deposits
Trust
hard
resources
is
fact
.e
cated
.
Trust Co.
Savings Banks
Mutual
of the amount •about $36 bil¬
will be deter¬ lion of savings
was a
capital loans to business.
'
cor¬
guest w,hich eventually
mined to have been needed.
As and
other
given re¬
Earl B. Schwulst
fice, where he was appointed an cently by the Senior Officers of the.liquidation- progresses and re¬ time deposits,
serves
are
Assistant Treasurer in 1931 and the bank at the New York Ath->
released, further 114 and
mutual
Second
Vice-President
in
1944. letic Club.
quidating payments will be made savings banks over $18 billion of
Mr./Gersten began his
to stockholders."
The letter, also
Mr. Sherman joined the company
savings deposits.
Life insurance
banking career 40 years ago as
stated
that the first liquidating
in
1930.
He
was
appointed an a
companies hold over $55 billion of
messenger
for
the
National
dividend would
be
Assistant Treasurer in 1934 and
paid to the assets, arid savings and loan asso¬
Bank
of
Commerce
in
New
stockholders "on and after the day
Second
Vice-President
in
1942.
ciations over $10 billion. *
York.
He worked in various de¬
following the final adjournment v Thrift departments of commer¬
Guaranty Trust Co. also an¬ partments^of the rbatnk; and ;was a
of the annual stockholders meetnounces
the appointment of Senior
cial banks, savings banks, insur¬
Vice-President
when
he
ins called to be held on Jan. .19,
David C. Williams as an Assistant resigned to become President of
ance
companies and savings and
1949.'"
•
The Public National. Bank -and
loan societies thus constitute the
Secretary, Foreign Department, ;
>:*.
ff
$
:■■■'
pany
.
Govern¬
ment and
.
Ellis A. Simmons, Assistant Secre¬
—
,
Presidents, formerly Second VicePresidents;
Joseph
McDonough, Savings; Andrew J. Oreste, Jr.,
Second Vice-President, formerly Manager of the Sterling Safe De¬
Assistant Secretary;
Frederic L. posit Co., and Henry P. Steitz,
Simmons, Economist; Ferdinande Assistant Treasurer, The Chase which are now either in court or
about to be filed.
From May 1,
H. Brewer, Laurence E. Darden, Safe Deposit Co.
1948, to Dec. 31, 1948, the ex¬
Jr., John M. Keyes, and Frank
penses of the Trust Company, in¬
R. Schaumberg, Assistant Treas¬
E.
Chester Gersten,
who was
urers;) George
J. Jedlicka
and elected President of The Public cluding operations, have'exceeded
sell
companies do not continue
government
securities
in
volume, they will have to reduce
their purchases of corporate bonds
and
real
1949.
estate
Less
mortgages during
demand
(Continued
on
from
page
life
49)
in-
Volume
COMMERCIAL
THE
Number 4772
169
&
FINANCIAL
CHRONICLE
(443)
15
T.t
The Commercial Banker
Higher Price of Gold
By PAUL EINZIG
noting demand of South African gold miners for 30%
Dr. Einzlg,
increase,
wage
President, Graham-Newman Corp.
Finance expert attributes to banker unique
opportun *.y to inculcate sound investing principles for benefit
of his customers as well as national economy. Mai tains
"aggressive" investor should adopt business-
*
gold price would be inflationary.
versal higher
,,
LONDON, ENG.—The demand of a 30% increase of wages by the
African gold mine workers has revived interest in the ques¬
South
of gold should be increased. If this demand is
of production of gold would make the
tion whether the price
the rise in the cost
working of
{many of. the.
parities
fall
production
abled
its
ob¬
prices for
gold. As
has
of
price
only mean
tion,
prin¬
that
a
strong
ex¬
sive investment has two main in¬
To such
gredients: (a) U. S. Savings Bonds,
Series E, and (b) a diversified list
of first line, or leading, common
stocks,
bought at
a -reasonable
government
could
afford
not
allow such
to
a
perts.
this
in
ence
My
audi¬
apol¬
my
ogies for lec¬
turing them
on
My
prescription for defen¬
of their substantial tax ad¬
cause
purpose
gest
can
-
UnderJ
no
corpo¬
possibly
be
Second¬
Series E Savings Bonds pro¬
a better yield than the bestgrade corporate bonds; they carry
a
vitally
important
guarantee
against market-price decline; they
have several other advantages of
ly,
vide
upper
vantage, in lieu of taxable U. S.
For the smaller investor,
today is to sug-
amount of gold imports. But
own
obligation
obliga-
bonds.
price
own
ject.
Graham
Benjamin
,
level. For the investor in convenience and from the tax
income brackets there are angle.
"U-i.
;
sub¬ persuasive reasons to buy higherMost people—including at least;/
grade tax-exempt securities, be¬ some in this audience, I am sure—.
their
familiar
an
other
into
S.
from U.
away
safer than Federal debt.
han¬
appear
could be made
from
rate
5
by
higher gold buying
a
Prescribed
and
American
point of view. It is true that more
dollars
would
be
paid for the
of
even
E-Bonds—Plus-Equities
de¬
dled
for the
leads
tions
ized
in favor
■
it
modern fiscal conditions
raising
cipal article of
price
this
in
export,
the
does
United
would
case
is
institution
of investment policy. In the larger banks,
s-
partmental¬
of gold, for it
that more dol¬
it
i
n
an
»
activity,
path lead?
and
i
m
tration
On closer examina¬
however,
d
a
ems
Where
simple
tne
it
interest
no
gold imports.
South
Africa's
counsel
cost of
lars would have to be paid
their
is
face
buying
would
better
gold
the
States
en¬
to
tain
On
E-Bonds and
to
in direct contact with the various financial needs of his
in-<j>
course,
vestment
is inde¬
as
comes
clients, including their prob
of
gold price.
or
confine commitments
is addressed primarily to the "upstate banker"* who manages
local friends and
and
rates,
ou*mit of wnicn
pendent of factors such
produc¬
are
ers
This paper
;>f moderate size, and who
-
sharply,
unless
exchange
or
^cld
the
d
would
g o 1
ester should
equities; and all should evince active inte.est in stockholder-management problems.
,
ihe soviet Union, which
country is not interested in goL.
and South Af¬
output
like approach to opportunities; while "defensive" in
;
ception or
unprofitable,
rican
notable ex¬
Fundi with the
tary
seams
.poorer
By BENJAMIN GRAHAM*
V-
of gold. Says higher gold price would enable
payment of U. S. export surplus in dollars, and thus eliminate its /;■
settlement of international balances by "give away." Denies uni- ;
price
creasing
satisfied
As Investment Counsellor
K
in it either subsidizing gold production or in¬
sees
fail to
the
realize
possible
issues.
in
flexibility now,
Series
a
E
program.
the full/,
arrangements guiding, principles to aid the conversely, a good case may be
.everyone'scommercial banker in discussing made out for the purchase of in¬ current savings. But, Tn addition*
could Britain view with indiffer¬
very large part of the proceeds
ence
such a decline of the most of the American export surplus the investment problems of his vestment—fund shares—instead of by use of the co-ownership provi¬
under
has to be given away in any case, clients
present-day con¬ a selected common-stock list—nor sions, a large amount of principal
impoitant dollar-earning export
of
the
Obviously we have no is this unsound policy for larger funds can be rapidly transferred •
Sterling Area.
/ ,ue payment of higner prices for ditions.
investors as well.
into this medium, in spite of the
It is no wonder that suggestions imported
gold would make no time or occasion to go into de¬
You may be a little shocked by limitation on annual
difference in practice. Instead of tailed
purchase.
for a higher price of gold have
,,
techniques
of
analysis.
deterioration
un¬
Nor
position.
dollar
satisfactory
already
the
of
same
some
They
since under existing
available
are
needs
for
of " practically
a
.
.
the exclusion of several major cat¬
view of the basic position
giving away dollars in the form My
of outright grants or loans which of the commercial banker in this egories of securities—all corporate
be
the free market to the highest would never
repaid, dollars field is summarized in a para¬ bonds, all foreign bonds, all pre¬
ferred
stocks, and
all. common
bidder, or to subsidize gold pro¬ would be given away by paying graph of my book—entitled "The
stocks of secondary or lower sta¬
Intelligent Investor" — which is
duction. Owing to the almost un¬ more for gold imports.
tus,
Incidentally, we are unkind
Nor is this all. The result of an now in press, and from which I
precedented hoarding demand in
enough to exclude practically all
•
the East, due to monetary insta¬ all-round increase in the buying quote: '
be to sell the gold in
tions would
bility
the
price
gold
of
crease
of
high
would
be
there at very
>
oonains increase of
to the United States.
cies, and the gold producers' gain
tent. the dollar
would
therefore
be
ment's loss.
the
govern¬
the
As for subsidies,
International
Fund
Monetary
is
less
or
Payment would not be re¬
ceived, however, in hard curren¬
prices.
cially
consult
output,
more
a
be • an in¬
and there
would
the
output
African
South
sold
be
uncertainty,
political
and
whole
could
solu¬
Alternative
revived.
been
corre-
gold exports
To that
ex¬
scarcity would be¬
relieved, and the need for
come
would
This
reduced.
become
would
assistance
financial
American
that, for at least part
>f the export surplus, the-United
lution.
force the much more important States would be paid in gold, in¬
rule outlawing multiple currency stead of having to export without
practices, it has been so far high¬ receiving any payment whatever.
ly successful in preventing the ap¬
Finally, the writing up of the
plication of the device of subsidies bookkeeping value of the large
which,
while far
from
ideal, existing American gold reserve
waging
a crusade against that so¬
While it is unable to en¬
would
in
serve
existing
circumstances
constructive purpose by
a
stimulating the gold output in
countries needing hard currencies.
The choice lies between doing
away
on subsidies or
increase in the
The question is,
with the ban
agreeing
to
gold.
an
price
of
what
form
would
assume.
other
countries
the
latter
South
gold
and
their
exporting
home-produced
course
could
of
resort to unilateral devalu¬
solution
this
ations.
Should
chosen,
however,
the
would
relief
be
ob¬
go
assisting
in
towards
solution of t the
long
a
the
way
budgetary problem, aggravated as
it is by rearmament costs and
Marshall
aid
financing.
To
benefit by
to
also
the revalua¬
There
that
an
price
is
no
reason
to
believe
all-round increase of the
of gold
flationary
United
in¬
either; in the
in
any
other
would
effect
States
or
the .smaller
one's
produce
country. The volume of: credit is
local
espe¬
towns,
to
about
banker
A commercial bank¬
security salesmen; with the excep¬
tion
of
tax-exempt
issues'" and
shares of closed end investment
the
investment
occasions
more
problem;,
conscientious
brain-racking to you and to me
than any other—namely the pre¬
widow
dicament of the
left with 4
between $50,000 and $100,000
on
which to support herself and
young children.
Assume it is de¬
say
sirable
there
more
of
Series E bonds.
If
to fplace
these funds in
are
half
or
two children she can buy
companies or funds. This program
marks a great departure from con¬
no less than $45,000, cost price, of
may not be a thoroughgoing
Series E bonds during a 13-month
expert on security values, but he servative investment as it was
period or shorter.
Furthermore;
is experienced
and conservative.
prescribed and practiced not so the 2.90% compound interest can
He is especially useful to the de¬
many years ago.
Then the back1- be transformed into current in¬
fensive, or passive investor, who is
bone of the typical portfolio was a come of about
2.70%, by the sim¬
often tempted to stray from the
diversified list of high-grade cor¬
ple expedient of cashing in $1,200
straight and unexciting path, and
bonds,
returning
some redemption-value of bonds each
porate
who needs the steadying influence
4V2 % to 5%, Preferred stocks were
year. Thus, with a little ingenuity,
of a prudent mind. The more ag¬
admissible, in moderation; com¬ the Series E Savings Bond can be
gressive investor, seeking counsel mon : stocks were
generally ex¬ made the primary element of the
in the selection of security bar ¬
cluded entirely. vast majority of conservative in¬
gains, will not ordinarily find the
Investment policy in every sec¬ vestment
programs.
commercial banker's viewpoint to
tor - has been influenced by the
Whatever
portion
cannot
be
be especially suited to his own ob¬
enormous expansion of U. S. debt
adequately accomplished by the
jectives."
V
'
since 1933, and -it was inevitable Issue Series E may
assuredly be
er
,
•
,
classified
into
the
to which you
can
investors
defensive kind,
help, and the aggressive
kind, who if they-want counsel
should seek it elsewhere. The real
distinction here is between those
who
invest
money
vest
put
only
their
to work, and those, who in¬
to
.
to
their .' training
put
and
abilities to work in the field of
se¬
bonds
should
major element in
both, individual and institutional
have become
You will have noted that I have
here
Government
that
Help for the Defensive Investor
be of real
tion of their gold reserves.
the merchandise being offered by
good old custom,
a
in
investments.
some
extent olher countries would
stand
solution
Africa
mean
"lb is
/ Take
that
a
portfolios. During the same period
—and in part for the same rearsons that underlie the increasing
role of Uv (,S. bonds—there has
been
a
growing acceptance of
common'stocks as an appropriate
element in a sound portfolio. (As
you know, the fear and actuality
of inflation has been an
important
taken
of
care
through
Series
G
bonds, with their 2V2 % regular in¬
terest and their numerous protec¬
tive features in addition.
:
j
y Individual - investment
policies
are
often greatly influenced
by
the real
fancied need for a cer-.
or
tain rate of return.
Many people
put some of their funds in lowergrade
bonds
and in preferred
stocks, "to sweeten the yield" of
their entire portfolio. My long ex¬
consideration here.)
perience leads me to warn strong¬
Thus we see that older invest¬
The latter person
ly against this practice. It is bad
quasi-professional; he ment'..practice' has been modified business for the rank-and-file in¬
It is to be hoped that the pro¬
has embarked on a peculiar and in the direction of Government vestor to trade quality for yield;
be devalued there would be an
posal will receive due considera¬ exacting business; and he needs bonds and common stocks. How¬
immediate increase in the price of
even if the overall result happens
tion.
After all, it does seem un¬
more equipment than the ordinary
ever, this view has not yet been to work out all right.
Such secu¬
imported goods, and other items
reasonable that gpld should be the
layman is able to bring into the carried to what I consider its logi¬ rities are peculiarly subject to of the cost of living and cost of
only
commodity
the
price
of area of investment.
cal conclusion—namely, that indi¬ market
vicissitudes, and to corre¬
production would soon follow. Be¬
which should remain pegged to
Thus the first function of the vidual investment of the conven¬ sponding chills and fevers in the
fore
very
long the adjustment
prewar level while all other prices
tional kind should be confined to minds of their owners. Nearly all
commercial banker is to dissuade
would be more or less complete,
have risen well about it all over his friends from
these
two categories.
Corporate of them sell at big discounts at
and gold producers would be no
trying to act as
the world.
::'r;;yrbetter off than they were before
aggressive investors, unless they bonds and preferred stocks are various times in their history, j
know securities about as well as a Still found in most such portfolios; They may then present good op--j
devaluation."
"
tained
would
only be temporary.
If the South African pound
no
longer
determined
amount of the.
should
by
the
gold reserve.
curity
values.
is at least
a
.
The
only
way
in
which
gold
producing countries could obtain
lasting relief would be through an
all-round
increase
of
the
Middlebrook
(Special
to
The
Financial
Should the American buy¬
ing price of gold be raised from
its present
figure of $35 all other
represented on the In¬
terna..onal Monetary Fund would
HARTFORD, CONN.
Chronicle)
J.
O'Brien has
become
—
Edward
associated
with Coburn & Middlebrook, Inc.,
37 Lewis Street. Mr. O'Brien was
formerly
connected
with
Brain-
be
easy
act
to
likewise. It would
obtain a unanimous
increase
in
of
favor
a
fundamental
trying to
earn
ventional
or
turn
on
business
error
in
than a con¬
"passive" rate of re¬
more
their investible funds. The
With J. H. Hilsman & Co.
(Special
to
The
Financial
banker, then, should be to guide
this
high
standard percentages
as
40%,
or
more—are
still allotted to them in the trust
department activities of New York
and other banks.v (Example: Allo¬
cation of Bank of New York com¬
trust
mon
U.
S.
fund, Jan. 31, 1948:
25%; other bonds
issues
30%; preferred stocks 17%; com¬
mon stocks 287o.)
Chronicle)
Excluded
Let
vestors into the
path of sound and
*A
talk
by Mr. Graham before
Bankers Ass'n, New
York City, Jan. 24, 1949.
Y.
State
me now
guments
tion
N.
portunities
defensive
Let
adapt an old investment
me
saying to this type of securities:
To the extent they help you eat
better
they
These
the
general
comments apply
However,
for
run
of
preferred
most
conditions.
rather
complicated
under
excluding
corpora¬
-
adverse
stocks
preferreds from
portfolio.
In the first
likely to make you
are
sleep worse.
state briefly my ar¬
and
bargain- ;
that very fact is an
against their purchase
in
ordinary times,
and at full
prices, by the lay investor.
argument
to
the idea of diversification
reduce risk is meaningless when
place,
to
for
bonds
shrewd
for
hunters—but
Corporate Bonds and Preferreds
large group of defensive in¬
the
certain
and
—as
second function of the commercial
of an all-round
ATLANTA,
GA. — Samuel
G.
price of gold in Walker is with J. H. Hilsman &
all
countries of importance, Co.,
Inc., Citizens & Southern
whether or not they are repre¬ Building. In the past Mr. Walker
sented on the International Mone- was with Norris & Hirshberg, Inc.
decision
a
:
ard-Judd & Co.
countries
willingly
or
plumber knows plumbing.
This means that, since the great
majority have merely their money
to put up, they would be making
good
official
buying price of gold. This depends
of course entirely on the United
States.
good banker knows banking
With Coburn &
I am inclined to
exception of many
technical reasons,
make
a
current
public
utility
preferred issues,
(Continued on page 43)
(444)
16
COMMERCIAL
THE
FINANCIAL
&
Thursday, January 27, 1949
CHRONICLE
Managing the Bank Portfolio in 1949
Canadian Securities
v
By WALTER L. REHFELD*
!
^
President, Robert Morris Associates
Vice-President, Mercantile-Commerce Bank & Trust Company, St. Louis, Mo.
By WILLIAM J. McKAY
The
forthcoming
likely to be
one
fifth
session
Canada's
of
Problems in 1949 bank
Parliament is
20th
loans for
of the most momentous in the history of the Domin¬
ion's virile legislative body. As it is probable that a general election
be called before the close of the year, party politics will take
added
in
emphasis.
colorless
somewhat
ish aid.
former
tratiori is apparently vulnerable as
far as these issues are concerned
it can point with justifiable pride
policies, the former Ontario Pre- to its able conduct of affairs in
mier, George Drew.
! general during the difficult war
the official opposition will now
be sparked by that fiery implacable opponent of Administration
en,
Opposition
Liberal
the
supplant and postwar periods. It will conGovernment in the sequently be no easy task for the
efforts
to
will
Parliament
next
Conservative
further
be
encouraged in view of the
opposition
to
con-
precari- vince the people that Canada un-
der the present regime has not
made truly remarkable progress,
servative attack is likely to be di-"
During the week the external
rected
principally
against
the section of the bond market was
Government system of restrictions strong with unusual activity in
and controls. There is little ques- Nationals and high-grade provintion that the Foreign Exchange cials following persistent savings
Administration majority of only four seats. The Conously
narrow
Interest in the indays following the reconvening ternals was limited and there was
Parliament will be violently as- little change pricewise. Free funds
Control
60
of
Board
.
bank demand.
Act which expires
a
tivities
Although the Liberal Adminis-
Brack-
leader John
Conservative
It is
privilege and a great pleasure to appear on the program of the Louisiana State
Bankers Association. My interest in the subject of this talk stems not only from my own
In place of fairly the cost of this item of Brit- banking experience but from many years of participation in, and association with, the ac¬
leadership.
party
the
fluctuated within a narrow range
but the corporate-arbitrage rate
of
Morris
or¬
ganization
o
officers
g
has
where
of
ter
sideration
analyze
throug h
several
o u
cases
have
t
major
L.
Walter
basic
cycles since 1914. Among the de¬
velopments which have, contrib¬
uted
materially to this field of
by the
cates of
a
Conservative advo-
freer economy. Although
.
.
..
.
..
,
,
,
study
are
Conditions.
It
is
the
economic factor which determines
the
conditions
are
was
made.
changes
bad loss. I do
to take up your time re¬
a
If
in
under
it
which
were
the
business
loans
for
not
the
outlook,
could
say
the same things
the management of a bank
portfolio at the beginning of
each new year that were said at
the beginning of the last one. As
a matter of fact, the points empha¬
we
about
hashing well-known tenets Of our
profession, but the point I want to
get over at the outset is this: There
business
of
and
lateral
con¬
analysis
universally refer to
men
C's
credit.
They are
Character, Capacity, Capital, Col¬
ignored that could
or
prevented
not want
Rehfeld
some
sound
of
overlooked
risks
credit
Credit
'probably
always
will
be
plenty of illustrations in the form
problem
e
t
Changing Economic Factor
several
and
of how to bet¬
'
'
credit
n g
vestigati
'
'
The
being consistently applied by
analysts. There have been
are
in-
been
your
In other words, his¬
tory does repeat itself — teach
them foresight with your hind¬
sight.
experiences.
of
accepted and established practices
and loan-
men
t h
f
credit
bank
lot of good
by giving them the benefit of
credit appraisal in
my
remarks
on
loan portfolio
management.
However,
it does
not go without saying and should
not be assumed that all generally
principles
This
ciates.
n
ther upon
Asso¬
national
ficers in your banks a
will not elaborate fur¬
detailed techniques and
I
known,
Robert
the
i
<$>-
and
members
loan
are a great many loaning officers
Code of Ethics for today who have not been seasoned
there can be few doubts that this continued to improve.
However credit men, a little blue book en¬ with the experience of making
or a
similar measure will event- with the termination at the end of titled "The Credit Department—A loans through a complete business
ually be reenacted, the opposition the month of the International Training Ground for the Bank cycle, and living with loans made
will almost certainly loudly es- Petroleum-Standard
Oil of New Loan Officer," annual statistical during a boom and endeavoring to
collect them in an unanticipated
pouse the cause of the freedom of Jersey exchange offer the corpo- studies of composite financial
the Canadian dollar. This will en- rate-arbitage rate is likely to lose statements
for
many
lines
of depression. I refer vto the young¬
courage
the
resumption of the some of its recent strength. Among business,
and
texts
on
credit er generation that has come up the
and
financial
state¬ 'adder since 1940. We in the Robert
pressure by minority interests for
stocks the base-metals were practices
ment
the devaluation of the Canadian
.,
analysis. In view of the Morris Associates are keenly
dollar. Such efforts however ap- a*=>ain t° the fore led by Waite- fact that all of these tools avail¬ aware of the problem which this
pear to be foredoomed to failure Amulet
which advanced on a able to credit grantors are well- situation poses and are launching
a
as
International Monetary Fund heavy turnover to a new high of
program of education directed
*An address by Mr. Rehfeld at at meeting it which will empha¬
obligations and the currently im- $141/4 while Quemont also reached
size
cases
reflecting experience
the Mid-Winter Conference of the
proved position of the dollar are
* ,
___
,
.1
sailed
(1) appropriate level of
as:
.
Conservative
sive
listed by Mr. Rehfeld
are
Stresses importance of keeping risk assets in proper rela¬
capital funds and advocates reappraising loans on basis of specific categories as well as on qual>
ity. Urges sticking with sound loan commitments in recession.
tion to
The Progress
opposition will vvorld level will not be the point
make a superlative effort for elec- at issue. Instead the government
toral favor, which will be all the will doubtlessly be called upon to
keener as a result of the change explain
its failure to distribute
on
portfolio management
given bank; (2) what steps should be taken in managing existing loans; and (3) loan policy
be followed in event of business recession.
to
will
a
a
sized by a number of eminent au¬
thorities during 1947 and 1948 are
equally applicable in
1949.
It is important to look back and
how
see
the
far
have
we
along
gone
since the war and, by
of comparison, to check that
road
way
position against
conditions.
I have passed out
a
few basic
statistical compila¬
tions which provide an interesting
prewar
For this purpose
,,7
form for the
whole. It is some¬
paradox that everyone
picture in
summary
country
as
what
a
of
a
m
definite
to
factors
debar
any
would
that
Pea^ at $17. Western oilp
werejquiet but the undertone was
a new
seem
immediate steps in
this direction.
Condemnation
I steady.
;i '
the
of
of
action
the
in raising the dol- 1
lar to its present parity, although
it will have widespread appeal,
is not likely to cause the governthe government
Golds and industrials
other
drift in
c
,
hand
Baton Rouge,
.
By RALPH COUGHENOUR
(special
to the financial
nature.
Conservative
to
lend
money
44)
on page
JONES*
Associate Professor of Economics, Yale
chronicle)
ST. LOUIS, MO.—Erwin von
of the Administration's wheat pol- Gemmingen has joined the staff
icy on the other hand is likely to; of Scherck, Richter Co., Landreth
uncover many
chinks in the Lib- Building. Mr. von Gemmingen in
eral armor. It will be difficult for the past conducted his own inth© authorities in Ottawa to justify vestment firm in St. Louis and
the inequitable burden placed on in New York City.
a
(Continued
Made Realistic?
How Can Profit Reports Be
,
ocherck, Kichter Co. Adds
ment embarrassment of too serious
bankers
exhorted
gained during the-30s. You veter¬
ans can do the young loaning
of¬
tc
dull and inactive market.
a
La., Jan. 24, 1949.
on
inclined
were
Association,
Bankers
Louisiana
criticism
University
something is wrong with prevailing methods of profit computation, outlines
revising established accounting methods. Estimates inflation has resulted in overstate¬
companies' earnings in last seven yea's by over $1 billion. Sees huge overstatement of
business profits as unfavorable to adoption of sound economic policies.
Professor Jones, asserting
difficulties
in
of steel
ment
.
Canadian
farmers
as
the United Kingdom
a
result
of
profits. Have they been excessive or inadequate? While
evidence to support either view, nearly everyone agrees
S. Cleo Hunter Joins
Wheat Agree¬
ment which has been estimated to
Walston, Hoffman Co.
have cost this important section of j
the electorate about $350 millions.)
^AN DIEGO, CALIF.
bulk of her grain requirements
at
the
JL
with
associated
^c?Ine
?s
,
S. Cleo
profit
substantially
below
tation.
something, of
course, is the
changing val¬
ue
"
(Special
to
The
DENVER,
Lowndes
has
Otis
with
Bank
COLO.
—
Charles
associated
become
&
Co.,
Building.
T.
First
National
With Harris, Upham & Co.
(Special
to
LOS
! Dean
The--Financial
ANGELES,
M.
Chronicle)
C A L I F.—
is now with
Harris, Upham & Co., 523 West
Sixth Street.
Mr.
Kennedy for
many years was with Bl.yth & Co.
CORPORATION
Kennedy
with
that
Oil Industry
A vailable
V;
NEW YORK 5,
;
N.
Y.
Members Toronto Stock
WORTH 4-2400
NY,
1-1045y
61
-
Breadway, N. Y.
y
Exchange
WHit*h«H 4-6060
Direct wire to Toronto
a
most
as
conven¬
of
the
dollar
rapid
results
survey
it
appears
effect
noteworthy
cause
of
the
com¬
panies to report about three times
as much net income as they really
total
The
earned.
the
overstatement
seven-year
about $1
billion.
amounted
period>
was
In 1946 the dis¬
to
over
8% of
distortion when
An 8%
are
of inflation and directed it
toward
"
very
industry
the
sales.
Charles King & Co.
rest,
changes.
tortion
TWO WALL STREET
Jones
do, on the assump¬
of inflation was to
for
Information
C.
accounting
by
value
the
in¬
that profits
extraordinarily
is
superficial
symptoms.
profits have lent
plausibility to the claim that sub¬
stantial wage increases could be
These high book
tional methods
tion
well
among
even
persons,
been and
causes
Ralph
which
methods
to create a
and
probably
excessive.
These high book profits have di¬
verted
attention from the basic
reality
of
was
high
sem¬
a
that
Western Canada
-.I'*'-
nave
produce
profit figures
steel
The
INCORPORATED
formed
to
From
A. E. AMES & CO.
opinion,
and
impossible
never
CANADIAN STOCKS
nomic
direction,
blance
1947
re-
given without price increases and
have spawned proposals for such
remedial legislation as price con¬
from an address by
Professor Jones given before the
Conference on Finance, American
!;:Exeerpts
.
serve
useful
any
Inflated
profits
ported in such
runs
read.
it is
may
re¬
that he who
Are we ready to
that
admit
now
are
a way
beyond
our
ca¬
Association. ' N © w
be held responsible for
presenting
inherently
misleading, reports which are as
free as possible from inflationary
reports which
other
or
not
are
bias.
If
business
firms
choose to report profits which are
inflated, it would
have
no
figures
proper
seem
that they
complaint
taken
are
at
face
if the
value.
The remedy
profits
sound
in
obviously is to report
the first place on a
realistic
and
burden
of
proof
basis.
The
then) be
would
upon
those
who
question
the
;'
trol, excess profits taxes, and un¬ computations.
distributed profits taxes. If profits
What Can Be Done About It ♦
really were as high as reported,
If the desirability of reporting
price control might conceivably
work.
Under present conditions profits on a realistic basis is so
it could not succeed since ficti¬ obvious, why isn't something done
tious book profits will not meet about it? It will be worth while,
I think, to examine some of the
payrolls.
And
if
profits were
really as high as reported, excess
profits
taxes
and
profits
justifica¬
undistributed
might have some
tion, but to tax as an excess profit
Management
hardly
purpose.
opinion unfavor¬ pacity to report real profits with
clarity?
Accountants and
the adoption of sound eco¬ equal
policies.
The
prevalent management, is seems to me, must
able to
the
persistently in
one
1946 and
could
climate of public
moves
rapidly
ly
i
in
it is manifest¬
PROVINCIAL
MUNICIPAL
overstatements of business profits
the
of
dollar
Chronicle)
Financial
When
value
huge
of
effect
principal
The
of the dol¬
lar.
With Otis & Co. in Denver
GOVERNMENT
sales
That
Walston, Hoffman & Good¬
win, 530 Broadway. Mr. Hunter
was
formerly an officer of First
CANADIAN BONDS
ported earnings are only 6% of
can have disturbing effects.
And it most assuredly did.
of
compu¬
California Company.
price
there is no dearth of statistical
that something is wrong with
i ling
p r e v a
methods
(special to the financial chronicl^
The fact that Britain obtained the
a
generated by inflation rages over the question of busi¬
One of the hottest controversies
ness
something which is not profit at
all
or
borrow
to. require
money
,
in
corporations to
order
to
dis-
obstacles.
The
consists
simple
tance
*
of
to
first,
change,
naturallyf
inertia, reluc¬
and
wishful
thinking. Of these, wishful think¬
ing is the worst. The argument of
the
wishful
thinkers
goes
some¬
thing like this:
Inflation is not
yet serious enough to require ac-
'
York
City, Jan. .21, 1949.
tribute profits which do not
exist
^
(Continued
on page
45)
r
;
Jr
Jan. 26.
dollar value of
$9 billion.
over
:::
The Montreal Stock Exchange celebrated the 75th anniversary
its incorporation with a dinner in the Windsor Hotel, Montreal, on
Wednesday, Jan., 26, 1949, as was indicated in the "Chronicle" of
Jan. !20. Among those present were the heads of corporations whose
.
of
Shares are listed
Stock Exchange. The dollar value
of these listings is over the $9
change, repre-'
billion
of
sentatives
Federal,
provincial and
•civic
The
and
and
to
members
»
press.
The
mem¬
in
bers
only
Forget; Vice-
com-
is G. P. G.
The General Manager
\
.
Forget
Jacques
Dunlop, and the Assistant Manager
this
anniver¬
sary,
York
;
City,
,
't 1
l
.
or
o
requirements
partner
a
at all
ih Marx & Co.
of
and conducted
his
in
their membership
through
business.
the
or
the
which
Canada has made during the past
to
progress
75 years.
' , V'/k
Montreal
■
records
The
-
Masius
has
been active
as
John
prior thereto
,v
j
individual
art
F.
Reilly
plain
j
\
.
a
was
,
broker
floor
partner
in
Skall,. Joseph, Miller & Co.
the
of
-Stock
Exchange contain official
minutes dating back to 1863 when
a
"Board
formed
Brokers"
Stock
of
First, *
and
fice
of
.o'clock,
12:30
the
spring
1866
a
Trade
Building
room
honorary
tute
and
The
will
be
.
(situated at that
-
stands), where they
number of years. Rules
forced,
Brokers
the
Stock
that
the
from
pose
~
of
Board
itself the
in
name
with
a
of
Government
York
and the New
Exchange
Stock
it,
before
.local market had a very mod¬
beginning indeed.
In 1874
were but 63 issues traded.
Bank issues, 21 in number, made
the
est
there
up
T.
at that time was around
800
shares daily.
general increase in business
A
during the first nine years of the
the
of
The
the
ac¬
1901 sales averaged about
7,000 shares per day: the mem¬
bership had increased to a total
of 45 and the value of a Stock
Exchange seat had risen from a
figure of $2,500 in 1876 to over
$12,000.
In 1902 membership was
increased three times, to total 60
at that time that
build its
own home
on a property located
on St. Francois Xavier Street and
seats, and it
was
purchased from the Seminaire de
Saint-Sulpice.
Construction was
completed in 1904 and the mem¬
bers
moved
into
the
building
which has housed them up to the
present day.
In
192-3
Montreal
ized
a
'
/
the
Stock
' r,':• •>:,,;
•
members
; ?■
which will form
jhe study by Pro¬
Maclaurin
includes
the
lay¬
as a good
what to avoid as
investment and
Mr.
his
and
asso¬
investigation Of
unit operations,
as
building codes and zoning restric¬
tions, building trades union prac¬
tices, the relation of component
manufacturers- to
the
building
dealt with the
has
Hyder
factors
such
what to look for
man
industry,
general investment field for more
than 20 years, specializing in the
handling of individual portfolios.
For his course, he will call in
recognized authorities to discuss
of
the
Exchange organ¬
Montreal
Curb
the
attitude
of
home-owners
to¬
ward standardization.
The
what
studies will be focused
has been done and
Among the specialists to address
the class will be W. Truslow Hyde,
Rudd
Shields
of
industrials.
The
.
course
and
-
•
-
will
the
building
was
completed to house
At
the
over
260
present time there
securities listed on
/
expan-
registration
terms
are
withi bankers
tiations
and
issue
of
as
underwriting
amount
of
no
nego¬
no
as
to
to
the
the
profits.
It is expected that a number of
leading concerns in the building
industry will cooperate in the
Study in order that all aspects of
the problems of the industry may
be
for the
Fee
School
304
of
\
stockholders'
is
approval and there
good deal of logic in apply¬
ing surplus earnings to strengthen
a
the company.
On the other
hand, whereas the
proceeds from borrowings or from
new security issues are available,
dollar for dollar, for use in plant
cash
to
eat.
one
If
dividends
is
never
than
amount of book earnings.
Blair & Go.
Opens
New Trading Depl,
of the
Blair
&
Co.,
Inc.,
Street, New York City,
Business Build¬
the
ing, New York City,
opening of
partment
a new
specializing
.
who
announces
trading de¬
bank,
,7
Borrowing
Financing through bond issues,
through borrowing from banks
or
insurance
companies,
is
in
many
ways peculiarly appropri¬
ate to the present. In these days
of infinite uncertainty it gives a
real measure of security to the
investor. If earnings fall off and
the investor is not paid off, he
preferred stocks is
system of taxa¬
our
stockholders
common
control
land
own
the
com¬
would certainly be foolish
to expand through preferred stock
issues unless they, the common
stockholders,
profited
thereby.
In other words, there is i no in¬
pany
centiveinapce thrhugh pre¬
ferred stock issues unless the re¬
turn
the plant facilities to he
on:
financed
stock
through
will
the
exceed
preferred
the. dividends
paid to the preferred stockholder.
If, however, we assume that the
corporation tax rate will be 50%,
if
and
we
that
assume
the
com¬
must pay 6% for new pre¬
ferred stock issues, then it fol¬
pany
that
lows
than
the
unless
facilities provide
12%
plant
new
return of
annum,
the
per
a
more
com¬
stockholder will not be
mon
any
the
better off by issuing
preferred
highly con¬
fused economic outlook, there are
In»view of the
stock.
businessmen
few
who
can
afford
to
expand their facilities on the
assumption that they will profit
only
far
so
yields
the
new
than
12%
as
more
investment,
for
in¬
an
definite period ahead.
Equity Financing
We
stock
come
back then to
financing
common
the only kind
of sound financing in/ times\ such
as
these.
as
Unfortunately,
examine
the
if
we
of
funds
available, it becomes evident that
few
funds
purchase of
mon
or
44' Wall
in
Through
by
.The
tion.
al¬
the
on
hit
hard
so,
.
Financing
/
Financing
Stock
The issue of
stocks
certain
Registration application may be
made through the Institute office
at
?
a
will be $15.
course
thoroughly understood.
necessity to secure the
reinvested
earnings will come to be ex¬
cluded
in valuing
stocks.
The
policy
of
reinvesting
earnings
tends
to
depress the price
of
stocks,
which has always de¬
pended more on the amount of
laurin said.
daily newspapers.
.
sources
available
are
common
are
classes
for
the
stocks. Com¬
brought only by
of
people,
for
their purchase requires sophistica¬
tion.
One must know how to
about
it,
where to check
brokers
what
go
advice,
dependable.
are
Usually only those working in of¬
fices
in
cities
large
have
this
know-how, and of these only ex¬
ecutives
have
sufficient
make substantial
funds
to
purchases, aside,
of
course, from those who have
put the company in bank¬ fortunes already invested in se¬
But
these
classes
of
ruptcy and all of the company's curities.
underwrites, distributes and deals assets will go toward the satis-; people no longer have excess
faction of his. bonds. Conversely,; funds which they can apply to the
in
government^
municipal -and
however, it is dangerous and un¬ purchase of common stocks.
,
corporate securities. Heads of the sound for the
/company
to in¬
In earlier years, a man- oper¬
firm's trading divisions are James crease its debt
during times of
ating a small business, or a corpo¬
E. Gavin, bank stocks; Horace W. great
prosperity,
while
facing ration
executive, or a large in¬
extraordinary uncertainties. Large
Wells, insurance stocks; John W.
vestor, lucky enough to have a
debts imperil the interests of the
windfall of say $50,000 in any one
Bair, public utility stocks; and stockholders.
Where
companies
R. Sims Reeves, industrial stocks. are subject to regulation, as in the year over and above his normal
earnings
would
be more
than
The analysis- and research divi¬ case of public utilities, increases
likely to use such sum to buy
in debt are even disallowed by
sion will be headed by Robert S.
common
stocks.
The chances of
public authorities.
any one individual having a $50,Burns, bank and insurance issues;
insurance, public- Utility and in¬
dustrial securities.
Southern Nat'l
can
The firm also
.
Corp. Is Formed
SAN
TEX. —The
ANTONIO,
Southern Nation al Investment
Corporation
formed
been
has
with offices in the Milan Building
act
to
ert
as
originators and dealers
Mclntyre
bonds.
Rob¬
is President of the
corporation and E. P. Kinzie
Secretary-Treasurer,
Exchange
/ /
Mr. Mclntyre has been conduct¬
investment business
ing his
own
in
the Curb Market.
There
Commission.
lowed
s
financial pages
new
the
no
tiful cake which
housing industry, Professor Mac¬
session on how to read and under¬
stand
advancement of the
study will result in measures tc
bring order and stability to the
Co., heavy
also include
listing requirements of the senior
market, and in 1929 construction
to
\
stantial
industry and it is hoped that the
in Texas municipal
annex
-
Anojjier objection is that, if sub¬
earnings are consistently
reinvested,
the
Suspicion
may
grow that the stockholders will
never be able to put their hands
cn such earnings.
It is something
like being presented with a beau¬
on
what .can
retarded the
trading facilities for unlisted se¬
curities, which could not meet the
an
,
.
.
expansion, each $2 of reinvested
earnings produces only $1 for cap¬
ital needs, if we assume a cor¬
porate tax of say 50%.
and
developments,
site
investments.
.
Market
view to provide organized
the
with
of
for
fessor
to
.
the Exchange decided to
...
to finance
is
There
There is
program
basis
ciates
"is
Jr., of Josephthal and Company,
Exchange's incorporation made a
public utilities; Herbert S. Wyeth
move
to larger quarters imper¬
of Shields and Co., railroads; Clif¬
ative and
in 1883 the Reading
ton A. Hipkins of Braun, Bosworth
Room of the Merchants Exchange
and Co., tax exempt securities;
Building at No. 11 St.-Sacrement
Edmund W. Tabell of Walston.
Street (where the Marconi Build¬
Hoffman and Goodwin, a technical
ing now stands) was rented for its
analysis of the market; Alfred S.
daily board meetings.
By
Preferred
with the Securities and Exchange
industrial, railroad, public utility, be done operationally to overcome
one-third of this list and turn¬ oil, chemical and other kinds of the various handicaps which have
over
v
v
procedures
sion.
and a staff of experts.
Hyder,
Hyder
tell
As was the case with the Lon¬
don Stock Exchange
all
that.,the
on in the
higher.
Langmuir
Dean
issues;
securing of funds from re¬
invested earnings is the easiest of
managing
Pierce.
and
less seasoned preferred
stocks has to be far
The
partner of Merrill Lynch,
financial
of
uegree
and
scure
through
ing is undesirable..
.
unsound,"
the Province of Quebec.
rein¬
earn¬
loans, and through the issue of
preferred stocks.
Unfortunately,
each of these methods of financ¬
Inmaking; the arinouncement,
Winthrop H.. Smith, President oi
com¬
prestige and now
a
strength which is almost beyond
belief. {■ The ! yield
on
more
ob¬
andbank
:
cording to Mr.
Carl
incorpo¬
was
industry
of Financial Knowledge.
pur¬
course,"
Exchange and
Exchange
under
rated
charter
calling
began
Montreal
the
1872
In
eco¬
announced by the f Merrill
Foundation for the Advancement
Fehner. & Reane, said
given study would be carried
"The
and en¬
up
the
ings,
a
U. S. Steel and
yield over 5%.
well-seasoned
two
panies enjoy
nave
as
Steel
Bethlehem
funds;
present
stocks *of
preierred
companies such
us
the
namely,
was
Foundation
The
These
bond
the
stock issues at the
time.
'
listing fees were in¬
and
stituted.
1874
drawn
were
Arts
ferred
e.
alt ernative
for a research program on
nomics of the housing
•
r,
methods of
Tuesday ever department of economics and sor
'nings- for teri •cial; sciences^ .at MIT..unjder the
■*
weeks, begin¬ direction of Dr. W. Rupert Macning Feb. 1. - laurin; Professor of Economics,
regarding memberships and com¬
missions
let
up
vested
course
of
Of
standpoint of the com¬
it is far sounder to raise
capital funds through the sale of
preferred stock, but it is difficult,
if not impossible, to market pre¬
1
A grant of $50,000 to, the Massa¬
chusetts Institute of Technology
Sciences.
now
met for a
Insti¬
versity
•
time where tjtie Lake of the Woods
Building
Uni-
lumbia
of¬
the-Board
in
hired
semes¬
ter in the Co¬
the members
-Fjoard's
In
secretary.
layman
during. the
was
the-
in:
the
for
investments
eral
The
met daily between 12:00
members
1
through
the brokerage
firm of Shields and Company, will
conduct a survey course in gen¬
members.
11
had
-
raising
Board
The
Montreal.
in
originally
—
"
late
imposs i b 1
From Merrill Foundation
Carl T. Hyder, of
From the
pany,
ex¬
this procedure
is virtually
and
MIT Receives Grant
Course at Columbia:
of
shall
I
as
take
of- fi¬
in large
contributed
have
measure
sale
stocks, but
Mr.
'■
association with the world
nance
costs.
financing expansion under existing conditions would be through
common
vestment
but paid tribute to those who
is J. E. McKenna.
on the possibility of adequately financing capital
pessimistic, but wishful thinking is to be avoided
It is best to face the realities. The only sound method
are
in-
own
common
My conclusions
he
thereto
was
.
prior;
broker;
financing capital
to
and from
stock financing
is the only desirable method under existing conditions, but this is
extremely difficult during present undervalued equity markets caused
by excessive taxation, SEC restrictions, and Administration's actual
and potentially adverse policies. Believes mutual fund instrument
embodies future hope of accomplishing stock distribution.
individ-
an
drawbacks
various
cites
preferred stock issuance. Hence concludes
as
Reilly. has re¬
cently..- been
doing business
as
economist
requirements from retained earnings, from borrowing,
.
Mr-,,
Of Feb, 1.
,,
(
Orated
mem
are:
Ferguson, F. G. McArthur, A. E. D.
Tremain.
'
<
hold¬
ing the dinner
not
Exchange
Stock
Chairman, F. J. Vincent; Secre¬
tary-Treasurer, D. C. McEachran;
Governors: Raymond Allan, H. S.
Bogert, J., E. Chaput,LW. T. K.
Collier, L. T. Des Rivieres, H. J.
of
the
the
officers, of
present
Reilly & Co. with offices at
r q a d f
..."
,
Street,. ° New
B
u a
8 million shares.
Chairman, Jacques
institu-
tions
the volume of
and
over
Montreal
of.
leading finan¬
cial
just
was
govern¬
ments
mark,
shares traded during the past year
the
By DEAN LANGMUIR*
Market
J. F;
; 25.
;;
;'
the Ex-//
on
17
j
John F. ,Reilly and-Harold M;
Masius, both members of the New
York Stock Exchange, will form
':':i
j
F.cReiHy & Co. a
(445)
CHRONICLE
To Be Formed in N.Y.C.
threeof century of progress at Windsor Hotel, Montreal, on
Exchange now has 260 securities listed for trading with
Jacques Forget, Chairman, presides at dinner commemorating
quarters
& \ FINANCIAL
COMMERCIAL
THE
169 ;v Number ,4772
Volume
Antonio
San
are
name
the
pany
of
Robert
under
the
William M. Friedel, utility issues;
firm
and
Mclntyre Com¬
for some years.
i
sues.
Carl
C.
Arisit,. industrial is.'II.
*An
addres^ by
Mr. Langmuir
Management As¬
sociation, New York, Jan. 21, 1949.
before American
000 windfall are
in
the
slight indeed, but
aggregate,
(Continued
in
a
on page
growing
36)
18
COMMERCIAL
THE
(446)
&
FINANCIAL
CHRONICLE
The Outlook for World Trade M
Chase Nat'l Bank
-
~
BLAISDELL, JR.*
By THOMAS C.
Acting Assistant Secretary of Commerce
Holding narrowing
ment official
gap
in it
sees
'
^
/
'
during preceding
between U. S. exports and imports is healthy I development, Commerce Depart¬
indication of world economic recovery. Stresses importance of sound currencies
"
developing world trade and takes encouraging view of International' Trade Organization and Mar-i
shall Plan as means of breaking down nationalist e:onomic barriers, j Calls for more and better non¬
government international organizations as aid in world trade progress.
v
'
,
I want to make a prediction or two
noon
and talk about some of the government's
policies affecting international trade. Government policies!in the field of international
trade are not easy to establish. They are far more difficult to establish than the policies
f f
a
t i
e c
n
g<$>
domestic
We
trade.
be
may
very
clear
what
to
to
as
want
we
do, but too
often
run
to
counter
what the busi¬
people of
ness
other
tries
coun¬
want
do.
A
to
gener¬
which
terest
a
number
been
has
old
of
shown
by
firms who were
primarily exporters in expanding
the import phase of their activi¬
As far
rbwing
the effect of this nar-
as
national econ¬
gap on our
trading
of
with
countries
'
whose
business
similar
to
practices
each
to
and
own
our
were
other's, the difficulties of interna¬
tional trade were relatively minor.
But
today we are living in a
world that has been atomized—in
more
than ond.
ways
of that in
But more
moment.
a
At this time of year, when we
making our budget appraisals
and when the appraisals of the
(
are
.
national economy are being made
the purpose
of establishing
for
have to
think in terms of quantities and
legislative
we
suggest
ourselves open
The minute
figures.
figure
a
programs,
lay
we
we
because
someone else'$ judgment
be—and usually is—different
from ours.
At any rate, we in the
Department, of Commerce think
we see an export trade volume for
may
•
year'1948-1949 of some¬
thing in the magnitude of $12V2
to $13 billion.
For the same pe¬
riod we expect that our imports
will probably be about $7 billion.
the fiscal
This leaves
balance
with
us
a
net export
bsing
$5V2 to $6 billion.
these
figures
I
am,
course,
speaking only of the
chandise
somewhat
all
.
.
since
the
items"
•
deceptive,
aware,
trade
balance.
trade
are
you
important
as
the
as
obvious trade in goods. The ship'ping services which we buy from
o^her
countries,
tures
abroad,
banking
tourist
expendi¬
the provision of
insurance services,
and
special services in the exportimport trade by those who buy in
the
one
market
and
sell
in
another
simply for the difference in price,
are all important factors in estab¬
lishing
financial
the
of
balance
payments.
exports
sidered
this gap
difference
and
on
a
in
total
an
infla¬
to! the -other major infla¬
tionary forces at work, particu¬
larly the unusually high levels of
pared
private investment in new indus¬
trial and commercial undertakings
and the high level
of housing con-,
struction.
It
has
interesting to note
been
the
forces
the
behind
imports. Most impor¬
tant, of course, has been the abil¬
growth
imports,
con¬
basis
than
the
trade
•gap
of about the same magnitude
goods, still shows
a
traders
can
as
international
officials
government
or
live and work
in it effec¬
if
with
of
to' build
are
we
struc-.
a
ture of international business-that
give
amount of
•*
1948, states that net earnings for the
per share, compared with $2.68
$2.37
1948
earnings
losses
posit
se¬
curities which
amounted
200
$32,106,000, which is equivalent to
$4 34 per share on the 7,400,000
to
shares of stock.
share,
per
comparedwith
17 0
of
p er
in
1947.
share
bank
crich, "now has
.
early Twentieth Century
world
the
One par was the in¬
ternational
trading
which there
the
into two
divided
was
great parts.
was
iri
world
freedom of busi¬
activity. The other part was
ness
of
world
self-sufficient
non-industralized
the
this
,
earn¬
the other
side, the slow rise in the
of goods by foreign
and Asia and
a
interior of Africa
large part of Latin
The vast movements of
international
trade
tional investment
interna¬
and
were
accompa¬
increases in
population,
along
with
rising
standards of living throughout the
by tremendous
States became the
eastern United
industrial producing areas
manufacturers and their intensi¬ of the world, and they sold their
fied sales efforts in the United goods to each other and to the less
States have begun to bear fruit. industralized areas to pay for raw
As
businessmen they are doing materials and to make possible
production
good business for their own coun¬
tries and they are
doing
us a
economic life, such as
great
expanding
tin,
banking
timony and rubber from the Far
and
These
other basic ma¬
been coming in in
and
its
other
in
this
The develop¬
part
in
possible the exchange of curren-j
cies
East.
played
great development.
ment of the gold standard made]
an¬
our
investments
good parts of the world. International
turn
between
so
and
bank
banks
large
fund o£
reserve
a
billion.!
$1
very
In view of
fund,
reserve,
it
clear that the existing laws
seems
establishing
the
basis
for
assess¬
ments should be modified and the
rate
W. W. Aldrich
of
assessment
duced.•
should
be
re¬
V
-
•
,
generally
the
shared
different
activity during the
a
ex¬
j" During
the
1939-1948
nations,
there was
year,
period
ten-year
total
a
aggregating
sharp contrast in the matter of
net
earnings.
of
$94,200,000
its of banks
and
1947
from
capita! funds)
amounted
lower
were
than
Dec.
1.96%
period
as
1948.
com¬
Chairman
there
on
a
h
I d
on
Aldrich
were
the
of
•
e
an¬
plans for
no
current dividend
or
stock dividend, stating
we
have reached
our
the point where
are
$233,562,000
meeting
"I do not believe
capital funds
sufficiently great to increase
the dividend under present condi¬
tions." In his address to the share¬
holders,
year
a
25,
declaring
2.32% compared with
same
annual
increasing the
loans- for the last quarter
for the
with
stockholders
nounced
during the 12 months, the average
was
the
Jan.
increased
earnings ; on
loans, which amount to $9,857,000,
or 43%
over 1947.
Indicating the
upward
trend of interest rates
of 1948
31,
$327,764,000,
to
and
Chase's
to
on
Dec.
on
31, 1939.
At
Despite slightly lower net earn¬
ings in 1948, Mr; Aldrich reported
a gross income from operations in
the year of $69,081,000, an increase
of 7.9%; over 1947, due in large
rate
1947
of
in 1946."
part
un¬
pared with $322,025,000 at the end
variations
small
The
.
the whole showed
on
comparatively
$108,040,000.
combined capital, surplus and
divided/! profits
(referred to
profits
Industry^
generally
continued upward - to
new peaks, whereas the net prof¬
the
of
parts
earth: the great
nied
this
than
more
Commenting
on
"The Federal Deposit Insurance
Corporation," commented Mr. Al-
profit
a
since the Federal De¬
years
Insurance
Corporation was
organized. Aggregate payments in
that
period
have
amounted
to-
to
on
to $17,579,000, or.
share the previous year. The
Ihe 14
are
ascribed
largely
year amounted
per
<$>-
.
During the Nineteenth Century
and the
stockholders' meet-
at
the trader a certain perience ]pf;;iridustry and business has been added to Chase capital
in reaching new high ;< levels., of
security and certainty,'
funds, after dividend payments
will
ity of the American people to buy
High levels of purchasing power international trading worlds Difin the hands of consumers have jfe;*eat pares or /ma l worm spe¬
made* them willing to buy almost cialized ' in the things they could
anything that has real merit. On do best. Western Europe and the
the
ago.
Mr.
bank
Aldrich
discussing
operations
maintained
the bank's dividend policy was as
The
the
Chase's
assessment
Federal
Corporation
Deposit
in
1948
000. the largest
which
the
paid to
liberal
Insurance
was
$3,100,-
three
has
paid during
that of other banks. For
pointed
he
j payment has been $160
annual assessment:
Chase
as
years,
54%
or
60%
of
in
net
share^
in
1946;
earnings
1947 and
in
68%
the
out,
per
1948.
First Boston Corp. Group Offers $50,000,000
Consolidated Edison
well-developed was the]
of the
international
mechanism
3% Mortgage Bonds
The First Boston
Corp. headed a group of 49 investment banking
larger quantities and give hints of was hardly aware of the financial firms which publicly offered Jan. 26 $50,000,000 of Consolidated
Edison Co. of New York, Inc., first and refunding mortgage bonds,
improved economic and industrial services which were hlways ready
3% series E, due 1979. The bonds were priced at 102.399 and accrued
conditions
in
that
part
of the at hand.
These were the- days
interest
to
yield 2.88% to ma <«>
——
world.
when flights of currency between;
Awarded at competitive controlling certain utility compa¬
nations
were
almost
unknown. turity.
Evidence of World Recovery
/
bidding on Jan. 25, 1949, the is¬ nies and a non-utility known as
These were the days when money
What I have been saying boils as such was regarded as having sue is one Of the largest of cor¬ Consolidated Telegraph & Elec¬
terials
have
down, in
covery.
brief phrase, to the
economic re¬
one
evidences
world
of
I think we can say with¬
produc¬
out hesitation that on the
side
been
total
world and decide how
our
individuals and
as
America.
of
some
full
between
broader
remains, it is
tionary pressure on our economy.
In all fairness, we must not over¬
emphasize its importance as com¬
tion
Closing Export-Import Gap
This
as
always imported large amounts of
certain raw materials essential to
is
"inivisible
so-called
are
past two years.
mer¬
This
as
forces of the
However, as long
inflationary
by earning dollars to pay us
for the goods they buy. We have
international
in
the
In
of
of
together do real¬
ize the great promise inherent in
our
technological
achievements.
The only way to gain some meas¬
ure of certainty is to face the real¬
we
when we were
TJfos. C. Blaisdell, Jr.
i
ago,
work
can
Chairman Aldrich
years.
Winthrop W.. Aldrich, Chairman of the Board of Directors of the
Chase National Bank of New York, in his report to shareholders for
is concerned,; we can feel
gen- :
tively. I should like to devote the ings in
even
greater satisfaction in what
eral, Mr, " A1-:
rest of my time this noon to a
is' taking
place.
Our domestic
drich
stated:
brief survey of some of the realK
markets have
been
willing and
"A 11 h o u g h
anxious to absorb the gradually ties that must be faced and dealt
omy '
increasing volume of imports, ana
the increase
in goods available
has offset to a certain extent some
ation
tions
ities of
ties.''
de-
our
sires
heartening to see ihe increased in¬
;
*
'
lower
This
1948 Operations
on
ing defends bank's dividend policy.
m
*
Reports
Annual, Report, to Shareholders for year 1948 shows earnings of
$2.37 per share, after deducting net loss on sale of bonds bought
■
.
Thursday, January 27, 1949
recovery
is certainly in
has
because the
sensed that
changing and their
This
swing.
possible
exchanges that the average trader
little
direct
in the
the
are
was
a
necessary
development of trade.
recovery
only
place in the world is no longer one
in which isolationism is possible.
Proceeds
used
of
International Gold
various
In
world,
during
countries
the * last
the
of
half
the Nineteenth
a
the
of
extent
of
will
be
Edison
to
sale
$40,000,000 for the
like
a
p r
i
n c
i
p a
1
amount of short term notes which
"
Standard
from
pub¬
.
Consolidated
by
payment
Need
of
Century and dur¬
mistake to say it is ing the
early
Twentieth. Cen¬
as
the one we have mentioned.
impossible.
Isolationism is pos¬ tury, this- great expansion and
The significant thing, however, is
sible, if we are prepared to pay development of trade was rudely
that this gap has been narrowing
the price. ; The price would be interrupted from time to time, not
since the middle of 1947. I think
lower standards of living.
In ad¬ only by wars/ which from one'
we
all agree that this develop¬
dition, we would have to admit standpoint only added to the vol-!
ment is healthy.
Those who are that we were afraid to act like ume of
trade, but, more signifi¬
particularly interested in the ex¬ free people in a world of ex¬ cantly, by the great business crises
port business probably do not feel
panding interests and expanding arising from business booms fol¬
entirely happy with a decline in opportunities.
lowed by business slumps.;
The
the
export
trade.
Fortunately,
The
expanding
and
rapidly significance of the business cycle
many of them also have an inter¬
on national policy slowly became
changing world of the Twentieth
est in the import trade, and the
However," an
under¬
Century is full of uncertainties. apparent.
decline in the amount of business
Uncertainty is in the atmosphere standing of the relationship be¬
they have been doing in exports
tween
cyclical
movements
in
we breathe and it determines the
business and the financial policies
has been partly offset by the in¬
way we
act and think. ' Within
of governments was far from be¬
creased business they have been a generation we have seen two
ing well developed. The accepted
doing in imports.
It has been wars and a world-wide depres¬
principles
of finance were
so
sion.
What we all want is some
firmly ingrained that after the
measure
of certainty about what
*An address by Asst. Secretary
first
World
War:—which
had
Blaisdell before the Drug, Chem¬ is in store for us during the rest
thrown the international financial
ical and Allied Trades Section of of the century. We want to see the
madhm^ry badly out of line—it
the New York Board of Trade,
way clear to a relatively stable
Perhaps it is
securities/marketed
porate
licly thus far in 1949.
American people have
the times
significance in trade.
instru¬
ment, but other than that was not.
in and of itself, a moving force
Money
issued
were
interim
in
of the
The
program.
bal¬
proceeds will be usee
connection
tion
with
financing of the company'.'
construction
ance
connection
in
with
the
construc¬
esti¬
mated, will involve expenditures
of approximately $225,000,000 for
the years 1949 inrough 1952.
For
ries
which,
program -
it
is
general redemption the se¬
-bonds
E
105.40%
on
are
redeemable
at
prior to December
or
and thereafter at. prices
31, 1949,
trical
Subway
Co.
Consolidated
Edison and its subsidiaries supply
electric service in the Boroughs
of
Manhattan, The Bronx, and
Brooklyn, in a large part of the
Borough of Queens
and
West¬
chester
supplied
and
Bronx
and
County.
Gas service is
in Manhattan and the
some
Westchester
service is
in
Queens
County.
Steam
areas
supplied in part of Man¬
hattan.
Giving effect to this financing
the
company
and its
subsidiaries
will have long term debt of
732,400.
Consolidated
$493,-
Edison
has
outstanding 1,915,319 shares of $5
preferred stock without
and
par
11,477,215 shares of
value
common
,
New York
City, Jan. 18, 1949.
*
world
in which
we
and other
na¬
(Continued on page 38)
scaling
to
down
redemption prices
to
100%.
Specia]
calculated
are
protect the basic offering yield
of
2.88%
maturity.
Edison
dated
Inc.,
to
Co.
organized
New
under
State laws in 1884
Gas Co.
of
as
Consoli¬
New
York,
York
Consolidated
of New York, is a public
utility operating company engaged
in
the
manufacture, transmission
and distribution of
gas.
It is also
a
electricity and
stock
without part
The
Consolidated
1948
was
erating
value.
consolidated
net income of
Edison
for
the
$36,824,881 after all
expenses,
year
op¬
taxes and other
charges. Total operating
revenues
of the Edison System for the
year
1948
aggregated
against
ceding
enue
$335,893,718
year,
$370,832,235,
in
the
while operating
deductions
were
holding company1 against. $286,201,045.
pre¬
rev¬
$321,545,417,
Volume
Number
169
4772
( THE COMMERCIAL & FINANCIAL CHRONICLE
Otis & Go.
Appoints New Officers arid Directors;
LsIbnching Program of Expansion
#|
(
'
Cleveland investment firm
was
founded in 1899.
19
The Fiiluie of (he Securities Business
7
|
-
CLEVELAND, OHIO.—With the appointment of -six new officer^
and director^, Otis & Co.; Terminal Tower, launched an aggressive
program, for the expansion of its business in all departments:
Th<^
(447)
By HAROLD B. DORSEY*
President, Argus
\
.
Holding securities business
as
industry is
Research Corporation
house divided, weak and ineffective, Mr. Dorsey urges
centralized representative organization, for. all
segments and branches, with coordinating sub-commit¬
tees for each. Urges public relations and
educational campaign to regain respect of
public and a policy
of-iihproving earnings and morale of securities business personnel. Advocates
aggressive merchandising
of: securities, together with
modernizing and creative leadership in making securities business a vital
ail
a
<•
"
-
.'
••
-
.
-L*':
in the economic*machine.
cog
To
considerable extent; the future of the
a
security business depends upon the initia¬
tive,, energy and ingenuity with which its personnel and
leadership plan and work for its
future.
Such
ihe
secu r
b
s
u
i
n-e
thinks
it
s
R.
Miller
John
A.
Kruse
Harry W.
their
most
to
aware
Dealers, the National Society
Security Analysts and others.
realize
(2)/ The
Harold
B.
Dorsey
planning
security business.
going
into
of
too
the
much
briefly look at
ditions that exist
knowledge
mon
It is
now.
that
con¬
com¬
insuffi¬
an
cient- proportion of new capital is
flowing into securities and
Robert
Cyril H. Weagle
Glenn
*
R.( Miller, who has been
Otis &, Co.'s Public
handling
Utility Department since 1946, be¬
Executive
comes
Director.
a
111.,
University
and
of
the
ac¬
Elgin,
C. Winston &
Commerce
Canada and the United States.
is active in Cleveland
ac¬
civic
exception
circles
and
He
war
of
three years' service in the Army
with the Contract
Renegotiation
Division of the Cleveland
Ord¬
Robert
L. Kaiser becomes .Sec¬
retary (and
Director. Mr. Kaiser
is a. native of Elyria, Ohio, and a
graduate of Miami University and
District. Prior to the war
he spent two years as an invest¬
ment analyst with the Continental
nance
a
Cleveland
with
&
School.
Law
Otis
Co.
in
He
1946
'
*
"".
r
In addition to recognizing
merous
unfortunate
and
nu¬
unsound
economic trends among these con¬
ditions,
I
think
most
of
us
also
will admit that the morale of the
came
as
con¬
personnel of the security business
is very low. It seems to be punchCasualty Company of Chicago and troller, which position he retains.
drunk and a great deal of time is
seven years in a similar
capacity Mr, Kaiser, had been with the Na¬
devoted to explaining why it is
with Sheridan, Farwell & Morri¬ tional
Refining
Company v from
son, Chicago investment counsel.- 1935 to 1943,- first as Auditor and punchdrunk,- but correctives are
spasmodic and on a small scale, at
lors.
•
'
V'. .• Chi£f Accountant and then
As¬
as
I John A. Kruse becomes Vice- sistant General Counsel and As¬
President in Charge; of Syndicates sistant Secretary. He was admit¬
Sales and a Director.. Mr. ted to the Ohio Bar in 1940. For
and
Co.* the three years prior to his asso¬
since 1932 and has, been Manager ciation with *Otis "& CO*, he "was a
Kruse
has
of the
been
with
Otis
&
Trading Department for 13
Mr. Kruse, a native Cleve-
years.
lander,
was
with the Bond Depart¬
ment of, the Union Trust
before
Company
joining Otis & Co.
Mr.
Secretary-Treasurer for
,
Kruse
was
the Northern
Ohio District of the
Investment Bankers Association in
1946
and Vice-President
of
the
Cleveland Security Traders Asso¬
,
ciation in 1947.
Lincoln
ment
who
He succeeds C. B.
has
but
reached
retire¬
M. Hawkins succeeds Mr.- Kruse
Manager of the Trading
ment.
■! *
business'career
Co./
lie
&
has- been associated with
OtiS '& Co. since 1921.
C
ident in
has
charge of the New York
and
been
a
Director.
Mr.
Irwin
continuously associated
with Otis & Co. since 1926 and has
been Manager of its Cincinnati
of:
fice for many years. A native of
Fort Thomas, Ky., and a graduate
of
the
Mr.
University
Irwin
nance
served
of
on
Cincinnati;
the
War
Fi¬
Committee
the
company.
•
•
. •
-
cers
,
elected
were
by
District
No. 10 of the National Association
of
Securities
Dealers; Herman J.
Sheedy, McDonald & Co.,. Cleve¬
Weagle
cummer
came
with
vacations, Mr.
Otis
&
Co. in
1928, and is its senior salesman,
ijindeniable fact that there -is no
organization reoresentative of the
whole security business and one is
needed very badly. Grave prob¬
lems are presented that are much
too
large for anyone of the various
business
H. Murch
&
Co., Cleveland,
^nd„ Don "M». Kraft,; Collin,: Norton
&:
,
Co., -Toledo,
members
"
""
of
the
1 /
"A. J. Stiver, Saunders, Stiver &
Emerson. &
spends his
is
:
Now, much as I hate to be a
Party to piling one bureaucracy
top of another one, it is an
associations
Co., Cleveland; Frank Re-id, May-1 ferent/segments
ipal Department and
Scotia, where he
fellow
on
ardr PrescottrHawley, Shepard &
Co., a'ntd Harold L. Emerson,. H. L.
Nova
only to be followed by
who con¬
The associations
President in Charge of the Munic¬
Director. A
industry
divided and
an
another representative
tends
that, the
first
Existing
District Committee.
a
necessary,
land, Chairman; Robert O. Shep-
Cincinnati office.'
of
curity business, as
jstands; as a house
(lynamic organization that is in-
COLUMBUS, OHIO—At its an¬
nual meeting the following -offi¬
nard
native
a consequence of
of morale, the se¬
elligent enough and representaive enough to command the re¬
spect of the people.
.''I;,;//'
Elects Officers
Co.;
have
pointed
members
conduct
been
the
NASD
District
No.' 10
Kentucky.
-do
Perhaps
solution
would
i
tackle.
to
representing dif¬
of the security
not
have
someone
but
run
my
a
broad
as
a
better
suggestion
follows:
of the various
represent seg-
one
that
has
own
somewhat
(1)" Let each
associations
includes
Ohic
governing
board
the
and
set up
It
cally
designating
these- subcommittees
that.I intend to elaborate a little
on -some
of
the
I
a
them.
see
outstanding prob¬
security business as
Legal—It is trite for
are
me
elements.>of
jformity
^
pf
bqt could
efficiency and
legal
r,
alsq
misunderstandings that
to
-if1* ^
about
of
that
rise,
uni-
does
so
whole
this be
tistics
the
but
ter from
common
point.
a
The
,
a
The
genesis
Very
bar-1 movements
minds
of
is to
the
of
or
ques-
tionable-legality-- for/ them to
else
of
contract?
by investing
Ij
1
A ATvtt
Frankly, I
not
/-»
*
r«
u
they
A
sure
right.
Gen-
in
v\
i
ocock,
whether
;
.
influence
CT A.ALr
common
not
am
are
rv iv\ wi
.
)
,
-
prove
busings
to
economic welfare.
mendbus
need
the
nation's
There is
reason,
economic
forces that
decisions
of
will'
the
-
/
,
r
;
,
.
The general public is woefully
upon the profitability of business
operations
and
upon
a
normal
flow
tre-
a
the
our
welfare
.
the vital importance of the
security
whether
unfamiliar with the fact that their
is so heavily dependent
(b)-Ecdhbmicfs
This
group
would prepare the data that would
.
possibly
to
is
of
business leaders.
or
the
jobs is to expand
the
_
in
leaders,
can
as
This
tell'why we focus all
the Public
Jhat;a 5 %. return could studies on those
be obtained
Electric's;
found
business
^inion,it
tbe number
cyclical
our
be
who
■
for
very direCt
decision
-
view-
sense
profits
bearing on the
willingness of business leaders to
expand or contract employment,
have
all,
*
of
only
looks at the mat-
prospects
the
L
Not
by staquite untoi
also
one
make
eral
In¬
demonstrated
it is
standable if
example, I have, had partners of
that, in their
A V*
is
be¬
welfare
economy.
After
matter.of
there
correlation
public. For
was a
com¬
statisti¬
people employed.
our
dissemmation of facts
securities ta the
fact
precise
are
the
corporation profits and the
can
many
are a:
of
variably, when corporation prof¬
interpretations
clear, away
country
provable
number
tremend-
a
pro-
improve
to
living.
that 99% of the
unaware
very
its
(a)
remark that there
of
this
of
tween
of the
lems
fnereby
standard
pletely
in the process of
is
prices, ,to increase
anct
people
subcommittees along func¬
tional lines.
and
I venture to say
cQordipating head would then
of
capital
movements;
but;
(this condition is largely the fault
for
explaining to of the security business.
At the1
the-public—and-even to our own 1 moment, there is no outstanding
members—the absolute necessity ' group which has the
respect of
for
the existence/of
business
the
security
(the public and which is willing to.
undertake the task oi making the
vital cog in our ecomachine.
Private
enter-
nomic
as
a
,
public aware of these facts. And
it is the public's ignorance
of
prise, as we know it, cannot continue, without/the guidance of a
certain, proportion
savings back
into
these
of .individual
the
facts
that permits derqa-.
to succeed in their leftist
gogues
productive
,
policies.
economic
new
stream. > Without
this |
What
capital, where else are we to> familiar
obtain, the. funds
to
finance
for, the
our
of
even
progress in
living, or'we can
Responsible for the
of
with
these
educational
standard
numerous
say, are
feel
groups
it
effort?
the
I do, but
as
This
Understood
simple
fact
by the public
is
not j larger
I
know
individuals
and
small
way
about
voices
our
are
We need
'more
not
much
representative
such as I am
by | coordinated body
.executives
and, ,1/am , suggesting here.
^orry to say, I find it is not com- | /(d) Compensation
pletely., appreciated fby the per- i private
enterprise
nor
that
and
same
i|f we allow for population growth \ strong enough.
trends?
more;
than
facts
security
business?
Hence, why is it not our responsibility to
provide the mechanism for this,
maintenance
present standard of living
our
single industry is
the
new
enterprises, new. products and new
processes, which are responsible
a
,
business
_
sonnel
of
the
security
business.
jTman
Other, equally important economic
information
would
be.
of
When
I
j
'
on
this subject of
the-; merchandising
methods of the business/ several
rhonths ago,-'! received very con¬
,
siderable mail
from
individuals
frankly expressed an unfa¬
"An address by Mr; Dorsey-at- vorable, but a completely unfair,
Acting of the Boston Investment opinion of security firms and their
Club, Boston, Mass., Jan. 21, 1949. personnel. Certainly it will take a
the
•
system, every
performs a true eco-
.
function
reward.
is
There
—
do
incentive
Under
entitled
is
to
his
considerable
evidence that current
tions
wrote
modernizing
who
nomic
broad: interest I
supplied by the eco-
nomic committee.
Who
■
'
and
the
enough representation to speak
(c) Public Relations —I think
with authority and in some in¬ all of us
agree that 5 the public
stances'they are prone to grind relations aspect •. of the security
their own particular axe. k ; '
business
is
in
terrible
shape.
ap¬
committee,
of
uucuon
v
,
as
state
^
NASD District Ne„J0
/of - Hamilton
County, Ohio, "hnd; Northern Ken¬
tucky.^ Charles A. Whiting suc¬
ceeds Mr. Irwin as Manager of the
Cyril H. Weagle becomes Vice-
this low
Dwyer,- Vice-President wrong. There is a lack of intelli¬
in charge of
the..Chicago office, gent coordination of effort, lack of
has also been elected a Director of a
flag to rally around, lack of a
-
Harry Irwin becomes Vice-Pres¬
]Perhaps
.
JOhn E.
,
office
-
with .Otis
as
Depart¬
W-
(•(?•;•-
,,/..-
L L/v.
(consequently is weak and ineffec¬
(Junior Grade) in theN
tive./, It has been pointed out to
Uni.ted States Navy.
me that one representative of the
Htarvey L. Hawkins becomes £ industry will get the ear of some
Director. Mr, Hawkins, is a native Congressman and tell him that
Cle.velander and has spent his en¬
such-and-such
legislation
is
who
will; continue
with the company in anadvisory
and consultative
capacity. Daniel
age
best.
Lieutenant
tire
public.
,
tive. '
j.;
capital is required to
jobs and pay decent wages.
does not realize that
capital is required to .reduce
is.
We know that liquid savings
large but, for various reasons,
an abnormally large
proportion of
these savings is relatively inac¬
Section Captain for the War
Bond Drives. ,>/••,
of
new
Coordinating
espe¬
are
was a
facts
thoroughly
costs
recog¬
normal
lar.
church and
during the
is
It
larger than
a
not
public
ous
number
of
legal questions
consumer disposable
going| into consumers :facing. the security business that'
are common to
durable
goods; these items are
numerou^dmsmns ;
A legal departcompeting very successfully for ^ ithe. business.
the potential venture capital dol¬ ;ment here wouldmot only provide
income
John
Co., Philadelphia, in
than,
economic
does
The
a
proportion of
:
vacations
summer
public.
of
certified
with
institutional
nized
graduate of Acadia
the leading salesman for
was
countant, Mr. Miller has spent the
past 15 years in the investment
business
cially into equities.
University, Nova- Scotia, and dur-r
Northwestern
School
Ohio
an
a
Vice-President ing his college
A native of
graduate
a
Kaiser
many
counts.- He is
manager' of
and
L.
the
that
create
committee
select
(3)fThe
overall
us
of
Labor
who commands the respect of the
really be an
integral part
detail, let
life.
of
head,rof the Bernard Baruch type,
should
;!> Without
central
would'then
mind, all
these'.fac¬
the
industry
National Association of Securities
socialistic
of
a
.
trends, etc. To
tors
industry vigorous
and
well
coordinated
intelligent campaign to regain the respect of
newly
central
standings
verging on
perse cution,
my
which
over
then would consist of
representa¬
tives
from
the
Association
of
ltc e n
of
security
organized- the public.
«
But of equal importance in this
board,
which
matter of public relations is
th,e
duty of our industry to accept a
Stocl^ • Exchange Firms, the In¬ very large proportion of the re¬
vestment Bankers Association, the
sponsibility for making the public
f
ti ves,
misunder¬
Irwin
the
member
to
of
taxes," loss
of
appoint
I
o
course,
Glenn
ments
has
refer
i
s
control.
no
contention may seem to overlook the effects
of outside factors
a
i t y
not
provide
to
stimulate
compensaa
sufficient
the
ingen¬
uity, the energy and the construc¬
tive thinking of the present, and
prospective personnel of the busi¬
A
study of this subject "has
bearing on the type of
manpower that will be attracted
ness.
a
direct
the
to
(e)
business.
Morale
—
conversations
.
Judging from
with
my
numerous
members of the
security industry,
the
the
morale
of
(Continued
on
personnel
page
34)
is
kw.wjiww '-w1 utol 1
(ww
■ •
,
20
THE
(448)
•
'
built.
the
vised
detail
to
as
the
on
a
great need for
construction
suit against the Amer¬
ican Telephone &
Telegraph Company under the Anti-Trust Act,
proposing that Western Electric Company (which has been part'of
ways
,
methods
the Bell System for 65
years) should be broken up into three pub¬
licly-owned companies; that all Bell System companies should then
buy their supplies and equipment at competitive bidding; that A. T.
discovering better
is by expe¬
rience, and here it is usually the
client
who
& T. should
buy Western Electric's half interest in the jointly-owned
Telephone Laboratories; and that A. T. & T. control of the tele¬
phone operating companies' practices should be restricted (reportedly
is
footing the bill.
apply the experience
one project to the next
similar project."
Marshall Plan.
Naturally
gained on
put up
in
American Telephone & Telegraph
The Department of Justice recently filed
doing work better and cheap¬
er," Mr. Strike remarked.
"Our
of
dollars
grants
Bell
we
the extent necessary to
to
and
part of the Marshall
Plan, for these projects, and for¬
Of
pete
collect. We are not popular as a
collector, and we are no good at
being an imperialist.
"At the same time, we are not
strong enough to
undertake this program, except under limited ex¬
Robert A. Taft
then
contributor
"Commercial
to
Dr.
Benjamin
Connell
M.
Professor
the
University
Los
-:
t
of
I
-
for themselves."—Senator Robert A. Taft.
California
3 0
"
years
companies, two'Would
com¬
producers.
assistance
Moreover,
A.
T.
T.
&
and
have to be licensed to all applicants
(on
deprive American Tel. & Tel. consolidated
Electric
1948
share
present
supplied)
income,
which
but
which
amounted
averaged
capitalization)
only
the
over
to
a
about
decade
record
70c
per
1938-1947.
However, Western Electric's elimination
would not directly affect the
or the
pending applications by Bell System com¬
panies for rate increases aggregating $260 million annually.
in
system rate bases
a
These applications
distinguished
:.j v'.j
technical
share
Angeles, and during the last
'
other
earnings of Western
high of about $2 in
Anderson,
Banking at
of
with
The divestment would
& Financial Chronicle/'
would have to do
areas
a
Electric
which would open the Bell
equipment market to Associated Tel. & Tel., International Tel. & Tel.,
Stromberg-Carlson, and others. Companies such as Anaconda Wire
& Cable, General
Cable, Rcme Cable, and subsidiaries of Phelps
Dodge and Kennecott Copper, could bid competitively to supply tele¬
phone wire and cable to Bell companies.
University of California.
at
and
compete
(with
Was Connell Professor of Bank¬
ing
dangers lie in overestimating of the good
such a
program would do. Greater dangers lie in
a
disappointing over-promising. If the objective is
to raise
living standards in these under-developed
areas to those of the United
States, what we could
do by guaranteed investment would be
only a drop
Western
new
Western Electric patents would
tional Bank from 1920 to 1939.
"Real
three
in
would
Distinguished authority on mone¬
tary subjects served Chase Na¬
pense.
the
the manufacture of telephone equipment, while the third
produce electronic and non-telephone items.
Through'Com¬
petitive bidding the two firms making telephone equipment would
Benjamin M. Anderson,
Economist, Is Dead
get them, rather than trying to
insure competitive policies on equipment
supply procurement).
years, as a
in the bucket to what these
Utility Securities
By OWEN ELY
body
discover
to
of
construction
half-billion
Public
"There is
research
a
best method
a
have
we
quality, lower in cost."
in
new
"I would
Thursday, January 27, 1949
faster, better in
are
plans | of the President | it is as¬
sumed that they will follow the
^
almost rather
{'
■
oiir
course
materials that
have not been ad¬
we
)
CHRONICLE
try by supplying equipment and
Governments operate, particularly so¬
Governments.
Such operations may lead
to
imperialism, and there we
would be left holding the bag.
"While
v-
.\
'
turers, and so forth—have made
major contributions to the indus¬
way
cialistic
which
for
Of
'
■
FINANCIAL
suppliers—
equipment and material manufac¬
"I doubt the wisdom of wide-scale guarantees to
private investment abroad. There is uncertainty as
to
&
industries
V
Let's Get Down to Earth
•
.
.
COMMERCIAL
were
designed to offset higher costs and raise
(excluding Western Electric) averaged
economist,
The Senator appears to have made at least
start
a
the
died
less than 4.8% on invested
capital in the nine months ended Sept. 30,
1948.
In* the 12 months ended Nov. 30 Bell
System earnings were
$10.21 a share compared with
$7.62 in the
bringing this "bold new program" down to earth.
We can only hope he keeps the
good work up.
Santa
Monica,
in
at
Cal.,
on
Jan.
.
Dr.
was
Industry
lack of research
and
nicle,"
the
of
his
construction
and
Economic His¬
meeting of the New York Society of Security Analysts in
tory of the
Strike, President of F. H. Mc¬
United States, 1914-1946," which
constructors, expressed optimism regarding
is
scheduled
for
the immediate future of the construction
publication
industry. "The outlook for
shortly. Dr. Anderson was Presi¬
<♦>construction
1949
is
good,"
Concerning the outlook for the
future, Mr. Strike asserted:
Mr.
Strike
said.
"It
will
than
"The
be
less
in
other
/.
good."
in
•
that is
probably
industry,
to agri¬
culture, is the
S.
tion
Its national product
in
the
neighborhood
$17 billion.
This year the in¬
be off somewhat, but
dustry will
automobile
That
probably there will be nearly $15
off
ease
to
facilities
benefit
whose
forte
is
the
replacement
v
.
,
is
tion business is
healthy amount of business."
"The principal cause of the de¬
cline
in
industrial
construction
year,"
high
are
costs."
15
Should
a
Strike
said, "was
"Construction
considerably
about
to
Mr.
to
out
of
I
would
20%,
total
costs
construction
line—
say.
decline
point where demand for the
present
ing
limited supply of build¬
trades
workers
is
eased—
there
two
are
only
million
a
little better than
trained
construction
mechanics in the U. S—with
re¬
sultant lowering of
building costs,
particularly labor rates,
a
number
of industrial construction
projects,
now
being
deferred, could well
develop and bring renewed stim¬
ulus to industri ii build
mg activ¬
ity.
I know
oi
at
least
10
firms
_
the
to
facilities," Mr. Strike
remarked.
"I would like to dispel, if
ardous
one,"
an
the
pos¬
construc¬
especially haz¬
speaker
added.
what business hasn't.
panies
like
Large
there
are at least 25
companies in this
category—have been in business
a
long
ards'
my
time.
in
own—and
The alleged
business are
the
'haz¬
tions
are
lated
as
often not
ours
as
well calcu¬
due to the fact
struction costs to drop before
they
go ahead.
great
This factor provides
backlog
of
work,
if
when prices do ease."
a
and
Ph. D. degree from Columbia in
1911;
■'//:;/ i' w:'-
'/y :: i
He
became
lumbia
*
instructor at Co¬
University in 1913, but
thereafter went to Har¬
shortly
vard
an
Assistant
as
Professor
of
dividend
normal
above
the
of
National
Bank
Commerce, New York. Two
later Dr. Anderson became
one
So
far
as
I know, no
company can claim as much
2%
of
all
the
construction
According to Mr. Strike,
outstanding shortcoming of
"an
construction
the
industry is the lack
of research.
Most of
to
our
research
date has been supplied by the
is
the
to
consolidated
invested
on
loss
capital,
retention
or
excluding
Western
of
earnings.
Electric's
A return moderately
Western
Electric,
should
$9 dividend.
It is expected that A. T. & T. will
strongly contest
suit in the courts.
Since a case of this
the anti-trust
importance might very well
Supreme Court, the anticipated long delay should give
ample time to work out other problems with respect to rates and
to
go
the
the construction program; and
Electric,
which
of lesser
eventually the importance of Western
abnormally big year in 1948, will appear
importance.
Western
had
an
-
Electric's
profits, after taxes, on sales to A. T. & T.
companies over the past 25 years has averaged only 4% of
sales;
but of course this
relatively low profit margin does not indicate
whether prices for its products were low or
high as measured by
competitive
follows in
standards.
In
the
past
decade
the
record
has
been
as
millions of dollars:
A. T. & T.
Equity
in
of
Sales
Dividend
Payments
Net Income
to A. T. & T.
9 Mos. Ended
years
econo¬
Sept. 30, 1948
$39
$27
996
32
27
1946
610
12
12
next
1945
861
15
12
joined the University of California
at Los Angeles
as
Professor of
Economics
and
was
appointed
1944
827
14
12
1943
714
13
12
time he
was
Economic
Connell
1939,
1947
during which
editor of the "Chase
Bulletin."
He
__
1942
professor at that institu¬
1941
tion in 1946.
J
574
8
6
402
_
13
18
1940
Course In Investments
ST.
LOUIS,
MO.
University
—
College of Washington University
will present an advance course on
"Investments for the Layman." It
of
the analysis
specific securities and
ments
This
current
course
will
in¬
,
Registration
repetition
of
the
prices.
is
from
given
sented
on
last
more
ten
fall will
be
Wednesday
nings beginning Feb. 9.
3
Tel..
was
of
course
adversely affected .marketwise by announcement of the
suit, the stock dropping five or six
points to 143 (lowest since 1943), However, continued
buying by
bargain hunters and investors has restored the price almost to
the
level, around 148. Evidently the investing public has consid¬
earlier
erable
and
from
faith in the company's ability to
to
withstand
any
difficulties
obtain further rate increases
entailed
Western Electric.
by
'
David Gerf II With
possible
separation
V
,
.
Harold Levitt Vice-Pres.
Fred W. Fairman & Go. Of HoHon, Holt
(Special
to
The
Financial
Chronicle)
CHICAGO, ILL.—David F. Cerf
ele¬
mentary course on the same sub¬
ject
6
American Tel. &
Jan. 31 to Feb. 5; tuition, $16.
A
13
180
begin Feb.
continue for ten Thursday
evenings.
24
16
develop¬
security
affecting
new
10 and
of
the
33
193
1938
Washington Univ.
249
1939
teresting to note, however, that
industries.
6%
$845
serving until
terpretation
no
than
enable the company to earn somewhat more than the
mist for the Chase National Bank,
will deal chiefly with
one
construction company dom¬
inates the building field, such as
you will find domination in other
rate
contribution
Economics, holding the post until
1918, when he was made economic
they
lack experience, facilities, or the
necessary wherewithal.
It is in¬
business done in any given year."
con¬
a
more
likely to apply to small, 'fly-bynight' companies that are operat¬
ing on a shoestring. Their opera¬
boards
waiting for
A. B.
T., the results of rate
place since the war, and the further gradual mechanization of facil¬
ities, are of greater importance in considering the safety of the $9
com¬
as
are
an
Co¬
Loeb," Rhoades' recent study of A. T.
applications, the expansion which has taken
"It has its hazards to be
sure, but
that have expansion
plans on their
but
in
'
program.
As pointed out in Carl M.
concerns
rehabilitation
of steel mills and the
of worn-out
produc¬
redounds
construction
of
born
was
the
from
adviser
sible, the idea that the
this
fairly
a
on
billion worth of construction work
done in the United States.
This
a
will
come when demand and
"This current strain
Strike
lead¬
ing industry.
of
an
large degree."
Clifford
Monetary Policy.
on
Anderson
degree
means
production
next
was
production
on
require rehabilitation.
tion
1948
strain
more
that eventually
steel mills and other factories will
t i nued,
National
University of
Missouri in 1906, an A.M. from the
than
University of Illinois in 1910 and
traveling constantly at its
top speed,
"the construc¬
in
even
facilities, much like
"Though
nation's
This
Committee
Economists'
industry, as well as
lumbia, Mo. He received
industries, is today
cases"
some
that.
few
people
realize it,"
Mr.
Strike
c o n
steel
heavy
the
of
Dr.
operating at 100% of capacity and
1948, but the
picture, is still
dent
which
&
"T h e
Financial
Benj. M. Anderson
a
return
previous corresponding
period; and the parent company alone earned $9.20 vs. $7.43.
Ex¬
cluding Western Electric, the latest figures would have been reduced
to about $8.21 for system
earnings, and $7.70 for the parent com¬
pany:
However, if the stock of Western Electric should be sold <to
the public, or offered to
Telephone stockholders on a subscription
basis, substantial funds would be obtained which of course would
yield a return to American Telephone when used in its
telephone
book,
as
New York City on Jan. 13, Clifford S.
Graw & Co., engineers and
in
of
just
completed a
death had
handicaps but looks for large replacement of
heavy industrial plants to keep construction outlays at high level.
At
con¬
at
time
Sees high costs and
year.
1
a
"C hro
Strike, President of F. H. McGraw & Company, tells
Security Analysts construction outlay in 1949 will approximate $15
billion compared with $17 billion in past
occa¬
tributor to the
•Clifford S.
.
an
sion
Outlook for Gonstruction
19.
Anderson
rate
pre¬
eve¬
II
has
become
associated
Fred W. Fairman &
with
LOS
old
E.
ANGELES, CALIF.—Har¬
Levitt
ated with
West
has
become
associ¬
Holton, Hull & Co., 210
Seventh
Co., 208 South
Street, members of
La Salle Street, members of the the Los Angeles Stock
Exchange,
Chicago Stock Exchange. Mr. Cerf as Vice-President. Mr. Levitt was
was
formerly syndicate manager formerly a partner in Flynn &
for Floyd D. Cerf Co.
Levitt.
Volume
169
21
(449)
Number 4772
The Investment Poitfolio
Our Reporter
JL
Governments
on
—
y
Bank Income
as
By F. BRIAN REUTER*
'
y-."
k
Vice-President, Mellon National Bank & Trust Co., Pittsburgh, Pa.
By JOHN T. CHIPPENDALE, JR.
Lengthening
■
maturities
of
in
order
to
Mr.
income, ana
scaled-up selling have tended to push prices of long gov¬
ernments ahead, especially the eligibles.
It seems as though the
monetary - authorities have marked up prices of their offerings, arid
preserve
.
has
been
followed
1
in
holdings of the more distant, maturities.
Price advances have
been orderly and the tone of the market is
good, with sizable orders
by the dealers • who
.
still
,
too heavy
not
are
...
waiting to be filled although some of these buyers are hoping
purchases on a reaction which may or may not develop. . . .
The 2"H% due
due
s
bought.
.
The
.
accumulation
;
y
with
the
partially-exempts
continue
make
a
bit
of the play at this time.
it
(the
tions.
.
.
Before
the
holders of
the pegs would
was
be pulled.
buyer.
a
.
.
Accordingly they
ings
:
...
i
nt
".
.
this pro;
is followed in most
.
.
inued,
-
it
fear
now
felt
is
further.
is not of
that
.
.
lower quotations, but of
positions
must
rebuilt
be
sold
were
higher
ones,
prices
before
;-V it will be that
INCOME THE
for
way
while.
a
.
.
and
has
advance
had
such
time
.
.
trend
.
of
INCENTIVE
effect upon the government market a short
The elections, the reports of President Truman and
economic
conditions
main
the
are
changed attitude in the money markets.
for
reasons
this
the
and
heavy service charges
.
A protected government market is one of the important
the
market
ket
cn
because
program,
has
on
the
the down
of
whole
side
the
been
influence
great
economy.
have
to
.
tested
and
the
in
past.
.
.
axiom which be¬
an
prices
direction.
...
To
is
be
the
brakes
that
one
the rise
sure,
are
applied,
not
does
far
so
to
go
because
been
has
a
stable
in either
extremes
moderate
a
Guessing price limits of government securities is at best
business but nonetheless
some
a
.
.
.
hazardous
market followers are looking
money
the
at
picture this way: The longest taxable 2\k %, they believe,
should move ahead gradually, but with due allowance for minor
interruption's—because prices do fluctuate—to about the 103 level.
.
.
.
1956/59 according to some should head into the area
The 2V4S due
10314
of
These
that
prices would not be too far from the support levels
held
were
present
was
by
the
authorities
the
before
given to the financial community.
Christmas
1947
The partially-
...
especially the 2%s due 1960/65, are expected to run
into supply as they get up to 111.
The restricted issues will
probably come in for more than passing resistance as they ap¬
exempts,
.
.
.
proach 101, the old support level that
until they revised prices
managers
was
defended by the
money
Christmas Eve, 1947.
on
among
.
than
investment
the
Trust accounts and
.
pension funds
reported to
are
.
.
be
.
The
2s due 1952/54 are being bought in considerable volume
commercial banks, with out-of-town institutions reportedly
the largest takers of these securities.
Two large Midwest deposit
bqnks were reported to have been sizable buyers this week of the
by the
.
.
Los
and
Revel
George
Miller
are
retiring
from the Board of Governors.
The vfollowing have been ap¬
pointed ! to the Nominating Com¬
flng.
BOS ANGELES, CAL.—Charles
Tj Jawetz, Daniel Reeves & Co.;
Paul J. Marache, Marache, Sims &
Co.,
Goodwin,
&
E. Zimmerman,
Co., have been
elected to the Board of Governors
of the Los Angeles Stock Exchange
mittee
for
1949:
H.
M.
Bateman,
and undoubtedly a most
important industry from the point
of view of the well-being of our
dustry
economy as a
still a business.
able nation
whole, banking it
Ours is
in the world today
and the vast wealth and happiness
which
we
have achieved.
The sys¬
competitive free enterprise
down
essentially
to
make
more
money
to
a
few
Walston,
and faster
than his fellqw citizen.
There
ologists,
were
a
1947.
tal
of bank deposits ^in
level
the
permittee
unless the government retires very
an
American,
was,
/'The Elephant,"
and each
prepared and presented
monograph on the subject. '
a
this
The German
produced
impressive
leather which
a
some¬
bound in
entitled
book
was
expected
rather stable de¬
a
posit structure in the nation, it is
up
to the individual profit-making
to
evaluate its particulai
bank
circumstances, since it can always
lose
deposits to, or gain then
from, other and competing banks
This
self-appraisal is not
ficult task,.
a
dif¬
Every bank has a pasv
deposit and loar
record of both its
fluctuation
Such
years.
long period ol
analysis will re¬
over
a
an
stability
veal the relative
of both
demand and savings deposits and
a careful appraisal of present fac¬
enable
should
tors
guess
banker
a
tc
wi.th fair accuracy, weightec
the conservative
assumption,
the evening discussing a
particular topic. The agenda" for
meeting
within
The
spend
one
revenues.
Hence,
movement
and
of
side, the fu¬
these deposits
of
course,
mus
be that it is unlikely that we will
ever
be able to level out the
and
valleys in
that at
some
our
peaks
economy
worse.
also
must
It
be
remem¬
bered that in the past our private
strains which an unbalanced econ¬
omy
wise
measure
always produces. It might be
to
enouglr
old-fashioned
be
to fear that history
will in some
repeat itself.
.
:
;
book
offering
suede
was
bound in green pastel
leather
and
was
of the
entitled
Savings Deposits, the "Hard Core"
Thus,
*An address by Mr.
fore the
first ^approach to a
of really satisfactory
the
continuity
income is
to estimate what
I call
Elephant."
the "hard core" money of a bank¬
Reuter be¬
ing, predominantly savings depos¬
its. This is the expectable propor¬
ing
-
21st Annual Mid-Winter
Meeting of the New York
Bankers Association,
New
City, Jan. 24, 1949.
State
York
■
,
useful application of
most
The
this philosophy is to imagine your
institution
consisting of three
as
depos¬
of demand
bank
savings bank and a bank or,
if you will, an investment trust
consisting of the capital funds, the
stockholders' direct share in the
a
three
Against each* of these
banks, and based upon your
own
informed
business.
the
appraisa^ of
relative
volatility of the liabilities
each, there would be allocated
an appropriate "strip" of cash and.
assets, in quality, marketability,
maturity, and yield suited to the
expected
fluctuations
in
each
in
class
The more stable the
"bank."
deposits,' the longer and higheryielding may properly be the In¬
vestments allocated against them
—with due regard always to pro¬
of
conservative margin of
viding
a
safety,
but most definitely,
institution—generally speak¬
tion of the deposits.of a
bank .vis-a-vis its
the
country as
a
making
with¬
fetish of "shortness
particular
city, district and
whole, which the
Such
sake."
pro¬
provides
of the
demand, time,
yardstick
useful
most
a
a
shortness'
for
_
profitability of your
and savings deposits, in terms of
the average rate of interest re¬
ceived on assets allocated to each,
and the interest paid on savings
deposits.
Time is riot available
nor
is it appropriate .now to en¬
the ramifications of
procedure, since the de¬
application must necessarily
large
upon
such
a
tailed
be
highly individual matter for
institution. I leave the sub^
a
each
ject merely with the note that the
most successful and long record
mutual
of
the
savings
banks renders
composition of their portfolios
quite useful as a yardstick in es¬
tablishing the nature of the sttip
of assets allocated against savings
deposits. The longest and highest,/
investments
yielding
rally go against capital
the overall excess or
will natu¬
funds, and
deficiency of
liquidity may then be measured
by what is left for demand depos¬
the latters ex¬
its, in the light of
pectable volatility.
Interest
of
Future
future date the busi¬
banking system has suffered the
full' impact of the stresses and
vations on the subject were con¬
tained in a not too voluminous
The Frenchman's
demand.
loan
cial
anc
picture will change for the
ness
"The Feeding Habits of the Ele¬
phant.The Englishman's obser¬
plainly bound, entitled "The
Elephant from the Viewpoint of
ply to meet all ordinary commer¬
cedure, incidentally, also
ture
Frenchman
a
core"
in our
provide am¬
posit rise since 1941, however in¬
flationary
in origin, cannot be
canceled or significantly reduced,
on
who used to meet at intervals and
of
flow
out
Englishman,
an
"hard
government budget cash surplus
cannot shrink
greatly. The de¬
four prominent zo¬
German,
"The Love Life
over
Scott,
remark¬
position
our
ton, First California Co., and Nor¬
man A.
Tulk, Noble, Tulk & Co.
and.
B.
a
is demonstrated by
as
the Sportsman."
three-year terms.
D. Roger
Hopkins, Jr., Hopkins, Ilarbach &
Co.; J. Derry Kerr, Kerr & Bell,
Oliver
bankin:
framework 'of
Bateman, Eichler & Co.; Harry B.
Brooks, Wm. R. Staats Co.; D.
Roger Hopkins, Jr., J. D. Middle-
According to W. G^ Paul, Presi¬
dent, the Exchange had the great¬
est volume of activity in 1948 since
1930, showing an increase of 40%
for
the
of
system as a whole, of business as
a whole, and of the - fiscal policies
finance have operated,
some degree stultified
their outlook. While it is true tbat
in a measure ours is a service in¬
in
gaged
have not to
what
Hoffman &
actions
net
by
large amounts of debt out of ex¬
.
1960/65.
Elected to Board of
the
governed
partly
and
regulation, and
warnings under which those^ en¬
control,
of
years
th ick
1958/63 and
control
cess
boils
.
the sizable buyers of the2%s due 1959/62.
2Ms due
port¬
.
.
anc
working assets of an indi¬
vidual bank are partly within its
folio. I sometimes wonder whether
simple words. An American wants
.
.
are
...
Corporate, bonds are being sold by savings banks and the pro¬
ceeds are being, put into Treasury bonds.
.
The spread in yields
between high-grade corporates and governments has narrowed to
the point where many institutions are liquidating the former securi¬
ties in order to acquire government bonds.
World Bank obli¬
gations continue to get attention from deposit banks and non-bank
.
are
and
tem of
.
MARKET MEMOS
investors.
towards
men engaged in commerce
industry, but this aggressive¬
ness, from
my
observation, ap¬
pears to be confined to operations
as
other
and
modest recovery from levels that would not have been
reached were it not for the downside fear that fed upon itself.
represents
course
deposits
by the government to ex pane
greatly over the foreseeable fu¬
ture, and in the absence of a large
their
quite as alert
businesslike, and profit-conscious
advance before
to
earn¬
.
market
government market
of
understand,
size of the
the
of the
nation is unlikely to be
responsibilities
their depositors."
time being at least, the important thing in the govern¬
seems
to be how far will 'the managers allow
bond
that
all
of
IIOW MUCH HIGHER?
For the
We
and
and should
economy
its,
depositors.
own
almost quote verbatim the ex¬
pression which he used. "Profit of the government. In what I have
making is, of course, the dominant to say on this matter; ! Jim forced
motive
of the
average
banking to assume as a framework of in¬
institution, event jf the best ,i6f dividual bank policy, that the to¬
frequently subordinate
above
will fluctuate with changes
one's
ings to the conscientious discharge
The limits of the mar¬
.
.
set
bank
own
ebb
this
The
time.
deposits
banks—a
heart" for
fixed in my mind that 1
so
them
factors
Treasury
the
concern
one's
of
assuming that the spread between
short and long yields constitutes
a
sufficient incentive to lengthen
—a
condition whicn prevails at
past and future possibili¬
ties of one's own community ana
Deposit Trend
Many bankers
ment
my
can
.
.
mean
.
in
dear
structure
and the
^'
came
the
The
size of the public
that the money markets
are
going to be under the domination of the monetary authorities,
and this presages low interest rates for a long time to come. . .
debt
been
when I was
working for a studious and able
firm in the investment banking
business, the salesmen were told
by one of the elder statesmen oi
adverse
an
ago.
the
insti¬
About 24 years ago
.
is indicated that the crying need today is for the maintenance
earnings and practically nothing is heard about liquidity which
of
as
years.
though
It
-
the
•
sound
banking practice."
This touches on something which
at, because
The market is full of buyers, and it seems as
.
tutions
in the main, can 4£pend
retaining. Tins amount, it is
submitted, rrtay properly be kept
continually invested in the high¬
est grade securities withotit
too
mucn
regard for their maturity,
bank,
upon
this
investments in ordei
profit but means
obtaining the highest flow of con¬
tinuous income possible after be¬
ing thoroughly conversant witi
cedure
to get these bonds back,
on
of them at higher prices than they
many
the
present time the rush is
a
'
to sell them at a
k
At the
■
it
make
\;
V
purchasing
in¬
vested capital.
co
to
'
'
one.
*
earn-
on
strive
can
we
that anyone
bigger bank portfolio
a
Naturally, the term "profit mak¬
ing" docs not, for a bank, mean
ex¬
The article
all sellers and
were
but
better
a
as
for
cess
a
.
well
make
can
expenses
as
elections last year
It is not suggested
to
reasonable
the fear of lower govern¬
liquidity complex that institutional
long Treasuries wanted to get rid of them, but fast, before
.
bond prices created such
none
.
.
.
ing
cardboard,
Better!"
operat¬
cover
principal buyer, the Federal Reserve banks,
being hit with plenty of bonds.
Today again the Central
Banks are the all-important operators in the government market,
but this time they are the
only sizable sellers of Treasury obliga¬
were
ment
can
adjusted to
produce ,t h e
these obligations and the
mono¬
a
held
together by brass paper clips, the
title of which was, "The Elephant.
How
to Make Him
Bigger and
be
income
produced
in
bound
graph
bank s)
vestmerits
American
The
their
remaining in-
...
abrupt turnabout in prices of government securities makes
to believe that just about two months ago no one wanted
hard
li¬
quidity,
SELLERS NOW BUYERS
The
for
sufficient
under
2% % due 1960/65 the bellwether of this
more
a
providing
group. . . . The tap bonds are getting good buying as the longest
and shortest maturities vie for the spotlight with the 2*4s seemingly getting
.
four
last
investment
an
dissertation ori bank investments which
9/15/67/72 is the market leader, although the
and the 21/£s due 1956/58 are being well
1956/59
.
-
pamphlet which reached my desk a few months ago there was a brief
pointed out thai fortunately a banker is able to
reasonably accurate projection of operating costs and then went on to say
In
d
to make
2*4
business, contends income motive in its operations should extend
a
policies/and a bank's portfolio should mean purchasing investments wJh view of ob¬
taining highest'flow of Continuous income possible, after being conversant with structure of one's own
bank and its deposit fluctuations and trends. Foresees stability in present volume of bank deposits and
stresses dependence of investment policy on "bard core" of savings deposits.
Urges actuarial view? ;V-y*
point in judging investment results.
'to its investment
Federal's
this
Reuter, asserting banking is still
Rates -■:(
have made no mention of
I
of
future
highest
An
and
capital
rates
on
the
the
invests
long-term
grade
ments.
own
past
interest
appraisal of
one's
funds position, the
record of ones' own deposit
loan
fluctuation
and
the
relatively
one's
task of assaying
community and de¬
easy
own
positors, is a factual study torn-.,
pared with some of the crystal
gazing which has to be resorted to
in determining the long-term inrC
terest rate level over the next 10
15
or
years.
Some proof of
has been very
past
have
the
with
or 13. years when many
blown hot and then cold oil
12
subject "of
a
long-term
bonds
consequent loss of income/
Successful
•
this
evident during the
banking,
(Continued
and
on page
money
34)
w»rww-ww>ww«w*»i, iknumih
22
(450)
THE
COMMERCIAL
CHRONICLE
FINANCIAL
&
Mid-West Stock Exch,
Curb 5 and 20 Club 7
Securities Salesman's Corner
Edward
member
There
is
one
way that you can be sure to make a great effort
and still get nowhere—and that is to
go around in a circle. There are
times when many salesmen fall into the
unconscious habit of seeing
the same people TOO OFTEN. Familiar
faces and places grow on us.
But it is true that staying in the same
pasture sometimes does not
A.
O'Brien,
the
of
the
of
Curb
tne
the greenest.
,
an
observer.
Neither the Detroit nor New Orleans Stock Ex-;
changes sent representatives..
"
dames EUDay, President of the
Chicago Exchange, who has been
the leader in promoting the consolidation' said the linal plan will
o 1
Presiaent
be based on the reports of the various committees which nad beem
the;, g r o u p
since its for*; studying the proposal.
He estimated it would, take a month for the
plan to be prepared and two or three additional months before it
mation
ir.
of the inherent features of the securities busi¬
one
is the fact that there is much less
stability to the average invest¬
most other lines of endeavor.
It is absolutely
necessary to cultivate new business constantly if one is to even
ness
Landsberg,
ho
w
sides the
fact
that
it
must
be
done
in
business.
C 1
u
t h
people be¬
a
healthy
a
b
i
tr t i
me
liours in
Kimm,
day, and probably
even
Edward
A.
James J. Hop-
O'Brien
•
:
k i
i
n s
w
M.
efficiently a salesman can double or triple his earnings—just by the
simple expedient of seeing a higher calibre of prospect. Those who
can invest in
larger amounts
those who are easier to see and
change who will complete 25
.
.
with
these
those
.
.
.
who
are
.
receptive to suggestions
more
the clients that count when it
are
ter business.
7/':7; ]■
.
comes
77'7'/77
to
doing
.
.
.
more and bet¬
7-7'/7"7'777
Many a salesman goes back to some quite likable customer again
again. He spends several hours obtaining a small order, or he
gives so much service that his time is squandered. Habit becomes
very strong in such instances, and even if the realization is there that
and
the game is not worth the
man
candle, repeated calls are made;
digging up small odd lot orders,
works much too hard
Many
a
or doing
much that the profit in their
orders are insignificant. By the end of the week he's
dog tired and
poe much better off financially than when he started.
//"A*7 :
business with people who shop around
There is
you
great deal of better business available than that which
You would be surprised to know of some of the ac¬
a
have.
now
so
obtained just by going out and seeing
Contacting and following up leads is like blazing a
you never know when you may uncover a gold mine.
enough people.
trail
.
.
.
There have been
answer
to
clover.
cases
One case,
lar
newspaper
account.
As
where salesmen have called upon prospects in
advertisentients and have literally fallen into
with which I
This
is
large accounts that
and go after
unusual
am
to
familiar, led to
be
true
obtain if
you can
them.
/
,
you
four million dol¬
a
J. but there
patiently keep oh
.
are
many
your toes
are obtained you can still keep in
by telephone. The time you spend obtain¬
ing a small order is sometimes greater than a larger one. What hap¬
pens when a doctor who is a general practitioner gets too many $3.00
man
He becomes
a specialist and raises his fees.
He has to do it
Bigger accounts, better accounts, are the difference
medium earnings and high earnings in every business.
If a
believes he
is
anywhere in this
accounts
.
.
.
good
or
(and you should if you ever expect to get
any other business) then go after the important
that is where
and better
success
be found.
earnings
are
to
sure
777:^
N. Y. Curb Exch. to Vote
by mail
rates
on
Wednesday,
stock
on
transactions
exchange President.
submitted
was
Curb Exchange
on
Jan.
20
by Francis
v' ;'
>
'
the
Jan.
board
of
1949.
19,
To
become
its
regular meeting on
effective the. amendments
at
governors
must be approved by a majority of the votes cast by at least a
majority of the regular members of the Curb Exchange. The voting
period is of two Weeks' duration with an additional two weeks
1
possible in the absence of sufficient votes.
V
; '
,
*
If so approved, the revised commission schedules would provide
;
estimated 13.07% overall increase in stock commissions and woufd
become effective as of the opening of business on
Monday, Feb.
an
'14, 1949.
...
..
7
'•
••
v
Issue underwritten by national syndicate headed by Blyth & Co.,
Inc. and
»
annual
on Jan. 25 awarded to Blyth &
Co., Inc.,
Halsey, Stuart & Co. Inc. and associates, $50,000,000 World War II
veterans' bonus bonds, series A, due Jan. 15, 1953 to 1964.
The group bid a premium of $1,111.10 naming a 4% interest rate
for bonds maturing in 1953 and$
1954; 314% for those maturing in premium of 2% and accrued in¬
1955 and 3,10% for the 1956-1964 terest.
7:
maturities, representing
terest cost of 3.16%.
a
net in¬
The under¬
reoffering the bonds
to yield from 2% for
are
The
$50,000,000 of bonds
sents part of
000
an
authorized
amendment
at
repre¬
issue of $60,000,by constitutional
an
election
held
those due 1953 to 3% for the 1964
last
maturity. Bonds maturing Jan. 15,
are redeem^
valid general ooligations of the
State for the payment of the prin¬
.1954, and thereafter,
able
in
whole
beefsteaks dinner
entertainment
of members
become
of
Baltimore
the
of
the
Stock
Exchange
on
Philadelphia Exchange consti¬
steps incident to the formal consolidation of
the twO\ stock exchanges..-Tnere still remains the
approval by the
membership of the constitutional, amendments to make the merger
complete.,
1
'
7
;
of
the
members
tinal
,
•
./The Baltimore candidates,
/
.
«
•
.
to be voted on Feb. 2, are J. Dorsey
Stock Exchange; Floyd W. Bousman
Brown,.-President, Baltimore
of Sterling Morris &'
Bousman; Leon H. Block of Simon J. Block &
Son; Anthony D. Cassatt of Merrill Lynch, Pierce, Fenner & Beane;
Elisha
Riggs Jones of E.
Alexander Brown
R. Jones & Co.; F. Grainger Marburg of
Sons; T. Stockton Matthews of Robert Garrett
&
&
Sons; W. Carroll Mead of Mead, Miller & Co.;. Philip L. Poe of
Philip L. Poe & Co.; John Redwood,. Jr.,; of Baker Watts & Co.;
followed* the
the
Philadelphia
"neither
local
Stock
Exchange, said the new exchange will be
Philadelphia nor to Baltimore but indigenous to
to
,
meeting, with Edward C. Werle;
Chairman of the Curb Exchange, 7:77"Through its facilities," Mr. Barclay stated,-"it will provide a
board, Andrew Baird, Vice-Chair-, single market place for the transaction of business originating in
and about the third and seventh cities of the nation."
man, and Col. William A .Lock; 7
wood, Exchange Counsel,v present
as
honorary members and Louis
."Philadelphia and Baltimore members will have equal facil¬
ities," Mr. Barclay added. He said "to continue dual trading floors
Burgers, President of the Ex¬
change Employees' Quarter Cen¬
tury Club, and Daniel Hannafm
Uoe
or
in
Nov.
2r and
will * constitute
part,
in the
cipal arid interest primarily from
inverse order of maturity,
begins
the avails and proceeds of the tax
ning Jan. 15,
plus
1953, at
par
would
have been uneconomical."
Therefore it has been agreed
the "present floor in Philadelphia for the joint operation."
To
td
effect this
President of the Curb Floor Clerks'
established
Association,
arrangement private telephone channels will be
directly from the Philadelphia floor to Baltimore and to
the
of
stein
was
guests. Jack FeinChairman of the coW,
as
mittee for the affair/
offices
members; in
Baltimore.
A joint clearing corporation1
offices in both Baltimore and Philadelphia:
also will be set up with
' "■A
O'Brien, who first went ir.
on" the
work
a
i levied
on
beer.
old
outdoor
Market in
Broad Street
rand
in
boy
1915
and
Curb
an
as
er¬
served,-iri
the U. S. Navy during World War
was elected
to membership on
I,
Broach
Faculty of i
Rutgers Session::.;
on
TULSA,
OKLA. —Falkner
C.
January. 1920. He Broach, Vice-Presidenc and direc¬
member of the Curb- tor
National Bank of .Tulsa, has
vviil complete-the three-year ten¬
ure
to receiving a di¬
diploma is issued
jointly-by Rutgers University and
is currently a
Exchange board of governors an:
has been nominated for reelectim
to that office at the annual meet¬
the
He is
Exchange
a
member
committees
of
been
chosen
nation's
to
join
53
of
ti
the
Admitting
&
vest-
n
will admit
Harold
Bull
J.
of
to general partnership
Rosewater, Charles Mi
New
York
City,-member
of the New York Stock
Exchange,
Harry N." LePan and Corwin L<
Liston; and to limited partner¬
ship Edward D. Untermyer, Jean
New
York
on-the'
faxulty
Jan.
on
^l7;;Intef4
est of the late William Pendleton
for
19
to New York
meeting of
a
faculty
in the Bilt-
Hotel.
more
In Inveslm't
of
School
this
SAN
ment
to
will
the
profes¬
sional
bankers. .Broach,,the
and
the
on
servingTor
only
will
faculty,
the
His first tenure
was
second
time.
two summers
i'-; '"' 7;i:T■■';"7'v7";7'-/
faculty member, Broach
of six
one
chosen to
men
lecture in the Investments section.
The
p.m.;
will
of
spring
for adults,
the
Down¬
the
beginning Feb. 1.
provide three
will
course
semester
among
ago.;
The
the
in
University
Tuesday evening from 7:00
9:40
to
Falkner C. Broach
coveted honor
for
This course,
presented
Division
every
a
Oklahoman
be
town
Graduate
is
TEX. — Be¬
during the
success
Technique
semester.
faculty of the
be
its
term, Trinity University is
again offering its course in Invest¬
for
Appoint¬
School
of
fall
sessions.
ment
Technique
ANTONIO,
cause
summer's
King, member: of; ther A.'As a
Exchange, will .retire will be
from the firm
March
School's
Trinity Univ. 'Bourse 7|
ment' leaders
versity,
bers of the New York and Cleve¬
land Stock Exchanges, on Feb.' 3
the
e
at
Rutgers : Uni-
CLEVELAND, OHIO—Prescott
Co., Guardian Building,', mem¬
City
top
Banking;
Many New Partners
Graduate School.
Mr. Broach will
go
banking, trust
andf-i
ate
Prescott Go.
necessary
ploma... The
that market in
hours
of
college
credit
is approved for veterans
der the*"GI Bill."
The
tion
cover
course,
of
E.
S.
under
C.
un-»
♦
the
instruc¬
Coppock,
will
Investor's
Dilemma, Char¬
Media;
Economic Cycles,- Flux of Supply,
and
Demand, Characteristics' of
Commodities,
Theory
of
Pric'q
Pattern 7 Development,7 Logic
of
acteristics
of
Investment
study of
System, the Technical
Analysis^' Internal Mar¬
money : market,' government and ket
Analysis,7 Class Construction
agency obligations, iand invests Of Essential Trend Indices, Line
E. N. Potter to Be Partner
ment
ipoUcies ; and> practices, for. Charting; Bar Ghartirig/ Point and
the bank's bond' portfolio.
7
*n Stanley Heller & Co. ; 7;
Figure Charting, etc. 7
T r *7 7
/•;; The 1949 sessions of the Gradu¬
Enrollment is limited to 25
Jr.,
ceased Jan.
The State -of Louisiana
prices
las*
Wuestehube.v
The
and
Palmer,
Halsey, Stuart & Co. Inc.
and
at
194k
to
one
.
Gilbert .L.
writers
in
club
Curb
the
Hy* Palmer, S. Livingston Mather
and Charles G. Raibley.
fVy
•
$50,CCD,000 Louisiana! Bonus Bonds Marketed
,r
Ex¬
years
2U
tutes
of The Gradu-7
Amendments to Section 2, Article VI, of the constitution of the
Curb Exchange incorporating the proposed commission changes were
by
.
the
Jan.
posting
Henry C. Hagen, Felix Hessberg' Joseph W. Sener of John C. Legg & Co.; Harry M. Sheely of Harry
M. Sheely & Co.; Cornelius B. Sheridan, of Mitchell &
Robert Lehman, James A. McDer-i
Co.; Walter
'
mott, Austin K. Neftel, J. Edward Koppeirnan and Walter M. Weilepo. \v77-7:/7;7
Walsh, Rudyard K. Winchell, John- :77 In an address to the " Cashiers Association of Investment and
Brokerage Houses in Baltimore, William A.' Barclay, President of
Wise and W. T.
.
approved
of
floor transactions and admissions
Higher Commissions
to the regular members of the
Adams Truslow,
,
the
ing next month.
proposed increase in the schedule of New York Curb Exchange
commission
s
night, bringing to 156 the,, full
membership." The new members;
are Joseph
Decker, Bryce, A. Fyey;
of
A
of
initiatedv to
ones
in self defense.
between
by the various memberships'
_
larger accounts
touch with the smaller
patients?
members
members
were
Mr.
and
new
vote
a
,
counts that other salesmen have
new
Eleven
as
•
Treasurer; and Lawrence
Stern, Secretary.
spend more than half of them talking with customers and
prospects.
The most important asset any salesman has
is TIME. If it is used
talk
a
The
v.
during
elected Vice-President, Walter E
a
for
Exchange Merger Nears Completion
the
There is always the
possibility that you will uncover some
NEW
CLIENTS
THAT- WILL
BE
MORE
PRODUCTIVE
THAN
THOSE YOU NOW HAVE. After
all, there are only eight working
the most efficient salesmen do not
submitted
Phita Batt.
had
headed
among NEW
order to maintain
be
Mortimer
fields.
advantage in going out
would
1947, succeed.
keep
Up with the natural dropping off of clients that comes about period¬
ically. Yet, many salesmen continue to go back again and
again, over
the same ground, until forced
by necessity to branch out into new
There is another
las
annual
t
ment clientele than in
•
.
meeting." M r.
O'Brien, Vice-
.
Unfortunately,
major central securities market.
The meeting isvthe second of
series of conferences regarding the proposed merger. Harry Besse,
President of the Boston Stock Exchange, appeared at the conference
one
i
atv: the
recent
most
nourishment—grass that is grazed upon continuously,
often grows short and stubby. There are times when
"distant pastures"
are
;
a
Twenty
Club
pro¬
vide
Exchange
members' Five
and
prepare
memberships.
On Jan. 21, representatives of five Mid-West stock exchanges,
comprising Chicago, Cleveland, Cincinnati,- Minneapolis and St.
Louis, convened in Chicago to consider a plan for consolidation into'
Curb
Exchange since 1920, was elected
President
Jan. 21 to
on
pl^n of consolidation to be submitted to
regular
a
York
New
Merger Parleys Resumed
Representatives of exchanges met in Chicago
Eiects O'Brien Pres.
By JOHN DUTTON
Thursday, January 27, 1949
On Feb.
member
of
Exchange,
in
Prescott
18.
&
Co!,
>*;777 *
,
3, Eliphalet N; Potter,
the
New
will
be
York
Stock
admitted
to
partnership
in /Stanley Heller &
Co., 30 Pine Street, New'York
City/members of the New York
Stock
and
Potter
has
Curb
Exchanges.
been
a
partner
Mr.
in
Combs, Maxwell & Pottery which
will
be
dissolved
on
that
date!
.course
the /Federal
cover
a
Resetve
ate School are scheduled for June
20
to
on,
the campus
July 2.
sity,- at New Brunswick, N. J.
The
Graduate
tablished .in
can-
School
was
es¬
1935 by The Ameri¬
Bankers
bank
officers
Association
and
to
certain
f
7
77;,; 17
Eugene F. Durand With
offer
E. F. Hulton & Co.
bank
7 TUCSON,
employees educational opportuni¬
ties jof an advanced character, in
Robert
per-
sons,
They will be held
of Rutgers Univer¬
ARI^7—
:
Eugene
F.
becom ing' associated
F,; Hutton & Co., 20 East
Pennington Street.;
Mr. Durand
Durand:;, js
with
;
E.
G. Kennedy, Jr.,, member the fields of their.professional inExchange/will withdraw, terest.
was, formerly; senior
partner of
from partnership in Stanley, Hel't v:/About- 950 students, will:attend ;Eugeiie
F<.J>ur^rid & Co., which is
ler & Co. on Feb. 3.
1
1...77, 7 this-year's sessions,, some .of. whom being dissolved as of Fgb^l.
of
the
*
Volume
169, JJumbej 4772
THE^COMMERCIAL
,,.
A Plait for American Investment Abroad
^
Eric Johnston proposes creation
of
3.v 3'""':'
\3''.
'■
1
.
By A. W. ZELOMEK*
'
Mr. Zelomek foresees
an average decline in
general business during 1949 of around 5%, with sharpest
drop in last half of year. Says retailers are in more liquid position than year ago and merchandise
supplies are better, but there will be more competition and pressure on profit margins, will continue,
v
Stresses importance of sound buying for merchandisers and an aggressive selling policy.
a dispatch of the United Press from Washington^ on
Eric Johnston, President of the Motion Picture .Association
of America and former President of the Chamber of
Commerce olme
U.
S., has
proposal^fo
plan to implement President Truman's
a
Economist, International Statistical Bureau, Inc.
•
'■ '
According to
Jan. 22,
use
American
be
capital
poration'
de-;
called
'World
with
.^conomic Cor¬
tdtah capital
a
of
velop friendly
^1,000,000,000. 1 i>r6p'ose' thaf'thfr
countries
fund
throug hout
United
the world,
loss
3 I suspect very
,
,•
t*
h* <4
,
<"'k« v
.
<n
/r
*
"I intend to
take
State
on
confiscation
this plan
year
'
other
ston
istration
tee
M
Johnston is
re¬
ments
ported to have
Eric A.
Johnston
with
the
United
Press.
I
prise.
setting
propose
in
John¬
up
a
body to
business
be
acumen
on
enter
Cleveland
—and
the
stock
response
ness
else.
mon
market
has
shown;less
to inflation and the busi¬
boom
The
than
almost
anything
price of com¬
average
stocks,
as
measured by Stand¬
ard and Poor's
index, is only about
19% above the 1935-1939 average.
Most other
business and
indicators
h
a v e
'
financial
recorded
far
greater increases. To mention only
two, the wholesale commodity
price index is 103% higher than
for
1935-1939, and the physical
volume of industrial production is
&4% higher.
33:333
"As snown
the diagrams,
the
relatively low level of the stock
market
is apparent not only in
stock prices, but also in the vol¬
ume
of trading.! The diagram at
the left compares total personal
income with common stock prices,
the data being plotted at quarterly
intervals
beginning .with
1934.
Both curves are indexes, and the
base period or 100 is the 1935-1939
average.
Stock prices are repre-^
sented
by Standard and Poor?s
index of 416
on
common
stocks.
believe
o
other
inflationary
of
estimates
sales
gear
operations
your
to
than
to
A. 3W.H Zelomek
conclude
be-
-
variability in sales results.
that
suggest
attitude
time
conditions., What
rather
you
maintain ar.
uncertainty for the
of
being.
to
as
You
will
assure *
your
success.
.
see
can
like
be
already
this
what
it
point in worrying about it. I be¬
a deflationary trend has
already begun.
At the moment,
at least, it seems likely to me thai
it will pick up downward mo¬
that'df
crea&eliriincome, inflationary
timent,
-else
employment
insist
!pli% tbe problems that
you
will
In
terms
seems
is
tition.
this
add
1935-1939-100
of
income,
the
of
4%
the
^advantages that normally ac¬
to the mass, buyer.
,
3
believe I am not being overpessimistic when I point out that
the independent store cannot meet,
this competition on the grounds
of
price " alone.
Group
buyinghelps preserve the balance, but
the independent store must also
depend on prestige values that
I
peal.
.
Even
amazed
or
shocked
if
I
tell
ther
crystal
a
the
ball
that
dealers, for their share in
purchasing power.
Ffom
answers.
common
grind
the
viewpoint,
there is no question
you should do.
'
ever,
what
In
goods supplies increased.
(b) There
is
another
"
durable
bfeen
inventory and
policy you should
operate during the first half as if
would
be
ment
the
second
In
half.
retail
home
.3.
outlets—major
policy,
furnishings,
you should operate with an ag¬
gressiveness and coordination that
creased the volume of residential'
mortgage debt outstanding.
3 Installment
of
rising income; and which will
centive
be
even more
essential in
of
decline
you
will -have
a
intensity.
meetjbut they
you
marked effect
3' 3 .-33' •' ' '
.yor Ythe' sake!
of
;
the
;;
outlook
to
merely ;in
sales and
be. \ Let
terms
as
this
income
of
briefly
do
and
me
as
lS"
possible.
y.
t.' '
.
H
•
V
'
Reasonable
record,
therefore,
1 e t
me
summarize
briefly what I believe the business
a
period
-
Here
'
'
'
*
^
^'
' 3
Certainties
*
'
'
are-the
things that I be¬
lieve should guide your operating
policy, in the first half of 1949.
These things are all of them rea¬
certainties.
sonable
be
year I doubt
much change
trend
have
first
of
income
leveled
that there will
in the current
and
off.
quarter will
tinue,a little above
sales.
Income
Both
in
probably
the
con-
a year ago.
In
liquid position at the begin¬
ning of the year than they were
a
year ago.—This is all to their
advantage. It is an advantage that
more
they
will
need,
and
Which they can benefit.
one
The
from
con¬
dition of most wholesale markets
■
jV^Ap, address by
Mr. Zelomek
before'; the. 38th Convention of the
Retail
Dry
Goods
Association,
New York City, Jan. 13, 1949.
an
,
3.-;
in¬
they were;
I
as
An increase in credit outstand--
ings fri
and
the
consumers
increase
as
a
whole—
last
in the
two*
has been rapid and substan-;
tial—raises the break-even point
years
the
of
family.
average
The
con¬
whom the general mer¬
chandise outlet depends, must not
sumer, on
3 /During the first six months of )" (1) Retailers generally are in a
the
were
But
installment
well as the increase in
mortgages,
create
commitments
against future income. '
*
sales,
f
>
sales
sales while
taking1 place.
are
ing volume of purchasing power.
3'''
-
if
to increase
relative share of a diminish¬
your
their
on
new
particularly have rapidly in-1
ers
would be appropriate in a period
;th4;problenii:
through
appliances, i
cars, etc.—.
but to the fact'that urban consum¬
merchandising
your
goods
to the items that are sold
in
decline
some
great deal of selling in
lines has already*
accomplished on an install¬
basis.
I refer here not onlyV
A
tion.-
.
commitment
there
factor'
that also deserves some considera¬
buying,
your
competition
It
new.
how¬
about
sense
-.3*
is
nothing
began to reassert itself
when the war ended, as durable
This
you
out all
practical
con¬
sumer
be
magic
a
nor
will
against durable goods
distributors, particularly new car'
that the economist has found nei¬
formula
3
Stores operating in the gen¬
merchandise field
will
be;
eral
will
3'
must also
tions for 1949.
(a)
ap¬
3V:
in planning opera¬
considered
be
competing
you
;33:
Several other factors
showing a small gain. At
if the first half plateau if
maintained, income for 1949 would
show only a minor increase.
believe
price
based on more than
are
best,
don't
again,
crue
the year
I
chain
and
order
back in business
the
since income begins
year,
,
more compe¬
having been deprived of sup¬
plies during the war period. They,
are beginning to exercise some of,
worst
5%.
or
Mail
are
will influence your efforts. They
will not determine the nature of
3 3, OF PERSONAL INCOME
opera-
after
foi
to
up
—
Nevertheless, outside conditions
..
a
t
stores
that,
however, would
imply s
fairly sharp drop in the last half
33 General Business Outlook
PERCENT
simulta¬
merchandising
aggressive
,
>
with
that will fit in
likely at the moment
decline
a
of
simhave
or
to obtain
schedules
liquid and
delivery
the
on
3 (3) There will be
that
sen¬
He
demands.
tion.
What
by years
ter.
3-V-33
: i
;
as a percentage of
total personal sponse to the rise in business and
;
Any value that • my talk will
income. The market value of stock earnings. At present one jmporhave for you, therefore; is not so
sales is the; Securities and
Ex-,-tant factor is the proposed increase
•much in calling your attention to
ehange Commission's series, whi,ch in corporation .taxes; Any todiw^
these
problems, in emphasizing
begins in 1934. In both diagrams, tion in profits from. ;sd<?h ^action
the data,for personal income are would be at the expense; ,of : divi¬ their;importance, and in urging
-you; to deal with them, as it will
'-'i those of the
Department of Com¬ dends; or of funds,,forr .business
be
in
attempting : to outline a
merce.; This series does not differ operations, including the' maiQfce.r
practical and an effective program
greatly from the one for national nance, improvement^ and 3exfj|iithat will help you.
3*-"
income, and is available by quar¬ sion of physical; facilities; or of
:V. i!
ters beginning with 1929.
f,': both combined.",;?
STOCK PRICES AND PERSONAL INCOME
a
But in most cases he can
months.
the year as a whole?
the
STOCK SAEES AS
3
.
provide
to
neously, at least in the next few
Yet there is bound to be
increase in government
spending, and it is not by any
anything
or
in3l949 to eliminate
store
some
contradiction, is that there
cannot be A sufficiently great in-
:
his
that
tics
year.;
of later
during the entire'pe¬
riod shown on the diagram,'stock
trading in relation to income' was
considerablyunder the ^average
level of the 60 years prior to 1934.
This is due partly to the margin
;
is
function
steady supply of merchandise fcr';
his own store, which has the style,
in the second half of the
mentum
Income
year.
there is not much
yet, and
lieve that
rising sharply during most of
1948, but sales became less Yavor-
which
above
the
may not always be able
all these 'characteristics
petitors.
In fact
much
But; in
begin to exercise his;
quality and delivery characteris¬
favor¬
so
they go down. And you know that
to total personal
;all this has occurred at a time
dropped to a very low
,when general business conditions
point indeed. * An earlier series,
were never more favorable in all
which
goes
back to
1875 - and
history^.
'3
which is reasonably
comparable
; These developments present real
with the curve on the
diagram}1
problems for retailers. And the
discloses that the ratio in 1942 was
one
certainty that can be stated
the smallest in 73 ye.ars. The 4948
heVe .aqd now. without any fear
not
schedules.
time
am
related
is
some¬
You- don't have to
operate for that period for some
I
income has
1942.
obtain
to
on
he can
This
that the market value of all stock
ratio
order
delivery
Toward the second half of 1949.
•
i
;.
,
items
en¬
his counters. There
arte-spots here and there where
the buyer still cannot sit down
and write his own ticket as to
-
as
in
seller
thing to put
legitimate function.
do
,
v;
total
it, its
(2) The condition of better sup¬
marked
.
am
■
plies will continue.—The day is
past when the buyer must kneel,
on
a
prayer rug in front of the
mam
t
T
delivery
handicaped.
departments as a whole, and for
individual items there will be e
•
one
to
you
already encountered in 1948." You
accompanying restrictions yhich went into effect 'will have to
deal with them your¬
diagrams, the market value of al,l in 1934.3; v.y.; 3j ;;
selves,; and how you do that is,
sales of stocks on all registered
"There are various reasons for
strictly speaking, an internal mat¬
exchanges is expressed
the stock marker's^ lack of re¬
y.'Tn
that
short
merchandising operation will
be
origi¬
,a„hle,
markdowns
heavier, , and
nated in the war is clearly reflected'
competition at the
retail
level means certain that taxes will be
in-the sharp rise in total personal
much more intense. ~
increased enough to fully offset
^ .
income, Which is now 175% great¬
All of you know how much liq¬ this. The Veterans' Administra¬
er than in 1940.
Stock prices are
uidation there was in some mar¬ tion will
pay out somewhere be
also higher than ib that year, but
kets, particularly but not exclu¬ tween $2 and $3 billion 6f insur¬
the increase amounts to only 35%..
sively
in ; textile - and
apparel, ance readjustment payments. Pos¬
Thus there is now " an ^extraordi¬
^despite the record high level of sibly the plateau of the fir<St half
nary
disparity betweeh^^pfh'fhhn income.
can be maintained.
But it seems
.-;3 j:--3;"33-; 1
stock prices and total personal in¬
I; All of you know that sales of safer now to accept the possibility
come
as
compared "with earlier .individual
items
that production
have
become
and prices wil
years, ;3
quite erratic, that for some items drop somewhat, and that income
"The
second
diagram
reveals
,they go up while for other items and sales will be below a year ago
sales
—.—
-
the
on
If the store lacks
basis.
tire
'
1948.
importance at this
Current conditions require
point.
to
You will succeed only by running
your store better than your com¬
diagram, the long
boom
of
have too much
was
the
■■■
items
able
tions in 19.49 will not be
sales-volume
truthfully!>In
"
ti,
at
individual
able
the "Bulletin," "that
I
suggesting is that outside condi¬
Company shows by diagrams almost steady in-
"It has been
general business conditions in the
large number of retailers, however, I am
a
1
quarter,
level
the
business
January issue of the "Business Bulletin" of the Cleveland
Trust Company, in reviewing the stock market of 1948, calls atten¬
tion to the stagnation of stock prices and low volume of stock trans^actions as compared with the almost steady rise in personarincomes
said," states
second
littling the importance of general-
The
since 1933.
•
following
Incomes at Lowest Level
Trust
'
Department store sales during
this period may be up a little or
down
a
little.- Frankly, I don't
y e a r
even
i
your success in
the investments."-
in personal incomes, with stock prices and
crease
to
are. most
,n^,t
'
'
best, it
would
probably
maintain
that
level, and at worst it mignt slip
a little bit, but would still be close
at
important;-1
that I
V
I
'
'
.
economist who merely published business fore-
do with
as we
the
developed y o u r success
and
'
were an
<s>-
reconomic
cycle
n o
;
'
thi^poJnU in
Please
:
closely
as
'
<
internal
years.-;
}
.
by
-
guaran-1 problems
Also, it will npt guarantee;
return
a
to
Working
*
tel 1
to
lieve
ordinary'course of
abroad
■
(hon¬
the
the
1
*
you that I,be¬
'business, because i-'want 'Invest¬
r.
told
not
l''"''*
'■*'*
esty-
^capital inlands;3>3 '7
"would
ahead.
r*
compelled
their
Mr.
'
simple
investments against losses in¬
curred
offi¬
s,"
of
corporation,"
stated,
and
Admin¬
cial
"This
;
Depart-
nt
e
investors,,.against
and
„
nationalization
!vested in foreign
with'. the
up
States
through
'
»»•:
much that, if I
^eiasts, I'AVOuld try to impress you with the importance of
should be used to-1 guarantee
-
•
"
*"•
-* •
.
technique and
to
23-
a
confiscation.
■
(451)
CHRONICLE
1949 Business Outlook and Retail Problems
billion dollar corporation to
gaarantee U. S. investors against loss from nationalization and
:
FINANCIAL
places
f* a
premium
'
on
retailers
having money to spend as they go
along. If the store has'it. it will
be
able
to
come
in and
find sal¬
and clothe his family,
regular payments
on
an increasing level of install-*
ment and other credit outstanding.
only feed
but
must
meet
Every retailer consequently will *
be
competing,
the
current sales
forms
the
of
not
only
results
against
in other
distribution, but against
payments
that
(Continued
the
on page
average
36)
24
(452)
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
Thursday, January 27, 1949
actually at work. /The gain
ih ' cars-at-work; is disheartening
cars
Prospects of Railway Equipment Industry
—and it may even
diminish.
By JOHN I. SNYDER, JR.*
>
.Freight Car Shortage Serious
;
A
Chief executive of
railway equipment producer reviews shortage of
ide and describes
handicaps in
freight
shortage
car
which
has been serious for more than
railway equipment during last dec¬
two
years
has aroused shipper
rebuilding old can railroads repairing and rebuilding outmoded cars,
l6ng-continued freight car crisis is new freight cars in much larger numbers than it
clamor, and brought occasional
has been possible
Criticism from other sources.
t6 produce up to this time. Sees economic
fallacy i 1 arilroads repairing and rebuilding outmoded cars,
As an illustration of the
quanwhen more than
40% of car builders' capacity is mt in use. Urges program for
dry in which some railroads find
producing 180,000 new
and improved cars annually as a "national necessity."
themselves, consider the Pennsyl¬
* '
It will help toward a better
vania.
It is the biggest
freight
understanding of the present railway equipment situation
carrying road and handles nearly
if you will recall that we have
been passing through a
unique period. First we had a dec¬ one-tenth of the nation's total rail
ade of depression. Then we had five
years of war. During these 15 years there was very freight traffic. As of Jan. 1, 1948,
low
,,
production
equipment
of
the
which
oft
types
the
railroads
—
•-
—
old
the
_.
During the depression decade
the railroads suffered a net deficit
enough ;o vote. Today
million of the cars owned
by Class I railroads, or more than
bo%, are 21 years and up. Accord-
licly that Johnson is right about
the 14,000 figure, but that he will
settle for 12,000
monthly for the
trWoughout "seven lean years," 1932
ing
the
want and need
very
now
to
1938
bhy
inclusive.
many
streamlined
or
1&33,
neW
Red
freight
Class
mid 2,163 freight
the rock-bottom
To1
get
look
better
a
at
the
In
14
j this age story
points out that
Tnat
cars.
low,
of
was
course.
much
perspective, let's
periods
as
a
More
than
2,600,000
There
was
,
their
"
You may recall that this
to joint planning by the
r.
.
catfse
tfi!
me
double
the
Instead
pansion'
(l9'42
j
.
i
of
this
to- almost
war
to 1945 inclusive)
avdraged about 45,000
deliveries
woul(J
the
into
rebuiu
be
for
scrap
to be shipped to
freight
not
are
for
prepared
now
it
referred to by Mr
Faricy—our doubled demand for
railway,
American
continues
economy
to
expan'dj
.
only
tfrah 45,000.
The
little
a
annual
more
average
dialing the 1920s was about 85,000.
Tftbs, there has been accumulated
ay gigantic
deficit of
deferred
re¬
placement. The freight car deficit
figure indicated approaches 700,ooo:
-
yd;/;,,/..
needs
will
be
supplied
by
about
;r0% greater steel production than
in the prewar peak
year,
1929.
Our
of
use
other
electrical
activity—last-year was con¬
siderably more than twice what it
in
1939; while the electrical
industry is speeding the expan-
Similarly,
there was a sharp
drop in the building of passenger, s^on of capacity to take care
equipment.
During two decades CUJ neec*s
tomorrow.
before the deprersion
had been
we
sehding annually nearly 1,800
passenger
The'
'JOS
annual
was
a
an
year
story
similar.
average
so
tioh there
during
the
the
of 185
new
delivered.
The
locomotives
It
seems
the
cut-backs
sharp; and
in
addi-
-
a
Getting back
to
"main
line."
let's
recbrd further.
examine
"".
'
■
*
-
Car Deficiency Since 1930
There h av been
fhaW
600,000
ffeijght
ihofe
car
loss
loss
from
cars
fleet since
disturbing
mated
a
is
than
the
of
more
the
total
1930.
Far
the
old-age
esti¬
story.
In 1930 about one-third of the
cars
*An address by Mr. Snyder at
Meeting of Association of Cus¬
tomers'
Brokers, New York City,
1949.;
-
-
con¬
alloca¬
suggestions
by
improved
an^ enlarged to keen pace with
the needs of our growing population and our expanding economy.
consider
its
Freight
Because
Car
periodic
have
freight
been
-
<
y
car
hampering
J
duction of 14,000 new
Another
gioup headed
freight
survey
cars
by
by Secretary, of the
for production
' each
month
years.
of 15,000
new
cars
during the next five
Col. Johngon has spoken of
need
livery
of
ODT has
this
use
for
a
14,000
program
to
tee,
V/Z.-p.-'W
three-fold increase in
a
During that year, the
"garage bill" of Class I rail¬
roads
was
nearly
$400,000,000.
During five years it had totaled
years.
total
$1,840,000,000.
That was a sum
enough to buy considerably
than 400,000 new box, gon¬
dola and hopper cars—types which
were
shortest in supply—at 1947
big
more
!■/■''•'
: ;
ample/, evidence
prices.
is
There
the
on
types of
industry,
so
y
that
spending of gigantic sums to
make old cars do is proving to
be "Operation Rat Hole."
Solution
Shortage
of
The
only solution of the longcontinued freight car crisis is new
cars
During last
to
many
in considerably larger
possible
cars
produce
this time.
of freight
to
up
the
increase
level
production the
things:
To
car
builders need
car
two
1
orders
More
and
steel.
more
From about the time that
a 10,000-cars-monthly
program
was
urst
publicly discussed, in late
December, 1946, and continuing
:-/yd /' through 18 months, the railroads
-•
ordering
were
rate
of
at
cars
average
an
monthly.
Of
these orders one-quarter went to
10,000
cars
much, reporting
of some
their
much
quarters to the contract builders.
as
rebuilding
as
the .original
as
one-
•
the
was ver>
jAydelott of the AAR, testi¬
conceded
that
when
than
more
which
cars,
fying before the Overton Commit¬
of
cost
spent
was
the
on
re¬
captive shops and three-
own
During
car
year one railroad
ported to the ICC
stated
that-short¬
there
the rebuild¬
was
the last half of 1948
a sharp change in
this
(Continued
37)
page
on
for
16,000
Spahr Opposes Increased Gold Price
freight cars', notably gon¬
dolas, threaten to bring about cut¬
backs
in
steel.
overall
production
de¬
cars
monthly. Mr. Faricy has said pub-
Executive
of
.
The
mates
the
railroads
old
of
during the next ten
AAR figures,
covering both
at
cars
annual
an
the railroads and private
show a rapidly
rate
car
lines
•
qn
the conten¬
able
tion that since
•fV'
During 1947,': retirements
mining 'costs
averaged; less
than '6,000
cars
have risen so
monthly, as* against about 2,000'
high
some
per month during the war.
Re¬
tirements during 1948
average
monthly.
•
,
rose
of
V
mines
to pro¬
%
r*
o'
they are com¬
pelled to sell
months
deliveries exceeded
re¬
•JglpZ
-JtAL
-
/
I
about -500
margin wag
"monthly.
cars
Cars
Still
the
and
factor
total
awaiting
AAR
f•
of
has
repair.
of
A
raised.
a
order"
recent
than
more
AAR
amounted,
cars
figures
fine
Spahr,
to
Walter E. Spahr
An in¬
'llf
freight car situation as of Nov. 1/
1948, with one year earlier—again
a
Executive
Vice-President,
National
nation has
a
Committee
supply of gold
adequate,' to
/support its
paper
<;and; deposits, as; we ; have,
„
money
vate
if conventional standards of
in
lines—show
ownership of
gaity
urement ancl comparison have any
of less than
cars
meas¬
this in spite of i-value, Itheiie is hoi known valid
delivery of nearly 112,000 new' reason Why the size of that na¬
22,000 in
the
one
year,-
.
in
cars
that
But the
line
12-month
gain in"
and at
15,000.
I
net
a
-
cars
•
tion's
-/
work-was:onlyabout
a
tendency
to look at sincreases, in ear deliv¬
eries and to conclude that we are
standard
srduld be
;
j Should
value
v
afraid- there is
am
period.
actual!"
our
the
;
paper
Under such
paper
con¬
price of
money
gold will fc j determined by all the
of supply and demand af¬
fecting both the gold and paper
forces
?
arguments. in behalf of
subsidy
that
*
,
"The
are
such
granted-
subsidies
in
Africa, that
a
to the general effect
Canada
we
have
and
been
South
subsidize the sil¬
interests,' the farmers and
others, and that, therefore the gold
ver
covering both railroads and pri¬
car
will rise. This1
money.
on-Monetary Policy.
the
terms of such paper
the
Economists'
normal.
comparing
be
$35 per fine ounce.;
; "Whenever the fixed link be¬
tween paper money and gold is
broken, the value of irredeemable
money in terms of gold will de¬
cline
and the- price of gold in
ditions
be
in
conditions/would
and gold is gold.
price of gold would
be injurious to the people of the
United States," says Dr. Walter E
crease
line
statement reported that the
"bad
per
should
the
been
off
cars
$35
the;
on
that the price of gold
is simpiy because paper is
ounce,
and,
therefore, the
price of gold
*
Awaiting Repairs
another
in
only
/
fr
/
their, gold • to
by about-. T.600
cars
monthly. During the July-Novem¬ the Treasury
period
Vests
money,
such
well above the Treasury price of
tirements
at
reason
under
longer make a
profit while
■
paper
valid
■
can. no
8,30C
over
During the first six
ber
on
ket for gold which would be higher than the Treasury's present fixed
price; and a subsidy to gold mines. All these proposals are apparently
chiefly
;
——
rate,
year
Committee
based
rising retirement
last
National
value.
100,000
an
Economists'
"Proposals are being made for an increase in the price of gold,
through such methods as devaluation of the dollar, again; free mar¬
should
retire
duce
of
*
that
years.
Vice-President
Monetary Policy says it would be injurious to people. Sees better
monetary remedy in return to gold standard at present legal gold
yy, " ..•/>> •*"];; "/• J
"Railway Age" calls atten¬
tion to another
phase of the freight
car problem.
This periodical esti¬
a
Interior Krug estimated the need
the
that
industry have
Shortage
One, by a committee appointed
by the former Secretary of Com¬
monthly.
repair has been gen¬
reported this
on
•
Mr.
" "
metal-working customers
regularly
30,000
'shortages
V
the age and condition of
tion coming from anybody in the
you
was
ten
for
available.
per year
numbers than it has been
cars.
sugges-
i steel industry is self-evident
car-,problem
of
a
That
$227
latest figure
the
pas
during the war years, has
been increasing. Both are uneco¬
nomic; especially so in view oi
in the
some
The absurdity of such
the
Studies
are
replaced in about It
low
10,000-cars-
back to 7,500 cars
monthly.
iqonetary
unit
reduced," he continues,
; oqrj government
dollar ' again, we
de¬
will
then have joined the company oi
those people | ih j foreign ] nations
whose governments cannot or will
mine^
A
should
valid
these
be
answer
subsidized
is
subsidies
that
is
miner i entering
Every
too.
:
none
of
defensible.
the
gold
field knows the price of his prod¬
uct is of necessity fixed and that
his
problem; is to keep his cost
below that price.
Most other in¬
dustries often have the problem of
high
rising costs not merely' in
a fixed price for their
or
the face of
product but in the face of falling
prices for/their output."
;. r j*.
doing
pretty; well,r. considering
shortages of supplies and other
not maintain fixed monetary units
and we will havd become volun¬
obstacles.
tary partners in sharing the mis¬
would render their best service to
eries; of y monetary depreciation
' the/
consequent, economic
their
a
In 3 948 deliveries-were
nearly .65%
up
,
Jari: 21,
steel
1947,
rate,- the
which
cars
of repairs per car—both new
freight
years.
Accent
And there have
program.
rise
be
merce, reported the need for pro¬
^riilght
j
such simple logic
me
should
car
the
v
of
current
freight
been made.
freight
the
obvious and axiomatic—that
revolution
to the
been
of
going; Industry, agriculture and business
alike for more than two
on in the locomotive
years,
industry be¬
certain
significant: studies have
tween steam and djesel power. \
was
for
service
so
rail
was
were
though
not
tracks.
During
230.
regarding
Wqfe
the
average
about
waf years
cars
onto
cars
new
continuation
monthly
power—an¬
yardstick measuring indus¬
trial
was
be
cost
and old—rose to
120
ages of
come.
torical pattern
that
could
car during 1947.
spending of about
three-quarters Of the cost of a new
car
in order to give an old one
"a second life" of perhaps eight
or ten years.
This may be an ex¬
treme case, but it illustrates the
economic fallacy of rebuilding..
As for repairing: The average
box
new
a
That meant the
that
due to both increased
est
tool
of railway service, and
population and steady increases
the greatest revenue
producer, is jn living standards.
There are
tm freight car. Keeping in
mind; ahout 23% .more people in the
otir historical
habit of doubling
country than in 1930—when "the
od'r demand for rail / transporta¬
.freight
car ; population"
was
tion, let's turn to the detailed rec¬ 600,000 greater than' at
present.
ord. of this tool.
;
Factory production has been run¬
During the' past T7-, years the ning at about twice the level of
average
annual
production
of the 1935-39 period. This year our
ears was
be
re¬
in 1947.
cars
perv car
years, while total replacement o■
the fleet would require more than
of
in support- quarter of the total freight car
the rail- ! fleet.
And, leaders of the steel
record
car
declaration
I do not know whether the his¬
service every 15 years. The great-'
freight
30
Rebuilding.of
tions
and
transportation history shows that, ' rail
transportation about every 15
country has years—will
continue.
But
the
on. the average, the
aotfbled its demand
appears to
goaj
its box
some of
cost proved to be
equal to about 75% of the average
the
production
the
years
freight
pile, I do not
another war, should
American
out
mere
that
Pennsylvania
v/
;
•
this
year-end, the
production
score
was
little more than half the
a
At
its
rate
At
eral.* The
and
roads
resumption of freight car building
anything like the needed scale.
pointed
the
per month.
wnne
considered
were
could
Qr
his
of
on
has
nrpwsr
The ODT chief cites this part of;
.
Railroads
about 28
as
-
cars.
of
1,764,
they ^ere "reti,?ed>" witJ? a steel industry and "some in govPossibillty that a sma11 proportion ernment that the program be cut
annu¬
There followed, then, two
difficult
reconversion
y e a rs
Shortage of materials prevented
Association
t
generally
cars
at
year
total wanted.
formally esti¬
or
new
to
2,000 cars—the
substitution in the Altoons
siderable
logic—that
the steel industry, to help produce
more
steel for more new freight
ally.
"Ike
th
Al
vears
3,000 new
shops during 1948.
reduced
new-car
the
five
The road
build
unanimity of very ex¬
years,
plus double- pert opinion, curiously' there has running as high as 30,000 cars un¬
million cars now been
a
million cars
great difficulty in assuring dergoing "heavy repairs" monthly.
nearly
cut up
ex¬
years
cars
Av+
r
own
pair work.
freight car need at
£00,000 to be delivered during the
it, they
returned to service. Junked means
fig-
planned
the
sound
seems
report
to
shop of rebuilding and heavy
mean
building nro-1
building pro-
production
during
mated
Occasion—in
one
annual
15,000
ready for the junk
car
into
was
it
than
more
last
cars.
calendar
use,
1H
,
acute
goal
1941
As
should be rated
due
entrv
a
burden
railroads' old' At that,age> Prewar irel%h}
an
back
oacK
whose
gram
i
Our
existed
cu.
cu*
war
tire.
then
even
shoVtage
was
in
in
m*
u
of
during the
the railroads
Col. Johnson therefore contends
were
year
~
nnn
l
v™
period.
freight
—and
fairly good
a
on
miles
year—as
have had to "run the wheels off"
then operating.
n/11
per
themselves have expressed
annually.
cars
was
reason:
least
12,000 new
cars delivered
monthly."
Finally,
the / Interstate
Com¬
He
in its
Early in the
Inter¬
foreign Commerce stated
"at
decided
cars
before
on
than 30 years old.
then
—
work—in
carrying
averaged only
than 40,000
more
completely.
testimony
Committee
Pennsy owned 226,000 freight
Of these
nearly 60% are
cars.
more
during the war merce Commission
whose dila¬
and since, all freight cars have tory
rate
deliberations have
been turning in about twice as slowed
up the ordering of cars on
During the 'thirties the delivery
little
AAR
House
state and
passenger cars
ca-rs
present.
of
the need for
two
freight
Director
the Office of Defense Transporta-
prewar
of hew
i
Col. Johnson,
to
don. the statistical record stated
in calendar years does not tell
whole.
a
a
won't
ir.k
passenger cars.
roads installed
I
j nearly
locomotives
cars,
locomotives, 7
were
badly,
The
cost of
Chairman of Board, and President, Pressed Steel
Car Co., Inc.
.
ing of
level
1946
1947,-and at
times, the
figure!- But,' obviously, thr
means
late
over;
nearlyv. three
little
into
a
and
I
chaos, y
"1 j
,/
it does notrtrans-i
4tThe agitation 'for
if
a free gold
major gain iri freight! market; while we have irredeem-
"Thb
said
~
f
higher-price-ifor-gold bloc
country
Dr,
their
United
and
themselves,"
Spahr, "if they devoted
efforts
/to
returning-
the
States to: a! gold -standard
at $35 per fine ounce."
".J
.
;
Volume
THE
Number 4772
169
COMMERCIAL
FINANCIAL
&
CHRONICLE
native
Taxation and the
.„vV/
;; :l;;
Holding
l
situation
has been made in President's budget, for higheiv taxesr and that there i$r
case
,
.
,
In this discussion of taxation and the
;
budget, I want to make it clear that the opinions
Association,
cause
the Committee
sciously
Development,
of
nor
H.
R.
Macy
&
Inc.
them consciously or uncon¬
moral
foundations of our country, the
aspiration for freedom for all and
recognition of the dignity of the
Economic
for
prejudices
whose
of those
undermine
to
individual
Co.,
.T h e
and
of
the
his
inalienable
met.,
are
The
consolidated
rights
•
as
human person;
a
•
.
adequate, defense
An
cash
budget,
as.
President
Truman
pointed out in his first Economic
Report-, is the measure of the im¬
the economy. The con¬
solidated
cash
because,
this
budget; does
it
first
is
consolidated,
that is, it includes all transactions
Developmenthas
tions
actions^* between
set
up; a
committee on
policy for
1949, of which
am
not'
m
e
b
and
m
a
a
have
program
though serious
program
and
intolerable,
a
e
such
budgetary consequences. The
budgetary consequences of such
tax
I
of
Beardsley
r,
are
long.
as
not
as. we
have no peace, a defense program,
Ruml
adequate
an
which, in
due
to the
program,
a
between the government and the
agencies of
internal
the
Federal
the
Govern¬
ment
itself;-and second, because
it is a cash budget, that is, it
shows the intake and outgo on a
cash
basis
in
the
in
year
which
the transaction takes place.
course will present its views
the tax problem oh 1949. R; H.
Macy & Co., Inc., of which. I
director, does not take any
a
sition with
am-
po¬
and
ingly Macy's is in
no
to
associated with my personal views
out
carry
the Federal budget and the
tax problem that faces this coun¬
economic
try in the months and years that
do
lie ahead.
sums
as
to
defense
for
We have had presented, to us in
the past few days several state-:
ments.
by
the
Administration
which
deal
outlook,
with
the
the
Federal
.y -v
message
budget of
expen¬
moral
have
old
programs
it is the
citizen
that
spent
be
waste
and
aspects
national
question
which
budget and
military,political,
and
and
not
viously
economic
the
the
Program
and
Cash
Treasury's
7?-";"'
Budget ;
our
ditures which has been devised to
be
Tax
The
welfare, is both necessary
desirable.
has presented a
accord¬
way
strengthening of
The. President, in, his
being with
merchandising questions;
the
domestic
respect to budget and
tax policy, its concern
program that looks both
requirements for armament
for
and
of
welfare.
I
Committee
Economic
for
Development, in its recent report
op "Taxes ard the Budget" rec¬
ommends that
tax
the
cash budget.
V;
•;
;
...
,
of
suggested
cially compiled and in current
dollars
that
the
Federal
are
efficiently,-; thatduplication be elimi¬
spent
nated and that the purposes to¬
the taxation program which the
ward
which
expenditure is t di-.
Administration believes to be de¬
rected be common purposes which
sirable.
In the remarks which I
represent the national will.
about to make, I shall take the
po¬
sition that in view of the economic
i If we are to have efficiency in
ments
budget require¬
presented, no convincing
as
has
case
been
in
crease
there is
at
bear
enterprise,
an
the
in¬
least
in
excise
inequitable and
unevenly, on business
harmful
,
and
five
years
must
have,
an
in¬
In
That
yearv
S; Gov¬
principle,
sounder
Savings Bonds : to the
pUblic.
The sale of savings bonds
picks up purchasing power that
wpuld otherwise have to be with¬
drawn by taxation.
It has a great
advantage over taxation jn that
it! is selective and does not impose
shall
we
if
ground
be
on
commit¬
our
quirements
those
on
who cannot afford
it,
as
taxation would, the non-recurring
costs of government.
During the
the
sale
of
we
war
war
knew that
bonds to
was
private
those
incomes,
al means of
as
.withdrawing purchas¬
ing power from the hands of the
peoplei ' But in spite of the fact
that
made
we
wartime,,
this
do not
we
distinction, in
to have
seem
directed to
are
emergencies
nonrie-
in¬
to
or
of
crease
productivity, capital re¬
as distinguished from
ordinary expenditures, are cov¬
ered
lic
by sales of bonds to the pub¬
than by taxation. The
rather
tax
burden
ings bonds
will
are
be
lower
tive
nature
if'sav¬
sold to meet budg- ')
etary expenditures of
whether
a
construe-
at
home
•
or
abroad.
particularly
alterhative to taxation
an
curring
To
that
up, the budgft shows
shall have a surplus in the
sum
we
cash
,
:
consolidated budget, without
>
imposing any increase in the rate
;
of taxation.
i
ourselves
tionary
it
If
wish to protect
we
against
possible
pressures we can
infla-
*,
if
i
do
so
becomes
necessary by the sale
savings bonds to the public.. If
will plan to sell $4,000,000,000
of savings bonds net to the public,
carried this conception over to the
*
of
problem
we
of financing the present
necessities of 'national defense.,
A,
savings' bend
much
flexible
more
is
program
than
tax
a
shall
we
have
that is necessary
tration's
days: such
uncertain
in
we
tax
we
are
that is
we
are
time \when
deflation, we
fiscal planning the
our,
or
;
■
,
In* addW
the flexibility;
•;
essential at;the. present
so
we \
whether inflation
ahead.
f
all. ;
in the adminis-
proposals.
shall have
these when
facing, inflation,
need
tion
tp; whether
as
as
accomplished
■;
,
;
know
\
deflation lips
;
do ; note:
or
-T....
Government
offi-t
uses
When Great Northern declared its second semi-annual dividend
in. 1948, increasing the rate to $2.00. compared with the $1.50 paid
semteannnally since 1945, a break .with tradition was also announced;
in
It.
are
the
the
,
administrative
impact
transactions
should
of
the
on
economy,, we
the consolidated
look
to
cash budget.
If
budget
objective is a
balanced in the
our
is
that
government
economic sense, then
solidated
it is the
budget .that
cash
con¬
want
of
balance.
to
first
the
importance
administration
fiscal
of
..
for
the
policy in
stated
that henceforth
directors
,
would
give consideration to
dividends quarterly. Nothing was said as to what rate might be expeetedr but it was generallylioped and believed that a $4.90 annual
rate was in prospect. Such expectations have been bolstered
by recent
action
basis
|
we
is .amatter
It
was
T
for
was
The
directors.
$1.00.
first
dividend
'
-
declared
on
a
•
[
quarterly
:'V
.
4
Declaration of this, dividend, with its implication that the stock
-
can
on
of, the
,
;
considered
be
now
the stock marketwise.
•
straight; $4.00 basis, had little influence
»
The stock continued to trade in the low 40s
I
on
a
with.an.indicated income return of 9.52%.
To railroad security anar
:
the years ahead and for public un¬
lysts this depressed price level appears as at least slightly ridiculous, ;
derstanding of the budget and; its particularly in the light of the high credit standing of the road and >
organization and reorganization of
impact on the economy, that the the investment status of its shares. Moreover, considering the highly ;
the
agencies in
the,, executive
seasonal nature of the road's operations, the decision of the directors - ;
branch of the government. And surpluses and deficits of the Fed¬
eral Government should be evalu¬ to-put the stock on a quarterly basis is generally accepted as, sign ;
second, a higher level of compen¬
ated in terms of the consolidated
of increasing, confidence of the management in the earnings outlook.
,
;
sation, as has been recommended,
cash budget and that the conven¬
The management of Great;Northern was one of the first in
should be established for top, gov¬
kthe-:
tional budget should be relegated industry to. recognize the necessity" for-putting the debt structure in ;
ernment officials in order to hold
to its, proper function , as an in¬
order.. Early, in the recovery period following the deep recession-of u
in the Federal service and. to at¬
strument, of internal, control, of the middle 1930s, it started an aggressive campaign ta strengthen the
tract to the Federal service the
financial transac¬ road's-status in this respect. With: substantial debt retirement, au&~ :
talent that is necessary for; effi¬ governmental
mented< by comprehensive lower coupon, refunding of callable bonds, •
cient managerial operation .of the tions.;
n\' • : - •
-•
i
The time to make the change¬ fixed: charges, have been reduced to under $7,500,000.
essential services of; the executive
In the. early "
1930s: they had been above $19,500,000; Just as important, in.doing it8<
branch of the Federal Govern-, over is now, when we are pre¬
paring,;-^ accept new fiscal, re¬ refunding the company evolved a very healthy maturity schedule, .'
ment..
*.
;.; •
;.y.'vv
sponsibilities to meet our new running, for; non-equipment debt, from 1952 to 2010. Operation of.the
Financing Budget Expenditures.
defense requirements,•; *' '
,;.V sinking fund will moderate the impact of the successive maturities, ;
)
J When we examine the budget as the largest of which is for $40 million in 1982.
; Coming, back to the budget,-1
are
a
of
President
creased
that
adjustment
un¬
legacy, of, the wartime
necessary
taxation
for
for .some
room
which
which
made
taxation;,-indeed,
downward,
taxes
public expenditure, two measures
are
obviously
necessary.
First,
the
and
our¬
ments that
.
outlook
Providing for Non-Recurring
Emergencies
the
to
budget and the consolidated cash
budget.. When we are interested
Ob¬ These
of, every
*
~
a
,']
~
been
desire
well-
program
1 The CED in this Policy Reportstates that there are two budgets
aggregate
new.
that
onsolidated
c
■
the
and
flexibility
should: gear our
we
to
program
of
program both; as. to timing and as
tO), its
intensity of v; impact.
In
defense
on
defense
the .coming
is the sale of U.
actions
on
kind
25
appro¬
find
we
individuals,;;
people;-and. excludes all transac-n
.Economic
for
which
with small and moderate
program
has, military, moral, political and
economic aspects.
The implica¬
-;
more,
increase
pact of government's fiscal trans¬
,
Comm i t tee
taxation
ernment
National
mation
selves in
much
"tax
a
in
measure
which I express are only my own. They are not necessarily the views of any organization
with which I am associated.
Particularly they are not necessarily: the opinions of the
Planning
and
priate than
especially in excises, Mr. Ruml advocates; increased sale of savings bonds
being both practical and anti-inffationary^ Calls for more efticiency in public expenditure,, and gparr
- r
; i - • *■ •'
>
ing of tax program to Treasury's cash budget, " .*• "V i
.* / „ : >
as
i,
convincing
no
flexible
& Co,'
for reduced taxation,
room
in
increase
an
that* is* effective as a deflationary organized savings bond
measure and which is much, more
would provide.
.
By BEARBSLEY RUML*!-..;.
!
Chairman of. the Board, R. H. Macy
,
Budget
to
(453)
ago*
scope
of authority in,the
.
Issues
of
Fiscal? Policy
j
The Economic- and Budget Mes¬
of the President confirm the
opinion that the. question of war
and peace underlies all issues of
sages
fiscal
policy, just as it underlies
policy and much private
policy as well.
It- has been said
all public
and
over
again
over
months that
in
•
recent
the aggregate of expendi¬ it has been presented, we note an
budget as extraordinary fact, namely that
being within small limits one way the consolidated cash budget,even
accept
shooting war in the,
unlikely because
the aggressors are unlikely to at¬
tack, probably believing that over
the years their objectives can be
a
tures, presented .in the
is
future
near
the other the financial require¬
ments of a prudent program-for
or
after
projected shows a surplus of $1,475,000,000. ' This surplus assumes
gained without resort to the
mass
national defense and the advance¬
violence
even
ment
Peace
war.-
is
unlikely because the
more
sors
of
have
imposition:
their objective
on
the world: of
a
way
going to have
peace
for many years' to come,
then we are going, to have de¬
fense programs far into the future.
Adequate defense means an ade¬
quate armament program., but it
than that.
more
Therefore, I do not quarrel with
that are being suggested
the totals
for the
Federal
1950.
budget for Fiscal
"
•.
'
| However, .when we. come to the
of how these ' expendi¬
question
with other; a different story; and it is at this,
military co¬ point that I find myself unable to
operation with other countries. If agree with the proposals, which
economic
cooperation
countries.
It
formational
tional
means
extensive
means
and:
skillful
activities' and
exchanges.
It
in¬
educa-
means
the
correction of ineauities and
tices
at
home,
It
means
injus^
protec¬
tion
have been made..
*An
fore
the
N
a
the
change
of
1949r
j
for
date
Crease from Jan.
rate
in->"
1, 1950 to July-1,
Although
discussion of; this
no
surplus appeared in the text of the
budget
forth
it
message,
in
Table
was
13
of
clearly set
the
Budget
itself, and; was discussed by the
President: at his press conference
on the budget message.
j
Higher .Tax
i
:
.
Rates
Mean
tax
rates
should* be
creased as.has been
V
The, time has
provide
000,000, the
in-,
recommended,
in
the
.
additional
an
excess
cash
expenditure, should, be
be¬
American
Association,
cash, budget,. We will-then-know
where we stand with respect- to
the:. Federal
,
Government's
re¬
quirements and our own responsi¬
Atlantic City, N. J.^ Jan. 13,. 1949., bilities in seeing to it that they
or more, of total
freight revenues. Indirectly, in influencing the gen- X
era! economy of territories served, they affect an even larger share of '
the company's: business. In general, these items have been- relatively }
immune to the inroads of non-rail competition.
Moreover* the oub- v.
look for;-all of them continues bright;
Another-favorable factor has \
Prospective i
opening; Up of; a,, substantial acreage of new irrigated farm lands also
augurs well'for the development of new traffic sources.
v
the-industrial1 growth
would,
There
be
is
tude.
some
need
no
time for
a
$4,000,-
of receipts over
budget,
$5,500,000,000.
at
the
present
surplus of this magni¬
Indeed in
qertainty
view
of the
un-
to the business out¬
look and the level of employment,
such* a surplus - is positively dan¬
gerous;
"
as
of
the
Pacific Northwest.
.
•
•
Great
Northern has traditionally
been
an
efficient property
to^
To a.considerable degree this efficiency is inherent in, the
!
type -of - business, done, with a large* volume of bulk full train load
•
operate.
freight.
-
a
Over
a-
long period: of years the company has consistently 7
larger proportion of gross through to net operating income »
as a
whole.
This
.
factor of efficiency, affords a substantial cushion against possible fur-
;
The transportation ratio has also been well below the average.
thee unit cost increases- and against
traffic*
f
'
the inevitable decline in freight
''' ' "
•
-V
♦
•
Great Northern has. had an enviable long-term earnings record,-
consolidated
.
when state¬
about deficit and; surplus,
come,
The company is heavily de~- '•
They are iron ore, wheats and
Normally they supply an average of around 40%, -
lumber products.
before Federal income taxes than have the Class I carriers
Excessive Cash Budget
If
that they will continue 'so.
are
pendent-on three major traffic source's.
carried
expenditures, that is, the. surplus
fiscal policy,
Great Northern is fundamentally one of the stronger railroads- in country, Traffic and revenue trends have been favorable,- and'iiv* h
beep
;
,
by Mr. Ruml
t-i o n a.l -
Grocers'-.
ex¬
the refor-, made in terms of the consolidated
address
Wholesale
projected forSocial Security benefits as well as,
discuss certain basic questions of
income and.
!
increase
to
destroy'-what *. they cannot other¬
means
the
expenditures
reasons for my disagree¬
ment^. it is necessary for; me to
ments
It
In order to
plain the
against those among Us whose
loyalties elsewhere induce them to
wise control.
both'
the
should, be financed—that is
tures
means-
It
enlargement of
programs
elsewhere.
the
to
needed
,
means
one
applied,
not
we, are
welfare; If
economy
and efficiency
point reductions can be
madev these amounts can* well- be
at
the
of life that- is repugnant to free-,
dom everywhere* - - "
If
national
through
aggres¬
as
of the
assuming
,
the
dications
.
'
Fortunately,
'
we
Even
in
share*
1938
recession,
earnings
Average
on
and
when fixed
charges
were
ttfiodest
,
a ;
earnings: for the ten years .1938-1947 were $6.55 a„"
year-to-year
through November,
years*;
above
the stock amounted to more than $1.00-
share, with $7.28 earned in the last year of that period.
previous
have "an alter¬
the
$14 million,
improvementr. in
results for
There
the
was a
11- months
19.48, despite heavy charge-offs on account: oft
F-o.r-1948
topped $8.50 a share;
.
as
a
whole' it
seems likely
that* earnings
j;'i JSAs *♦,,
c.
T»
•!■'
26
'
V
'
T 1 /■ S
•
nesses
relationship
privately
and
insurance
In
tion
negotiated
sales
securities
companies.
to
:
A. F. Whitney, President of this labor organization, strongly
extending compulsory competitive bidding in the sale of
advocates
securities
the
porations.
t
ac
t by
Congress
of
"enabling
railroad
acquired
company
in the
as
railroad industry. Bankers'
domination
of
proportionate
in
railroads
is
un¬
burden
debt
found
provisions of section 5 (2)
bidding
of
irement
thq financial structure of rail¬
'
had
all
an
powerful
monopoly
the
over
the same prudent
basis as it buys its equipment, that
is, on competitive bidding. :
financing
on
Competitive bidding is financial
democracy.
It prevents monopoly
in
totalitarianism
and
corporate
tem. Investment bankers are- more
subsidiary companies
pursuant to authority granted un¬
interested in the conservation of
der section 20-a of the Act where
tion
at
p
being
to
A. F.
resent
limited
utilities
public
of
any
Whitney
railroad
and
a
company
its
such securities
sold
not to be
are
only by | by the parent company, but are to
discretion and orders of Federal be
held subject to our further
Administrative bodies.
.•> ;;4 \
order; and
flotations
existing
and
The text of Mr. Whitney's state¬
ment follows:
shall
by
i
Any securities as to which
find, upon due showing
(7)
we
railroad company, either
application under the provi¬
a
upon
-
Scope of Present Regulations
Y It
sions of section 20-a
that the principle of
competitive bidding has been re¬
quired by statute only in the case
Of public utility securities.
Since
1870, Massachusetts has had laws
requiring the sale of certain pub¬
lic utility issues at competitive
bidding. There is no organic or
enabling Federal legislation re¬
quiring competitive bidding. Such
Competitive bidding as is required
by Federal law is through admin¬
appears
istrative
is
interpretation, but there
Federal
no
and .railroad
-flotations and exist only by dis¬
cretion of Federal administrative
to:
utilities
public
bodies.
,
..
Power Commission adopted com¬
regulations.
In
..1941, the Securities and Exchange
Commission
adopted
a
ruling
known as Rule U-50, requiring
petitive
bidding
competitive bidding on the sale of
securities for public utility hold-
Zing companies and their subsid¬
iaries.
In 1939, the Federal Com¬
munications
Commission,
in
rec-
*
ommending to Congress that it be
'
to regulate the
telephone securities,
authority
given
issuance
of
suggested that competitive bidding
be adopted as a method of market¬
spe¬
of such application under
section 20-a, that sale at competi¬
tive bidding should not be re¬
quired.
There
rather extensive
are
emptions to the competitive bid¬
text
that
of
rule
the
for
excep¬
tions.II
Principle
the
Is
of
are,
arguments
J
tion 20-a
merce
of
the
Interstate
"bidding
-
for
railroad
securities
certif¬
other than equipment trust
icates.
requiring
competitive
In general,
bidding by law.
Provision is made for eX-
'following specific exceptions were
made in the order:
41)
Common
the
preferred
'stocks;
(2) Securities sold or otherwise
issued pro rata to existing holders
if securities of the issuing-com¬
.
pany
right
for
pursuant to any preemptive
or privilege or in exchange
or
extension
-securities,
any
,
or
in
of outstanding
connection with
liquidation, reorganization, or
financial adjustment;
(3) Any note or other security
maturing in not more than three
years;
(4) Securities sold or otherwise
by financial houses in 1926,
when
the
Interstate
Commission
bidding
tificates,
Commerce
required competitive
equipment trust
experience under
on
requirement has
cer¬
that
that such
proven
merit.
ens
Competitive bidding wid¬
the
market
curities
for
corporate
the
lowers
and
se¬
of
cost
note that large banking houses
a
as
law
dealer
securities.
The monop¬
the belief that these
to induce
as
large houses are not so solicitous
of the welfare of small traders.
Their
ments
the
opposition to legal require¬
for competitive bidding on
grounds of solicitude for small
bidding argue both that competi¬
tive bidding results in "overpric¬
ing"
and
in
As
"underpricing"
-
of
Commissioner Rob¬
Healy put it, the Securities
Exchange Commission con¬
cluded
that
"there
was
no
way
short of
of
determining the reasonableness
or the fairness of prices,
spreads
assure
d.^i^e^sted advice in fi-
contended that finan-*
forceful
was
answer
given in
to this contention
communication ad¬
a
their
dealing with affiliates
With
banking, after all,
profession. The invest¬
banker is primarily a mer¬
"Investment
is
not
ment
a
chant,
buys
who
wholesale
The
for
securities
resale
fact that he
at
is in
at
profit.
position
a
a
profit by the advice he gives
any
claim he may
make to stand in the same posi¬
to
tion
that
with
a
reference to
status
or lawyer does to
Neither the doctor nor
middleman.
Let
bankers who, in the face of
facts, claim a professional
answer a question. Are they
the. lawyer
these
issuer
doctor
his client.
those
the
is
a
reference
to
the
Senate
Rail¬
(Senate
that
instance of such abuses in the case
the tens of
of
millions
of
dollars
of
equipment trust certificates is¬
under competitive bidding.
So far as this class of securities is
sued
concerned,
the
bid¬
to have
competitive
ding requirement
wiped out with
seems
one
the
stroke
types of abuse which, as
our record abundantly illustrates,
clusters about the traditional type
underwriting arrangements."—
Congressional
Record
Appendix
of
for Feb.
6, 1941, pp. A-465-6.
.
In
Railway Progress for Novem¬
ber, 1948, page 9, Robert R. Young
said:
the
railroads
traded,
has
is
by
been
road
to
progress
quickened,
the
lash
not
in
re-
of criticism
demonstrated
over
the
intervening
years
by
certain
highly constructive, if long de¬
layed, reversals of ICC policy. We
have, for example:
adopted
on
as
All of them aim to pre¬
competition and to keep that
competition fair. The laws, backed
serve
both
by
parties,
among the foundation stones
democratic system of cap¬
are
of
political
major
our
italism.
Rule
is
Let it not be thought that
U-50
railroad
Bidding
April 1-3, 1943, that such
was
a
law
undesirable and unnecessary.
It is estimated the rule has
already
be
remembered
Federal
no
that
enabling legis¬
requiring competitive bid¬
ding. Such competitive bidding as
required today exists only
by
administrative discretion,
changes in
merely
matter
a
procedure.
Ours
of
is
business
system of
free enterprise and when practices
are
allowed
to
develop
which
eliminate
or
a
suppress
competition,
the very fundamentals of that sys¬
tem
endangered.
are
The liberat¬
by concentration of the manage¬
ment
underwriting
and
securities
the
in
firms."
of
of
hands
Y>:.V ' Y
new
few
a
April 29, 1938,
173, 75th
President
Roosevelt declared that "strength¬
ening and enforcement of anti¬
Document
Congress,
No.
Session,
3rd
trust laws" called for "more effec¬
tive
methods for breaking up
in¬
relationships and like
devices for bestowing business by
terlocking
The President referred to
favor."
"banker
financial
and
influence
over
channels of invest¬
stated:
and
"Interlocking
?
financial controls have taken from
much
its
of
dependability and daring—with¬
out
compensating
advantages.
They have not given the stability
they promised."
the
of
One
tending
velopments
finance
in
nopoly
serious
de¬
has
1948, 48.2% of all corporate
financing consisted of pri¬
placements with insurance
companies. The increasing control
of the insurance companies over
bond
financing
has
attention
already
of
Con¬
The
half
of
the
nation's
cor¬
directly to in¬
surance
companies, it is evident
that a very few private individ¬
uals in these companies hold an
porate
bonds sold
enormous
over
power
our
econ¬
The adoption of a universal
competitive bidding requirement
would, at one stroke, break this
omy.
monopoly.
The trend toward
intermediaries in
private
placements
companies, often
at fees which exceeded the profit
they would have made on the
small underwriting participation
insurance
they customarily take in
public offerings. A typical exam¬
ple is the $250,000,000 Shell-Ca¬
ribbean Petroleum Co. 4% bonds,
recently
placed with insurance
companies by J. P. Morgan & Co.
law
requiring com¬
petitive bidding would go far
by
nature
purpose
nnt
is
and
by
in
fundamental
ultra-conservative,
mnsistpntlv
D.
Roosevelt
said
interlocking directorates
terlocking
about
in-r-
and
financial
controls, it
obvious that assuring
financial prudence
only with re¬
spect to public utility corporations
does not fully protect the
public
or
adequately promote 'the free
enterprise
capitalistic - system.
should
be
S3ven those public utlit'y corpora¬
tions that are
subject to the'com¬
petitive
bidding
rule
are
fre¬
quently
controlled
interests
that
the
by
control
same
many
non¬
utility corporations.
The
theory of requiring competitive
bidding in the case of securities
of
public utilities is that extrav¬
in the financial transac¬
agance
tions of these corporations is
flected
such
in
the
rates
re¬
service of
and
corporations
of
protection
to the consumer therefore
the
requirement
justifies
competitive
of
bidding.
It
,
would
to make little
appear
difference
to
the
consumer
cial
mismanagement, he
for his
much
electric
pays
or
gas
too
ser¬
vice or whether he pays too much
for his clothing, his automobile or
the
other things
many
consumes.
be
The
protected
in
obtains
utility corporations.
true
should
all
things which
not merely in those
he consumes,
he
which he
consumer
when
it
from
public
Especially is
is
considered
through interlocking financial
controls the financial management
of
public utility and non-public
utility corporations is frequently
identical.
Through the purchase
of
their
supplies, public utility
corporations pay a heavy tribute
to banker domination of
supplier
corporations.
If competitive
bidding prevents
extravagance and mismanagement
of
public utilities, and experience
has shown that it does, then there
is no reason why competitive bid¬
ding in the sale of non-nublic
utility
corporations
would
not
achieve
like
desirable
results.
Furthermore, the desirable orinciple of free enterprise would be
benefited if competitive bidding
were
required generallv in the
sale
of corporate
securities.1
If
enabling legislation were en¬
acted,
administrative
obviously
their
negotiating
Federal
Franklin
bodies
.
frequently act as
A
body.
Having in mind what the late
private place¬
influence
banking houses which hftve tradi¬
tionally monopolized the corpo¬
rate financing field,
Such houses
with
tion by petition to the administra¬
of Wall Street
ments has increased the
of that small group
are many excep¬
and
tive
that
of
the
there, there
exemptions and many
opportunities for seeking exemp¬
the
been
bond issues to insurance
companies. In the first ten months
gress.
even
tions
this
porate
corporate
per¬
bidding requirement.
Competitive bidding, for the most
part, is required only in the case
of public
utility securities and,
mo¬
toward
toward private sale of cor¬
trend
result
services
most
or
of whether, though
corporate finan¬
spheres
interlocking
through
ment"
.
industry" and
control,
of
control
"close
the
thinking
administrative body
in elimination of the
public
Y
In his message of
Senate
the
competitive
(competitive bidding)
terprise from the deadening dom¬
ination of banker influence which
fessions, liability for disasters re¬
negotiations
sion Act.
Commis¬
Trade
by the ICC on July 1,
1944, after it had advised Congress
for
private
Federal
securities
Rule
cost' of
the
and
of
pattern
the Clayton Act,
solving America's serious monop¬
oly problem It would release the
forces of progress in corporate en¬
Competitive
must
on
Bidding
lation
can
American
the Sherman Act,
which
"That
It
there is
traditional
almost
record
Investigating Committee) is
while it is replete with in¬
III
Enabling Legislation
Competitive
sonnel of the
23-volume
willing to assume, as do the mem¬
bers of the legal and medical pro¬
Experience has shown that the
competi¬
upon
"Big Five" insurance
companies control billions of dol¬
lars of the nation's savings. With
The
disinterested?"
insistence
1938, President Harry S. Truman,
when Senator, said the following:
"The significant thing about our
road
for
/
tion in the sale of this particular
kind of merchandise follows the
attracted
"1.
sulting from advice which is not
"The
y; "
Y
Need
may be
railroad investigation of 1937 and
many
It w£s there stated:
1941'.
Utilities Commis¬
sioners said:
vate
-
bring something of the
confidential relationship of a doc¬
tor or lawyer to their clients.
A
of Railroad and
Association
virility, independence,
regarded as em¬
stances of financial abuses result¬
anating from any sincerity of pur¬
ing from continuing banker rela¬
pose.
v4;v'-'s 444 -'444:; ;-v4<a
tionship, I do not recall a single
It
is also
National
1941,
business
dealers cannot be
cial houses
the
28,
traditional
argument that such
would injure
the- ,small
in
before
Aug.
on
American
one
olistic tendency of large financial
houses in the past has been such
address
raising capital. It is interesting to
of
offer
his
note that opponents of competitive
any
legal requirements
for
competitive bidding. It is striking
to
invalidates
and
were
competitive bidding that
would afford us satisfactory means
'
emptions from this order and the
Although dire predictions
made
ex¬
•
large financial houses are opposed
Com¬
Act, requiring competitive
'
persuasive
a
this.
of
The rail¬
progress.
industry is
road
ample
and
change Commission and others by
Otis & Co; under date of Jan. 23,
an
provisions of Sec-
economic
on
ert E.
4. On June 1, 1944, the Interstate
Commerce Commission issued
ones
new
securities.
elaborate
con
on
the
dressed to the Securities and Ex¬
brder under the
crea¬
through the
processes of corporate expansion.
Consequently, banker domination
of corporations lays a dead hand
course,
ing such securities.
"
of
and
pro
of
subject
Competitive
Sound?
Bidding
There
:Y:;:4\Y%Y:YY4
of
existing assets than in the
bankers' predictions were without
ex¬
ding Rule U-50 of the Securities
and Exchange Commission, but see
to
Sinqp 1926, the Interstate Com¬
merce Commission has required
Zttiat railroad equipment trust cer¬
tificates be sold at competitive
Ifcidding. In 1939, the Federal
.
upon
filing
as
securities.
or
application preliminary to the
requiring bid¬
law
such, in the sale of any
Such Federal require¬
ments for competitive bidding as
are in
existence are applied only
ding,
cial
in
prise and competition in a field
which' has long been characterized
:by
instead
:v.
Commissioner Healy of the Se¬
curities and Exchange Commission
ing influence of our competitive
bidding rule will foster free enter¬
gives strength and
vitality to the free enterprise: sys¬
issued -to:
as:
the railroads alone, hence
shipper, $183,000,000."
the
financing. ; It
of Federal law
of
1 railroad
Two financial houses have
roads.
the
Act, and any securities of
such
other
company
to be ac¬
quired by any other person pur¬
suant to such authority;
(6) Securities sold or otherwise
matter
requ
serted such disastrous influence
its
of
make compet-.
•
profitable type of
In no industry
monopoly as¬
bankers'
financing of American
railroads. A corporation should do
der the
e g i s 1 ation"
that'would
a
does
pursuant to authority granted un¬
1
itive
sell.
to
the
the
other
en-
m e n
has
bonds
exceed
$1,000,000, principal
amount;
(5) Securities of any railroad
company issued in exchange for
the securities or properties of any
He
for
issue
total
not
classes of cor¬
calls
the
when
issued
all
of
find
doubtedly responsible for the dis¬
to.
public is¬
sues
security
corpora¬
only com¬
outstanding.
Tradi¬
bankers
easiest and most
I
ideal
Thursday, January 27, 1949
saved
which has
one
stock
tional
ties," issued and distributed by the Brotherhood of Railroad Train¬
men,
is
mon
pamphlet entitled "Competitive Bidding in the Sale of Securi¬
a
'1*
CHRONICLE
serious liability for any
a
corporation. ' The
*
ration
FINANCIAL
continuing confidential (relation¬
ship between a corporation and its
bankers. High bonded indebted¬
abiing legislation requiring competitive bidding for "non-monopolistic as well as monopolistic industries." Attacks banker-corpo-
u
1
against the principle of competi¬
tive
bidding is not worth t any
claimed advantages because of the
Urges Overall Competitive Bidding in
Securities Sales
.
>
COMMERCIAL ;&
THE
A. F. Whitney, President of the Brotherhood of Railroad Trainmen,
in booklet issued by his organization, wants Congress to pass en-
'
r.
V
(454)
[■y
•
reactionary.
if
and
would
be
undoubtedly
more
more
fortified
vigorous in
administration of the re¬
quirement of competitive bidding.
A
mandate from
quire
competitive
Congress to
re¬
bidding would
naturally bring
a
more vigorous
enforcement of the principle than
where all organic laws are silent
on the subject of competitive
bid¬
ding and this principle is applied
only
by administrative discretion
which is, of course, subject to
con¬
stant
change
and
impairment
through changes in administration
or changes in the thinking of the
administrative
body.
Enabling
legislation
would give the prin¬
ciple of competitive bidding the
strength and stability of law and
would accomplish much in break¬
ing down the monopolistic, inter¬
locking,
forces that
not
dominating
now
financial
largely determine
only the destiny of
tions, but the destiny of
enterprise system.
corpora¬
our
free
THE
Number 4772
169
Volume
merous
By MALCOLM P.
"
;
Graduate School of Business
*"
1
'
*
i
McNAIR*
Administration, Harvard University
^«
*
*
•
•'
,
'
"
i"'
*
i
>
•
»
v
XX/r-'
*
•
«
k
"
'
" ,• •
^
^
^
:*
f
health is good, Harvard economist points out as soft spots:
(1) price declines; (2) tightening of money and credit; and (3) balanced supply and demand for spe- j
cilic goods. Says there are no signs yet these fafctors will have a chain reaction and foresees no like- j
lihood of further inflation.* Contends buslnesrspending will be restricted by stock market: conditions and
President's proposed increased taxes and holds consumer spending in 1949 is big conundrum, which will
•-Us'xUU<xx':;
determine extent of fbusiness,readjustment. ^
J ./
j /:
of these remarks is, first,? to take a good, sober,, realistic look
-happening to business today'; secondly;, in the light, of this situation to hazard a
the outlook for 1949; and, thirdly, to consider what you as department store
The purpose
ing
to
meet
situation. flecting
spending
consumer
as
appeared
weeks following ;
the /election?
Doesn't it portend;
of r. approximately >70%
of ^con¬ something more serious than a
mere ^readjustment
sumer disposable income.: Jteasons
of an abnor- t
for this bulge of course are pri¬ mally
high
rate
of
consumer !
during/the
-seven
.
,
at what is
true
of
i
indexes
the
ture in 1920,and.
re¬
,
,
•
,
,
ety in: retail ^ circles, is in . reality
nothingmore than one further
forecast of
executives
need to bedo-^
this
But dur¬
the period
;
marily, associated with?war short¬ spending? "
j ages and the accumulation of war* -"'-•Now, keeping in the back of our
time savings
that enabled con¬ minds - these * two differing intersumers to make good those short* 'pretations of what is going on in
.
.business foday, let's look specifi¬
i ,.;f ages.. Thus .this, hypothesis main*
tains thatthe Current .situations cally-at Jhe prospect for half a
y which has caused so much anxi¬ dozen -major groups. of factors1 in.
Though asserting nation's. basic economic
is
other services.)
since 1946, -retail
sales have been running at a rate
ing
for 1949
The Business Prospects
27
(455)
CHRONICLE
FINANCIAL
&
COMMERCIAL
again after 1929.
These half dozen important
1949/
of. the.,
segments
economy
are
money and credit, business spend¬
ing, construction, exports, consum¬
dergoing ever since /the iend /Of er spending, and government tax¬
1946; only this time the brunt of ation and expenditure. Tor ?each
this particular readjustment hap¬ of these certain comments are in
pens to- fall on the retailer.
Ac¬ order.
cording to this view retail sales
1. Money and Credit—Present'
and
profits may undergo some moderate restriction, such as the
impairment in 1949, but there will new Regulation W, will continue,
not be any general business de¬
but there is not likely to be much
step in the series of readjustments
which the economy has been un-
What might cause such a chain
agricultural
prices. In
respects prices have been reaction,
or
general
business
point for any making the characteristic pattern downturn? 'Study of such basic
appraisal of which frequently appears at a causes of business downturns has
what is hap¬ major turning point. While prices of course* long .occupied the "tal¬
pression; there will be no great further tightening of credit con¬
pening in bus¬ of many finished goods have still ents of economists, and numerous
rising, prices of semi-fin¬ theories have been developed; At price declines, no ; mass unem¬ trols in 1949.
iness
to d a y been
no
general economic
For the longer-run period the
must
certain¬ ished goods have faltered or stood some risk of over-simplification; ployment,
distress...I think it is a fair state¬ election results constitute a defi¬
ly be the rec¬ still, and prices of many raw ma¬ perhaps it is fair to say that there
ment that this is the conclusion nite forecast of continued infla¬
ognition
that terials have declined. This is com¬ is fairly general agreement on
presently supported by the weight tionary
tendencies,
via
social
the basic eco¬ monly the way in which prices three basic potential causes of a
of economic opinion.
At the re¬ benefits,
government'; subsidies
nomic
health behave when the whole compli¬ general business depression:, (1)
cent
meeting of about a dozen and supports, and high wages, all
of this coun¬ cated price structure comes to a a really vigorous effort to curtail
(Though credit and to ^reduce the money economists, who met for the pur¬ leading to an eventual future de¬
try
is
good: major turning point.
pose
of discussion -the business cline in the value of the dollar.
we have
been metals have not been conforming supply such as was initiated by
outlook for 1949, this belief that
Prof. M. P. McNair
These longer-run results of in¬
achieving a to this general pattern, it is to be the Federal Reserve authorities in
we are today facing nothing more
flationary policies endorsed by the
(2) a
v
record vol¬ noted that the price of steel scrap 1920 and again in 1929;
critical than another of a continu*. electorate last November are not
began to drop on Jan. 8.)
Thus sharp general drop in- business
ume of physical production, with
ing series of mild business read¬ likely, however, to appear soon
the Federal Reserve Index stand¬ price behavior reinforces the evi¬ spending; and (3) a general de¬
dence arising from the soft spots cline in consumer- spending oc¬ justments had the support of more, enough to top the scales toward
ing at
194; the gross national
than two-thirds of those present.'
further inflation in 1949.
in the supply and demand situa¬ casioned either by a drop in the
product in the year just closed
The. other ;alternative .explana-,
2. Business Spending — T o t a l
tion. ' ■
disposable income of consumers
.made a new all-time high at $253
Xion for the present drop in con*, capital outlays in 1948 were nearly
Then there is a third area in or by a -general decision on the
billion; personal income ,at the
sumers' propensity to spend, or
$19 billion; .figures for the last
end of the year was running at which signals of business read¬ part of consumers to save money
increase
in their propensity to quarter exceeded $5 billion.+
v
: v X.'"xX
the *rate of $215 billion; we still justment are flying,'and that;, is rather than spend it.
\ In any appraisal of prospects, of
save, is less reassuring. ' It is, in
have 59V2;million jobs, with only the all-important area of money
/So much for theories of business
brief, that consumers have finally spending either by business or. by
2
million unemployed; ^agricul¬ and credit. All thinking persons depressions, on which today you
been priced out of the market, consumers,
attention has to : be
tural income, in spite of price de¬ are aware that inflation is;pri¬ will find considerable agreement
that we are faced with what is given to three things: the need, the
clines, attained a new high for marily a monetary phenomenon. among economists.'Now which; if essentially an incipient buyers'
availability of funds, and the atti¬
1948; steel production is running Prices have been high because the any, of these things is it that is
strike, that having elected Mr. tude of the buyers.
at a rate close to 100% of capac¬ total supply of money has been actually happening currently?
In Truman on the strength of his
Needs for capital expansion are
roughly two and the first place we are not under¬
ity; electric power output con¬ increased .by
promise,
to
reduce
prices," the still large. Deficiencies of the war
tinues to make new highs; total fone-half to three times whereas going
a
severe
restriction
of American
people are going to sit
period and the earlier depression
retail sales for 1,948 achieved a the total physical output of goods money and credit; the mild meas¬
back and wait for him to perform
period * are still: not completely
has increased only perhaps 75%. ures taken by the Federal Reserve
new high record, with department
all made
according to schedule.We
up.
At the samp time in¬
store sales making a sharp recov¬ It is definitely significant, there¬ authorities have perhaps had some
know that a general tendency to
creased population, enhanced pur¬
ery just before Christmas to top fore, that in recent months there effect, but nothing has happened
stay out of the market waiting for
chasing power, and advances in
has been, for the time being at resembling the sharply restrictive
1947 volume by 5%.
•
lower
prices could have
some
technology all combine to call for
credit -policies
which were in¬ serious business
Nevertheless
there
are
some least, a basic reversal of the trend
repercussions. We additional
capital expansion, s
toward an increased money sup¬ voked in: 1920 and again in 1929.
also know that a very substantial
very
definite signs of business
Requirements for capital expan¬
ply which has been in evidence In the second place, we are not
readjustment. We are all aware
proportion of .consumer expend¬
sion- in many specific situations
since 1940. This reversal takes the experiencing a decline in business
itures
of certain soft spots in the econ¬
nowadays is ^directed to
are
still strong,
form, of a less-than-seasonal ad¬ spending; the figure for the fourth
notably public
consumer
/durable
goods,
pur¬
omy: I do not need to remind you
vance in business loans.- Thus the
quarter of 1948 for business in¬ chases! of which is essentially de¬ utilities, /.petroleum,
railroads,
that
department v store sales for
in
mild credit restrictions are having vestment
capital
equipment ferrable. If
mining machinery, heavy electric¬
seven weeks after the election ran
now,- with'the > keen
al equipment, and so on. • v..
some
effect: the requirement of topped ->$5
billion, the .; highest
v
edge taken off their demand for
steadily behind the 1947 figures;
one-third down is deterring some quarterly figure on record. In the
1947 vand 1948/
durable goods, consumers are ago¬ X In* contrast ; to
sales of the mail order houses fell
third place,-we ,are not, experieincbelow the preceding year in No¬ purchases of durable goods; banks
ing to stand off and wait for lower however, v there will not be fhe
are- not
making loans quite so ing a .. decline in consumer dis¬
vember for the first * time rn the
prices, those lower Xpriees will need in 1949 to build up additional
readily; credit costs a little more posable incqme;; as : already ; :-inr '
;»'•
probably be realized all right; :but inventories.
postwar period; car loadings have
and,::is not quite so reasily: avail¬ dicated,.; /the , spendable " mohfey they *ntay; be .realized Cas ~a ^result
been falling behind'last year' by
Availability of funds is a someable.
r-"V* V; I'U-i flowing: into the hands of con¬ of S severe. *economic ^dislocation,,: twhat
a small percentage; specific weak
greater question -mark :for
Thus in three important eco¬ sumers has thus far exhibited no general unemployment, .sharp idor, 1949:
Retained profits constitute
situations exist in apparel,-* tex¬
Jailing off. Thus only one/pos- elines .in ^consumer*
nomic sectors, namely,, money and
income,- and..: an Important source of business
tiles,' and shoes, -where -layoffs
jsible explanation remains, namely',
great damage to our economic and funds.> Fbllowing the record prof¬
•have >been
increasing;: in recent Credit, ' price behavior, arid ^bal¬
that there has been a decrease in
political:; structure.; Those • who its of 1948, the prospect is for con¬
weeks; the used car market has ance of supply and demandfor consumer
willingness to
spend,
place
this gloomier ; interpreta-* siderably reduced profits in 1949,
declined, sharply; the real- estate specific goods, evidences are daily;
that " out of their disposable -irition on present business rtrends,
'
The: President's tax* proposals, if
market; has edged off, .and fore-: becoming stronger that the infla¬
the
The
starting
many
,
•
>
.
.
.
.
.
.
,
.
.
.
,
,
"
•
.
under¬
among; whpriuce#aih^
taking to save someWhat more and bered a
good many business ex¬
No Chain Reaction Yet
spend, less. Certainly - this is. *n0t ecutives : in : the industries where
!k'
ters, movies and. night clubs have
news to those of you' who; were
soft spots have appeared, are skep¬
all shown signs, of weakness if not x- But- before we go any farther,
watching consumer behavior dur¬ tical of the
argument that the
distress. For many lines of mer- lust to keep the record, straight; it
ing November and early Decem¬
drop - in
consumer - spending
is
chandise it is :apparent that: the had -better be pointed ..out i that ber.: Also this
hypothesis is sup¬
merely a "readjustment to a nor¬
pipelines finally have been filled, «ver since V-J Day we have had ported by the figures: the rate of
mal pattern. They inquire,""How
and in some instance are flowing among us the dispensers of gloom
.
tion has
radios,;; records,
luggage, tires; jewelry, furs, thea¬
closures
:
are
up;,
passed its peak.
come
.VCUv
consumers
are
,
•
-
early as
the prophets of disaster, and the third
quarter of 1948 . exhib¬
consumer
in de¬
partment store inventories as of
over;
the
and
the increase of 12%
first
of
December
the significant
is
one
in the postwar pe¬ ited a substantial advance from
prognostications of bus¬ an annual rate of $11 billion to an
downturn have invariably annual rate of
$15 billion.
been
confounded
by
The economy has gone
of
least
previous
two
the event.
through at
periods
of
in the economy it marked hesitation, after which in
is to be noted that prices during each instance the upward trend
these soft spots
recent months have behaved
manner
which
in
a
characteristically
presages a downturn. The general
wholesale price index, lately at
164, is slightly lower than
year ago. During the past
about
it
was
a
this index twice came up to
a
peak and then fell off. At the
same time several of the indexes
year
of
prices
sures
and
inflationary
has been renewed.
know
that
after % another
getting
its
has
:
'
•
question
is
posed,
How do
succeeded
pipelines
.
=
.:; •
V;;'"' Spending
the
this won't happen
filled.
in
Yet
prices are well below the economy- as a whole has been
the high ground where they stood strong enough and broad. enough
last year; for instance,
Moody's to absorb these successive adjust¬
Spot
Commodity
Index is, 396 ments without stumbling into a
To borrow, a
against 458 a year ago. Especially general decline.
phrase
popularized
by
nuclear
; *An address by Professor. McNair physics; we have not as: yet at any
before the
National Retail Dry time-experienced a "chain reac¬
r, Goods * Association,
New rV York tion'' of the type -which pulled
_
-
Thus
spend, tended to hold back in
their spending?!'
There are two
again?
! What has been taking alternative explanations, one of
place apparently is that the econ¬ which is more optimistic than the
omy
has been undergoing- suc¬ other. This more optimistic hy¬
cessive adjustments; one industry pothesis is that present consumer
we
of sensitive
City, Jan. 12, 1949.
Why Consumers Have Reduced
"Why: have consumers,, who by
pres¬ and large still have the money to
•
;
as.
riod their
Behavior
In addition to the emergence
even
thus far
that
of
pieces of evidence.. iness
Price
saving
down
the
whole
.
economic-struc¬
•
now
do
we
know
what- is
a
.
normal
enacted, will fend to impair prof¬
its
as
of funds for cap-f
source
a
.x,!
ital expenditure.
At .the
same
time it is scarcely
likely that the Stock market will
favorably to new issues.
.. _;
be
'
With
respect to the attitude of
/ toward:
capital ex¬
businessmen
pattern of consumer expenditure pansion, the effects of the election
are most certain to exert a restric¬
today? v How do we know that'
tive
influence.
This
influence
70%
isn't more nearly normal
arises not only from the prospect
than 55% or 60%?" They point to
of
increased
taxes, - stepped-up
numerous
changes ;in the spend¬
ing pattern,, such .as lower outgo
for rent, domestic services, public
utility rates, interest on personal
debt, foreign travel, and so on.
They point also to the increased
spending power from full employ*
ment and enhanced- productivity.
They cite the increase of 33% in
real
since
per
capita purchasing power
which means a shift
19401,
government controls, repeal of the
Taft-Hartley law, and increased
spending
also
it
for
arises
social benefits, but
from, the profound
shock to business sentiment in dis¬
covering on the day after election
that/ contrary to all the high hopes
entertained by business during the
early postwar period, the New
Deal is here to stay, and a labor
of millions of families into higher government steering left of center
will be in power for the next four
reversion to income
groups with consequently
a
more nearly normal pattern
of
years.
altered* patterns
of -purchasing.
consumer
.spending.-This
hy¬
The probable upshot of all this
pothesis has considerable statisti¬ 'Which of these changes are tem¬ is some decline in business spend¬
cal support.
During the period porary, they ask, and which/are ing in 1949, perhaps on the order
from
1929 -through
1941
retail
,
permanent? Should we not there¬ •of .15%. ■ -■ • ; ~,v .
sales normally tended to absorb
3. Construction—The edge is off
between
55% and1 60% of con¬ fore, they - inquire; view with con-,
the urgent need for private and
sumer
disposable income. - (This, siderable alarm-such a decreasedii business
construction; but this is
figure fori retail. sales of course
not quite so true of the need for
>;i ;l Arno H, Johnson,"Market Potentials/
behavior simply is a
,.
does not include
rent, .travel,
expenditures, for
education,
and
nu¬
1948,"/ Harvard- ■ Business > Review,' Vol.
XXVI, No.4, January, 1948, p. 11... '
.
/(Continued
on
page
28)
*
28
THE
(456)
COMMERCIAL
&. FINANCIAL
CHRONICLE
Thursday, January 27, ,1949
business activity, prices, and em¬
ployment."
-•
(Continued from page 27) ;
higher prices for the basic stand¬
ard of living).
Because such ad¬
commercial
construction, stores,
ditional
purchases are optional
hotels, garages, and so on.
-'
and deferrable, consumer spend¬
With respect to availability of
ing may tend more and more to
funds, savings have been drawn
resemble business spending in its
down and banks are tightening Up
susceptibility" to wide fluctuations.
/ on real estate loans.
i
,
for
achieving
well have
may
fect in 1949.
.
■
•
caution in
crease
•,
1.
The
probable result in
•"
1.949.
;
4.
exports
was
•
of the important
one
factors which
buoyed
the
up
econ-
in the second half of 1947 and
oray
.in the first half of 1948.
After some
decline, exports are
rising; and since the
election virtually guarantees the
once
more
continuation
of
since
United
present
in "Europe, .(.and
States ; policies
^
additional
funds* will
sbon
J be required for ERP, it is alto•
r
likely
gether
that
Will
exports
^rise in 1949.
ri* At the
i
same
ports also
-
)
may
time, however, imbe expected to in-
.crease.
„
.
j
Consumer
5.
:
the
big
1949.
:
Spending—This is
conundrum,
least
at
for
"
needs
Consumer
;
for
nondur-
gables are very high indeed with
a
full-employment economy; in fact,
:we have been prone to underesti-
v
'
:
total of about $15
a
■'■'''"T;
v.V'V'-riv
State spending in particular for
and
roads
public
buildings
will
President
will
parently
about
Truman's
budget
call for
total
a
of
and it is quite
Congress will iii-
,
that
possible
this budget with respect to
military needs.
At the same time
it is unlikely that Congress will
cut down much,, if any, of the pro¬
posed spending for social benefits.
(Parenthetically, it may be re¬
marked /that just as the problem
of 1942
was
it looks
as
"guns
though
butter,"
versus
of the prob¬
one
lems of 1949 may be "guns versus
gravy.")
To
this
balance
tional
taxes
budget
requested
are
addi¬
of $4
arid
dividual taxpayers in middle
brackets.
upper
If
J
we assume a
,
'
,
balanced budget,
then the effect of. government tax¬
ation
and
spending
on,
consumer.
and
income
(.With respect to funds, the out-
•
f -look for-consumer disposable rin:
•
at present seems good.
come
-will
be
cultural
•
small
a
decline
income
There
in
because
agrithe
of
-"
price drop, but some part of this
;:
vnray be a transfer (in the form of
t "
lower food prices) to. other secof
tors
the
population, who will
thereby have more to spend. The
agricultural price support policy
.
•
will
,<7
prevent
any
farm income.
:
-
fourth
-seems
w
'.
drop
-
in
•
•
4n regard to wages, a
-
-
-
severe
moderate
round of wage advances
to* be in prospect, although
lower food prices will strengthen
the employers' position in bar¬
gaining. The effect of any strikes
at this stage will be deflationary.
to consumer durable inis the possibility of higher
respect
..
'.
taxes
on
On
-
J
individuals.
the
other
hand, there are
some
specific plus factors which
can -be' taken
into account, such
income tax refunds after March
as
15 and state veterans' bonuses.
Obviously
«
;
•
'major
a
maintaining
consumer
'
factor
in
disposable
income will be the continuation of
employment, and that, of
course is contingent on the whole
we
.
Willingness to spend at the
r
ment seems to be the
crux
mo-
of the
For the early part of 1949
matter.
the
•r
key question is how large a
part of disposal income consumers
are going to spend.
In some de¬
gree the answer to consumer will¬
ingness to spend depends on the
behavior
business
of
viduals
in
to
productive enterprise.
other
of
end
brackets
will
itself
and
reasons
income that is available
become
expenditures for
of
effect
chase
of
and
shelter
more
available
goods
other
going to be in 1949.
dozen
than in
for
than
pur¬
taxes
to
,
for
1949
in
-
On the other hand, it should be
of
th&n
business
1ft
activity in
1949
/Secondly,
some
moderate declines in employment,
thirdly, a somewhat lower price
level, and, fourthly, a somewhat
less favorable profit performance,
sort
of
business
face
we
some
recession
during
1949, how far can it be expected
to run?
This question naturally
will be uppermost in the minds Of
many
as
events
the
-,
are
a
ing factors.
be
the
"
,
number of
In
the
(But this
March
to
15
pay
Then with the large
income
taxes.
flow of funds
into the Treasury the government
for some time after March
not be
it
spending
comes
in.
money as
15 will
rapidly
Therefore govern¬
operations
may
deflationary force
well
in the
of
the
the
now
which
menace
it
'has
sometimes been in the past: stock
market borrowings are negligible;
The effect of government
and
expenditure
one
of the
in
taxa¬
1949
serious; the
residential mortgage
be heavy, but these
mortgages have been written with
more safeguards tlian in the
past;
burden
may
consumer
credit, though high ab¬
solutely, is not out of line with
sales; and in any event, the his¬
torical experience is that this kind
of debt is not characteristically a
vulnerable factor.
debt
Looking at the
over-all, the data
alarming. It has
situation
in
are
no
sense
been estimated that at the end of
1948 individual debt is
only 35%
of disposable income as against a
figure of 60% in 1929 (Arno John¬
of
son
the
Walter
J.
against
as
185%
in
1929
(Northern Trust Company of Chi¬
cago).
ture
•
-
'
is
the
factor
Again
nearly
so
of
-
the
inventory
situation
vulnerable
as
at
various turning points in the past.
There
parts of the picture puzzle to put
together.
come
lar
has
not
been
any
great
take
can
a
justifiable, pride in
i
array
the
:
If the budget should be¬
»widely-unbalanced,
infla¬
inflation in
that
can
history they have
our
likewise be crossed off
is
in
banking
the
such
the early
the
kind
of
weakness
structure' which
devastating
effects
ing structure is far stronger than
it
was
ity probably
can be
dismissed that
banking weaknesses would
be enacted
those factors faded out very
rapidly once the toboggan slide
had started. All the historical evi¬
dence is that in the United States
yet have made a smooth
transition from wartime boom to
a
high level economy. That doesn't
that it can't be done; but i'
say
do it
we
other
tion-is that
sobering, considera¬
today- there is a new
factor
of
vulnerability, present,
namely, the high breaks-even point
for numerous businesses, both in
manufacturing and in distribution.
This
percentages
.
•
almost
are
'v/./ ]'< (rririj
;;.: profits,.(both ;rin dollars and 'in
percentages;; will. .; probably ; be
lower.
;
.
-■:.\'v.vlL'v-:,;;Kv rivri;-/i
.To
put' it
another
way,'rithe
creeping buyers' market which
have
we-
been
observing for.;; several
months, first in one industry^.and
in
then
another, has!, now crept
So -what are We: gp-
the top:
over
ing to do about it?
^
I think there;
are
three watchwords for alert re-"
management in 1949. . ; They
"Push Merchandise Values,"
are:
"Control
Those
Stocks,"
and
"Fight That Expense." Let me say
just a word about each of these.
Merchandising Watchwords
On
merchandising the ball has
been passed to you. It is, up to you
to
coax
those consumer dollars
pack into the market.
You
are
your
the
com¬
munities, and it is the job" oi purrif
chasing; agents to ; bargain and.
haggle, if necessary, but always to
get values.
Insist that rinanufac-.;
turers produce goods priced at the.
levels that consumers will be will¬
ing to
go
Cut out the frills arid
pay.
after the
mass
markets.
This is
the
only way in which there will
fighting chance for the econ¬
omy to make the transition from
postwar boom to high-level con¬
sumption without taking a bad
bump.
;*'■
'
be
a
The next thing is to watch those
keep flexible, hold back
some open-to-buy for market op-,
portunities and profitable record¬
ers.
Many of you people on mer¬
chandising Jobs haven't had experience in a buyers' market JThis
stocks,
_
The
Expense
certain
it will be the first
now
time.
"T
high br eak-even point
coupled with the as yet untested
rigidities, in. cost "that have been
introduced in the business struc¬
•
is it.
In too many stores the rate
stock-turn slowed up in 1948.
of
In 1949 you
have got to* get those,
stocks back in line with sales' krid
keep them there.1
ture, .largely by the high wage
levels and the union contracts re¬
The
next
of
'
the
three
obvious
jobs'for 1949 is to fight that ex¬
presents a new pense. Comfortable increases' in
Conceivably we may dollar sales volume wiil no longer
have here a new type of vulner¬ be present to act as ah; automatic v
ferred
to
above,
problem.
ability,
to
a
that will be conducive
one
rapid
spread of layoffs and
unemployment.
So
we
if the
'
.
boom
can't be too"
'
sure
of making a
.
economy; we
cushion to
absorb
increases.
The
dollar
expense
Harvard
Bureau
figures and the Controllers' Con-
figures all :show a - very
sharp rise in the cost of handling
the average transaction over each
gress
really is over,
smooth •transitiori to (a -high-level
can't be top sure that
of
the
last
several
rise has got to be
; That
years.
halted. Now I
as
a
oper¬
they so often have in the
past, to accelerate
any
declines in
business
dip in 1949 might not
turn out to be a
with their money.
Consumer will¬
ingness to spend is the key
ques¬
tion in the months ahead, and it is
a
question to which the skill and
ability
1949
of
may
retail
management
in
go far
in furnishing
an
answer.
after 1929, and the possibil¬
ate,
may
in
1930's, Today the bank¬
On the other hand the kind of tax
which
so
far as the present situation is con¬
tionary trends would be resumed.
program
an impressive
jor downturns, such as 1920. and
we never
'
Expense dollars unless sharply
controlled- will * tend, tq increase.
r
econ¬ purchasing agents for
[factors of strength and stability,
j and yet on every one of those ma11930,
VV
so many
evidence purporting to
existence' of numerous
of
show
maintain
to
v
v
of
| major downward turn of the
I
values
'
recognize that you are: merchandise - people,
and you
may
be
'fairly substantial tempted to say: "What has ex¬
not given way to the temptation
pense control got to do with me?"
one.
But -the general balance of
Today expense control is, every¬
to speculate
in inventory.
The. all; these basic factors for the time
body's job.
The
decisions you
lessons of 1921 were well learned.
being hinges very definitely on make as merchandise people af¬
A third factor of vulnerability what
fect expenses, and the job of ex¬
consumers are going to do
the fact that during this ^greatest
is had
most difficult
side of the
vulnerability of our situ¬
omy there has been
offering
tail
.
stabilizing factors, there are twe
sobering considerations that must
be painted into the background.
first
cerned
early part of 1949.
only one
ation and the presence
pre¬
business and individuals must ac¬
and
is
•
turning points.
things to assess
with respect to vulnerability is the
| The first of these is the undeni¬
debt structure. Clearly that is not
able fact that historically at every
One
the
reduced
business situation, is far less vul¬
food, clothing
(after allowance for
"
picture, and before you repose toe
great confidence in the apparent
it
general
at
dur¬
rimportant 'factors;
11
first place
'
s
Markdowns will quite probably
increase because of the necessity
stabilizirig
able, goods , are
reassur¬
that the
argued
but the market will
opportunities to merchants
keep their open-to-buy flex¬
sales.
for many types of
«
un¬
.
.
of stability.
three
or
L
-
number
der pressure,
of
seas.
the
;;
Markon will continue to be
ballast to reduce the
a
increase
or
of transactions.
ible..
stabilizing, influence.
a
consumers
business
two
next
"
•Thei^
can
watch
we
of
first-class merchandising job'to
a
offer
influences
which have been universally com¬
mented on of course rinciuae agri¬
cultural price supports,'the' high
level of wages, and the existence,
of so many union wage contracts
(The latter two. factors,, ho We verV
can also be argued to point in an¬
other direction, as we will note iri
a
^moment.) Basically, of course,
the clear need for further capital
goods expansion and the still un¬
satisfied long-run requirements of
1948,
If it turns out that
cline, and retailers will have to do
maintain
who
Other
opinion that the straws right now
a somewhat lower
kept in mind that with a balanced
amount of inventory speculationas
budget' some aspects of govern¬
financing may well be defla¬ compared, for example, with 1919tionary 4n
1949.
For instance, 1920. Retail merchants in
particu¬
now
of the average transaction will de¬
part of the total outgo of the. na¬
ment
cumulate funds between
;
Sales will run about even with
Irist year or a little under; the size
stormy economic
point to, first,
is not
in
influences
something like this:
nation,
operates as
reviewer will' hazard the humble
speculation.
-
~
.
ex¬
amplitude of the ship's rollih^ in
-
rate
the
stitute
of
terms
Closely related to the debt pic¬
inflationary
significant stabilize
the government does in itself con¬
important segments of the
what is likely to be the
result
vive
1949:
the positive side
on
very
tional economy is in the hands oi
.
business
activity,
employment,
price level, and profits?
It .is
frankly anybody's guess;. but this
balance.
a
are
essentially on a
buyers' strike, the situation Which
we are going to be
looking at in
the^ department store business in
the first, half of
1949
sizes up
consumers
these
of
nevertheless the
simple fact that such a substantial
economy,
net
Obviously any such unbalanced
budget situation would tend to re¬
clearly
by Arno Johnson that $100 billion
impose
to
Congress
tion
In 1949 it is estimated
arma¬
ment, for ERP, and for European
Lend-Lease, or (2) unwillingness
point
can
some
of
From this quick survey of half a
income
however,
to
relations with Russia
our
might happen for two reasons: (1)
It-is distinctly possible,
that the budget might
unbalanced in 1949; this
budget.
necessities.
basic necessities of
of what
Thompson
Company). Likewise, taking the
total of all private debt, corporate
as
well as individual, that total
amounts to only 86% of national
for goods and services other than
be
it must be
just been said is based
assumption of a balanced
the
a
will
in
What has
on
exert
why con¬
sumer
spending is so critical is
the increase in the percentage of
1940
decline
,
fiscal
of consumer income
lower
ing (through plant expansion for
armament, for example) and con¬
sumer spending (by means of in¬
creased employment).
ment
consumer
a
hand
other
the
as
the
cause
in¬
any
the
recognized that the government
may spend funds in such a way as
to. increase both business spend¬
by retailers.
of
At the
scale
on
disposable income.
consumer
On
the
**taxes
creased
indi¬
invest
some
.
upper-* the farm
mortgage situation is not
on
reluctant to
be
particularly the policies followed
One
taxds
bracket incomes may cause
high
general mix of the situation which
are discussing.
f')'y
.
heavier
Also,
emphasizing the
di
spending
increased
One specific minus factor with
'; /come
businessmen to make such outlays.
to
1949
foi
armament, ERP, European lendspending.
^ lease, and so on, has already been
Practically any one of- these commented on; but the genera;
views can be cogently argued; a -fact should not be lost sight oi
great deal hinges on the action of that whether or not we approve oi
Congress; and; back of it all,'of such widespread participation by
course, lies the big question mark government in the economic life
both business
government does with it. For nerable than it has been
instance, heavier taxes on busi¬ vious historical
.
one
increased
the
;s mate this aspect- of the consumer. ness profits such as proposed may
^]uaarketr: "For consumer ( durables tend to dry up business spending
i goods, although the keen edge is because
they will decrease the
h. off the demand, the needs are still
funds available for capital outlays
'£• substantially high. v,P
„
and will reduce the incentive of
in
and consumer
business months.
income
is
a
question of how much is
taken by the government in taxes,
whom it is taken from, anil What
addition
historical factors of vulnerability,
government spending in 1949 may ring influences. The probable
well serve to compensate for some tent of
government spending
ap¬
$44 billion,
at it is that
decline in
are
increase.
billion from business and from in¬
On i balance,
the
net
export
situation in 1949 will not be dej flationary
and may ;lend some
\ -sUpiport to the total;economy.-;
:
1949,
gov¬
will, both rise
crease
"
I
to
Exports—The increase in net
•
•
in
oillion.
de¬
some
cline in private construction (publie construction not included) in
<
spending
and
local
and
ernment
making commit-
ments.,
taxation
spending.—State
1
•
Government
6.
As to attitudes, the uncertainties
of the outlook will presumably in-
a
'In
absence
But still another way
.
of looking
budget
deflationary ef¬
balanced
a
to a normal pattern that we are
facing or whether it is the begin¬
ning of-a basic downturn because
;j
r:
7J
Whichever
nearlyJ correct
basic
in
causes
<>
:-J
hypothesis
in
of the
regard
is
'
more
to- the
recent decline
pense
ization
can
can
be accomplished
expense
job of
in
expense
because
done,
the organ¬
conscious.
I
control
here
and
will note from the "pub¬
lished statements of certain retail
organizations
year
ting
whether it is merely readjustment
won
that
be
there you
lem.
spending,
is
know this
is,
consumer
control
only if everybody
during
this
past
that " some of them are get¬
on
"top of this expense prob¬
But it is
a
battle that
can
only by everybody taking
be
a
COMMERCIAL
Number 4772
Volume 169
,
/,
Basically
; the surface aspects.
•:-V
r
.
and concepts.
ideas
Ex-
incurred to carry out
jobs. Jobs in a retail organization
perises
are
done for
for
b i 1 Up n
might strengthen the de¬
capital goods and thus
Sustain
job
opportunity.
Many
year
deferred
tisticai
y
1
their
"Is that staReport necessary?"
Many
■
the, basic .step, in
expense
control is the revamping
of man-
" times
.v
;
" agement thinking about the
that have to be done.
Next
.
jobs
high
our
of
Everywhere
search
-
for
c
methods, whether by mechanical
-rheahs,'.altered' physical layouts,
improved systems, or -other meahs.
"Finally, people are of tremendous
♦.
„
prices,
standard
living
has
been advanced
we 'must press- the
better- and' improved
i d
o n s
e r
This
;
-
is
clearly shown
by the physi¬
cal
volume of y
goods
projects
C.
pro-
A.
investors
security,
loath
are
Sienkiewicz
bound to go forward
under
competitive
system of resilient,
NASD Elects Seven
New Governors
WASHINGTON, D. C.- The Na¬
Association
of Securities
to
tional
take risks in the market and pre¬
re¬
efforts of gov¬
economy.
equity capital
Partly because of the
discriminatory effects of taxation
and general clamor for economic
be
may
dream¬
have new inventions and new
Dealers, Inc., announces the
also become large fer to seek other ways for assur¬ tion
factors, depending on the turn of ing their future. They have been They
reluctant to buy stocks so that
events abroad.
The cost of living, particularly corporate financing has been re¬
food, items, has been .'declining, stricted to retained earnings, sale
of bonds and bank credit.
For
and disparities among individual
commodities and groups of com¬ example: in the 1920's stock flo¬
modities are being gradually ad¬ tations averaged about 35% of all
justed; Z This correction in price corporate security issues for neW
Felationshlps has been well Under capital, ' while in the past two
way..' since the third quarter of years they accounted for only 25%
Under the present
^hd it promises to be of the total.
quirements
In,- spite1 of
necessary
public
put into operation this year.
Foreign aid and defense
needs
wants.
and
a
to industry.
for
mand
last
to satisfy
it is
to apply imagination to
A the - methods of doing -those jobs.
••
\'0f: $175
rate
Our in¬
with the result that
With cooperative
trend in the flow of
it
that
certain "deliveries?"
,
the
at
of pro¬
continue
ernment, management, labor,
farmers and the consuming public,
<$>-
Consumers
methods
better
leaders
dreams
we are
spent
new
discoveries.
We have
these
of
necessity
jobs. "Does that particular 'type
of'" merchandise" ftaVe ' to1 be
marked?" "Can we avoid making
;
'
v.
we
just ended the third postwar year of unprecedented business activity. Never
before in peacetime have so many people been at work earning higher incomes and buying
every instance some¬
Output of our industries and farms reached record levels.
be weighing the im¬ goods in such large volumes.
and
portance
.
ing
employees, are done for man-:
agement. In
body should
.
dustrial
artificial situations and create business uncertainties.
:
customers, are done
ate
'
technological prog¬
on
with re¬
power, new prod¬
ducing and selling goods.
factors of high -industrial production, employment and income and large consumer
and government spending powery prominent Philadelphia banker lists as unfavorable forces: (1) grow¬
ing resistance to high prices; (2) higher break-eyen poiifts in business operations; and (3) declining
trend in flow of equity capital to Industry. Says government fiscal and monetary policies give rise to
than that.
involves
and
As against favorable
control goes much -aeeper
In the first instance, it
pense
'
to
ucts
President, Central-Penn National Bank of Philadelphia
29
marching
spect
By C. A. SIENKIEWICZ *
ex-
our
in
ress
Conflicting Forces in 1949
planning and .-budgeting and checking
performance, but those are only
Expense control involves
.
(457)
CHRONICLE
FINANCIAL
vitality;
sharply. different attitude toward
expense from that which charac¬
terized the inflation period.
y
,
&
may
of
new
seven
elec¬
Governors.
are:
control. It duced. and;
is-people who do jobs; and if you marketed. -<We have also' made drderly or Without violence, such tax system it is advantageous for
jean, .develop real interest; son .the substantial additions '. to "our. plSht MSf'tbbK 'place in the early 1920's. corporations to meet their needs
; -patl ipf - people. in:
do'ihgAthipgs and equipment,. as- well' as hous¬ It 1st important to allow and en¬ through debt or credit rather thah
;; better- and
accomplishing., more ing.
'Such "additions, are,"-real courage this adjustment so that a equity financing because as an
output for a ; given period-of time, wealth and should assure' us of proper equilibrium can be estab¬ expense it; is deductible for tax
T\
^ I A further gains in bur living standi lished as soon as possible.
We income purposes.
importance, in expense
,11
-
.
;\<V
}<
s
.;.<7vX'NoWt sfjf tybiivTocfe&t Expense
that
in
control
ideas, concepts,
'
•
,
penses are
1949.A
bounds in
V
;
These are difficult times to in¬
terpret.
We .'Ore in the midst of
transition .'from postwar, boom to
r
"*?
of. period of. leveling
"readjustment.
In7 itself
this is difficult enough; Put the
situation is complicated by Jihe
'
off'
1
.
:
or"
'fact that we are also
*
.
Hind
some
-.
•
:
preparedness to
period of greater
"
in transition
phase of the cold war, a
to a new
expendorganize and sustain the
defend ourselves, greater
i
itures
to
peace-seeking nations. On top of
*,. this, furthermore, we are seemirigly in transition to a second
phase of the New Deal, with im1
creased emphasis -on social behe-
■
:
•
•
factor
prewar
our
a
wishful' thinking or into; £
sense of false optimism or" secur¬
war.
ity.
We have yet
big job to do.;
that
all
in
mined support of
will view current economic prob¬
into
a
distortions
our;
econ¬
truce
ratheryfhan of stable
Approximately '70%
peace
of our 'na¬
directly or
employment' and in¬
high levels. / Such an
approach would mean more goods
jobs, more money to spend
more
and
therefore
at
cloud
Conflicting
the
and
home
abroad
be¬
picture and make any
forecasting, or any application of
forecasts, rather precarious busi¬
these
c
this
of
view
total situation
readjustment -in business
particularly, some .drop in-prices
is to be regarded as healthyr jlf
/.if,- some
•
\:
'
ful
the jobs
& with thfe business boom- going
tilt we
-
to take on
were
augmenting our armament, rewestern Europe, restoring
of
!■'... aiming
v
;
European productivity, and at the
same time conferring" vast new ;so-
:
cial benefits and
special subsidies
domestic
the
in
•
.we
economy,
factors; will' help
business
let
Second,
those factors
able
and
consider
now
less
are
the
emphasize
of the j ob ahead
ness
is
us
that
favor¬
serious¬
of us. There
growing resistance on the part
a
plan, make decisions and go on in some markets a saturation point
producing and selling goods has been reached. Latest reports
which the;people need and want, .show that inventories in all kinds
v
What
are
First, let
able
conflicting^ oL plants have been unusually
large.
At the end of November,
stocks of goods at factories totaled
look at the favor¬
over $31.1
billion, at retail $15.6
Industrial produc¬
these
-.Vus
factors.
income
levels, although
the rate of expansion; has' > beer
declining and some ; increase in
unemployment
is
in
evidence.
billion and
There
still backlogs of orders
year,
goods and shortages of
supplies in some lines.
But on
the whole the supply and demand
factors reflect a better balance
were
tion,
employment
continue
and
at peak
,
;
should indeed find
•
ourselves- in a
precarious situation . where the
Vrapid imposition of controls would
•
Hence
inevitable.
be
busi-
some
readjustment is a necessary
safety factor. But in this period of
readjustment it is vitaiiy impor-
•
ness
?
V
tant that 'business
v-
V
slink back
and
Courage
should not lose
'into the
'
dog
house.; I say to you as em-
phatically as I can that our social
perservation of
/
salvation and the
our
depend in no small
this partic-
-degree on business at
•
•
liberties
i
u
l
a r
vigorous,
strong,
•
i
Let's
ly
\
ure
:
1
see
how well we can .meas¬
to
up
that
standard
apartment stores in 1949.
in de-
(Special
-
-LOS
•Thomas
nected
,
West
to
The
Financial
F.
with
Ardman
is
l
the
case
at
and
buying policies
fnore; conservative
time
Selling
any
becoming
are
and
such
in¬
as occurred here
being rapidly ad¬
justed.
Both business -units and
individuals are in a strong credit
ventory
and
losses
there
are
position although their debts in¬
creased "somewhat
in
the
past
The rate of savings is sub¬
below
the
wartime
These
substantial.
were
instances
all
in
inven¬
tories, of course, may have been
worked down over the turn of the
the
but
is
fact
that
they
large and called for skillful
handling to avoid losses through
price :: adjustments
which
have
.
.
Whereas, before the
war
break¬
points generally ranged from
40 to 60%, now they are running
anywhere from 60 to 85% or even
even
higher.
This
must be
operated
level
before
and
even
for
out
a
earn
income
future
needs.
begins to
current
Pressure
that a plant
at a very high
business
breaks
means
and
for
higher wages with
to productivity in
reference
instances has tended to up¬
cost-price relationships,
many
set
the prewar rate.
thereby dampening business plans
The decline in capital expendi¬
and
decisions
to
go
ahead.^
.
In
addition, the expectation of higher
taxes and the
by public capital expenditures—
Federal, State and municipal—so
industry to pass on wage increases
in the fqrm of price increases tend
to
lessen
business
incentive to
now
con¬
*An
address
by
Mr,
Seinkie-
growing inability of
delnhia
Chamber
of
Commerce
Philadelphia, Pa., Jan. 13, 1949.
•
than
"unfunding"
would
would cer¬
us
any
eventuality that might arise
to credit problems in
inflationary period because the
approach
method
One
adds
of
factors at
of
Equity
Capital
disturbing
present is the declining
the
most
the
to
supply-
of
is already very
which
large.
Right
prevails
uneasi¬
if not distrust, of increasing
or wrong, there
considerable feeling of
a
ness,
public intervention in the opera¬
tion
of
competitive
free
a
econ¬
This attitude is real, par¬
ticularly in the light of clouded
prospects for profits, the vast de¬
mand upon industry to contribute
to the social welfare program, and
omy.
the drain
a
national
on
James
J.
Lee
Jesse A. Sanders, Jr.,
resources as
international commit¬
result of
ments.
These
tors
among
are
the basic fac¬
to produce
combine
which
hesitation to venture,
and
a
than
rather
a
desire to
expand,
to
delay in business planning
and action.
#
immediate
The
the gradual return
prospect is for
of normal price
individual com¬
of commodi¬
cost of living has been
relationships
of
modities and groups
ties.
The
declining
and
further
this
volume
of'
may
slip off 5
cases,
is likely
The
year.
business
more.
or
and
to drop
overall
profits
10% and in some
This
general
pre¬
diction, of which you heard be¬
fore, must necessarily be only a
guess.
In any event, a downward
adjustment
of this
size_ would
mean
no
more than
a mild cor¬
rection;-certainly not an indica¬
tion of an early serious recession
or depression.
,
The / longer
Flow
Charles H. Pinkerton
present
world tensions.
Keeping interest rates low and
underwriting
the
government
bond
market
is a
questionable
good.
Less
F. H. MacDonald
to meet
from
expand.
wicz at the Second Annual Fore¬
casting Conference of the Phila-
"
of govern¬
maturing within
one year—also adds to these untainties because in general such
debt
is
inflationary.
It would
seem that a program of refunding
conserve
been in progress.
level, but it continues well above
Chronicle}
Flynn & Levitt, 411
Seventh Street.
was
since the end of the war.
at wholesale $8.5 bil¬
Increases
tures, which were unusually large
CALIF.—
ANGELES,
than
lion.
last year, -may be more than offset
•
With Flynn & Levitt
•
are
hard
year.
healthy.
and
for
itself stantially
keeping
y juncture
There is also evidence to show that
to
-forces?-
'
securities
ment
money
In
.V
tainly better prepare
Factors
government ness. " The best one can do is to of consumers to high prices—not
arid with the analyze favorable and unfavorable only high prices but also low
substantially factors in the current situation in quality of goods. The consumer is
government controls of the hone that understanding of becoming very conscious of both.
industry;; \
availabiltiy
the
to
debt—about $45 billion
increased
..
of investors
assist the situation; it
Unfavorable
Warren H. Crowell
Buhse
the government
minds
the
respect
rather
retailers.
it
competitive markets.
forces
business for
wholesalers and
good
manufacturers,
E.
% A large volume of: floating
at
come
in
-
and cost of credit.
cooperative
production,
is on the way to
normal relationships in free
more
initiate
will
"efforts directed toward stabilizing
indirectly attributable to war and
the present tensions in the world
are
anything but encouraging.
;' Our economy is full of mixed
trends
even
though
there
are
that
spirit of-moderation and ;with
a
perhaps
Howard
deter¬
regarding the stability of present
prices and creates uncertainties
administration
present
The
market, for example, raises
doubts
reasonable assurance
a
the
lems in
tional expenditures are
signs
bond
r
There is
;
omy have yet been removed anc
we
are
still in a state of armed
as
to
up
.
situations.
artificial
-iv has been since the
ment,. however,-/-should-.motHull us
set
are
implement our fiscal and mone¬
tary policies give rise to many
stabilize
cost-price relation¬
can
we
an
/
/
that
so
the
to
but
taxing and'spending,
threat, at least, of
-
•
it
basis.
This
back
go
price level,
which
Controls
ship will cease to be as disturbing
on
increased
with
fits,
accomplish¬
approach
is
Not
ap^must contribute if-exgoing to be kept within
tribute
.
fundamental
problems
those are all
pie,
tb Ciifrent
cooperative
cannot
a
ardsj if 'our
in terms of
way,
methods, and peoaspects of expense
control to which?; everybody in the organization cam con-
■
/
range
outlook
The state of our economy
signs
Our
fundamental weakness
population shows growth and
any
Rogers, Jr.
Howard E. Buhse of
& Weeks,
Warren
Hornblower
Chicago.
H.
Crowell of Crowell,
Weedon & Co., Los
Frederick
H.
Angeles.
Burke & MacDonald, Kansas
Charles H.
of
City.
MacDonald
Pinkerton of Baker,
Watts & Co., Baltimore.
James J.
Lee of
Lee Higginson
Corporation, New York.
Sampson Rogers, Jr.,
of
Mc-
is Master, Hutchinson & Co., Chicago.
shows health and vigor, not
of
Sampson
Jesse A. Sanders,
Jr., of Sanders
& Newsom, Dallas.
They will serve until the annual
[meeting in January, 1952.
m
SO
&
THE COMMERCIAL
(450)
FINANCIAL
CHRONICLE
idle
"Stop
beating
the cir¬
cumstances of the moment, but a
calculated program.
At least we
have the right to believe that it
is calculated and objective, that it
reflects the soundest thinking, the
gory.)
\\v;v,31
this
for
By CHARLES E. WILSON*
-
President, General Electric Company
which might cause depression: (1) revival of excess profits
taxes; (2) increased income taxes; (3) rationing and allocation of materials; (4) price controls; and
(5) a fourth round of wage increases. Attacks CIO's program as "markedly socialistic" and defends
competitive profit system as having a built-in corrective factor for high prices; Holds fourth round of
wage increases, unless accompanied by higher man-hour production, can only result in higher prices. Con- V
I
eludes; despite proposals of extremists, there has been a movement toward a middle ground.
Leading industrialist lists
;
i
as
measures
,
jokes have long since been told and retold at the expense of the unhappy
polls, the unfortunate feelers of the public pulse who either neglected to first
take off their mittens or ended up counting the beats of their own hearts and not the
Most of the
takers of the
patient's. It<£
is
in the administrative
agencies of the executive branch
government, in the union hall
and on the shop floor, and at the
corner drug store. Today we seem
of
find
to
have
foreseen
of the
Congress,
yet your committee,
in
picking my
subject,
should
committees
the
in
forums
and
vember,
might be. You will find such
those
little
some
time since No¬
ourselves
involved
in
a
great national debate over profits,
that
controls,
and other eco¬
"Prospects for nomic policies—the debate as to
1949" might what government should do, and
what labor should dov and -what
well
set
my
teeth on edge. consumers should do, to curb in¬
After
all, flation and keep our economy'
Perhaps
Syracuse is no from flying to pieces.
Charles E. Wilson
one
night you' resent, as I find myself re¬
stand for me, senting,': the" fact there is a debate
to be brushed off tomorrow. All at all, because it seems so clear to
us
in business that there is only
year long, like Schenectady and
Bridgeport and Erie and several one course to pursue in the oper¬
other familiar places, Syracuse is ation of our proved economy, just
just over my shoulder, and I can as it seems plear that a fourwhen
hear what it says and occasionally legged table will wobble
feel its nudges.
The limb of "fu¬ you take; one leg away and fall
ture prospects" can be a cold and if you remove another leg. But we
windy place on which to sit, but forget all too readily, in manage¬
such
I shall do my
a
title
prices,
as
ment, that we have a distinct ad¬
vantage.
We have access to the
best.
We might well
have selected for
records, to the facts and the fig¬
ures, to the accumulated experi¬
Reginald Heber's famous "Mis¬
ence of
generations of operating
sionary Hymn". — "Though every
men. While we seem to be speak¬
prospect pleases, and only man is
ing from instinct or prejudice we
vile."
are
actually going according to
I say that because, in all hon¬
the book.
Now we must review
esty, notwithstanding the spoken the lessons of that
book, and open
threats and the silent uncertain¬
it to others whose training has
ties which beset the business pic¬
been of a differentsort. Some¬
our
text those familiar lines from
ture, I find the prospects for our
common
how, through our sincerity and
logic, repeated over and over,
growth and success very
markets
favorable—the
we
our
all
serve, the standards by which we
live, the temper of the great mass
of human beings who bring indus¬
try to life through their efforts,
and
climate
the
of
the
convince
must
we
and the
antagonists that
doubters
make
we
33"
-V
sense.
the
-Z-.
You have
undoubtedly followed
the testimony of at least some of
United
witnesses
the
States,, which continues to be kind
before
the
recent
hearings conducted in Washing¬
ton by the profits subcommittee
industrious, and the tolerant.
I
of the joint Congressional Com¬
am -• sure > that
the hymn-writer
mittee on the Economic Report. I
classified all of these things as
was one of those asked to, testify,
"prospects!" Perhaps he was only
and I am going to take advantage
being a bit pessimistic in his
of your invitation tonight to re¬
characterization of man.
Given
all of these natural advantages, peat a few of the things that were
said, primarily because it seems
roan could be careless, or fearful,
to me that our prospects in 1949
or selfish. What hie wrought was
and thereafter can only be looked
going to be largely in his own
at realistically in the light of these
bands. That is fundamentally our
;
3" 3
!
situation in 1949;
We can take it proceedings...
to the
ambitious, the talented, the
,
•from there-.
/•
*\t,
\
of
One
'
,
r
Senator
It is not my
intention to speak
specifically to you about
the questions asked by
O'Mahoney was what I
thought ; should be recommended
by the committee in the way of a
legislative program, and my an¬
Syracuse, or even about you and
swer was that; nothing should be
your
own
ventures here. You
done.
That was too short an an¬
know those things—the plants, the
swer,
and on later reflection I
people, and the products—like the
wrote Senator Flanders and the
palms of your own hands, and cer¬
committee members along these
tainly Dr. Baker is your most
lines:
-qualified authority in respect to
Very
General Electric and its business in
the
concerns
of General
One of the greatest of those con¬
cerns
action of the
"The
Electric.
community
ness
month
is the recognition of our in¬
terdependence as economic factors
in this community.
ing
has
entire busi¬
during the past
been
a
most
disturb¬
Not
only in the stock
where- the
owners
of
one.
market,
American business have shown
of
Outlines
Our Profit
System
;
Rather I would like to examine
with
you
prospects
future
our
in terms of the broad
outlines of
much
to
buy
the
important
er
things that are being challenged,
and first of all we must get them
clear in
fidently
minds, then con¬
strenuously assert
forums wherever
our own
and
them in the open
eagerness to sell than
that
the
overall
more
market
disturbing,
fundamental custom¬
has
that
This
off.
action
been
cut
community vfrom
to
producer.
It is my
conclusion that the public is be¬
consumer
and more alarmed at
specific measures that
increasingly empha¬
sized by some of the members of
the new Congress.
There is a
definite feeling that some of these
measures aimed at inflation might
coming
more
of the
some
been
have
well
cause
effort
the
depression; that in
profits and
a
control
to
prices, the measures adopted may
cripple business activity critical¬
ly.
most
Those proposals which seem
alarming are as follows:
A revival
of the excess
profits tax in peacetime.
(1)
.
(2) .Higher taxes on individual
incomes,
allocation
or
materials.
>
A fourth round of wage in-
(5)
;
of
Price control.
(4)
creases.
.
!j&-.
;
t
,,
of Excess Profits
Fear
■
,
fewer
Tpc
and less
"Specifically! jn regard/to the
for
peacetime excess
profits tax, just the fear of such
revival has
already caused the
are
being
prog¬
which
of
the
chief
puts
forward
■
of new plant, in the event that
the-operators.:resist controls.
!>
organi¬
are capable,/ And yet, in
honest opinion, and i am runr
ning for no office and making no
zation
Other Socialist Propaganda
,,
Business
;
^,
columnist
men, some
said the other day, are
always too
votes, it is nakedly social¬ quick to raise the cry of "social¬
istic; it is utterly, foreign to every ism." Is that so wrong, under such
traditional concept of the rela¬ circumstances .as these?
Whence
bid for
tions
American
between
govern-
the
philosophy that stands
any
such
program • for
peacetime Americans? Let us not
only raise the cry but nail the
charge right on Mr. Murray's front
comes
behind
door.
And just to illustrate that there
other spokesmen with corre¬
are
spondingly similar ideas, here are
other recent quotations.'
A
president of one of the larger
two
are in business would hardly dig¬
CIO unions, addressing the Na¬
nify that with a denial. The "pric¬ tional Conference of Social Work¬
ing practices of industry" today, ers, said: 3
if they reflect anything, reflect
"Clearly,^ our only hope of eco¬
first and foremost the constantly nomic salvation is sound over-all
increased costs of labor and mate¬
planning. This planning must be
demon¬ done by the Federal Government
rials.
Our
system
strated
over
the years that it has
corrective
built-in
a
has
for
factor
too-high prices in the nature
the competitive market itself.
the
of
If
under its
or
direction; and the. de¬
cisions
of the planners must be
enforceable by law."
And to sum up the case, here is
price is too high, the consumer
Harry Bridges, of the Longshore¬
buy, and what can Congress man's Union on the Pacific Coast:
possibly evolve that will work
"My view is that the govern¬
more surely than that?
ment should take over the indus¬
'
Mr. Murray talks of the "under¬ try and take all the
profits out of
won't
lying pressure" for greater infla¬
as if it were something which
tion
industry has in its power to turn
it."
^3/;/3:
'
■
//3:33;3
Is this what the country wants?
If it is, then the process of
liq¬
off, at choice. The principal uidating
the
same
competitive
underlying pressure for greater system that has
given us our great
inflation, so far as I can see, lies strength, and our
great achieve¬
in the continuing threat of cease¬
ment has already hegun. I do not
less rounds of wage increases.
believe that it
on or
Mr.
for
and
will
European recon¬
military prepared¬
continue
also
has}
that ex¬
Murray also says
penditures
exert
to
inflationary pressure, and that is
They will do so principally
because they will reproduce war¬
true.
time
The real secret of
industrial
our
civilization today lies in the
tinuing liberation of
ual
con¬
by the
men
substitution of machines for
man¬
labor, by the development of
still
more
that
men
efficient
machines
so
devote their time
may
.
than
There is
reward.
a
broad
a
feeling that it would make the
government the; Only source of
funds for expansion or employ¬
ment, and it would make the •gov¬
ernment's
only source of such
funds
the printing press.
fourth
of
round
of it.""
increases
top
on
1
■ •"
shorter hours, and by sharehold¬
ers in increased income,
i We can
deny none of these -groups their
Murray declares
wants without discarding the sys¬
that if the program advocated by
tem itself.
13;333/v' 33'3' jA
the GIO does produce further in¬
Mr.
Finally,
flationary pressure, it can be cur¬
Role of Price- in the
Economy
price controls.
Let: us j consider the multiple
This
is simply to ?ay that we
role played" by price in our econ¬
indicate that the historic. fear of should let the causes of inflation
omy.
First; it is a factor bearing
fear which can be so. disastrous is run wild—but hot let the effects
on whether a consumer will
buy
Blow up the balloon
creeping into a commanding role take place.
.your product, or spend his
money
in business decisions.
This is not —but don't let it get any bigger.
to satisfy some entirely different
the time for drastic action of any It is a neat trick if you can do it.
need or want..
Second, price is a
sort' calculated
to
increase this Here is the program itself:
factor which determines whether
fear which could so easily cul¬
(1) Price - coritrol of ■. products or not a manufacturer will even
minate in an hysteria bordering for which
prices are rising.
make
factors
These
T have
that
tailed by imposing
noted
,
the
constructive
most
which
be
can
program
is
adopted
one
of
abstaining from the imposition of
ill-timed
ill-advised
or
which
likely to
in
are
the
measures
achieve less
beneficial results
than they do in the destruction of
confidence and the fostering , of
fear.
way
of
'
.
.
the product.
There are times when
panic.
on
:
•
(2)
Stand-by price controls for
other arpas.
of
(There is no mention
wage controls in
accompanying
either case.)
!
.
food
of
(3) Roll-back
where reductions at the farm level
have
not
been
along
passed
to
So
one
much for the
point.
ual
Socialistic
Program
letter
on
Not only from individ¬
legislators,
of
course,
have
from
Congress
the way
in
of
legislative program, presented by
Philip Murray. If you did see it,
you
were
probably no-more sur¬
was.
rather be
one
Our
of
feeling
dismay,
of
(5) Extension
credit controls.
(6) Authority
mand
and
to
spend
trols
in
the
the first
decision
time
;
summar¬
that
undistributed
•
-
i
(8) Attack against monopoly to
make
seek
to
as
to
pass
on
the
to
possible of
savings resulting from in¬
creased
efficiency
and
output,
many
as
the
mass
pro¬
standardization;
mand,
^
to
go
up "industry's pricing policy." It
is in the interest of
every com¬
capital for expansion even more
and
Will he
as:
buy it? ' Will I make it? Can he
buy it?
These are the ' primary
order
(7) Excess
can
to increase de¬ from the economies of
deposit reserves. duction and
difficult.)
con¬
potential
things
customer
consumer
place
a
You
(Thus making the flow of private
profits taxes.'
of
ize these three
pany
flationary pressures exist.
that
Third, whether
not the consumer has the
money
considerations
consumers.
(4) Allocation and rationing au¬
v
or
manufacturer;
,
prices
thority for those areas where in¬
CIO
should
people?
cate¬
333/
:
conditions, swelling the total to the
development of new prod¬
damage noted here. This is despite of national wages without provid¬
ucts and the increased
production
the fact that a great many people ing at the same time the comple¬
of the old products at lower
prices,
do not believe the Congress will mentary domestic goods on which
It is this problem of sharing the
those wages can be spent, thus
pass such a law. The accomplished
benefits
of
progress
which
is
fact of such a law would have a bidding
up
the price on what
fundamental and critical in our
This may be unavoid¬
shocking effect on the creation Of there is.
system. These benefits are claimed
possible
savings of
production able, but certainly we will11 only
by customers«in .lower prices, by
make the money supply bigger,
over consumption, as it would put
workers
in. higher wage#; - and
a
penalty on efficiency rather and prices higher, by piling a
prised' than I
and production
economic
my
ness
expects
jobs
the
of the nation
leaders of this great labor,
struction
proposal
1949.
•
i
Rationing
(3)
their
mean
interest .and
all the traffic would bear. We who
business
industrial
back
most
should have taken hold of the en¬
tire
wife"
your
Added to the
foregoing, the GIO
a
plants-ex¬
pansion program which, boiledl
down, consists of three elements:
government
financing of hew
careful research and the ut¬
plant; government construction of
consideration for the public new plant; government
operation
most
ress
of
from
rri|ent and American business; it is
political opportunism in callous
disregard
of
inevitable
conse¬
quences; and it won't work.
He
speaks with considerable hostility
of the "pricing practices of in¬
dustry" as if a handful of power¬
ful business men got together and
established a policy of charging
security—has become sud¬
fore the. Annual Dinner of the denly frugal in his buying- so that
jManufacturers Assoc.ia tion of consumer, goods- are backing up
Syracuse, Syracuse, N. Y., Janj 6, through retailers -and distributors,
Mr. Wilson be¬
it
should
customers come the suggestions that would
buying of be dangerous to the healthy con¬
equipment
for
expansion,
im¬ tinuation of the business cycle. In
provement- and replacement. Sim¬ .the last few
days you may have
ilarly, the individual consumer, seen an
expression of what the
apparently sensing storm signals CIO recommends to and
have
ahead—which
*An address by
trend,
collection
no
flowing
continue, must obviously lead to
the very cycle of unemployment
and depression which we are all
seeking so strenuously to avoid.
I have tried, with every pos¬
sible effort toward objectivity, to
accumulate
and judge the evi¬
dence as to why such an expres¬
sion of uncertainty and insecurity
market
value of that business has depre¬
ciated in staggering amounts, but
in the
profit system, in terms of the
forces which make it
work.\ It
is
these fundamental
more
so
laid
is
remarks,
Rocking the Boat of Prosperity
Thursday, January 27, 1949
thus
to
increase
in
the
>
de¬
enlarge the sales, create
new
jobs, and again reduce the
cpsts of production.
This is not
.
evidence
of the
Golden
Rule
in
business. It is enlightened selfish¬
ness.
'
•
?
<-v.;
■
-
Vt
price policies. (This,
This obj ective, of
depends on somebody^passing on: to
definition
of
"monopoly'';; and the consumer his proper share of
break present
of course,
"price policy."
...
It belongs in the
the
benefits
of
progress
through
price reductions, has—particularly
since the war—been greatly im¬
heights. We have seen how wrong
were
those
gloomy prophets of
sentence at the
selling the product, is
compensation to that supplier for
desirable and just that a fair part having, undertaken to solve the
customer's problem, for having it
of these benefits should accrue to
available at the right time and
the worker^—but not all. We have
considerable
evidence
that
the place, for the customer's right to
not buy it.
The supplier had to
substantial part of our productive
take that risk—and the risk was
economies have been paid off in
underwritten only to the extent of
the form of higher wages, rather
the possibility of a profit—not a
than in lower prices or increased
dividends.
In our own company, certainty. exceeded
have
times
many
ing
any
savings that could have been jus¬
tified
by
who
the
and
will
customers
tainly
have
for
far
or
better
that
than that—the incentive
risk-taking
tor future
of
the part
on
we
prices, that
Our
prices
.)
wages.
and
and
salaries, to the extent that they
are not balanced by a comparable
in output per
increase
man-hour,
only result in higher prices.
that unless prices are
cany
follows
It
to keep on
climbing, higher wages
paid only out of the in¬
creased productivity of labor.
To
achieve that there must be greater
be
can
capital
investment
the
an
only
long
labor
run,
American industry
as
itself
length
and I mean when
—is what, you
tell
we
lic
some
workers and the pub¬
our
that
today
at
are
we
against a
It is not easy,
fourth round.
it is sound and true, and we
find
way to
a
One
of
but
must
spell it out.
of
members
national
our
econ¬
in peace and in war. As we
argue
and plead
and expound,
with the Congress, with the Ad¬
ministration, with our employees
and their unions, with that man in
the corner drug store, this fact of
national welfare and well-being
is
problems today is to induce indi¬
viduals to provide risk capital to
meet the needs of an expanding
its
ry&ars has been financed in large
part" by plowing back'cbrporate
earnings and by the sale of bonds
notes, because the average
stockholder is not having
small
It is fundamental
part of it.
the whole subject of profits that
accompanied by
must be
capital
risk
of
investment
the
a reason¬
expectation o'f return. There
million corporate stock¬
holders in America today—typical
Americans—and they own busi¬
able
are
12
Yet these men and women
ness.
lhave
real
no
of
assurance
any
'
all.
The amount of
will depend on the
at
earnings
their earnings
the
of
relation
cost
various
and
factors
arising from the
picture of economic condi¬
tions.
Unless
these
conditions
look good, individuals will not in¬
vest—which is what I was trying
.price
whole
Congressional subcom¬
to tell the
quoted earlier.
that the
each of the three
mittee in my letter
It is abundantly apparent
'
of
interests
substantially inter¬
mingled, and no one of them can
foe given the exclusive benefits of
our progress.
The greatest longrange benefit to both consumer
'groups
and
are
worker
result from the
will
preservation of the proper share
of the stockholder. Unless investencouraged, the national
'ment is
economy
There
profit,
who
but
have
nothing
there
grown
antisocial in
are
thousands
to maturity to¬
day who are not aware of
The profit earned by a wise
nessman
is a measure
ice he has rendered
terms
of
value
that.
busi¬
of the serv¬
his market, in
placed
on
us,
who
only
and
his actions, can
by
man,
-
..
.
of
the world,
critics of
those
by its Committee
on
Finance
a. n
ized
Proffitt
perhaps we should await the ap¬
pointment
under clouded
American industry
population increasing faster than
at any previous time in its his¬
living and greater security, we
Electric
to
Co.-
knew
that
d i
security
that
must
living,
but also to
economy,
and
to
that standard of
our goal in the
to provide
help
be
public interest as well as our own.
Industry does not ask that these
profits be guaranteed. It will earn
them, if given a fair chance. It has
in the past.
And the free play
competition—not
of
set of
socialistic
and
baked
some
halfcon¬
trols—plus the long-range inter¬
ests *of the producer, as he seeks
the consumer market, will assure
profits which are earned
not excessive and are equit¬
that the
are
the appro¬
priate groups. It is with this real¬
ization of its grave responsibili¬
ties that industry asks that profits
divided
ably
among
prevented.
be not condemned or
Many countries pf the world are
striving to replace their industrial
capital that was destroyed by the
war.
Others are seeking the capi¬
provide an' industrial base
for their economy.
How to pro¬
tal
to
vide
an
seems
adequate capital structure
be the most demanding
to
economic
today.
have
ture.
problem
in
the
world
In this country we already
a
substantial capital struc¬
We know that it can be
and
expanded
only
through the reinvestment of the
savings of business and of indi¬
viduals.
We know it can best be
accomplished
efficiency
added
our
by
which
ever-increasing
will result in
to
reward
all
sections
of
community.
As
are
Dr.
E. J. W. Prof fit t
an
still
industrial
far
from
dollars it
paper
economy
we
our
t i sfied
of
power
currently
is
being paid and is agitating for a
fourth round of wage increases.
Prices, however, have been climb¬
ing
more
rapidly than wages.
financial
distinguished former President of
the Chamber, Wmthrop Aldrich,—
the National Monetary Commis¬
sion.
'
"
for
the
present,
to withdraw the Reso¬
before the Committee
and seek to obtain action upon a
lution
me
now
simpler
Resolution, which, I
maybe, toward a mael¬
of collapse and bust, dis¬
speeds
—
and
disruption. History re¬
peats itself,
few
how
do
again,
time and
time
take
of the
lessons
to
but
study the
am
confident, will have material in¬
fluence upon the convening Con¬
However, as we all are
to listen to the message of
our notable world dispensor of the
fruits of American industry and
gress.
eager
self-denial, I will avoid discussion
Resolution and respectfully
pre&eht it 'fbf yodr ebnsideratibn.';
past, and how few
the threat; or, if
The.resolu¬
tion follows:*
Congress of the
United
States
reassembled
this
month in its 81st Session, and
Whereas, The
Whereas, of paramount impor¬
to the stability and pro¬
comprehend
sensing danger, how few pay heed
to the warning.
Chamber's
"The
Finance
and
Committee
on
Currency, ; which
numbers among its members some
of the
outstanding financial lead¬
ers of the nation, has under con¬
sideration a Resolution urging a
The
return to the Gold Standard.
Committee has been conducting a
"However,
fore
Committee
the
complicated.
It
lists,
sections
various
Resolution
the
of
be¬
somewhat
is
specifically,
the
of
laws
1933, which, I hold, have started
this nation, unfortunately,, upon a
of dishonoring its pledges,
course
and
repudiating its obligations.
"Like the fabled egg,
fried into
an
omelette, the 1933 monetary
monstrosities, which have been
cooking for 15 years, may appear
difficult
to
unscramble—to
rate the white of the egg
yolk,
it
as
may appear
the
restore
if it
were
certain
may
tions
and
as
before
known.
were.
Likewise, it
difficult, I believe, to
quo ante 1933,
status
fearful
as
so.
Un¬
the future
under condi¬
they now exist, it is but
to
encounter
hesitation,
appear
natural
sepa¬
from the
desirable to do
to
be,
of
our
Nation will be the
reconsideration
by the Congress
of our National Monetary policy,
our
international fiscal relations,
the public
and
debt; and
Whergas, the Chamber of Com¬
of the State of New York,
in its Committee on Finance and
merce
Currency, has had under consid¬
a Resolution, urging Con¬
eration
:r
thorough ;study.
tance
gress
gress
to restore the gold standard,
(ante 1933), by
specifically repeal¬
banking
and
cur¬
rency
laws
enacted that year,
whereby gold was outlawed as
money, and the printing and issue
certain
ing
of
irredeemable
was
.
paper
currency
authorized; and
Whereas, said Finance of Cur¬
rency Committee of the Chamber,
has been conducting a thorough
study of the problem, and will re¬
quire, perhaps, further time
consideration; and
.
n
for
Whereas, it appears timely that,
the incoming Congress begins
matters,
his Chamber reiterate its position,
free
markets,
in
whether
grain,
other
or
ucts,
stock,
prod¬
Richard
F.
Uhlmarr*
no
are
longer permitted, then the extinc¬
tion of free elections cannot be far
behind.
"During the past year, we cele¬
our
100th
anniversary,
brated
which
was an
outstanding event m
the history of our country
was
markets
from all
from
and city
great testimonial to free
a
everywhere. People came
parts of this country and
Canada to pay
tribute to a
system which had
served many millions of people so
marketing
faithfully since its inception.
"A symposium was also ihagurated so that professors from 33
and
colleges
universities
could
the
accomplishments of
Chicago Board of Trade. It
had been felt for some time that
education was.'the only method to
better acquaint the public that an
come
here to learn first hand
functions and
the
exchange
be loved,
at,
or
mate
not an Individual to
hated, feared, laughed
was
wept about. It is an inani¬
thing, an institution, an ap¬
paratus, an auction establishment,
a
device, an arena, or. a score¬
board. It plays precisely the role
polling place, a voting booth
election.
One'difference is that the votes or
that
a
or
ballot box does in an
a
opinions thereon are made known
instantly for nearly four hours a
day, and about 1,200 hours a year.
public has been taught that a
seismograph records earth trem¬
The
ors, a
thermometer temperature, a
air
barometer
These
pressure,
counter
Geiger
and
a
radioactivity.
instruments measure phys¬
ical facts,
but the public does not
yet recognize that as these instru¬
ments do measure physical facts,
quotations on the great central
grain exchanges measure opinions
and do so just as accurately and
efficiently.
"Looking ahead, the important
question will be the handling cf
price supports. The prelim¬
inary estimate of the Department
of Agriculture indicates an 8% in¬
crease in winter wheat acreage in¬
stead of a
small decline which
farm
sought.
There is a pos¬
as
had been
its consideration of these
sibility of another banner yield fcr
1949. Even assuming some decline
particularly as to the gold stand¬
ard, by readopting its Resolution
of 3 November 1933, to wit:
in
"Resolved,
That
the
standard
...
re¬
gold
is the most satisfactory
a
and ex¬
inasmuch as it monetary system
may
require considerable more presses the belief that, as a delay
study to trace the ramification of in the declaration of a definite
...
export demand, we should de¬
benefits from surpluses be¬
rive
cause
food
costs
have
taken
too
share of the budget of the
average
family in recent years.
Thus an adjustment in agricultural
Chamber large
embarking upon the un¬ of the State of New York
It might be even more> affirms its conviction that
dreadful.
n
"Judg¬
when
and
"Therefore,
permit
M r
a
by what
happened
in Europe and
elsewhere
i n
the
world,/
proposed by our
has been
which
organization
the
of
structure,
.of the
Faster and faster the vicious circle 5
"Furthermore,
attaining
s s a
with the buy¬
ing
the
order
underwrite
be¬
coming i ncrea singly
strom
expanding
is
Labor
we
keep facilities up to date in an
Unem¬
is
spreading fast.
Profits sufficient not only
we
nomic
c
ployment
has
to an unchallenged position
leadership and usefulness in
the world's economy.
With- the
o
skies.
e
grown
have.
listed, and their relation¬
our
v e s
ing
I
to
1
has
presenting the
resolution, Dr.
plowed back or paid out in divi¬
dends and reinvested, is the food
which
stated.
these various sections of the laws
ships
e
;
T him
d^
have
" /
do
not
;credit,"
of the Chamber of Commerce
be considered
•
organ¬
exchanges
do
Finance and Currency.
In
Currency.
who
"Those
attack
;
Restoring Gold Standard
on
took occasion to answer
organized central com¬
modity exchanges.
the
greatest asset of
is the strength and
productive power of its industry
and agriculture.
Profit, whether
on
Board of Trade, when he be¬
his second term as President
the largest grain exchange.; in
gan
his judgment
call the final
turn.,
17
meeting of the Chi¬
cago
meeting of the Chamber of Commerce of the State of
New York in New York City on Jan. 6, Dr. Edward J. W. Proffitt,
offered a new resolution urging the restoration of the gold standard,
a matter now under
consideration by the Chamber's Committee on
At
country
maintained
will suffer.
is
Richard F. Uhlmann, on Jan.
at the annual
of State of New York introduces revised measure to
the
people,
any
of
any
to
up
now
but
Dr. Edward J. W. Proffitt at meeting
spirit of
Next to manpower and
Expansion think American industry has its
^!f plant" and equipment in recent biggest, job ahead. In the General
fo
accident of his¬
know the facts and have the tools
"We enter
popular language. '
and
It is
tory.
no
bulwarks and sym¬
and, if de¬
are
stroyed, the "extinction of free
elections cannot be far behind."
busi¬
American
of
have been
ness
the New Year,
is
This important concept
more difficult to translate
iAIIers Resolution
Productive Power *
economy.
even
achievements
stated:
tory, and with that population de¬
manding both a higher standard
an
1949
critics.
bols of free markets,
them.s
paramount.
of
economic
major
our
important is the
these individuals as
upon
omy,
gain
continues to prosper and expand.
This—admittedly
impact
So
can
changes
the
was
Board of
Says ex¬
Chicago
assails
Trade
change, they will always be open
to
conviction
and
proof.
The
are
More
groups.
worker,
per
stockholders.
satisfied
from
right, but it
polls were
of
President
first of these purposes
by the force of competitive
■
in
Commodity Exchanges
people have changed!" So I am cer¬
tain that the people will always
ing away on a wind of political
opportunism and class-conscious
economics are good.
They are
'
raises
Constant
The
ground.
in our hands, to interpret those
thought and feeling are good; as achievements, to project them, and
good as our prospects for under¬ to surpass them, in this land
standing each other and not blow¬ where "every prospect pleases"
eliminated and the conditions.
^
.><' /.i/y^.
deprived of lower
The significance of prices and
and increased purchasing
profits, incidentally, does not end
'/
with
our
employees, customers,
and stockholders, as independent
Wages and Prices
power.
Ullman Defends
recovery
set by the
is
>
middle
a
of
into the future may not be
entirely clear—it seldom is.
As
Mr. Gallup remarked ruefully af¬
ter the November returns, "The
just as good as our pros¬
for real national unity of
They
pects
of labor brought
measure
a
permanent gold standard in the
way
prospects
for
1949—to
your question—are good.
answer
a
United States."
extremists
the
seen
afford.
can
consumers
been
toward
have and will always
ever-expanding market
and better products so
Prospects for
wages, and
continue to contribute
can
has
impaired, and is able to pro¬
those
products
at prices
which
high
at
jobs
is
capital
consumer
new
whipping post, and
short for their excesses. There
up
duce
be
can
more
an
looking toward the restoration of!
business serving a long
adventurers
and
our
seen
have also
we
thereafter predicted
in
the
have
of
end
I
them.
in the last
way
long as our system is not thwarted
controversy
cent
we
employees will have more and
our
the
toward
as
seen
standard of
living—a falling backward rather
than a steady march ahead.
Cer¬
be found in the re¬ to the needs of an expanding
over
the
soeconomy
through
the products
called
"ability-to-pay"
theory,
and services we offer.
We believe
tinder which all* rises in profits
that to fulfill this objective we
were to be siphoned off into wage
must seek to make more profits
increases. If labor is given all the
for our stockholders.
All of this,
gains
from
technological
im- o'f course, must be done by effi¬
provement«-and it has been given cient operation within the prices
practice
war
shrinkage
a
of
busi¬
conduct our
so
our
disaster
purpose
better served at lower
this
of
example
familiar
to
us
and
aim
the
that
ness
efficiency.
A
is
most of
possible increasing
any
and
It
rates
wage
taken with the utmost promptness,
make
employees, to the exclusion of
consumer and owner alike.
It is
in
scales, tip sharply each
i5 years or so. We
It is my belief that we
only begun to realize our
full power.
There is fundamen¬
tally no reason why We should not
continue
to
go
on
to greater
just
have
to
increases
policy will make the policy more
difficult,
measures
should
bo
peak.
The
the buyers themselves.
price that a customer pays to
a
supplier, to the extent that it
covers more than the cost of mak¬
31
you and I will
believe we have
good as
services by
peded by the erroneous belief of
some
that all such gains belong
recent
(459)
CHRONICLE
FINANCIAL
&
COMMERCIAL
THE
Number 4772
169
Volume
a
prices, which has been long over¬
due, should help rather than in¬
jure the economy up to a certain
point."
32
COMMERCIAL
THE
(460)
&
FINANCIAL
CHRONICLE
the
Problems of International
Crucial, Year
There
By JOHN J. McCLOY
efforts to bring about
Says
a, recovery.
Europe's long-term problems depends not so much on amount of ERF' aid as upon effective- ?
ness of efforts to rectify fundamental maladjustments*
Points out both European and non-European
nations must take steps to put their fiscal and economic affairs in order, and calls upon U. S. to encour¬
dangerous form.
afflicted
not
solely
for
d i sr
the
would be
uptions
which
curred,
To
ulated by the aid which has trius
far
is
unnatural than to
more
been
States.
;
aid
must
efforts of the villifiers to decry, it.
and
Whether
cord.
keen
enough
discern
To
is
worthwhile
seem
The
importan
objectively
appraise
to
the effects of the aid given and n
John J. McCIoy
took
place.
develop
their
on
own
be
be
given
and
take the
measures
the process was, at least, best designed to ensure that it
vastly accelerated and heightened accomplishes the purposes in¬
by the work of the twentieth cen¬ tended;
tury aggressors whose depreda¬
In
our
experimentation with
tions it required so much energy these problems during and after
and wealth to curb.
the first war we relied primarily
The great cohesive influence of on
loans—government and pri¬
sure,
of
nice calculation
as
as
can
of certain
United
a
plane
flying characteristics to
maintained
be
be
to the amount
a jet
say,
booster in order to enable
in
in
States
flight.
relation
has taken
rope,
amount
that
is
of
needed
one
tries have achieved
striking
increases in production' and ex¬
ports.
In
some
countries
the
propulsion
the
length of
time that it should be applied in
order
and
Western
make
to
standard
air-borne.
had
This influence had been sustained
exports and imports and invisibles
Though the real test
flight has yet to be made, there
seems to be as, yet no clear indi¬
cation that the
guess
is not a
to
reasonable
by
a
combination of the toughness
values, very fa¬
of British human
vate.
then
the
ment
then
those
If
relation
the
known
prospects
they
responsible
loan
of
of
repay¬
little evidence of
gave
vorable
terms
of
trade,
large it and the result was the ill-will
accumulated
reserves
and
the which the debt repudiation period
maintenance of a rather complex | engendered.
The United States
nervous
system of international by a number of examples had
trade and finance, of which the J shown that it has now accepted
■
.
of
There
going
on
much
lowed
$4,3
it
billipn figure
sustained
need
and
for
intelli¬
as
to how
to
ought
should
the
conceal
gent effort in the direction of in¬
appro¬
problem
now
priate- for the second year of ERP
—whether
living
creasing production and stimulat¬
ing exports, which, of course, in¬
cludes the necessity of facing the
discussion
in Washington
Congress
to
even. more
one.
is much
of
some
has
risen
sharply, in a few cases perhaps
too sharply;
These are important
gains, but they must not be al¬
Europe
the British Empire was diluted by
losses of a staggering character.
rec¬
painful to do so when this
longer be the case.;;
The Western European
coun¬
good guess at
a
extra
beginning to
are
may no
section of the world, Western Eu¬
the
nations
more
The
to
European
be
the
suggested
of
costs and less
resist¬
to
change in method.
These
things
require
readjustments
which can be effected smoothly
only if there is a broader 'edu¬
ance
full
by
the ERP countries themselves, or
but the doctrine that the necessity or
of
the
people
of
Eu¬
I do not cation
the human qualities.
the urge to give aid may out¬ some figure slightly less.
as
to
the
realities
of
■< Germany,
which for years had distance the possibilities of repay¬ propose to enter into that discus¬ rope
sion here.
For the solution of their position.
It is not sufficient
been one of the area's chief sup¬
ment, at least in tangible form.
that the economist or even the
pliers and purchasers, was almost The
lend-lease
legislation,
the Europe's long-term problem de¬
pends,; as I see it, not so much politician show know these reali-,
completely destroyed economically UNRRA grants and,
more
re¬
ties.
It
is
important that the
and politically.
France, Holland, cently, the large EC A grants are upon the precise; size of - the ap¬
Italy, and to a considerably lesser the chief examples of the new. propriation to be made j important workers should know and under¬
stand them.
Barring a few areas,
extent. Belgium, were demoralized thinking in this regard.
But all as that may be, but rather upon
I
think the
significance of the
by occupation and destruction to admit that this cannot be carried action on both sides- of the Atlan¬
to
a point where people could not be
rectify the fundamental Marshall Plan has, been much
to an extreme, and there are some tic
more^ widely
discussed and ex¬
continuously
fed
and
clothed, things which a. mere plentitude- of economic maladjustments which
much less be expected to sustain dollars
cannot
achieve.
There create- the need* for that appro¬ pounded in the United States than
has been the case in Europe, yet
their former economic vigor.
We comes a point when
both the priation,. I say both sides of the
rather blandly, assumed that after grantor and: the receiver, of aid Atlantic because obviously this is the need for a full understanding
Much money op its necessity and its implica¬
this
devastation
there
would must think in terms of the grantee a common; problem.
tions is much more important to
emerge a period of calm and co¬ supporting himself, unless we are has been made available by the
States
and
more
will Europe than to the people of the
operation. We might have known prepared to accept the v concept United
better since the pattern of history that his weakness is fatal - and probably be forthcoming, but any¬ United States.
When so, much depends upon
shows that unity and cooperation there is no hope of any recovery. one who knmvsfc anything^ about
among the victors seldom survive In such a case >only death can re¬ giving away money or lending attaining a balance of trade, par¬
the urgency of war.
lieve the- burden of dependence money knows that money itself ticularly with;The Western; Hernia
never, solves the whole problem.
sphere* one- would expect that
In all this welter of confusion from the shoulders' of both the
There are many steps, to be taken,
greater steps would have- beenand despair the United States has giver and the- taker;
by both, the giver and receivers; of taken by the European countries
emerged as the- wealthiest and
the aid, if the- money made< avail¬ to reach the American market..
most potent economic factor in
The Instinct to Restore and
able is to be fully effective.
During the last three, years the
the world scene.
This in itself
Repair
I think: my first suggestion for proportion
of European exportscarries great implications.
Even
Bui we know that there is vital¬ the recipient countries, would be going to the Western Hemisphere
were it not for the great political
ity in the human race- of at rather to avoid, as one would avoid the has been smaller than before the
issue which the rise to power of
extraordinary character. All the plague, the tendency to rational¬ war-even though the exporter has
the Soviet Union has created, it
ravages
of war have
failed to ize the solution of all or most of enjoyed a seller's market here.
was
the remains inevitable that
quench the ever-present human their problems in terms of. further European exports have been at¬
the amounts and extent of
seriously
wars
impaired
all
.
aid the
United
States might render to
those less fortunate was bound to
be
in
forefront
the
of
minds.
The
with
men's
all
j"
United
a
States
somewhat
was
similar
were
then
situar-
given—large
government
credits—very few of
which were ever repaid.
And
substantial private capital, gradm,
ally gaining confidence in the then
hope of-European recovery, moved
to
Europe, but
witfei disastrous
American
in
large
results
investor.
This tendency
disaster for
degree
for the
\
in the midst of
the strong
may talk
to aid the
*An. address bv John J. McCIoy
Foreign Policy Asso¬
before the
Minneapolis,
Minn.,
19, 1949.
and
restore
repair, to
with
some reason
bear
the
Jan,
in mind
vast
United
other
that
assistance,
States
of
has
sing the administrators: of the re¬
covery program, is the negative
incentive which. it. partially in¬
which
rendered
in
of
the
to
exporting to the
least.
The
the
exaggerate
United
sales
in
United
the
greater than
were
States, were-
upon
to
be
accomplish¬
ments of the: bulk of the European
countries in arriving at: prewar or
difficult to grasp the greater
the amount of external aid avail-,
out
is
particularly with v .the> relatively
high cost of the cars, shows the
.
individuals,
subject
seem:
;
,
frequently
>
been
matter
a
rates,
»
of-.,
adjusting: exchange
true, and I think, no
seriously deny it, that the:
It
one can
>
r
is
:
>
dollar is under-valued, in relation
to
;
other currencies; or, to
put it another way, that such cup-.
rencies are over-valued in relation;
many
to the dollar.
foreign
This
that the; *
means
importer
>
V
is
frequently
stimulated to buy goods in the
United States and conversely the
,
prospective exporter is induced to
sell, his goods not in the United
;
but in the areas where *
higher. To reverse this ,'i
States;
prices
»
r
are
tendency is
one
;
*
:
'
1
•'
:
>
'
*
by recognizing the 1
homely need of living within your
income.
An adjustment of foreign
exchange in relation to the dollar
would
spell real harm if such
an
adjustment could not be made to
stick,
..
it certainly would not, if
national expenditures constantly
as
out-distanced
The
national
important
toward
the
lem
both
on
thing
solution
is
to
move ;
of the
prob- *■;
post- >.
each front because ;
fronts
pone" action on
r
revenues.
of failure to act
and
not
the other.
on
One particularly effective method
of
means
dealing with inflation is by
of the imposition and ehr
forcement
of
appropriate
>
sys-
">.■■■
It has been proven
*\
an
tem of taxes.
that
appropriate taxes can
be
in a free society. It is the
essence of a free society that they
be fairly levied.
Certainly it is
.
levied
true
nations
that
which
do
-
.
not
impose
a
fair system of taxation
their citizens cannot in the *
long run rely upon the tax col-
upon
f
lections
I
so.
other nations
of
am
that
do
■
,
fully convinced that '
recognized this ;
»>
V;;;.
not
all countries have
truism.
For
1
a
time I think most- of the. 7
from Europe w.gs discourage *
news
ing in
far as it related to cor ?
" action.
estab- ;,
Long
patterns of trade and di- k
and isolated national tradi.
so
.
operative
lished
verse
tions blocked
out into
the
all
efforts to
national
open
for recovery.
bring,
plans!
However, in the last.
few months,; through., the pressure? {J
tion of the necessity, officials o| ;-r
the respective recipient countries !
finally, have put their plans upon the table where, they were sub-.*
jected to real scrutiny and cross- * >
examination by the experts of the
various, nations. "It;is not tor he ' <
wondered
that
the
plans
dis-' i
closed
n^apy
incongruities and;';
that each
was poised in the direc-;
selling much and buying ;.
little.' Nor is it surprising that.•
they disclose a continuing deficit.
tion
of
of $3 billion fpr
1952,
.
'
:
'
■'Clfc: IS" disappointing to be
but
now
.
surest
the EGA and the nations,.
themselves
can see- by how much :
their plans are inadequate.
With, •'c
this, approach, we can feel we,'-
really
where
are;
beginning To get-some- :?
and
y
if
it
is
I
mark, the
continued
turn, of
it
-
Eu-
have referred only briefly
to
area,
yet all '
related economically in ] \
this recovery program, As Eu rone j
recovers more
purchases can: be
the;:non-European
areas
are
,,
made
from, non-European
areas, /
and conversely as underdeveloped
expand
their
J
.
productivity,
find a response in
they become both a. better source.....
the American market, and when
of supply and a better customer,
it is borne in mjnd that-, the prob¬ for
Europe.
To take part in" a
lem for Europe is not to capture vigorous trade the non-European : ;
to ' this
production figures, is due tendency, this scarcely constitutes
primarily to this instinct.
It has justification for procrastination on
better
.
•
"
'•
/'
•
'•
""
'
"
;
r
urgedthat the
recovery of Europe and
the development of; other
areas is
areas-
able prices, will
that the United States itself
strongly
has
toward true recovery.
the House of Commons and to the
general
It
rope
but
exist..,. ;. Sus¬
postpone difficult decisions, some, possibilities .which
longer than others. If it is pointed", tained effort, good quality, reason¬
the
the:-
Problem of Exchange Rates
j
special circuim-
sure,
more
like
it would
expected in
been made by
Nations,
demand
of
well
the fact
that British cars in any quantity
could sell in the. United States,
stances
straight¬
forward financial steps seem the
able.
fringe
a-
maw
anyone
There
1948.
political
obstacles
British automobile
ican demand.
the least need, in many cases due
to their own determined efforts,
the
have
the recipients them¬
selves. The greatly increased pro¬
duction figures which Sir Stafford
Cripps was able to announce to
have
the greatest: deficits, receive the
largest grants.
Those who have
attending
recovery
of
or to
underrate the extent of the Amer¬
nettles-
to
way
greatest need, that is those with
who
receive
contributions
where
regions
higher
were
States, but it is a mistake either to
Those
the
the
other
to
and market
conditions easier.
I realize that
there are many difficulties in the
prices
the
duces.
postwar period, by far the largest
areas
tracted
the part of the grantor.
of in¬
in spite
world
on
One of the major, problems haras¬
easily made, concerning con¬
tinued, and easy aid, yet we have
to
action,
We
too
world,
ciation,
to
adequate effort and; lack of co¬
operative spirit among the Euro¬
faced; pean countries and of assumptions
tion after the first World War and
credits
instinct
stand erect and unsupported.
the market, but
volume of sales--*
.
ac¬
This f igure is not- capable
of thrust that is needed from
thing
the
wars
to
applied, let,us
response
debate.
to
now
even
before
gen¬
both, it does not
was
them
despite all the
to
order
proper
has been
motivated by self-interest or pure
humanitarianism, or a mixture of
intelli¬
gence
that
in
take-off speed
to enable countries to reconstruct
those'
of human progress,
reach
the
erate
the
American
a
oj the great ohognize that tney now have to make1
jectives of the recovery program.
determined readjustments in their
But this recovery problem cannot
programs
if they are to avoid be
solved by the application out
a much more serious
readjustment of hand, of
a single exchange rate
at; a later date. It needs no sim¬
formula? The condition" w h i e h
ilar report to. demonstrate that: if
creates
such
rates
and
not the
non-European countries are not rates,
themselves
must
first be
taking steps to put their fiscal and dealt with.
It would serve ho
economic. affairs in order in t
purpose to adjust rates 'withoutperiod when export prices are the first
coping, with the problem of
highest in history, it will be much inflation
estimate the total figure external
great milestone in the march;
that
themselves
,
a manner un¬
in
as
wnosc-
-
Many people have attempted to
disintegration
apparent for
a
given, from the United
the United
precedented in history will stand
of
most
is
powerful and
fail to respond
It
The fact that
so.
the
of
only been strengthened and stim¬
States responded
There
seeds
were
do
oc¬
The fact is that
human
compelling
a
tendency.
righteous.
respon¬
sible
is
nonsame
encouraging
things about the recent interim
report
of
the
Organization for
European Economic Cooperation
Europe
over
to
One
of
a
Europe, and for the non-European
countries the period of peak ex¬
port prices may be even shorter
previous two centuries had grown to be the nerve center of the world's
economic, political and cultural development. The two great wars that had been fought
were
correct
large share
a
only to achieve
amounting to
that greater efforts in this direq^
tion could profitably be made*
Off
1952 is just around the corner for
all faced with the dangerous condition which afflicted
war we were
to
need
Far
tendency exists: though it takes a
somewhat
different
but
equally
that for the
area
Not
In respect of
European countries the
modify restrictions on foreign shipping and other foreign services? Holds inter¬
exchange rates cannot be stabilized until nations live within their revenues. Concludes reducing
Europe's dollar deficit will mean less drain on our own resources.
At the close of the
an
is
1952
day be made.
greater imports and
national
greater
a
tendency to feel that 1952 is a
long way off and that therefore
a
relatively- long period remains
in which to make the adjustments
which it is recognized must some
solution of
age
recipient if only
that it is
reason
hazard for the recipient than it? is
for the grantor.
President, International Bank for Reconstruction and Development
World Bank head reviews world economic maladjustments and
part of the
for the
Economic Recovery
I
Thursday, January 27, 1949
/
Volume
169
countries
THE
Number 4772
:
States to essential goods
have
likewise • jnany
things to do. :• They must check
inflation, press exports, diversify
their products; they must truly
encourage
the flow
of private
capital and .they must not incur
they
can¬
make
not
tainly
'
themselves
other
from
it
this
Call
sources.
would
procure
or
that
better
seem,
be purchased in countries
where they can be paid for in cur¬
rencies earned by the purchaser
goods
The Interests of the United States
talked
have
I
countries
to be
must
if
achieved but,
cated, there
United
ford
rather
to
complement
feel that
cannot
to do
the
justification for that attitude. But
if we look at the matter purely
United
mental
view of funda¬
interests
States
We must
dollar problem as well; the extent
of Europe's deficit in its dollar
is
services
Europe
for
which
is' not
take to
enable Europe
duce its dollar deficit will
smaller
drain
overall
country's
cannot
be
added
measure
regarded simply
of
take
these
look
a
some
abroad.
tive
There
are
restrictions
are
many
in
or
We
States.
all
sending
legisla¬
tariff.
but
There
it
still
is
continue
strictions
which
Liitie
be
carried
States
could
world
ment
all
which
the
by
of
aware
exist
shipping to
restrictions
the
the
on
of foreign
use
American goods.
that
particular
groups
within this country are
helped by these restrictions :and
perhaps in the case of- shipping
l
_•*&.
there are certain strategic advan¬
Now
iv
-
tages to
were
true
•".■J'-.
•-
be
'-ije —<>?
a
■
jt
_
but they
derived
To
whole.
a
I
do
the' extent: that
sends'
dollars,
or
nations
little
_
______
words,
cause
__
to
give away things for which,'in
absence * of
restrictions,
it.
would be paid, for either the tax- '
payer must pay for that excess or
the foreigners must be allowed to
earn
it.
To put it another way,
every
dollar earned by foreign
the
to
used
is
commerce
sooner
something
buy
or
later
the
in
else
their principal
as
entitled
There is another field in which
United
solve
to
its
give
consider
the
h
States
United
itself
Vi
v%
decide to
own
States for goods which can be pro¬
elsewhere.
A high, volume
of exports,
private investment.
Although
market
are
and
its-lending
must
and
businesslike
be
activities
carried
The
manner.
in
on
a
short-
is
sound
investments
to
amounts by
the
in
trail
far
business
political loans
loans
or
of
greater
private capital.
The Bank is not in the
loans
for
to:
or
cover -
relief
-current
payment deficits.. Our
of
nancing
that
States
devel-
oped: "and the; dependence of other
countries On United States
means
should look
exports
1'
ihto.^racticAF^e^ms,-
that the United States
with
favor
-
purchases
the
limit
upon
efforts of other countries to
their
much moral
as
physical.
vinA the^ United
capital
to
remove
accumulation
investment
and
in
ownership
injection of added
to arrest economic
rather than the
taxes
likely
growth,
be
should
undertaken.
effort of
maximum .personal
The
industrious individuals of unusual,
"The national
tax
policy should
prompt¬
be flexible and should be
ly adjusted to the changing needs
of business
and
of
course
in the
consumers
economic
evolving
of
specific
>
productive
projects in cases where reasonable
of repayment exist but
prospects
where the
risks involved, for one
1948.
He
now
lent
ing
2)
page
lic
refunds
deducted
ai-e
revenues
mind
with
the
earlier
esti¬
mates of the President and his ad¬
visers, the
is
of the change
purpose
obscure.
estimates
Revised
of
uses
billion, which is the equiva¬
of $42.2 billion before allow¬
for
the
new
accounting
last
August
says
current
economic
we interpret ter
to
which
with
compared
the
view
In
readjustments tak¬
ing place of themselves, touching
a wider area of industry, and the
recession
in
the
cost
of living,
especially food prices, the natural
question which both the Congress
and public opinion will ask, to put
it
bluntly, is: ,"Why upset the
apple cart?" In brief, we expect
Congress: (a) recognizing the
emergency nature of the budget,
to reduce the cost of government
the
to
and
fare
cut down
to "wait and see" and grant,
enues,
'•:U
small part, if any, of the
a
A'AAA
taxes
on
Direct
taxes
on
individuals
In Millions
$18,369
investment
Our
corporations
•"\ iX v'
':
$19,327
$958
11,709
476
11,233
the
country is
dealing with,
relatively-slight changes are suf¬
ficient
stocks
surplus)
a
The
size
reduction of individual income tax
to
deficit
million;
$600-$900
the
increase
tax
(or
re¬
The
fact
is
that
ing to the rise in wages and na¬
tional income, which in November
was
the
at
annual
of
rate
$216
resume
a
continuation
of
at
the
annual rate
of
about
$209
billion.
Our
that
studies
lead
to
us
receipts in fiscal
believe
1949
(new
by the President seems
entirely out of proportion
be
to
even
the size
of the estimated
deficit in the budget prepared by
the Bureau of the Budget itself. ;,:
Considering the discrepancy in
the President's
estimates
revenue
of 16%
in 1947 and 27%
before,
we
the year
conclude the Congress
will resist the request for
lion
additional
$4 bil¬
revenue.
investment
balancing of production and
consumption at best is a supreme¬
ly difficult task and ,it is being
over-optimistic to look for a per¬
fect balance.
readjust¬
cially
con¬
industry
to
finan¬
entrenched
well
leaders
an^L with: low costs;
(3)
margin
the
That
between
dividends and earnings is so great,
that
will
be made
dividend
increased
with
1948
rates
tax
and
\
•
That
(4)
in
crease
possible,
a
in
increase
earnings;
payments*
this year compared•>
conceding
moderate
corporate
reduction
some
in'
'
there
will
individual
be
no"
in¬
tax
income
the recent expansion in
rates and
The
continued
ments and uncertanties favor
fining
quested
collections."
of
of
a
underlying
minor;
are
That
(2)
now
eliminate
to
policy remain:*
this
with
That risks in sound common-
(1)
$1,434
•). .VV'Jh •
•-.
standpoint.
It is guided by these
assumptions:
v
Total Increase
V:
"
Conclusion
consistent
Direct
recommendations.
tax
A.
Increase
Budget Receipts
(b) recogniz¬
ing past errors in estimating rev¬
of the
January,1949
social wel¬
new
proposals, and
President's
principal categories follow:
drastic deflation..
nor
of
only
August 1948
.v.-''cSl
lent inflation
budget recently submitted in two
v;-
employment,
tration, the
tern
as
does the adminis-
present revenue
will furnish
sys-
receipts at least
about
2%
cannot be
sion from both the administration
and
its.severest
critics;
saving will be maintained.
The keynote
than
rather
for 1949 is stability
boom
or
bust.
In-:
creasing confidence, first reflected
as
we
expected, in conservativeinvestment
money bonds and
policy, mistakes of labor and oc¬
casional shortsightedness of busi¬
by
paring down expenditures, taking
the
President's figures at
their
*-'■
face value?
In
this
.
adjusted for changes in the pur¬
chasing power of the dollar, is
estimated by the Council at $1,226
• j
£ ■■t in. the fourth quarter of 1943,
beginning could
be made on social welfare legis¬
lation- without
unbalancing the
budget; ? The Hoover report will
pave the way for important econ¬
omies.
The budget as submitted
includes $600 million for universal
military training, which it is ex¬
not
a
deteriorates.
that,
on
the
countries
an
cite
this
fact
one
hand, they will create in the bor-
rowing
We-
because
it
economici budget of
illustrates
the
that'
in
a
dimensions which
The
distribution
of
income,
LOS ANGELES,
:
Supply
proving.
not
or
The
been
tive
shortages are growing
Efficiency is im¬
numerous.
process,
be
of
generated
financial
supply has
money
reduced
and
a
cumula¬
contraction will
by tight credit
crises.
Caution
has
generally prevailed in the placing
of hew
orders.
Price
weaknesses
CALIF.—Blair
Inc., of New York, has
opened a Los Angeles office at
639
South
Spring Street under
&
Co.,
the
of Carl E. Ap-
management
ponyi, it is announced.
Mr. Apponyi was formerly with.
Edgerton Wykofl' & Co.
Hunt Elected Trustee
fur¬
thermore, has improved compared
with the prewar period.. ;
:
; :
less
Opens
Angeles Brandt
Los
against $1,201 in the first quarter.
way,
for
loans will be such
Blair & Go.
namely,
the years since V-J Day, with all
the
deficiencies
of
government
cured
or
another, are too great
tremely unlikely will be instituted
private capital to assume. We
unless the international situation
hope that the character of our
reason
-
the President.
But
the proposed changes would jar
rather than promote proper ad¬
events,"
justment
^
blaze
Bank,
terest
that
very
instead of being in¬
expenditures. Except to
receipts and thus tend
to bring them into' line in the pub¬
objective of the Bank is to equal to the $41.9 billion expendicapital for the most ur- (tures projected for fiscal 1950, im
gent and productive reconstruc-1 stead of ^e estimated $873 mil-
field of operation is rather the fi¬
^Translated
the
of
deflate the
run
{Tt is therefore in the in¬
United
Re-arrangement
structure
to
—
grants.
other sources of supply be
tax
barriers
an inter-governmental basis) will range between $41 and
Toward Stability
has a mandate to con- j $42 billion, providing a sizable
high
grade
preferred
stock—duct its affairs on a non-political surplus over the expenditures of
As we examine the Economic
should sooner or later be reflected
and objective basis, it operates for $40.2 billion instead of the $600 Report and the other state papers,
in good common stocks.
the most part with funds raised million projected deficit. Further- supplemented by our own studies,
by it in the private investment more, assuming continued high we arrive at a different conclu¬
balance
.
basis
agency, it
of making
be reduced,
the
on
really been gen¬
cluded in
brings me to the Interna¬ approximately the present level
tional: Bank, for'the Bank, as I of incomes," which in June were
those exports is
:
erated
whereby
That
far from being an as¬
set;* is1 a;; decided, iiability. if, as, £t
present;- a -large 'percentage X of
being financed by
the
of
of it
and at the end
forces have
from
might help to
problem of having
encourage
other countries
look elsewhere than to the United
the
of
Act
$39.5
its goods and that is
to.
cured
tive
(Continued from
1950 without the imposition of additional taxes.
mates
side.
and
year
should know whether affirma¬
Upset the Stock Market!
it would be con¬ billion, whereas the President de¬
clared in August that the "esti¬
outcries from every
by
The nation's economic health in
fact is amazing.
be neither in the direction of vio¬
halt the program,
fronted
crucial
we
Let the Government Not
guilty of un¬ budgetary receipts are much bet¬
ter than had been anticipated ow¬
discrimination.
There
a
ly to improve the balance.
Progress has been made and talent and ability is needed and
real progress—the important cannot be summoned Without peithing is to maintain and accelerate mitting them to acquire a finan¬
it. The year 1949 will be another cial state.
as
States
would be no end to the calls made
+U
TTv\ifA/4
G4r»4/\o
1
upon the United States and, should
i*v\av\
economy has adjusted itself bette^
might have been expected to
present taxes, wages and prices.
Adjustments in process seem like¬
than
very
tion and development projects in ii0n deficit. Does anyone familiar ness, have been years of splendid
its member countries. The long- with government maintain with a achievement in
employment, pro¬
run, and what I regard as the straight face that in a budget ex^ duction and well
being. Incident¬
to more important objective of the 'Ceeding $40 billion, alleged deficits
ally, per capita disposable income,
States
away
extent
occurred, mainly in opt-of-
source
would
to,
solution, much easier
which will have to be applied
in the coming year will at least be
provide
United States.
the
the
the
ues
add for the
to
much
America
JPL, the Bank is
restrictions
these
plain
For
is
33*
line agricultural commodities. The
tendencies
the
of
period of time
long
a
over
States,
;
In
abroad.
Europe
It
greatly increased productive ca¬
pacities which now exist. The val¬
be
not
they'prevent have had occasion to say many
the United States froni receiving4 a times, is essentially a bridge bereturn on the excess of exports'it tween inter-governmental lending
for
for
States.
judgment, be
of hostility to¬
other
the
friendly
they prevent: the European bodjitries from
providing goods arid
services to the United States in
return
also
United
baffling.
to give way to pessimism than to
sustain the hope of success.
important not only for the
underdeveloped areas themselves
demoralizing than
more
United
the
not aid the United States economy
as
will
ing, or less than they thought they
carry
is
it
to find
achieve
we
and
easier to state the difficulties than
of
We think it is significant that
foreign capital. Under such cir¬
the President glides over receipts
cumstances, those receiving finan¬
in fiscal 1949 by stating merely:
cial aid would not regard it as ex¬
"The Revenue Act of 1948, passed
ceptional but as a matter of right,
over
my veto, is causing a sharp
while those who received noth¬
activities
foreign banks
and insurance companies. And you
are
success
All of these problems of inter¬
national economic recovery which
I have touched upon are compli¬
cated
will be
regard the United States Govern¬
re¬
in
be
have
to
it used
on
The
my
United
the
wards
the
severe
could, in
productive
more
deterrent.
a
be
the type of
on
can
United
to
there
grants.
United
about
It is not as high as
be
to
the
for
know
bear.
enue
ability of
other countries to sell or perform
services
that
so
private investment is far
healthier, economically and politi¬
cally. than governmental loans and
the
on
in
dwarfed
can
cause
imports into the United States—to
additional goods and services
get
we
j
the
Going back to January, 1948*
undue protraction of the pe¬ the President estimated
receipts
riod
of
necessary
inter-govern¬ of
$44.5 billion. In his Budget Re¬
mental financing. This is desirable
view of August he projected rev¬
not only from the standpoint of
enues in this fiscal year at 840.7
alleviating
the burden on the
billion, $3.7 billion less, giving as
American taxpayer, important as
a reason the
impact of the Rev¬
that consideration is, but also be¬
most obvious is action to stimulate
in return for those
be
States
■
any
The first and
steps are.
producing
Foreign Investment Should
means
States.
what
at
particular
private investment abroad should
oe
stimulated by every possible
an
as
period,
Finally, I believe that American
generosity to
Europe. They are justifiable only
as they
conform to the economic
Let's
of
Be Stimulated
a
of
self-interest of the United
S.
U.
steps
Such
resources.
ex¬
groups.
this
on
To the
whole will be penalized for the
benefit
to re¬
mean
we
but
a
,
re¬
ceiving payment.
It follows that
any steps which the United States
can
ERP
activities
necessarily
all
to
is distorted
European recovery will be de¬
layed and American taxpayers as
goods
it
Bank's
the
United
smaller
a
surplus for the American
taxpayer to finance.
•
'
important to the United
tent that that purpose
a measure
and
this country is sending to
Daring
be
have
export
Worid Bank to Supplement ERP
from the United States.
rope's dollar problem is America's
balance of payments
of
the
amount
of
will
.
help the recipient countries to
get back on their own feet, not to
subsidize; un-economic exports
:
forget that Eu¬
never
ternational lending and borrowing
of the 1920's.
■;
;
;
be
is
it
to
really the answer.
vate
insufficient. Our primary em¬
phasis will necessarily be, there¬
States to reduce the Marshall Plan
fore, on the financing, of produc¬
bill it is important that all efforts tive
projects in the underdevel¬
to use American foreign assistance
oped countries and colonial areas
as
a
vehicle
to
dump
surplus of the world.
There
is
ample
American production be resisted.
scope here for all the imagination,
The purpose of the foreign aid is
ingenuity and vigor we can bring
If
reasonably be called upon
this is not
The world
trade.
money
the point of
(461)
economic climate
an
.
anything else; there is some
from
CHRONICLE
Europe will
by ECA;
hope to do is to supple¬
is not yet at a stage of economic ment the ERP
program by financ¬
health
where it can afford the
ing
certain of the longer-term
luxury of unrestricted multilateral projects for which ECA funds may
having given such large
the United States
of
FINANCIAL
ducive to the flow of foreign pri-
States
can
not been able to earn.
efforts of its neighbors across the
Atlantic.
If we are disposed to
sums
they
United
the
be paid for only
in dollars which the purchaser has
af¬
well
can
in
than
where
is
I have indi¬
as
itself
take
to
other
recovery
steps which the
are
States
what
of
do
base and
&
con-1 that we can help to increase the
productivity of Latin America, of
capital; and, on the other, tbat; Africa, of the Middle and Far East,
discrimination
against American they will help to restore the con- the dependence of Europe and of
goods if you will, but 'it is a way fidence of investors which was so other countries on American ex-1
to avoid giving away goods., Cer¬ badly shaken by the careless in¬
ports will be diminished and there
.
over-burdensome debt."
COMMERCIAL
Alfred H. Hunt, Jr.,
dent
ican
Vice-Presi¬
and Treasurer of the Amer¬
.
Surety
elected
trustees
Group,
has
been
member of the board oi"
a
of American
Surety Co.,
parent company, it has been
Mr. Hunt, who was
the
announced.
formerly with
of
Brown
1940
Bros.
the banking
firm
Harriman & Co.,
Surety Co. in
in charge of portfolio invest¬
joined
ments.'
American
(462)
34
THE
COMMERCIAL
"FINANCIAL
&
CHRONICLE
ness
The Future of the Securities Business
(Continued from
volves
19)
page
nothing short of disastrous. As a
result of persecution, vilification
and
lack
of
of
ulating." It
to
get
of
is
idea
new
a
that
is coag¬
Due
because
across
natural
resistance
to
with
comes
industry.
that
90%
age.
self-respect
and
with
a
comes
that
their
of
are
are
in the
(An
centrated
in
paratively
few
small
the
most
dynamic
that make for
standard
of
perform
the
forces
improvement in the
living; we have to
that
helping
of
vital
the
function
surplus
nothing
of
one
In
about
eral
of
low
why
and
stock
common
the
ket for securities has
economic
this
is
benefit
that
of
and
rebounds
labor
fellow
our
Certainly
honorable
an
function
stream.
to
the
and
citizens.
vital
the
rest
From
*
of
the
changed with it.
It must be ob¬
vious to all of us that
economist's point of view, the in¬
on
telligent
6%
a
yield
an
of
and
the
aggressive
security
member
fraternity
has
to throw.his should¬
every reason
back and be proud of the con¬
structive job that he is doing for
ers
civilization.
If
we
sincerely
that pride, then he
make him feel
is
going
can
to
blossom
creative ideas.
forth
of
dustry
the
members
moment,
of
in¬
our
lacking in courage and
is afraid to get his chin
out; whereas if the industry were
are
everyone
in
condition
a
forming
its
where it
true
was
per¬
function,
we
creating that vital lead¬
that
is
so
necessary / in
combatting
toward
In
on
state
morale
trends
would
be
of
one
the
whole idea
my
coordinated group represent¬
our
entire industry; if the rep¬
resentatives
not
have
of
else
industry
confidence
selves, how
one
the
can
to
in
do
them¬
they expect
have
any¬
confidence
in
them?
(f)
income bracket exceeding
$25,per year used to mean 4V2%
after an effective 25% tax
rate,
whereas
afterDue
This
subcommittee
Methods^—
would
first
important
part
hoped that, if
diligence
the
would
it
is
to
structure
our
remain strong and
distributed
If
venture
stated
to
the
the
new
t
and
fail to
chjandising methods to
Herein it
recognize
problems.
I
be
can
billion
able
know
of
f
the
tained
speculator.
are
a
intricate
in
experience
nent basis
ness
in
presume
the
that
so
if
or
to
are
market
of
after
go
millions
of
use
some
of
the
chandising methods which
from
the
display
a
the
com¬
mer¬
de¬
we
managements
ad
those
Gimbel's
I
on
of
sandwiched
of
don't
Macy's
know
in
and
that
my
this subject would go as
using
as
prone
sky-writing, but I
to bring up the thought
of
should
in
conviction
my
be
some
that
startling
the
merchandising
the security business.
investments
of
direct
who.
•
is
a
the
common
matter
stocks
enterprises.
that
properly
of
That
falls
In this
connec¬
tion, it is often suggested that the
interest
open-end investment trust pro¬
vides the proper answer. Theoreti¬
cally, I agree that this is true for
certain 'purposes, but in connec¬
with these investment com¬
tion
stress on the apprecia¬
depreciation angle.
panies, I do think that
subcommittee '
our
broad
on
merchandising
¬ ! has
certain police duties to perof the moment in¬ I form.
At one time I was asked
(
the
'i
,
by
In
well
Every effort must
this particular sub¬
to
keep
informed
personnel
stantly
these
and
in
of
their
England,;- where T -received
earliest" .-financial:'
was
con¬
rela¬
tionships. I might go so far as to
that we see some evidence of
say
"managerial revolution." The
portion
that
of
is
been
incomes
attributed
increasing
tion
that
is
salaries
to
and
the
attributable
has
propor¬
to divi¬
dends has
been decreasing, which
might be interpreted as a greater
interest by management •• in sal¬
than
in
the
the stockholder.
must
be
the
or
kept
in
proper
is
economy
into trouble.
welfare11 of
The relationships
It is
to
run
fact that divi¬
a
dends and interest
balance
going
as
a
proportion
of national income have been de¬
creasing and
there
is
some
evi¬
the
by
turns
making of
the political and eco¬
background purely from!
investors,, viewpoint.
Some)
of higner learning—8»
a -bow
to my
friend Dri
institutions
with
cap¬
which
sort
a
relatively
of
prices.
obvious
pro¬
actual
but
to
the deposit level.
the
concerns
calculated
risk
to
be: and
bank (
in
investment
views,
as
investment/values.
there for.
of
ber
of
feeling that
selves
national
pinged
gold
which
level
of
business
prices ( and
interest
the
on
commodity
rates,
flow
have
had
their
im¬
influences.
sufficiently
friends.
out
finance
expan¬
of
earnings at the ex¬
dividends, rather than
by
new
financing.
These
and
various other points of similar na¬
of
pense
ture should be the function of
subcommittee
with
on
corporation
'
our
relationships
(h) Coordination—If
time
had
permitted, I would have gone into
a
great deal more detail in out¬
lining the functions of all of the
foregoing subcommittees because
I would like to emphasize the tre¬
mendous
that
of
scope
the
problems
facing—problems that
are
important not only to each
of us as members of the security
fraternity but, of a great deal
more
importance, to : our way of
life.
Either through- some sub¬
we
are
•
committee
a
coordination
on
as
or
function of the central board of
there must necessarily
balancing and integration of
governors,
ae
a
the
solution
and
action
proposed
each of the major subdivisions.
ay
Among other functions of this
matters
The
procedure would
be
pertaining to legislation.
suggested
new
.
to
re¬
a
suggest
may
of
higher than
loans
to
legislative
be warranted in
matter
deposits (
now.
crude
its
in
large;
yet,
importance of
banks
of
have
the
a
not
the investment portfolio in its re¬
The
lation to income.
was
endugh to hold down; a respon¬
sible position in a bank, he is
.^Central
bank credit management was rela~
operations
If
is good;
man
a
intelligent" enough to acquire the
and
the
knowledge upon
facts
largely through the operation of "which tb base
responsible invest-,1
the
rediscount
dead
and
nently
all
that
this
"
is
is
be" perma¬
to
•
SO.
While
•
All
rate/
appears
,
ment
'judgment—if the bank will the'time to devote to.J
give
him
this, study.
changed, the
If
man's background
deficient, there*
a
in such matters is
heed for bank investment remains
is an abundance of sound and con-S
The
servative
long-term
loans of
of
appears
banks
a
will
continue
investors
lending
as
while
trend
century of banking
to signify that commercial
stantial
well
downward
the
to
be
all
at
sub¬
times
as*
institutions and
for bank finyest-
need
training;1
and
inside
outside11
and
commercial
the
of
texts
both
courses,
banking syS'*-1?
tern, where that background cah:s
be
acquired.;
In
my (not
too"
humble opinion, it is money well;
spent—and
tax deductible in
the)
ment
continues, with the. rales of bargain--to train an investment
game changed^we need more man in every bank, whether full;
the
than
before .to'have
ever
a
pro-
fesional
knowledgeltQf those^qcts
which govern our; investing operr
ations...
or
part-time.
some
take
cases
a
point
a
be. that
iri:'
bank would have
to;
It
may
somewhat long-term view-'
on
this, such
as
training
a*
then, should utilize the wealth of
younger, employee for such work,)
in which case he could be absent*
available
from
the
such
places
Intelligent
bank
investment,
if it is to
facts
organization,: cessful. It must
earning and commanding the
position
ratio
co¬
ordinating
normal
a
much
tively
managements.
as
with eligible paper available.
I believe L
correct in tnis—is that
am
quite grasped
banks
serve
a
of these good.?
observation—and
my
fectly willing to
once
metro-'
In many banks, investing is
per-;
force a
part-time function and
Government
was
large num->
the
::./'v;'-''(;'(/■/
fraction of what it is now, banks
number
were
often indebted to the re-'
debt
a
outside
be»
and
do not, from the in*'!
viewpoint, avail them+(
vestment
automatic influences
the inter¬
undeniable
areas
the prewar gold standard with its
on
is
banks
politan
dence that management was per¬
sion
The willingness to
service
of
have the
Other
abandonment
as
an'
correspondent banks.
Use these!
"-That is what they are;
obsolete by sophisticated
changes, such
formulate
to
You have deposits with /
banks,
investors and the closest students
of good
firm
their
to
•opinion..
yardsticks,! of measurement- and
standards, which functioned suc¬
cessfully in the past are now re¬
garded
will
you
have not sufficient facts available
rule-of-
many
You pay com*-;;
them.
dealers—use
to
be genuinely glad to/
and, from my experience!1
with them, they will frankly tell't
you if they
have no opinion orV
Bapk jnvesting is, not. what it
thumb
pertaining to)
investment tnan-
portfolio
They
help
actually investing funds.
used
investments^,
of
the less fortunate and smaller "
missions
risk of
devote-
to
the facts
commercial banks.
The second half
.
study
all
bank,
Funds
philosophy the calculated
Wall)
in-(
and
reasons,-able
the
call the first half of my
us
in
time and money not only to:
more
are
Let
known
logic.
The)
larger commercial banks are, for-1
'
-
well
facts
vestment
unpredictable
Investing
pro¬
$25,000
over
greater
the securing of in¬
a better basis for
judgment than would be provided
man¬
stockholder
a
Street for their expositions of
•
their
were
government,
Nadler—are
ration managements that we con¬
of
considerably
upon
than in. the
philosophy of
ization has had the wholehearted
cooperation of 90% of the corpo¬
scious
tney
The
interpret
the
vides probably
:
(g) Corporation
Relationships
—Although my particular organ¬
tact, we still feel that these
agements have to be made
tnan
ago.
years
nomic
training,
gains.
This is obviously not
plea for the slightest relaxing of
quality standards, but neverthe¬
less
represents
an! investment
responsi¬
^
few
ital
keep the
division- con¬
bilities to the public.
sophisticated
my
whku
a
people
to
this
aware
rates/1 In
* matter
relegated
to "issues much more useiul statistics"'
the'A: average than, y formerly,
and
there
are*
skilled services available which;
.•'///'> V
banker.-//*,^
come
made
d
our
investment:
houses toaay appear to)
'more
eificient
and|
be
,
profitably
emphasis
be
is
.
concerned,
are
background 'by
there
not
be
be
suc¬
supposed
bank
in
order
where
to
to
go
ac-4
he would
policy and attitude quire,, in vestment; knowledge. For*
making or withhold¬ example, ift. you do not have. a(
ing loans, or examining agencies): Statistical departmeht iin a bank,?
that
Federal
towards
,
our
comments
on
the
length
of
a
you
cannot teach,
practical statis->
will .relieve
the banker of his responsibility.
By then same token, it should not
tics/ 1 feel certain that there ardi'
ness
be
ment houses
soundly conceived.
formulation of
which, in turn, should be to the
best interests of the security busi¬
if these proposals are to be
within the naural functions of the
security business.
it
be
can
my
am
"^'f(Continued from page 21).:
interest
of
opinion,
security values.
thinking now of registered
the interests of the public welfare,
of
.,
Bank Income
as
meL.ito
well
are
changes that
prominent
that
system
existed in history.
ever
banking
course
with the assist¬
people
of
the
civilization of any
pendent upon the uncertaih future
their
accumulated
value
much
to
want
spect of the public;1 would be in
our
security busi¬
One of the greatest merchandis
ing problems
considered
am
savings in • ex¬
rainy day reserve of
$5,000 could probably appraise the
business at large, perhaps
subconsciously, has tended to put
or
we
should
we
cess
curity
tion
of
companies
There
has
a
of
is very heavily on the market ap¬
preciation side). I think the se¬
too
I
ob¬
stocks
common
soundest
world.
be
can
in
has
making is part of successful bank
ing, surely must not be too! de¬
the
only
merchandising
will always be
matter of investing its
surplus savings; it cannot be ex¬
pected that each individual who
many rep¬
their
that
intricate
have
Believe , it
or
not,
great many people in
(whereas
don't
broadly recognized that the
public knows very little about the
many
I
I
It is
this country who want to
buy se¬
curities on a more or less
perma¬
resentatives
life
the
the
methods of
secondary mar¬
vital, however, and
witnessed so very frequently
lack of complete
understanding
the objectives of the investor
there
the
Frankly,
the
on
of
the
changes
of
my
that
year
returns
there
gamble in the
place, by and large they will
their possible losses
philo¬
sophically.
In
have
we
immediate
security business
is spending in its merchandising
efforts, but I do know that we are
failing to make the public aware
sented to them
ways.
per
what
because
first
just as
perhaps more
me
our
notice
income.
ideas
so
take
kets is
of
one
investment
not
the
who
aries
with
spending
in an effort
to get their fair share of
dispos¬
$%
am
matter
to
seems
to
far
The
its rher-
cope
the change.
American
;
in
where the secur¬
see
between
represents
the
as a
more
someone
ity business has revised
public is noted for its willingness
to take a
gamble, and if it is pre¬
because
relatively
the
higher brackets.
This cer¬
tainly is a fundamental change
be
are
investing pub¬
it
divi¬
in
someone
of
the companies in which we like
to invest.
My idea of an adver¬
tisement on security values would
to
exercised 'in
issue
capital,
to
3%
rate.
stock
common
valuable than it is to
mand
.be
is
quality of securities that
lic.
tax
nature
paratively small pieces of savings,
permanent, due
be
a
return
mass
sec¬
In regard to the
and
50%
progressive
the
that
item, the Investment Bank¬
Association would
have
an
ers
effective
means
somewhat radical in my views on
this subject but it seems to me
neces¬
securities and
new
ondary markets.
only
now
the
taxation,
dend
in
sarily be sub-divided into two
sections, namely primary distri¬
bution of
it
an
to
some
Merchandising
in
insurance companies are
socialism.
important in
a
ing
world
view, this subcommittee
my
most
of
the
person
000
would be
ership
.common stock to a
lower brackets is
As matters stand at the
most
with
a
the
are
to
committee
changed but
progress'
freedom and the greatest
we
prCsepL do-nothing
to the industry col¬
;.
customers brokers and investment
mar¬
a
-
Investments
counsel firms.
because of this condition.- I think
at
part in per-,
our
necessity for
I
in¬
I question whether the methods of
the
security
business
have
keen
very
separation of
own
sev¬
it must be admitted that the
a
versed in relative
yields is
individuals to find their way back
into the most creative channel of
a
ance
price-earnings
high
at¬
me
those
of
faned
have
we
un¬
problem.
or
tnat
critical time to do
will
indi¬
us
just criti¬
accrues a
investment
public
answer
currently
ratios
we
his
maintained
companies
by
of the
sell
the
policy, then
committee of any of these com¬
panies from the sales department.
But, after all, the investment
V/Y/':c"''
one
not
cism
to it,
constructive
convictions: to the extent that
continue
must be
bullish
he
the
are
stock
I
not bullish. He
were
vidually there
the
-has
to add
energy
something
lectively and to each of
have
may
and
petuating a free enterprise ecoV
But,
gentlemen, on this one nomic system that has drought 10,
point I must express my deepest the world the greatest degree of
a
semi¬
what
you
idea
have been accomplished.
titude. All of which demonstrates
com¬
held
could
to
of
little
common
."
reasons
nave
a
write
him
him
less
con¬
they
would
for
asked
company shares to the
$12,-
millions
know
opinion,
my
he
individ-
probably
who
vestment.
of
savings
pieces,
into
I
then
these
of
one
an
and
courage
of
one
jackass if I did not realize that
a
stocks
is below
people,
out
individuals
1
reallyl is
hands of
I
article
would do if I
been
common
of
indignantly replied that I
estate
one-half
the hands of
spread
jw
vital
importance to the welfare of the
industry
bullish
monthly.
available
savings used to be fairly well
nation.
Our
by
the head
companies if
interesting
statistic
viewpoint!) Whereas
social
irom a
deep convic¬
jobs
that
suggest
outstanding
100.
is
which
latest
aals whose income
lacking that
that
sincerity
tion
and
have
now
the blood in the
I would venture to say
business
really
progres¬
holdings
The
the
of
of
taxation
up.
satistics
of the personnel of the
security
there
incidence
these
taxes,
industry is lacking virility
and, in my opinion, one of the
reasons why
this is so is the av¬
age
income
the
oroken
Our
erage
to
sive
extremely difficult
change that often
that
Regardless of social
implications, it used to be a fact
that
certain
family funds held
an
inventory of blue chip stocks
through booms and depressions.
very
old blood
the
fact
certain re-distribution
a
of the wealth.
little
new blood is being attracted and,
I am sorry
to say, a large pro¬
portion
incentive,
the
been
.ias
some
obtained *
Thursday, January 27, 1949
I
the
thoroughly realize that all of
foregoing is in need of re¬
finement.
Nevertheless, I am per¬
fectly willing to set up a target
for
someone
to
shoot
at
because,
so far as I can
ascertain, many in¬
dividuals among us are in em¬
phatic agreement that something
should be done but, unfortunately,
nobody does anything about it. If
in my discussion and suggestions
on
the future of the
security busi¬
bank's bond portfolio,
permitted
policy
in
stultify
to
a
the
bond investment
with
accord
factual
a
study of his own .bank
own community,
•■
'f
and
his
•;
' correspondent banks and*
large and well equipped inVesttl
many
too
would
who
training,)1 with
fresher"
think
no
importance
statistical
Where
other
to
of
one
the
will
deny
research
the
V-;t<k
;
aspect
matter,
in
our
the
facts
but (that,
Investment
■'
'
"jj
Results
and
work.
is
i
'.Judging
•>
obtain
onlyr!
subsequent; '"re-1!
courses.
«■
I
be
to give any such bank!
employees an intensive course of)
glad
an¬
too? has
Now)
set
up
having
and
in
this
use,
-
machinery)
how
can
we
judgeinvestment
results?
The,
doing so are ob-tV
changed measurably in the past'25 ^imitations on
As .far as statistics,; field-: viQU§..,* Hindsight being what iti
work, and the following of details is,' it is somewhat, but not much,!
years.
and
ramifications
of
investments
easier, to saji: quantitatively what
Volume 169
would
done
Number 4772
have
happened
had
differently, tnan it is ip
other
human
Serious,
vicissitudes.?
tuitous
be
may
ride
a.
More
'
quite, for¬
decade
Page
Industry
last
5)
place his Order and get it in a few weeks, according to "The Iron
Age," national metalwprking weekly, in its current survey of the
ago
trade.J-y-;• j
7:;'.;:/:
In all the welter of
guesses, chartist- statements and sales
reports, states this trade magazine, it appears that the steel business
is reaching a plateau in the unusual demand of the last few years
f ors
and is
poised for
a
gossip,
market based
on
growth and replacements,
Reasons, and.: secure" good'xesults.
The, downward movement of scrap prices is alarming som§
op second-grade risks,
&uch,good
results, however, become woeful people this week,, (But others agree that for the first time since before
errors
of- judgment vwheh;,5 "the the war scrap grades are coming into better, balance pricewise. Re¬
inoving wheels -turns,. thq ycyqie cent purchases have served,to. place a price differential Between No. 1
reverses :*and the
drueinadequacy; heavy melting steej sprap—a ' prime grade Jaefpre the war—and No. 2
:
Of
investment
knowledge-i.and, heavy melting which generally is not ^s.i good.v, ,
.
philosophy and also!, watchlulnessis.
'
revealed.
.:
.
.:Further- to
?
i
;■
this.-, pointy
.In
:
tion
;C
markets,
in
arial.. viewpoint"
phia
may
•
vestment
in "Judging
results.
insurance.
.
Just-
underwriting,
overall
and
.
results
must
be
1939,
ago."
1
There; Is
the
ton,
vfc
gross
a
week
a
"The
caused
#40.58
in
average
differential'
has
been
scrap consump¬
no
Iron
a
Age"
scrap
composite price
decrease of 34 scents
a
to ease off to
gross ton from the price
sign that;ffieA;scriip.market will slide off the deep
basis of tile appraisal of tne de¬ end, in the near future, statesdhis trade: authority, but it is clear that
gree of success attained, /riot 4the ±he good .weather, the heavy stocks anddhe increase in pig iron out¬
emphasis
upon
the
occasional put will force a sensitive siUiation pricowise. It ean be expected that
insurance risk "which resulted in consumer pressure will ste^^onrscrapVprices. '
This week the steel 7 mdustry astounded even its worst critics
loss.
In "this vital, respect, bank
.
.
portfolio
inyestirig
by making steel at an, annuat -rate of 97,000,000ftons of steel ingots.
This rate cannot continue- far" months on end, but it can ancl profa
ably will stay close fa:
J
v 'V '
from
differs
accountafal--
trust investing where
fty
is by itern and not on the over-:
ail reckoning/ '
.
v
' :
,'i l have spent enough,years fa the
financial ,jyorld: how;: to be xori-
Recent developments in steel dravot added
zip to the efforts
of New Englandors to increaseSstdelmakipg facilities there with the
newest strongest effort coming front! the
Council.
I Thisorganization -has .the^figures, to^showfc.that (1) New England
yfaced that thish^hasis'upon !the!
steel it: consumes,
evaluation hf, -investment; results produces only fae-fourtfr. ^
(2) the change to f.o.b. mill .selling.has:created>a "protected market"
on a net or overall- basis islneqes-.
fa New England;,and: (Sfarawfraafariab 1^
to this region
Sary.
However,: this is not iri the(
least to be-taken, as any advocacy as a natural for mpre steelVbfapiiti
The New .England, Council, concludes "The Iron Age," is con¬
On. my part--bf >"SUbstdndard bonds'
from wnich a' superior total result vinced, that a pew integrated < miJI -will-, eventually be built some¬
plight be attained at-the- risk 0^ where ori East Coast tide ^wafer ^and- that^ fhey want it in New
England.
'
'
:' some large. individual; item;; losses.
;
new
This
18.
was a
drop of 1.0% from the $6.08 of
earlier, and a decline of 17.0% from $7.25 recorded a year
The latest index represents a new 20-month low;
it is only 1.2% above the 1947 low of $5.95 registered on May 20, 1947.
V
The index represents the sum total of the price per pound of 31
foods in general use.
;''V '
•' ;■■ '■
at this time.
PRICE INDEX CONTINUES
COMMODITY
TREND
FOR WEEK
MILDLY LOWER
;
V-
commodity price index;, corppiled by Dun
continued its mildly downward course during the
a new 17-month low of 266.13 on Jan.
18, down 2.75 points from 2,68.88 a week previous.
The current
figure represents a decline of 12.4% from the comparative 1948 index
.4
-
The daily wholesale
& Bradstreet, Inc.,
The index fell to
past week.
303.86.
of
The
established.
thedwp^rqdi^J&^apw greater than it was
hut, adds this trade .pfa>er,TmfalcoF!5^ditiohs will take care
A drop of $1 a ton in'No. 1:heavy fafatfag steel in Pnilaael-
of this.
in¬
as
the prewar
difference between^
actual
I
a; plea for the " exercise of
what;could' be called-'the "actu¬
make
.
Pittsburgh, Chicago-and'Philadolphiaj leading
*
■
week
a
-
•
.!,
;.
••
The steady, downward pressure in foods continued in evidence
week and the Dun & Bradstreet wholesale food price index
fell to $6.02 on Jan.
can
almost a
-wholly- *inadequate
for
.
(Continued from
steel
period of rising busi¬
conditions
ness
TO NEW 20-MONTH LOW
; v'
IN LATEST WEEK
;
35
(463)
CHRONICLE
FINANCIAL
FOOD PRICE INDEX DROPS
sound judgment fortified by sound
facts.
A man or ap institution
may
&
The State of Trade and
the result of genuinely
or
COMMERCIAL
we
mosc
however, is that invest¬
.
results
ment
THE
Activity
week
the Chicago Board of Trade quickened" in the past
liquidation in grain and lard markets;
on
the result of continued
as
Prices
narrow
in
moved
but
irregular
somewhat
were
a
fairly
downward.
and the general trend was again
range
Wheat displayed considerable resistance to pressure at times on
buying by mills and cash interests, the latter reflecting sales of the
actual grain to the
government.
The
new
outlook showed some improvement; reports from
crop
in
relatively light
arid Southwest indicated an ample supply' of moisture
the West
Government buying of cash corn was
most sections.
shipping demand reported very slow and bookings with the
Stocks, of corn on farms as of Jan. 1, 1949 were re¬
ported at 2,520 million bushels, the largest on record for that date.
with
country spotty.
The
flour
export
market
was
quite
during
active
week.
the
Trading in the domestic market was featured by large purchases of
hard winter wheat flours by a chain baker for March and April
delivery. The cocoa market continued weak with prices again sharply
lower. Manufacturers remained on the sidelines, reflecting the re¬
ported decline- in chocolate consumption. All fats and oils continued
their downward trend with lard selling at new low prices since
March, 1946.
.
-
Dominant
sales
.
The superiority ' of the, results
Such
^
of
ppljey^s debfaafefaas fae
a
record
new
which will be 18,400 tons larger than the previous peak reported
sot; dependent upon
.in the wej^k begfainng Jain. 17, 1949.
hignly personalized talents as\to
The operating rate of steel
render any generalizations^ perilr ; j companies faying 94% of the steel-making capacity of the inpus." More tnan that, I have pfan 1 dustry will be 101.1% of capacity for the week beginning Jan.
24,~ 1949, as against 100.1
the preceding week, the new rate
served the work and results»of
,
some
•
at the start of 1949.
ouisiariqmg abil¬
banners of
an
securities.
Rather, it has
been more through * the consistent
grade
4
,
'
li'he
ognizee
and
re I at lve
needed
to
recognize
mvestmen is
ease
w
fiefa
witn
by the producing companies at the start of 1949.
is
ELECTRIC OUTPUT RISES IN WEEK ENDED JAN. 22
equal
h 1 eh
dle
found
however, a mid¬
in which is
.There is,
*aftd
field
the
one.
greatest proportion 01
Many ..of tnese
bonds are neither demonstrably
good nor visibly bad and somej
securities.
our
,
.
ket fluctuations to which
Subjected.
.
112,587 (revised) units in the week preceding, according to "Ward's
Automotive Reports."
they are:
i
models
position.
! Community 'risks, fad so. forth, is
tution's
v
deposit
future
even difficult.
The second, which I call the cal¬
culated' risk
in investing," is a
matter of investment educationnbt'
impossible,
pf
the
of
help
wilting
friends.
The third is not. easy
and that is
to-'learn not to fear reaping the
full, income; advantages of very
high-grade medium and long-term
investment^ being constantly re¬
manded -of the fact that if the
intrinsics of
essentially
sound, you must not worry too
much, about its quoted value be¬
a
;
nor
technique, if you prefer it—coupled
with- taking; intelligent advantage
bond are
tween the time it is
Higher schedules were reported for Chevrolet and
with the latter producing nearly five times as many-of
as
apparel and household goods continued to be offered
reductions, retail dollar volume increased fractionally
in the period ended on Wednesday of last week.
The aggregate of
retail purchases slightly surpassed that of the comparable week last
year and selectivity continued to characterize the shopping habits of
most consumers, states Dun & Bradstreet, Inc., in its current sum¬
As
of trade.
BUSINESS FAILURES AT HIGHEST LEVEL IN
SIX YEARS
roseisharply to 142, the.high¬
last
areas
some sections reported an increase in the consumer
price-reduced furs. Promotions of men's wear became
more
widespread with the response generally moderate. Clearance
sales of men's shoes attracted favorable attention. Boys' wear sold
ing.
However,
in
an
increased
V
volume.
Consumers
fractionally
increased
purchases
their food
comparable week last year.
-
■
-
Shoppers displayed a more active interest in furniture than in
recent weeks. There was a slight rise in the demand for floor cover¬
ings. Retail purchases of radio and teleyision sets increased frac¬
tionally as consumers responded to markdown sales. The demand
for most electrical appliances continued to be limited and total vol¬
ume
moderately below that of the corresponding week last year.
was
sales volume
1
'
the
However,
mount.
Retail volume
household soft goods continued to
of
for the tountry in the period ended on Wednes¬
6% above that of a
day of last week was estimated to be from 2 to
year ago.
corresponding levels of
England and Mid3 to up 7, South down 2 to up 2,
4, Southwest down 1 to up 3 and
Regional estimates varied from the
a
year
west
ago
:
by the following percentages: New
8, East up
unchanged to up
4 to
up
Pacific Coast
up
1 to
dollar
total
The
up
up
corresponding week of 1948, and 51 in 1947.
bered 367
Failures
128 from 103
the
involving liabilities of $5,000
last week
comparable week
a
under $5,000 declined to
24
in
the
Retail
Casualties
num-
inithq .eompa^^
more
the
of
wholesale
orders
rose
fractionally
week
increased to
an
increase of 6%
from
the like
period of last year.
compared with an increase of 8% (revised) recorded in
ceding week. For the four weeks ended Jan. 15, 1949, sales
by 14% and for the year to date
year,:ago.>/Smrill .failures with liabilities
14,.the same number as a year ago, from
ing with department store sales reporting an
v.:
reached -the
occurred
the
./i-v.^i
.
-
since
,
t
the
to
Federal
store sales in New York
advanced
week
a
week of
was
1949,
This
the pre¬
increased
a good show¬
increase of 2% for
made
v
period.
According
largest
from
increased by 5%.
Retail trade here in New York last week
which
,
approximating that of the corresponding week a year
ago.
The number of buyers attending many wholesale markets
dipped moderately in the period but was more than half again as
large as that in the comparable week last year.
in
in
previous week.
failures
or
and exceeded the-95
;j
5.
volume
showed
reported.
in the
the
past week and total dollar volume slightly exceeded that of the
Department store sales on a country-wide basis/as taken
the Federal Reserve Board's index for the week ended Jan. 15,
in the week ended Jan. 20, Dun & Bradstreet,
This compared with 127 in the preceding week, 109
.Pacific Stalest casualties rv^o"£Mghe^.t:for:vthe week but Middle
Atlantic, East North Central and..New ;EnglaRd failures declined.
"
in
interest
Inc.
devised within the limits of your
,
week
est level in six years,
February, 1943
and wholesale failures were-the .most numerous'since October, 1942.
Manufacturing failures::;rose^ io-^the wveek>n.While construction and
commercial service casualties- declined slightly.
'
T.
capital funds.
of unseasonably moderate weather in many
shoppers decreased their purchases of heavy cloth¬
With the prevalence
last week, because vof six-day operations. :
Commercial and industrial failures
many
attractive
in the liko week of
.
FAVORABLY
COMPARES
PERIOD A YEAR AGO
WITH LIKE
Northwest
Output in the similar period a year ago was 110,774 units and
1941, 121,948!units. ;• :
/
Last week's output consisted of 82,511 cars .and 27,431 trucks built
in the United States and 2,236 cars and 2,069i trucks in Canada.
TRADE
WHOLESALE
AND
RETAIL
fropi
purchased and
the day when it matures, provid¬
ing that the ^structure of your
investment portfolio ;is carefully
own
pared[ with 685,000 bales in: November and 755,000 bales in Decem¬
ber a year ago.
\
\
t
;
Pontiac,
its 1949
in the previous week.v Buick output also was up
ago.
year
.
;vfThe first of my ideas, which is
the calculation of one's own insti-:
against
previous week, and 189,300 in the corresponding week
Consumption of cotton during December, as estimated
by the New York Cotton Exchange, amounted to 695,000 bales, com-
a
.
paring long periods of . business? CARLOADINGS ADVANCE SLIGHTLY IN LATEST WEEK
Stability, even acquire the char¬
Loadings of revenue freight for the week ended Jan. 15, 1949,
acteristics iof bonds of good in¬
totaled 733,272 cars, according to the Association of American Rail¬
vestment merit,
This area of the
roads.
This was an increase of 11,765 cars, or 1.6% above the pre¬
bond market is where the greatest
ceding week, but a decrease of 75,036 cars, or 9.3% under the cor¬
danger lies for the less skilled,
responding week in 1948. It also represented a decrease of 94,788
pud careless,. for while such se¬
cars, or 11.4% below the similar period in 1947.
curities are not bad credit risksfa the sense that risk of principal AUTO OUTPUT CLIMBS FURTHER
IpSs is incurred—they are poor
(
Production of cars arid trucks in the United States and Canada
Investments for a bank of deposit for the
past week was estimated to be: 114,247 units compared to
because of the unpredictable mar¬
price-fixing against /
for export, con¬
Spot market activity increased in volume and reported sales in
mary
distributed by the electric light
and power industry for. the week ended Jan..22 was estimated at
5,768,934,0Q0 kwh., according' toifad^E^
Institute. This
represented an increase of 42,226,000 kwh. above output in the pre¬
ceding week; 332,504,000 kwh. or 6.1% higher1 than the figure re¬
ported -for the week ended Jan. 24, 1948 and 912,530,000 kwh. in
excess
of the output" reported for ' the • corresponding period two
years ago.
,
rc -
included
increased buying
143,200 the
The amount of electrical energy
are
Wholly unsuited ior bank invest-,
ment.
based upon the
factors
of
prospects
the 10 spot markets totalled 226,100 bales in the latest week,
at
faghest^
cprreni; peji^enij^o^fate^^
total annual steel-making capacity, of 96,120,930 tons as reported
i y little
training in the investment
opera¬
-
weeW^^^ in 194Q,
The
of high¬
easiiy rec¬
cnafacteristics
1% from the previous week.
1,7.53,800 tons or.97,3% a month ago andvFT.lfi.OOO tons, or 95.2%
of the old capacity one year ago-and i-,^8d?2i0" tons for the average
pursuit of quality,
er aae investments are
Institute reports the schedule of
:
; ; '
:;
This week's operating rate- is equiva:reht to 1,863,800 tons of
steel ingots and castings ipompared to i;845,400 tons a week ago,
speculating in low
addiction to.
The
tions is up 1 point, or
ity and I have yet, to see one who,
attained ms hign standing tnrough
supporting
Korea,
cotton into the government loan and indi¬
cations that domestic consumption of the staple during December
was better than
had been generally anticipated.
is
outsome
to
with
tinued large entries of
The American Iron and Steel institute announced that steel
production this week is scheduled to break another
limits
Cotton prices
continued to move within narrow
closing spot values up slightly over a week ago. ' >
by 7%
decrease
1947.
recorded
Reserve
Board's index,
department
City for the weekly period to Jan. 15, 1949,
from the same period last .year. In the preceding
of 1% (revised) was registered over the similar
1949, a rise of 17%
For the four weeks ended Jan. 15,
over
increased by 4%.
that of last year
and for the
year
to date volume
;
* -'J
3G
(464)
COMMERCIAL
THE
FINANCIAL
&
CHRONICLE
Thursday, January 27, 1949
must do
1949 Business Outlook and Retail Problems
(Continued from page 23)
family must
against sales
been
.
continue
that
recorded.
to
have
'-
,
However, I consciously refrain
painting too black a picture
at this point.
After all, mark-
already
.
items
downs
in
establishments.
The
they
average family has just so much
to spend.
Even if we assume that
individual
into
still
the
different
items
display.
that
"
of
are,
in
the
have
you
,
There
among
In
To
but
to
it
tor.
trained
chandise
of
in
the
of their employees.
some
of
size
that
re¬
the
(be
shared
producer
months.
other
the
This,
has
been
of
18
is
course,
an¬
for operating with a
reason
high turnover.
Problems
lem.
There
attack
every
buyers
is
it.
on
Unless
effort, and
ordinate
all
prob¬
line of
single
no
put
you
unless
you
efforts,
however,
that the
than
j
achieved by buyers
tail
sale conditions
may
have
your
own
before.
ever
! unmixed
co¬
high
wages
This is not
disadvantage,
distribution
• was
department, where whole- I for
one
higher
j
con-
has only so much to spend,
successes
since
before
the
an
re¬
war
losing out in the competition
the
most
talented
young
But you are not getting
advantageous, | people.
effect on j the efficiency out of this high
are
adverse
an
sales in
other de-
some
partment.j. The buyer there
may
\ paid force
that you should be get¬
; ,il
• 1
'
•
7
j ting.
'
been
handicapped by mar- \
'To some extent this is no doubt
conditions,
and
allowances the fault of the individual organ¬
must be made for this fact.
(4)
There
will
be
izations.
only
most wholesale
minor
in
tensive
sales
When
unexpectedly fa¬
vorable, your buyers in most cases
will be able to meet this unex¬
degree
pected demand.
relatively
no
departments where
doubt
have
of
sales
estimates,
so
j
that the inventory increases com¬
ing from unexpected and unpre- '
dictable sales disappointments can
be offset by a high level of turn- ;
in
of
selling
due
to
inefficiency
external
-
is
condi¬
tions. .The labor market has been
Your entire pol¬
one
been
that in¬
In another sense, a considerable
are
conservative
so
training has been
! ./N'
■■■;'>
neglected.
icy, consequently, must be
like buy¬
have
enough to make
you no longer need
long-term sales forecasts
and place orders far in advance,
to make
sales
forces,
departments
many
easy
markets conditions
such that
Sales
ing forces, are in many cases in¬
experienced; although profit mar¬
gins have been narrowing/ sales
changes in total sales, but the per¬
formance of individual items will
be highly erratic.—Fortunately, in
ever
tight
had
changing
and
employees
difficulty
in
little
jobs.
Even
in
cases
where the entire staff feels normal
good-will
toward
the
lic.
but there is at least
(5)
;
Pressure
that
distribution-
on
margins will continue.-—It
would be over-optimistic to ex¬
the
pect
abandon
ward
consuming
its
critical
public
attitude
volume
was
achieved
that
|
j
the
at
ex¬
a
tailers have played their own part
in convincing the consumer that
It
quate and
sumer
most
goods
are
that prices, if the
waits
ade¬
con¬
long enough, will be
marked down. There will be many
■cases
will
the
where
compare
replacement
values
unfavorably
values that have
been
with
adver-
rapid
much
as
programs
more
can
effectively
they could have been
few months ago, and that
more
effec¬
the year progresses.
goes
without saying that at¬
tempts to increase selling effi¬
ciency have a broader aim than
that merely of expense control
important though this is. The sell¬
ing force is the-store's direct con¬
tact
with
the
public, and on it
depends the store's standing in the
j community.
tised at great expense in the past!
I want to emphasize again the
month or two.
And in these cases fact that
buying policies are im¬
position to receive finan¬
in
to the task
sense
maintaining turnover.
It should be recognized and em¬
phasized,
that
however,
efficient
buying also makes a direct con¬
selling efficiency and
to a reduced
selling cost. A welltribution to
trained and competent sales force
will make a much better showing
if the
merchandise
it
presents to
the
public is fresh, well-selected
and bought to sell at the right
price, than it will if the stock is
,
old
and
of
general
poor
quality.
Other efforts to increase selling
efficiency will fail unless inven¬
large
unexpected incre¬
any
man's
a
figures.
income
in
.
of
I have been told that the
dent
of
rations
of
one
in
selling
easier
much
efficiency will
achieve.
to
Public
few years
a
some¬
are
times encountered when it is
exercise
to
essary
nec¬
financial
re¬
straints because of outside condi¬
tions, while at the
same
time try¬
chandising
selling
and
the
meet
internal
mer¬
staff
to
for
need
stronger efforts and greater effi¬
ciency.
This is
important chal-
an
lange to management.
are
im¬
portant to the store's key person¬
nel, just as they are to the store
itself.
cial
In
far
so
restraints
from
not
that
are
necessary
overall viewpoint should
an
allowed
be
the
possible, finan¬
as
conflict
to
with
personal opportunities of the
merchandising and selling staff.
In
some
cases
certain amount
a
ruthlessness may be. necessary
Of
automatically defeated if they
adverse
an
eral morale.
The
that
ahead
are
ones
with by the
the entire staf
and
incentive
an
and
en¬
couragement
to, deal with them.
These problems in many respects
are serious and difficult.
But they
not
are
impossible.
If
manage¬
per
annum
in¬
funds.
find
gantic
he
to
pay
which
was
came
startled
was
to
outlay.
Like all other executives,
his annual income had been enor¬
funds
mously reduced by the higher sur¬
taxes, and on the other hand, as
there
was
only
would
have
of
his
thing
one
to
ask
direc¬
raise his
to
company
to do.
the
already somewhat in ex¬
$100,000.
This was fair
enough, for his services had been
business
have
of
the
morale to such an
constructive ef¬
fort. will face a serious handicap
damage
extent that
every
exceptionally valuable
riod
of
over
a
a-new
It
is
ir
prices is overdue, and it will prob¬
ably be accompanied by some de¬
cline
sales
in
and
increase
some
in unemployment.
There
yet
reasons
no
are
ficient
taxes
done
ap¬
after
to
Federal
provide
income
wealthier
the
The
State
and
for
the
annual
the
on
part
will
classes
purchase of
of the
not
pression of major
The
ahead
losses
common
is
or
not
to
de¬
result
only
in the year
to minimize
maintain
profits, but
to prepare and strengthen the es¬
tablishment for an improvement
in
conditions
when
readjustment has
No
one
line
of
r un
It
to be
will
not
cautious
be
its
present
course,
can
:
■
if
Even
they
would
had
be
liquid funds,
incentive
no
for
From
inflation.
j-f V
Further Tax Drawbacks
In times such
for
cult
buying and ag¬
gressive in selling. You must do
both.
It. will
degree of
would
revive
to
be
enough
merely
in
masses
faith
the
American
of
the
enterprise.
Discounting Underlying
.Nw \;
Assets
/
As
result
a
funds
of
the
lack
•' '
•
of
new
available
for the purchase
stocks, we find a dis¬
parity between the market value
of
common
of
common
stocks
the
and
value
of the
underlying assets, which is
the
most
extraordinary
phenomena of economic history/
Let me give you a few illustraof
one
i tions:
,
(1)
The assets of J. P. Morgan
of
the
of
J.
book
value. The good-will
Morgan & Co., built up
generations of demonstrated
P.
but on the, contrary, is given a
negative valuation. It is deducted
liquid assets.
The investor, who acquires $1 of
forecast
to
sound
assets
what
would
be
assurance
for
ness
securities
months,
Yet, in the
held
less
case
than
of
six
profits from security
prohib¬
any
sales disappear because of
itive surtax rates, while the losses
must be absorbed
himself.
by the investor
Short-term
profits
can¬
securities.
The
able
who
man
look
to
does
though
100%
he
is
long-term
on
retain
he
than six
more
months and realizes
bear
that
feels
ahead
75%
of
himself
his
must
of any losses. But, ac¬
cumulated
profits
long-term
are
inheritance
taxes, which themselves may as¬
sume prohibitive proportions. If,
on the other hand, he gives away
ultimately
subject
to
profits, his net long-term
gains
cap¬
further reduced by
are
millions
creased
decade, the wealth of
of
individuals
has
in¬
in
spite of taxes.
Farm¬
ers have made huge profits. With
full;; employment
and
higher
wages,
labor
is
prosperous
as
before.
never
worth
of
Quite
possibly
farmers
and
of
the
la-
increased
rich
of the
more
in the
than did the wealth
people in
similar
time in history. But the increased
wealth
of
absorbing
tighten financial controls. You They
the
man
any
farmer
have
no
and
effort
the
in
security
issues.
know nothing of the stock
new
the
if
stopped and the assets liqui¬
The same applies tq Guar¬
dated.
anty
Trust,
almost all
Irving
Trust
and
banks.
The investor who buys the
stock of a representative,
oil company such as Humble and
(2)
common
acquires, in effect, oil
at
price
a
re¬
barrel which
per
is half the price at which new oil
are
purchased and sold
by the company in which he ac¬
quired an interest. Here we have
reserves
a
situation where
oil
company—a
officer of
an
whose
man
an
com-;
petence has been proved over: -a
period of many years—buys .addi¬
tional
at
reserves
price-whieh,
a
his experience demonstrates to be
sound. Yet, the uninformed' stocks
holder
sells
in
half
ment
his
stock
properties
In the last
off
better
dissolved, the busi¬
company were
months later."
paid,
69c
every
much
the economic situation will be six
working
not
to
from the value o'x the
these it is diffi¬
as
investor
the
last few years
merely
in
be
social
a
people of wealth to buy common by
stocks, except for defensive pur- j ability and honesty, is therefore
not given any positive valuation,
poses; that is, as a hedge against
ac-
•
investment.
& Co. consist mostly in cash or in
borershas
enough
of
the equivalent of cash.
The mar¬
ket value of this stock is
only 69%
there
net
effort
complish this result.
*;
the
by these groups
medium
com¬
stock
gift taxes.
importance.
goal
through Sales
laborers, because
selling cost and be¬
investments, but .they
not in a position to buy more.
are
his
a
Mutual
enormously in
standpoint,
unfortunate, for investment
in common stocks,
wisely invested
in sound issues, is in the
long run
profitable and such investment
securities.
new
wealthy do have large
mon
ital
developing will be
be
financing
this is
years.
tuition fees of $4,000. This anec¬
dote illustrates clearly that higher
parent for believing, however, that
is
done, gi¬
would
the
unlikely that this can
successfully for'.years
come.
pe¬
Accordingly,
he asked for and was granted an
increase of $50,000 a year in sal¬
ary.
This amount was just suf¬
many
profits,
readjustment
downward
be
of
cess
profits
Summary
A
com¬
investment
enterprise.
distrust
to
Creole
will
for
the
through the
money
grown
high
of
cause
serves
i*
of
purchase of
of
,
sav¬
recent years, but not
to farmers and
chase
are,
do
effectively
mutual
available
the
they
of
If this could
not, therefore, be utilized to pur¬
that
to
and
could be
the
sums
made
of
farmer
man
stocks would be
mon
ment, in exercising caution, giver
impression
the
working
that after taxes his budget
simply
did not permit such an additional
with any
dealt
be
staff,
have
must
gen¬
on
>.
problems
must
entire
impact
of
$4,000
volved,
ficiency; yet these attempts will
be
ings
medium
in attempts to increase overall ef¬
have
has
Mutual Fund Possibilities
the
in
are
suspicious
are
which
The only way in which the'
! •'
time
gross
Financial considerations
They
They
Wall Street.
the
Relations
difficulties
advice.
When
He
of brokers.
everything
with
directed to
salary,
Serious
a
somewhat carelessly to undertake
to send two children of close rela¬
tives
through "finishing "school.
tors
Internal
of
presi¬
largest corpo¬
ago promised
our
tory control and merchandising the president of a great corpora¬
policy can produce and maintain a tion he was not free to make
maximum salability for stock on drastic cuts in the scale
of his liv¬
hand and for incoming merchan¬ ing habits. Nor could he
properly
dise. If buying and merchandising sell the stock of his
company which
policies can accomplish this,- on he owned. After
exploring every
the other hand,
worthwhile in¬ possibility,
he
concluded
that
be
cial
it is taxed away.
cause
of
to
runs
purely negligible proportions, be¬
what
they will become still
tive
supplies of
selling items, arid tb apply
his merchandise
than
even
more
I have little doubt
training
over
now
of extensive promotion. Re¬
pense
sales
to. be put
to-
Holiday
price and quality.
they will become
in the last half.
profit
fair chance
a
nor
not in
ment
slow
page 17)
market,
windfalls
distinguish
Nowadays,
ahead of time between potentially
employer,
incentive of competitive con¬
ditions has been largely lacking.
This situation is changing. Such
changes will probably be gradual
during the first part of the year,
mer-
quality
(Continued from
country the total amount of such
to
pressure
the
has had a par¬
ticular appeal to the buying pub¬
chandise
i
creasing
to beat.
'
can
sumer
ket
Every buyer will be under in¬
ing to stimulate the interest and
Cost
your opera¬
tion;
sense.
aggressiveness of the entire
Cost is your number one
and welcome volume of sales. Re¬
have
the
to
12
past
guide every phase of
%
-.
-
.
working with the store's merchan¬
equitably by
more
than
during
case
.
The
re¬
not
a
these
member,
are
individual
be promoted and which costs will be tough
;
create for you a favorable
You are paying
will
not
would
will
bring in exceptional values,
which
in
do
:
•
creasing pressure to analyze indi¬
vidual supply-demand conditions
anticipate changes in price
and quality. -It is m this respect
that the practical economist,
leastl the burden of cost reduction
i
will
these
\
What is called for^ in short, is a
and to
creases
ahead.
some
until
man-hour.
per
cases
entire staff;
Every buyer will be under in¬
likely in the next few months, at
they will be in another, and the
balance will shift continuously. No
buyer can accomplish the impos¬
sible, and you should not expect
him to.
'
You will find that
output
most
marked
are
Nevertheless, although cost
market than
one
there
store confidence in values are
sense of values, he cannot accom¬
plish the impossible. We are still
in a period of transition.
Values
will be better in
in
in
ductions
however well-trained he is,
however well-developed his
and
in
charged
jewel
years
prices
plants
have curtailed operations and dis¬
mer¬
a
material
raw
when
develop
a
of
sense
values, will be
value
rare
But,
buyer, who has
developed
a
still high.
Any marked
labor costs can only
are
And
management must make
A
highly
have
a
gains
will
allowance for this last fac¬
every
of
decrease
capabili¬
own
said
respects to that of retailers.
index
costs
also reflect changing conditions in
wholesale markets.
~
Retail
still
success
extent
some
be
problem, which is similar in
come
will, be due to their
ties,
fairness
major" decline at this
point,! although there have been
sharp drops in some cases.,,Labor
individual
extent this
some
are
must
shows
items that will sell very well and
that will help your entire opera¬
tion.
Manufac¬
it
many
No
find
considerable
a
manufacturers
that
buyers will be
ul in reaching this objec¬
will
too,
all
cost
your
They
markets
of liquidation.
will
the fi¬
a much
merely
dising staff, can bo of such value.
retail
level, .but, will
spread
throughout manufacturing circles.
durability whatsoever,
already been well satisfied.
Your problem at the moment is to
tempt the consumer with better
values, or with- improvements in
style and quality.
any
tive.
re-
beginning to feel
pressure .of price resistance.
Narrowing of profit margins will
not be a unique occurrence at the
have
success!
and
prices.
the
main, however, these needs,
particularly for merchandise that
of
now
back
come
markets
suffered
now
turers,
certain
fn the
Certain
half
a
items-down,
wholesale
past,
degree
basic needs that must be satisfied,
has
the
from
viewpoint, but in
broader
much greater extent than
a
have
on
•
course,
marked
being able to
wholesale
To
problem of dis¬
tributing this spending
and
year
to retail¬
new
place at corresponding
establishment,
•
there is
a
have
-
without
it will spend this amount in your
own
nothing
are
For
ers.
not
nancial
favorable.
too
portant
from
\
between
own'
your
be
to
make
.(c) Finally, do not overlook the
competition
must not expect unit volume
you
>
that, but at the same time ,coordination of effort, a combina¬
create^ incentives that tion
of
economic, psychological
inspire and stimulate your and merchandising intelligence, to
must
you
that
are
the
or
value
of
no
mor^ than
Whose, ".jydg-V
That of
that
stockholder?
Strangely
basis
worth
figure.
is correct?
executive
buys .arid
that oil,
company
on
of
the
/
-
the oil
average
r'q
j
D
enough,
the,j jmarket
Humble, Creole and the
other Standard Oil of
New'Jersey
subsidiaries, owned by the parent
exceeds by about <one-
company,
third the market value of the en-»;
tire
outstanding
parent company.
of J. P.
stock
of
the
As in the
case
Morgan & Co., the Stand-,
ard Oil of New
Jersey stockholder
would fare better if the
company
the
and
dissolved
were
.liquidated.
assets
y:,u' "v
•
'
plants built by our
^leading steel companies cost $250
per ton.
Yet the stock market
appraises steel companies on the
basiS of computing their capacity
New
(3)
at
$17
ton,
per
unit cost of
properties built,
Campaign to Increase \
In
%
-
new
picture, j The ordering rate drop¬
ped to about 6,600 cars monthly.
Of this total, 48% were placed in
is
Our
objective is to increase the
amount of
tion;
flowing to the industry and
bring in
new
While
valued in terms of income.
the
of
stocks
mon
Com¬
soundest
very
companies
yield
5%.
Obscure
companies, though strong finan¬
cially, often yield over 10%.
y
Washington's
.
The
:
ket
disparity between the mar¬
value
value
herent
of
lack
is
not
due
only
available
funds
for
to
the
Com¬
prices are depressed
largely as a result of the Admin¬
istration in Washington. Govern¬
ment
officials have
an
allergy
purchase of common stocks.
stock
mon
the
toward
stock
and
market1
will
v
satisfactorily met. That will
private capital will
that
to
the
be
improved
ing-of
how
is
public
mean
continue
which
by
America
of
progress
An
means
the
financed.
understand¬
organized securities
jobs will bring
their
do
more
cars
quickly, to relieve shortages, serve
shippers better and retain traffic
in
the
this
stiff
of
face
is
competition,
short-sighted.
Already
on
There
which
least
are,
are
of
of course,
deterrents
structure.
is
the
gains and
investments
are
not
the
risk
should
unfair and
be.
taxes
income
surate
with
the
not
Federal tax
Because of these
potential
the.v
obstacles
—
which
sixteen
months'
production during last
car builders' backlog,
monthly
The
year.
the
on
for
orders
total
as
from
commen¬
involved
There
basis,
'same
be
can
run
through in nine months, and some
car
builder
shops have only a
three to six months' backlog.
Furthermore, the railroad shops
29,438 cars last year. They
built 29,501 in 1923, the peak carbuilding
year
following World
War I. They have been operating
at their top, proved capacity. The
car
building industry has been
operating at less than 60% of its
as
1923
Curious Situation
discriminatory restric¬
tions of the
curities.
purchase of listed securities, per¬
tion, defying logic. The railroad
petrated by the Federal Reserve. Siiups chock-a-block with work—
Board. And there are some few/ and
packing
more
orders
in!
controls under the Securities
Freight cars are one of the Na¬
For
instance, the avail¬
ability of credit in connection
with. common stock holdings is
severely
limited.
Undoubtedly
this single factor has had an im¬
portant depressing effect on stock
prices,
In
particular, the Securities and
Exchange Commission has had a
powerful effect in curtailing the
freedom
tions.
of
stock
market
Securities
The
opera¬
Ex¬
and
Exj
change Act which
best
Nevertheless
capital
available
be
must
to
industry
through established channels. And
instituted necessary reforms,
but it is a question whether the
harmful effects may not outweigh
the good.
advent of the SEC,
Before the
■
was' possible for an individual
it
or
a
an
of individuals
group
to
buy
undervalued stock and then by
an
publicity
organized
attention
call
the
to
campaign
undervalua¬
tion and induce others to acquire
the scale up.
Some¬
campaigns were con¬
ceived in iniquity, but often such
operations were sound and thor¬
oughly constructive. In any event,
the stock
on
times such
there existed
incentive to raise
an
market value; of undervalued
the
securities.
At the present Jime no
organized campaign is pos¬
Nowadays a shrewd in¬
vestor may realize that a stock is
undervalued, but the most he can
do is to buy it for his own ac¬
count.
No group of persons can
cooperate in increasing the mar¬
ket value to its proper figure.
ter
prices
perhaps
is
the
lack
poration profits. The government
plays an ever increasing part in
determining the conditions under
which corporations operate and in
determining therefore the earn¬
ings. The uncertainty regarding
the future of tax rates is only one
illustration of the tremendous
certainties which
ors.vNo
one
now
knows
what
handicaps will be forced
ageihent this
year or
new
man-
on
next.
operate
to
many
depress
the
level of stock prices is not an in¬
dication that stock prices are un¬
attractive
as
investments.
On the
the
New
York
Stock
Exchange public relations adver¬
tising campaign. We will provide
situ-
in the face of threat of
than
more
of the
40%
builders' productive capacity
par
not in
use.
It would be far sounder, in the
the
public—if
be
the
railroad
in
orders
the
proportion of
shops were to
This
decreased.
would
railroads to speed
enable
repair and
considerable
the
reduce
mit the
For example, we now
form considerable
draft
number
cripples which are off line and
while they await their turn
the shops. It would also per¬
idle
in
car
builders to make
more
use of their superior fa¬
putting more new cars
rails, more quickly.
Particularly at this juncture the
complete
printed material for member firms
cilities in
to use.
on
One of the pamphlets will
be an explanation of how to buy
securities, how to become part
of
owners
our
the
railroads
should
concentrating
be
American
great
on improving their transportation
facilities, and should spend neither
there are many people who would cash nor energies on the fallacy
like to
become
part owners of of increasing their manufacturing
these many fine American corpo¬ facilities.
rations if they knew, how to go
In declaring before a National
corporate enterprises.
We believe
about it.
We
are'
going to/help member
own
public rela¬
Boards
the railroads
tions
problems by making avail¬
able to them ideas and material
representing the best thinking in
public relations.
them
become
We want to help
equipped
to
do
a
good job within their own organ¬
izations.
Businessmen
day
generally are to¬
with the un¬
concerned
as
availability of risk canital
I
are.
as
we.
you
concerned with the
are
problem—you as well as the of¬
ficials of all publicly owned cor¬
porations.
;1:
I hope you are concerned with
it because you can be exceedingly
helpful
the over-all program
undertaking. You all have
splendid lines of communication
to
are
not prepared for
Johnson,
Col.
war,
said
are
ODT
need 550,000
we
new
chief,
freight
"right
now."
Of these, he
said, 250,000 are needed to replace
retirements; and there should be
an
addition of 300,000 cars to the
existing fleet. He may be correct
about his "right now" but, un¬
fortunately, freight cars cannot be
cars
produced right
daresay all
of you are—:
although you may not be in im¬
mediate need of it.
I certainly
hope
of Traffic Advisory
a
few. months aga that
Meeting
firms with their
custodiers,
your
for
Secretary
declared
haj
our
Air
his
Symington
conviction
that
Air Force must be very strong
instant-action basis by 1952,
because beyond that time we can
on an
have
will
certainty that atomic
no
not
break
railroad
of
interest
against
war
de¬
are
pressed ih market value, the
mor.e
attractive investments they are on
the part joi the few who do have
liquid funds
with
which
to
the
conclusion,
problem
I
may
of securing
now
of
the-
in
the
in
1949
cycle
it
may
new
capital
funds
shrink with surprising speed.
financing
privately
industry and commerce
places. '■'
We
phase
and
of
and many
We
agree
is
one
day
of
the
age.
of our
major
perhaps we should
ourselves a similar trans¬
preparedness
set for
we may
assistance.
of
this
ap¬
we
have
That would
years.
that
mean
we
should
start, immediately, a pro¬
gram
for producing more than
180,000 cars annually—or, at the
rate of at least 15,000
ly.
I
cars
convinced
am
month¬
that
this
should be done.
It
would
again
the
orders.
to be
appeared
it
Faricy
of
their
steel
high-level
rate
Even the
threatened by car shortages.
Faricy urged all Class I railroad
in
to
order
If
also
the
50,000
they
types of
long
cars now
service,
110%
1939.
above
•
Looking at ourselves in the mirl'or, neither the railroads, nor the
car builders can be proud of their
following pleas by other types oi
shippers, he is urging AAR memcars.
better
nearly all of smaller
load capacity, show a marked in¬
crease in gross earnings since 1939.
The average annual revenue per
freight car in 1947 was nearly
presidents to order 60,000 addi¬
tional gondolas, beyond the 18,000
on order at that time.
During the
following three months only about
9,000 new gondola orders were
placed.
I now understand • that
oers
rail¬
The
these
for themselves—and quickly.
pay
was
box
afford
can
transportation tools because
industry that
production
investment.
profitable
roads
.
leaders of the
every
cars today
weigh more, cost more, carry more
—and they are a very sound and
of
by President
the AAR.
Followingdemands
by
outstanding
sharp
Almost
railroad orders
buying "more car" than in
1939—bigger cars, having greater
capacity and hence able to
pull in bigger earnings. Such cars
has
prospect
a
is
load
question
There
some
that in action taken
accomplishments
more
better,
railroad
presi¬
dents will, follow their leader in
to the
in
delivering
high-speed transportation
freight-using public, which
means
.
everyone.
*
..
.
have a 200,Railroad
cars
today' are still
backlog. That should en¬
able us to plan, obtain steel and 'Model T's." We are trying to meet
1950 competitive conditions with
other supplies, and produce on z
freight cars little different from
high-level basis.
those of decades past.
There has been recently a
f-Vy/
grow¬
With all of the new develop¬
ing awareness among the armed
we
may
<
.
forces
and
overall
various
civilian
the
railroads
bad
to
de¬
regarding the im¬
in the
car
logistics problem—if
wai
Some have urged lifting
the freight car goal to 12,000 cars
monthly and are; cautious about
any
higher figure because they
have in mind
other; necessary
pre¬
in
of
case
there
war,
certainty that
be
can
no
railway system
be protected against damage
There is probability that it would
suffer serious damage.
our
can
most
might
be
your
other
vitally
such
as
more
more
in
bad
years.
expenditures
wisely
needed
spent on
facilities,
efficient terminals.
into railroad revenues and,
thus, into the future prosperity of
the car building industry.
'■».
ting
Better
Call
it speculation if you
like,
try to picture the results ol
major damage in the areas of so
many trunk lines, around Balti¬
a crippling air attack
Harrisburg, bottleneck of
heavy steel and war industry traf¬
more; or of
Cars Needed
We of the car-building industry
avoid
cannot
taking
responsibility
better
new
and
cars
that
bring to the fore.
a
better car will
can
freight
more
Class I railroads'
to lading
be
must
example,
carry
of the
situation
some
this
of freight
types
research
For
for
there
because
but
in 1947
bill
was
safely.
The
for damage
nearly $122,-
000.000.
on
fic;
of
of chaotic T.N.T. disruption
or
major Chicago
While
and
neers
railroad
yards
specially-trained
engi¬
construction
gangs
struggled with repair, it would be
necessary
to route hundreds of
freight trains "the long way
around."
Cars
wheels
which
their
wore
off
trying to get more
transportation work done during
the
last
would
be
doing less
work—probably much less work
war
The
may be that in another war
should have an over-supply,
a
safety margin of a quarter of a
million freight
cars, instead of the
not-enough
have.
we now
But
is
somebody had
ahead
design
gether
to
future.
I
do
not
might be.
It
may
is
for
the
the
of the
car
know
what
it
be piany tons
present
cars
lighter
than
the
tnrough use of aluminum, magne¬
or other materials.
It may
sium
have roller bearings. It may look
as
much
different from
today's
the
does
car
as
car
compared
modern
with
Pullman
of
forty
Our
econ¬
that
years ago.
America is growing.
still
omy
is
have
more
that
expanding.
People
to spend and
more
goods to be
money
means
hauled.
better
The big
all
of
that .a*
question that confronts
us—the
railroads
builders—is
car
self-evident
job
I don't
know.
It
big
builders and the railroads to¬
car
It
we
who
the
and
will
carry
very
this freight of the future.
large, long-range freight car re¬
The railroads can carry it if we
placement program is a national
necessity—and a critical national jointly pool our imaginations, ~our
engineering and production skills,
necessity.
.
and
Cost
of
New
our
faith in the future of rail
Cars
-transportation to develop
Following the slump in freight
car
ordering rate some months
there was discussion of the
ago
increased cost of
prices
are up.
Of
cars.
course
But apparently they
remain among the cheaper things
that the railroads must buy.
Th e
AAR's
economist
testified that "fuels,"
and
"supplies"
are
that
cross
ties
are
than
more
He noted
147%;
up
uct
that will be
for
shippers
to
goods handled,
to
buy
and
flexible in
more
use,
a
prod¬
economical
for
safer
speedier, cheaper
operate,
and
more
use.
recen tly
"materials,"
120% above 1939 levels.
car
W. A. S. Wheeler Forms
Own Investment Firm
W. A. S. Wheeler, formerly a
lining lumber, 241 %; coal at mines,
140%; and diesel fuel has ad¬ partner in Elder, Wheeler & Co.,
vanced
124%.
thought of that
latest large freight
has
as
I noted the
car
order
re¬
ported in "Railway Age," 750 50hoppers for the Reading. The
price was $4,300 per car. That, I
discovered,
idle
capital
And, in the meantime, the truck,
the bus and the airplane are cut¬
including internal sabotage
war,
would
stand
virtually untouched.
war uses for steel.
Because of the threat of possible
ton
Railroad
design, in tools, and new ma¬
the freight car remains
terials,
paredness and
capital outlays now to ex¬
pand car building facilities which
make
ments of recent years in mechan¬
ical
comes.
I
unwise—and
be
economy—for
you
ones
We hope
plans and
sincerely hope
active
.-'v.:
'<•
sincerely hope you will
with us that this problem
and
prove
for
with
who should be investing
their surplus funds through es¬
tablished and
organized market
sefems altogether possible that the
demand
familiar
that
downward
business
more
say
American
opinion largely academic.
are
be
methods
capital'funds for expansion is in
my
extremely effective means of
reaching many, many people who
buy
them at depressed prices.
In
be
should
raises
high-level
national
and
—
contrary, the more stocks
This
of
pertinent point.
a
time
de¬
astronomically high.
are
In the
us.
share¬
your
from
terminal
Question of High-level Orders
know.
now.
portation goal. That is, by making
sure
that the rail freight system
holders and your employees. Your is strong enough for war service,
on an instant-action basis,
by 1952.
advertising program, your annual
Then perhaps our goal should be
reports and other communications
the Johnson figure, 550,000 new
to stockholders
your employee
oublications—all of them would ca|s by 1952—or, in the next three
to
arising
—
portance of the freight
Exchange.
in
too
longer
fense agencies
of
have
loses
and
discussion about the extent of the
rise in price of freight cars misses
losses-r-and
revenue
tion's most critical needs—ond es¬
members with material which
will enable them to follow through
on the nation-wide program of the
we
IncidChtally, the fact that
factors
un¬
face invest¬
around
our
The primary cause of depressed
stock
of confidence in the future of cor¬
curious
a
more
people who encounter self-interest of the railroads them¬
these obstacles and want them re¬ selves—and in the best interest of
such'
sible.
have
the
change Commission has, of coutsb, moved, the more likely the relief.
Our program will naturally cen¬
accomplished much good and it
has
we
going\ war—and
are
we
Private
made
shipper
longer
I lays,
themselves will tell
men
that
pecially
in the
not
are
public interest.
ahead.
hus
credit for the
of
37
000-car
toward all those who deal in se¬
use
■
this matter
pace.
the
are
you
more
built
this objective about.
(465)
major railroad objective
a
obtaining
operation at their average rate of
their in¬
stocks and
of
That
; (r
;
demand for capital for expansion
and
development is being more
markets
Impact
nation.
•
the books of the railroad shops are
are
greatly undervalued in terms of
asset value, they are also under¬
the
com¬
.:
.
that the tremendous current
mean
stocks
f common
of
merce
capital assets dollar for dollar.
equity capital which is
shops.
Since
going to try to help these small
Clearly, financing expansion by
common stocks is out of the ques¬
Bonds at least
railroad
4)
page
units do their jobs better.
;• \
Railroad
(Continued from page 24)
Equity Capital
(Continued frOm
FINANCIAL' CHRONICLE
&
Prospects of
Investor Confidence
at about one-
or
fifteenth of the
COMMERCIAL
THE
Number 4772
Volume 169
vance
represented
an
ad¬
of
only 90% over the aver¬
age price of hoppers in 1939, as
given in ICC records.
I have
an
idea that
some
of the
formed
W.
A.
S.
Wheeler
&
CoM with offices at 61 Broadway,
New
York
will act
as
City.
The
new
firm
dealers and brokers in
general market securities, special¬
izing in soft drink bottling indus¬
try securities.
will
be
Vincent M. Brown
office manager and man¬
ager of the
trading department.
38
(466)
COMMERCIAL &
THE
FINANCIAL
CHRONICLE
Thursdayj"January 27, 1949
will require a
thorough-going in*-
the Trade Organization. I ask
ybu
also- to be patient and not become
tegration mf national economies
autarchic developments and
The
icance
(Continued from page 18)
international
of
trade
whole economic complex
seemed imperative that a return to
the
neglected. It was not unusual to
hear people say that international
trade accounted for only a small
gold
standard
,
should
be
sought at the earliest possible mo¬
The severe slump, caused
ment.
makers of
Central bank¬
^conclusion
the
that
important
more
of several million
the
home
Movement
postwar
The
were
sharp departures from what until
had
then
considered
been
doctrine.
sound
established
well
How
present time many of the restric¬
tions which have been carried on
,
Toward
Autarchy
and
generally accepted the older
doctrines .were is illustrated by
the fact that in Great britain a
sible within the boundaries of any
one of the great European powers.
Labor
It
Exchequer was the most vigorous
proponent of
control
by
others.
The
the
of
return to gold and
a
the theory of the balanced budget.
The
reactions
the
from
the
first
most dramatic
World
of which
major inflations
of
Europe,
taining
of
theories
and the
nance
strength
gave
established
hard
ent
until
Various
series
a
to
and
drastic
of
gold
measures
as
to
cussions of these
field
of
only
top
trade
The
apparent.
the
we
to
manipulate
their
that
clear
created.
was
of
of
into
ac¬
on
the
maintaining
high
activity. The
economic
International Trade
an
Organization is based
sumption
that
the
on
tic
to
of
We
in
us
the
must live.
be
achieved
movement
through
of
goods
the
and
free
services
and
of
Our
the ^International
domes¬
by
violent
Fund;
that
almost
and
by
the International Bank. All
Economic. Life
moving through a
change in
pe¬
profound
our
period
which,
to
all
lieve
with
I
that
the
children
make of this
we
profound
are
determine
change
in
living is going
the
lives
of
our
bold enough to be¬
we
work and think
am
if
their
welfare; in mind We
probably do pretty well for
ourselves.
if
.
will
solution -V"
as
of
we
children.
'
' >f
im
of
fruitful
Wm. 6. Care*
ileadrl
&
Murphy' & Durieu, 30 Bread
Street, New York Ciry, announce
There
will
always
be necessary to control them
by
such a; clumsy device as the one
which
I
have
part in
a
adminis¬
tering in Washington—the export
control
system.;..;•:
More
private International
Organizations Needed
We
learning
are
intricacies
of
:
about the
more
international
fi¬
the structure of exchanges,
way - in which trade
takes
nance,
the
place,
and
private
the
significance
W.
and
public
trade;
but
many institutions will be needed
coun¬
tries
social
waste that
of
the
tional
that
agreed
are
was
older
trade
the
inevitable part
an
system
of
interna¬
but it would be
the
Bank
and
the formation of
and stock
der
Fund
Carey
the
a
real estate bond
trading.department
direction
of
un¬
William
G.
Carey, formerly of Blair F. Clayr >
baugh & Co.
■
passing strange if
the
G.
of
Monetary
through the fjow of to put our
knowledge J to use.
investment capital between coun
Some of them I have
mentioned,
:
tries that will be made easier
'30s.
What
few
are
about
their
and decreases in the
volume of particular types of ex¬
ports and imports, but it will not
the
or
early
economic
redevelopment
There
us.
concerned
which
'^ increases
employment
progressive development
of the world's resources can best
and
the
produce
cataclysm
are
riod
to
in international
trade
Changes in
seem
willing
the
not
are
world ; in
as¬
rencies that will be made possible
longer
in
trading system at least
full
permit
The plain fact is that we
no
fordes
ex¬
to the ap¬
answer
certain
up
possible
lies
a
the unregulated flow of economic
are
would
governments
an
give
cer¬
ago,
people; through, the free ex¬
change and stabilization of cur¬
cherish.
buried
have to find
Century
elements of security which, in our
industrial society, we all
commodities, or breaking
competing
industries
in
began to
and
19th
surrender
years
emphasis
new
charter for
modern
certain
It
the
necessity
late
20
Organization
levels
more,
of the
values
type
down
of
count
current
of
All of its provisions take
trading system similar to
one
change rates for the purpose of in¬
creasing their export market for
other countries.
Trade
*
means
would have to
tain
of
gold between countries was ca¬
pricious; the flight of capital from
one country to Another produced
important .changes in the busi¬
ness
cycle; and v some countries
began
flowing
only
pre¬
development in economics
politics that the International
intensity
reestablish
way to
ITO
sight.
and
remain with
will
a
trade.
world
a
were
flow
who
the
of
success
•
new
eco¬
however,
than simply going back. To build
in the
measures
international
find
we
This
.stabilize the relationships
the currencies. The reper¬
among
struggle
world
standard
a
that this
aware
smoothly
a
European countries undertook by
reestablish
faced, then, not with
are
the world at the present
time,, and ;, we are on time, then the possibil¬
it affects the daily business prac¬ ities of
reestablishing a system
tices of everyone in this room. with:
the minimum Of controls is
It was in the atmosphere of this within
con-
in varying degrees of
us
necessity for main¬
currencies.
least, of
for .economic
political and cultural systems.
nomic
fi¬
War
struggle between differ¬
We must be
the
to
sound
following
We
question about the
change in concept concern¬ as the one which we
formerly had.
ing the relation of politics to eco-i If we carry out our time schedule
nomics.
It is actually the ruling with the Marshall
Plan, and the
concept of most of the nations in first year's results
indicate that
Combined with it, of course,
the
was
the
were
nations
basic
over
World
second
struggle
I trol.
the continent
on
country
one
the result, in part at
this
the
War,
the
on
is, compared with the
vailing ideas
was
was
eco¬
nomic and financier developments
after
forced
The
This
possible only with the ex¬
pansion of political and economic
Chancellor,
Party
been
practicing
them.
Nations
;f_havet
placed controls on trade not jibe-
autarchy
Marshall Plan.
There is no al¬
—or
economic
self-sufficiency— cause they like controls but!j: be¬ ternative to its success. We are
during the '30s, growing partly cause controls appear to be a
faced with
an", imperative
from
mo'r<|
from the world-wide depression desirable
method
of
regulaltih# whic^therefdsmo' retreat; We and
and partly from the new national¬ economic life than to submit
;ourv;economy can absorb many
ism, has left its mark on our pres¬ nessmen and workers to the. adf.
WftbjWiSh^ fedbme here; any who
ent-day
attempts
to
revive
a
justing mechanisms of boomf xlex¬ wish • to-, make their contribution
world trading system.
It became pression, and unemployment.
should' be: welcomed.. But for the
clear that autarchy was impos¬
great millions of Europeans the
tenance of stable conditions in in¬
rates.
small
The movement toward
ternational trade and international
exchange
people.
was
than, the "main¬
changes in national policies
this
.
participated in the discus¬
sions concerning the International
Trade Organization have recog¬
nized quite frankly that at the
have
maintenance
stable conditions at
.of
to
came
that
world is not to be had
Simply for
separate nations cannot provide a the
asking.
\
m
living for. the nearly 300 million
>; There are those of lis who need
people of western Europe.
The not
worry very much abouUthe
Marshall Plan or ' its equivalent
new world
as far as we are per¬
will (Succeed, or there will be
sonally concerned. But most of us
decline in the population of west¬
do have a concern for those who
ern
Europe of 50%.
'
•
are
have
percentage meant the employment
policy.
statesmen
and
our
forgetting
come,
grew lib
of the autarchic de¬
course
velopments in the '30s. Those whb
in¬
percentage
ers
of
national
by the attempts to return to gold
created a profound effect on the
•
in the
was
ddwnheartened with the sobering
realization that.; the v brave new
the separations created by the unintegrated economic units of the
of the restrictions which
irl
our
the
and
Trade Organization and the other
organizations
started
which
have'
been
Board of Trade
o
\ I
part of the United Na¬
as
avoided.
tions
people we
machinery would be the Sponsors Radio Series
If
businessmen are concerned final
have, through our duly elected
answer,
All these institu¬
CHICAGO, ILL.—The Chicago
with maintaining
sary to preserve a hard currency, representatives, stated certain im¬
business free¬ tions are still far too nationalist Board of Trade is
sponsoring "The'
or should they
portant social beliefs and objec¬ dom and with the building of a in
permit their cur¬
their
management, ".Interna¬ Farmer and the Market Place," an'
rencies
to
adjust themselves to tives. Among them is the policy healthy international trade, they tional traders and business repre¬ educational'' and
public*, service'
the market and let the unemploy¬ of the Employment Stabilization must also be concerned with these sentatives of
corporate activities program developed as part of the
Act of 1946.
ment rolls rise?
This Act does not institutions,
which carry within with world-wide
affiliates will Board's public-relations activity,
/
The question, almost answered tell us how to solve all our prob¬ them the seeds of a, free trading understand-what I mean when I as a weekly feature of "The Farm:
economic
parent dilemma: Should they take
whatever steps might be neces¬
life.
As
a
must
be
"
.
<
*
itself.
Foreign trade
became lems,
soon
how to maintain busi-
nor
system.
The seeds will not grow
hess stability. But it is an expres¬
without attention.
achieving the
aims of national policy. The re¬ sion of the determination of the ;
Anyone who, at this stage, says
sult was a rapid development of American people that major de¬ that we have found the answer to
pressions and large-scale unem¬ our problem; anyone who
various restrictive devices,
such
says
as multiple exchange rates,
im¬ ployment will not be tolerated. that we know how to manage
This policy is not easy or simple
these newly born or newly con¬
port
controls,
export
controls,
to put into practice. It is an ob¬ ceived
international
tariffs, and subsidies. All of these
institutions,
devices were used at one time or jective, and much remains to be and that we know how to create
instrument
an
for
,
another
in, the
economic
as
hands of
done
instruments
various
fectiveness.
political
fortunate.
governments to achieve what ap¬
peared to be, at least temporarily,
sound domestic objectives.
the
appalling
It
depression
tionalism
of
efforts
ments
the
and
by
to
national
solve
lems, and
the
importance
trading.
It
now
their
na¬
seems
unbelievable that
country like Germany, with its
65
70
or
million
people, could
talk of being selfsufficient within
its
own
with
borders;
its
that
or
.
Italy,
expanding
population,
could have imagined that its econ¬
omy within Italy could be auton¬
omous; or that as late as 1932 the
British
to
Empire shpuld have
withdraw
boundaries
within
by
its
of
means
tried
own
empire
preference, when the Empire had
been
built
on
the
continually
broadening trade of its business¬
men.
In
early
years
our
country,
own
of
the
New
the
Deal
showed certain signs of this same
tendency toward isolationism. The
seriousness
focussed
relief
looked
its
of
domestic
attention
on
problems
immediate
that
we
ef¬
have been
important to
re¬
other
by
National
policy
inward for. the solution of
difficulties,
and
the
signif¬
trying, and
mean * everyone
concerned
with
the
who
is
policy of the
citizens
have
litical
institution
instrument
nomic
such
was an
for
the
as
insufficient
building
an
eco¬
which
in
world
stability
and employment and high levels
of
economic
activity
could be
maintained, They recognized that
the free flow of exchange under
a
gold standard was no longer
practical. They tried to invent a
,
substitute,
in
and
the
course
of
the Bretton Woods discussions the
foundation
national
was
laid for the Inter¬
Monetary Fund
and the
International Bank. These institu¬
tions
are
there
is
now
a
going concerns; but
third
institution
con¬
we are still carry¬
negotiations and about
which we are still struggling to
cerning which
ing
on
clarify
In
our
the
other
common
countries
who
interests with
us.
thinking.
design, the pur¬
pose of
the International Trade
Organization is to get rid of many
ternational
institutions
which
This
made
are
applies
New
to
labor
up
govern¬
some-
of
We have recognized these com¬
interests not only in the in¬
stitutions to which I have just re¬
actions
other
which
we
-
have taken.
I refer, of course, to
the developments under the Mar¬
shall Plan for strengthening the
nations
of
Europe
unifying
their efforts and reestablishing a
trading area which can stand as
and
part of the free trading world. We
have
tended
to
overlook
this
phase of the possibilities inherent
in
the
Marshall
Plan
develop¬
organizations.
of
people, is
The movement
important
as
development of the
tional trading world
of
in
only too aware
people in-and out
you are
Of this great port;
tions
mon
international
York,
of
organiza¬
it does to inter¬
as
corporate
the flow
of
in
as
on
goods;- and
the
restric¬
the movement of people
have as serious an influence
international trade
itations
which
the
are
you,
as
with
cerned
the lim¬
the movement of goods.
on
These
as
much
problems
as
have
a
concerned
ment
of
of
some
the Government.
the
in
Economic
New
wav,.
Research,. 1819 Broad- '
York 23, N. Y.—Cloth '
•'
—$5.00
' i
■
'• v
<
v;
Cause, and
Cure
of: "Dollar
Shortage," The—Frank D. Graham
-(—Department
•
.
Social
as
policies of
You and I have
of
Economics
and
•
Institutions, Princeton Uni¬
versity, Princeton, N. J.—paper
j
Charter for World
Clair
Wilcox
Trade, A-vf
The
MacMillan
>
Company, 60 Fifth Avenue, New
York, N. Y.—cloth—$4.50.
./ - .tl
•
—
Proceedings of the Annual Con¬
dealings.
I
issue some of: the export licenses vention r of-the ^Commercial
Fi¬
nance
that you want. Our offices supply
Industry held Oct. 25-26,
practical
!
—
con¬
limited
certain
Transportation
Prosperity and Depression
Thor
Hultgren — National Bureau of
with
businessmen
international 'trade,
I, who
responsi¬
bility with regard to the develop¬
are
American
the
interna¬
the move¬
new
on
can
ferred, but also in certain
much
as
national
Today" over Station WLS;
Chicago on Saturday mornings.:
those
as
only of representatives of
the. international
of
in¬
new,
community
ment
Other International Actions
the machinery of peace following
the last war recognized that a po¬
United Nations
of
concerned with
day-to-day
information
to
you
and we work
1948
-r-
contains
addresses
of
.
24
together on common problems af¬ experts in. the field of commercial
fecting your business.! You have financing and factoring—National
your
own
individual businesses Conference of Commercial Re+ '
that absorb most'of- your attention >C e i v a b 1 e ^Companies,
Inc.*- 29
and your energy.
But I ask that Broadway, New York 6,; N. Y.—
.
ments.,
upon
We
have
tended .to
look
the funds made available
as
relief funds. We have been slowly
realizing that
more
even
than relief—
.than economic recov¬
more
ery—is
involved.
Union is
a
mon
measures.
I
we
still
nations with
were
development of .the
ments.
World
important in
as
/J.As business representatives
are
reconcile the aims of indi¬
Those who
the
will be
productive
international
an
ignorance. We
vidual
.
character
private
Of
tions
United States, whether he holds
public office or whether he is a
private citizen. I mean also the
general wel¬
fare throughout the world.
the
security in bur own econonic in¬
stitutions merely demonstrates his
way to
prob¬
international
of
is
full
sions and to maintain full employ¬
ment.
Our problem is to find a
govern¬
own
So far
It
into
nations; are
determined to avoid depres¬
also
series
made them forget
even
the
a
intense
member
was
of
'30s which created the intense
it
translate
to
that
say
institutions
grand
of
The
Western
recognition of the com¬
security interests of this part
the
world.
We
feel
that,,eco¬
nomic recovery in western Europe
you
give.
broad
some
attention to
problems. -L ask
participate
more
work
centers
that
and
more
in
these
that
these
you
in the
insti¬
$5.00;.; •• • •;
1
^
.
•
■ •
A.
.
Theory of Corporate Net Profits,
The—A
Study—Roy A. Foulke—
Bradstreet,
Inc.,
290
Broadway, New York 7, N. Y.—
Dun
&
„
tutions,
with the
that
you
Bank and
be
concerned
the Fund
and
paper
COMMERCIAL
THE
Number 4772
169
Volume
What Can Business Expect
FINANCIAL
&
CHRONICLE
Commodity prices generally have
been turning lower and we are
hearing1 more about a buyer's
from Congiess?
Controls.
Continuation /of
,1948. In response to the will of port
(Continued from first page)
^governmental controls.' Today you the people, we voted a handsome authority for the government to
tax reduction.
We did it by bal¬ allocate transportation/ facilities.
dre confronted by a double threat,
vp-
market.
!
reimposition
ithe
will, squeeze
which
Controls
government
of
you
it did under OPA; and an
eiqual threat of concentration of
business into the hands of a few
who
handle
for
themselves
jas
the first
time in 16 years, and we rolled
up a record-breaking surplus in
the Federal Treasury of 8% bil¬
lion dollars.
ancing
everything, from the manufacture
to the retail level.
1
-The
^
;
President
-which
program
to the 81st
crystal clear
submitted
Congress makes it
.Truman
all
dollars
r'3
think
to
seems,
year
billion
Six
in
taxes; $4 billion
heavier'corporation and
in
it
billion.
more
curity
'
■
fiscal
for
Authority
President
with'
budget
time—$42
.shoals..
President
for
1950, which provides: The biggest
peacetime spending program of
that, unless you business men and
Everybody else are vigilant, vocal,
ind active m making their views
known to this Congress, we are
beaded
for
some
veryrocky
The
that
Truman's
of
'
budget
Contrast
,
.
the
personal income taxes,
and $2
billion in payroll and employer
taxes to cover the addition of 25
million
that
change of only 30 000 votes
spread over Illinois,
Ohio and
a
California
would
elected
have
Business
mittee
Your opportunities as busi¬
may also be determined
close decisions.
YoUr fate is
ness men
bn
today hanging in the balance.
Did President Truman receive
•'*"
should
be
a
Truman received a mi¬
to pressure
groups by throwing a whole bun¬
dle of economic and social legisla¬
tion onto the doorstep of Congress
in one package, without taking
control
to
Government
the lives and affairs of our people.
'On
"
vast majority
the contrary, a
of the American
people, including
Republicans and Democrats, •con¬
tinue to stand for the traditional
'principles of our Republic, and
are not in harmony with the ex¬
treme measures advocated by this
Administration.
Given
v
all
their
in
facts
the
perspective, the American
people will thrust aside those who
'
would
them of their freedom
rob
better
battle for
future
a
of
that
Committee,
Special Committee or
a
as
their
Standing Committee, in the 81st
to
can
that
see
operate in the
continues
it
to
interests of small
business.
:■'
in keeping with our
Government in Steel Business
further in his
of choice and destroy
the
But
problem
plants and other plants for pro¬
duction of any commodity deemed
by him to be in short supply. Your
industry may be next. Is this the
mandate that the pressure groups
now tell the Members of Congress
must be carried out?
in the cost of
Federal Govern¬
our
ment and
the
of Federal
employees
with
rise in the
years.
prewar
number
compared
as
But,
let
me
cite
just one signal which is very
important to watch.
The cost pf our Federal Govern¬
competitive
4
the good, people of Nebraska re¬
flected me in November to sup¬
forward-look-
constructive,
ward
cent
tee
of
billion
$50
people's
our
It is zooming to¬
a
A re¬
year.
report of the Joint Commit¬
Reduction of Non-Essential
on
Harry
Byrd
there
the
2
over
were
by
away.
million
em¬
Executive Branch
Government >
that
a
'Budget Message, his State of the
Union Message, and his Economic
Report.
y"
/ ;;?Zy;/':
None of these sheds light on
international matters
or
our
pol¬
icies in foreign affairs, except to
pojnt up the heavy expense resuiting from our years of failure
lasting, durable
is
This failure
*
on
the
people,
;
'
a
pockets
peace.
crushing weight
the American
of
provide billions for
as we
foreign aid and
billions for
more
defense.
'
Message
that
light.
we
yy"1, y
get the most
yyy/y/ '"y' "\-
The President is forced to carry
'»
during the first four months
present fiscal year, which
began July 1, 1948, the civilian
Federal payroll totalled about $2
of
the
billion, or at the rate of
$6 billion for the entire
approved,
the
number
of
strings during the
'
.
.
«
.
the
people in
be
are
to
Members of
individually
the
not
but
the
They have a deep re¬
sponsibility and that responsibility
is to protect the interests of the
citizens
of the
their
of
state
of
rocks
loose
fiscal
policies. I hope the Ameri¬
people understand this; I hope
the American people know how
President
Truman's; program
would
expand
our
swollen Federal
into
how
it
already
over-
bureaucracy, and
multiply
would
personal
greatly
details
of
our
what
do
we
to
can
.
years
.
♦
'
V
1947 and lkets.
,
,
V
•.
I..
_
7'-
Let's give
are
everyday
few of his proposals:
a
'
Extension of Credit and Ex'«
•
,
.
.
-
V
>
'
to jolt the American
people. into taking a more active
interest in foreign policy and in
making known their views on the
subject to the
Government at
Washington.
Left-wingers
and
communist
sympathizers who would depart
up
go socialistic."
tell you business men
socialism has
not
way of
enterprise.
our
But, let me
that national
worked
in
any
country where it has ever been
tried.
~
We have the best system of gov¬
ernment
the
of
earth.
on
We have
in
things
good
more
life
than
other people. We have a
higher standard of living than any
other country.
We have proven
under our system that security and
opportunity go hand in hand. And
we
have
accomplished all this
any
within
prosperity.
soil.
Unless
our
from
be
That
is
propose
to
meet
in. standing for
American policies
in foreign relations.
such traditional
are
It
na¬
axior
But how does the Admin¬
istration
the framework of
Consti¬
these
bur
people.
V
.)■
'
.
/
The Economic Report submitted
Future
generally,
the
future.
are
Congress is a remark-- icies will be shaped to the peo¬
document, remarkable be¬ ple's wishes.
V
of the subtle way in which
But, if the people are to act
it seeks to justify the mixture of wisely,
they must be fully in¬
formed. They must have all the
socialism/taxation and spending.
It adheres to the strange theory facts.
And, if the Congress is to
that if the people
spend their act wisely, it likewise should have
money, the result is inflationary. all of the facts.
Let us be frank
But, if the government takes it about it. Our people are having
from them in taxes, and spends it, to bear the burden of
supplying
the result is not inflationary.
billions for foreign aid and bil¬
Every proposition submitted by lions for defense because we have
the President to the 81st Congress failed to
yet win the peace. There
should
be
carefully scrutinized. is a need, a desperate need, yes,
We should only adopt a budget we
perhaps a critical need, for more
can
afford.
Let's
stop
talking forthright assertion of the just
about additional legislation that
principles upon which the Amer->
able
cause
will
require
make
we
an
more taxes, before
honest, serious effort
to cut the cost of
government, bal¬
the budget, and
ance
get on a pay-
as-you-go basis.
We have been able to produce a
national
income, keep in¬
at full operation, because
have enjoyed an era of com-
dustry
we
part^vely
will
relations be¬
peaceful
industry* and ' labor. What
81st
Congress do
in
tween
the
answering the demands for re¬
peal of the Taft-Hartley Act?
I
from
mandate
no
see
evidence
the
When
the
facts
all in
is
and
experience un¬
der
the Taft-Hartley
Act have
been weighed by Congress, it is
my confident hope that the salu¬
tary provisions of the act will be
retained.
The
labor
■
-.
question
..
whether
of
the
two-package ap¬
proach is of vital interest to the
public and the rank and file of
one-package
workers
as
or
well
is
the
for
sane
as
to
business.
method certainly
sound approach
The one-package
and
sensible consideration of the
a
Investors
and
business men, who
the
future,
lines
Some
caught
Prices,
tremely
off.
must plan for
deeply disturbed.
are
business
of
already
with the demand.
up
for
items,
except
scarce
The
truth
is
a
are
that
few ex¬
leveling
our
eco¬
clamor
of labor bosses for
two-package precedure is a typ¬
ical pressure tactic.
It is appar¬
ently the hope of self-seeking la¬
bor
leaders that they can thus
heavy demands
for goods for foreign aid, heavy
demand for goods for national de¬
fense, and a government managed
props:
currency.
genius
of
American industry
and agricul¬
ture has developed by leaps and
bounds, spurred by the demands
of war, foreign aid, and domestic
consumption. But, notwithstand¬
ing the heavy demand, supply is
rapidly approaching total demand.
productive
Taft-Hartley
the
Act
in
its entirety, reestablish
cial
A
of
responsibility
the
around
are eternal.
We may stray
temporarily from
those principles, but I have an
abiding faith * in the American
people.
Time
principles
are
do
changes, but these
not
bulwark
a
•
change. ~ They
to which
we
may
our
land, where oppor¬
security go hand in
hand, there is no limit to which
man can
rise, only the limitations
of his own ability with comoiote
tunity
and
freedom of choice.
Let's
keep it that
way.
,
New York Stock Exchange
Weekly Firm Changes
The New York Stock
has announced the
Exchange
following firm
changes:
Transfer of the Exchange mem¬
bership of Leonard A. Goldstone
to
Bernard S. Wallerstein will be
considered
Feb. 3.
by
the
Exchange
Mr. Wallerstein will
as
on
con¬
partner of Richard E.
a
Kohn & Co.
■
Transfer of the Exchange mem¬
bership of Edwin M. Bulkley, Jr.,
to
Edwin R. Wallace will be con¬
sidered
act
as
on
an
Feb. 3. Mr. Wallace will
individual floor broker
it is understood.
Transfer of the Exchange mem¬
bership of Robert G. Kennedy, Jr.,
to George L. Maxwell will be con¬
sidered
sense
peoples
earth,
a
in
on
Feb. 3.
Wilfred
J.
Durning,
limited
& Schley, died
Congress, notwithstanding its par¬
partner in Moore
tisan complexion, will, I believe,
on Jan.
20.
prevent the outright repeal of the
Taft-Hartley Act.
file
of
own
labor
best
The rank and
be serving its
will
interests
Congress in such
a
program.
Foreign Policy
the
President, in his Message
State of the Union, said:
domestic
"Our
foundation of
The
the
foreign policy."
programs
our
are
horse,
economy
because our do¬
depends entirely
what happens in foreign af¬
In
reality, our domestic
economy is completely dominated
by the international situation.
upon
fairs.
Of
R.
Dunn
died
at
his
home at the age of 70 after a brief
illness. Mr. Dunn, who had been
in
the
banking
for
business
fiscal
was
agent
for
50
the
Federal Land Banks and the Fed¬
eral
Intermediate Credit Bank in
New York
City.
.
President put the cart be¬
fore, the
mestic
Charles
years,
The
on
Charles R. Dunn Dead
by supporting
The Domestic Program and Our
nomic structure is resting on these
artificial
dom-loving
tinue
legislation.
The
principles upon which
country was founded "and
upon
which
our
country
has
grown,
prospered,
and
become
great, as the inspiration for free¬
revised by a
law should be
people stand.
Those
our
Here in
the
our
on
ican
repair.
Labor-Management Relations
lation.
anxious
the people; and in the final analy¬
sis our foreign and domestic pol¬
to the 81st
their spe¬
privileges under the Wagner
Act, and then stand off every at¬
tempt to pass new remedial legis¬
About
that
assume
Tax and tax,
destroy
Anxious
is reasonable to
those who advocate left-wing do¬
mestic programs will veer to the
eft in international affairs. And,
and so I repeat: You will get from the
spend and spend, the same old Congress what the people of the
New Deal game Of trying to prime United States demand of
Congress.
the pump and fasten tighter and The people are
sovereign ih the
tighter controls on the lives of all United States; all power rests in
situations?
new
tutional Government. But, we are
Business men, farmers, workers,
emphatic
very
from
no
personal rights and op¬
are
not likely to be
our
portunities
Sixty-five
comes
can
prosperity.
matic.
of
the farmers
there
prosperous
tional
backbone
people to return to jungle warfare
in Labor-Management
Relations
help make it
Let's
the
all
people of America.
The
Here
of
and
Unfortunately,; we hear some
people saying nowadays:
"Our
country is going socialistic any¬
way.
Let's give up the ship. Let's
have
the
on
of mi¬
interest
norities.
people
national
195.0, nearly half is for national
and foreign aid.
Those
facts ought
the
the
is
record
direct referendum?
a
committed
wrecked
in
the
The President is offering them
to keep faith with the many mi¬
norities which he marshalled so
about
decline
of
endorsement
/;
em¬
will
us recall one happy Nationalized
Medicine,
Federal
thought, if for no other reason Aid to
Education, Subsidies from
than just for the record.
the Federal Treasury for public
/
The
80th
Congress
was
in housing and slum clearance. New
charge
of
the
nation's
purse controls for the commodity mar.
.
ceived
income,
in the face of rising taxes, would
threaten our very solvency. Many
governments in history have been
A
Message, let
.
farmers were
voting for repeal of the Taft-Hart¬
ley Act? How many of these spe¬
cific proposals would have re¬
many
is
lives.
go
we
were
surance?
going to lose our American way of
life if we don't slug it out toe to
the statutes which affect the most
Just before
/ ■'
y
thought they
many
toe with the demagogues.
campaign pledges by lay¬
ing on the line the dollars and
cents it will
take to put them
.
;/\
■
How
And
ployees on the payroll
tremendously increased.
out his
'«*
taxes?
than
into effect.
1
voting for
in Federal
were
billion increase
$4
year.
if President Truman's program
the tragic chapters of the Budget
*
a
more
can
;*v It is, however, from the Budget
;
thought they
man,
Senator
Virginia—shows
of
ployees in the
of
et's take
iAs you business men President's
look at the would say:
a
ask you:
the 24 mil¬
me
lion who voted for President Tru¬
.
headed
during last
means, the
?$rst test of every legislative pro¬ November, an increase of more
posal must be: Does it strengthen than 12,000 over October.
pur freedoms and basic rights, or
Or, another way to look at it is
jipg legislation. This
win
let
life. Let's give up free
one-fourth
Committee
And may I
interject, with all modesty, that
:fo
then
about
entire, income.
Federal Expenditures—that is the
'
is,
work.
'productive enterprise.
Whittle them
it
If
How many of you, or
Congress
Big Gov¬
getting more and more
serious.
I could cite many figures
showing the tremendous increase
of
*
port
proposals. He asks
authority to build steel
the
for
cleverly,
ernment is
take
national
or
ment is now running at the rate of
;
proper
-
both ; in
The
Fedferal Government
Plainly, he received no sweepJng mandate for an all-powerful
culture
importance,
the costs
ability to pay.
schedules
priorities,
And, just how
firms got a
Problem of Big Government
•V.
consideration
into
that
Powerful
No Mandate for All
Federal
Com¬
see
then
percent of our wealth
obligation
government contracts.
business
either
nority of the popular votes cast.
•
That
established to
It Congress has yet to be determined.
If it is continued, I shall do all I
that
mind,
in
borne
Committee.
was
Small
America?
inandate to socialize
^President
Senate
In two and one-half
it will be concluded. Who
political
survival against big business, and
in securing a fair distribution of
That
is
only 30,000 votes out of a total break,
try.
the
of
;
•
ECA would
began.
will
But President Truman goes even
,
of 49 million for the entire coun¬
price
and
wage
voting for compulsory health in¬
How many thought they
were voting to socialize the steel
industry or any other industry?
small
President.
Republican
a
it
years
.
Chairman
that
continue four years from the time
commodi¬
President to
;
told
were
39
defense
surplus from
farm and factory that we produce
in America? You know that agri¬
.
*
We
ceilings
and to channel the use of pri¬
vately owned commodities,
It is a cunning thing for ah
Administration to
discharge its
health insurance.
v.
last
allocate
Power for the
impose
persons/to the Social Se¬
rolls, and for socialized
And this is only the start—this is
election was a mandate
to
carry
forward
a
reckless, only the beginning, in a program
spendthrift,
socialistic program. recommended by the President to
The Republican party' learned a keep bis campaign promises to the
lesson in politics on Nov. 2. And pressure groups. The cost will rise
you business man can well take by billions, in - succeeding years.
the same lesson to heart. It pays Our national economy would be
blown into
as
many
pieces as
to fight. It pays to slug it out.
Complacency, generated by in¬ Humpty-Dumpty.
Our country is suffering from
efficient polls of public opinion,
is the real cause for Our Repub¬ i, three bigS^Big Government, Big
lican defeat last November. : The Labor and Big Business.
During the 80th Congress, I was
contest was very close, so close
the
ties.
to
(467)
the $42
billion in expendi¬
tures requested for the fiscal year
Allston Burr Dies
Allston Burr died at his home at
the age of 82.
Mr. Burr entered
the investment business in 1898 as
a
member of the firm of Perry,
Coffin & Burr.
He had been
rector of Coffin
many years.
&
.
,
a
di¬
Burr, Inc., for
-
,
X
s
-
4
40
(4681
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
Thursday;. Jariuary 2 7,^1949;
entitled
"per capita disposable income" expressed in "con¬ manufacturer cannot fairly be
1947'dollars," ;we find that not once prior to 1940 held wresponsible ^either .for such
higher costs or for such monetary
were the
managers at Washington able to match the 1929
debasement;
* .V' \ '
•• \
mark.
Even in 1939, the best
year they ever had, they
FOr some time
past we have
failed by more than 2x/£% to reach the
goal set in 1929 been told that wages can be raised
by the reactionary elements which, according to New Deal generally ..without. advances in
critics, so mismanaged everything they touched. This was prices. That theory has been ad-:
.
As We See It
•
stant
(Continued from first page)
■
;
;
where—fairly reeks with the assumption that Government in this country has found the formula for unending
prosperity. This, of course, is not a new infirmity, the
notion that a way has been found to abolish poverty.
If there are any who suppose that it is we suggest that
they go to their files and consult the Republican campaign addresses of 1928, and a good deal of the literature
—some of it bearing rather sacred academic names—
of the later years of the second Coolidge Administration.
This, definitely, is not the first time that poverty has
|
«
'!
!
i
;
been abolished
or
six
years after President
his task of putting the
on
Roosevelt took
nation
and
over
set
out
its economic feet again.
on
from
Successful
partment of Commerce,
The
Conference Board
rose
series
from $493
to
from
rose
$552,
614
12%.
or
1926
constant
1923 to
$681 in 1929, or about 11%. Again, ac¬
cording to the President's experts, there were nine and a
But aside from the pride which so often goeth before half million
unemployed people in this country. This was
the fall, what is the New Deal record in this matter of dis¬ about 3.4 million less
than the peak in 1933. In
1929, ac¬
covering or installing an economic millenium? Naturally, cording to these same experts,
unemployment amounted to
the apologists for that regime would like to be; judged on
only about 1.6 million. ^Evidently if the New Deal is to be
the record of 1947 or 1948. They are the best years they
judged by its works during peacetime years, it must be
have ever experienced, but whether the high indexes of
regarded as anything but successful in accomplishing what
these years are to be attributed to them or to a world catas¬
it had set out to do, and what the President and his advisers
trophe is certainly a pertinent question—as is the further appear to assume that it has in fact
accomplished.
consideration as to whether any or all of the current indexes
But at points the President and the others
of production or distribution really tell the story of what
appear
to have some doubts on the point themselves. At least
Las happened during the past two or three years.
But to
they are not always quite sure that they have already
argue the case for the moment on the ground chosen by the
abolished poverty and ushered in an endless
period of
apologists (or the braggarts) themselves, let us look at the
continued peak prosperity. But if this is
record.
true, they do
not hesitate to claim, either in so
many words or else by
What has become known as "disposable income" of
plain implication, that they know how to do so. On the
the individual—that is, what he has of his income after
record, it would be a good thing if the rank and file
j paying his taxes—has just been estimated by the Presideveloped a healthy skepticism on the subject.
I
dent's experts at an average of $1,209 for the year 1948,
What Is the Record?
|
I
j
i
same
the 19-year period of roughly 37%. Statisticians
generally have not been quite so bold in coming up with
glib figures about such things for periods prior to 1929,
but there are some estimates. The Department of Commerce has estimated
per capita national income in "1939
dollars'- at $552 in 1929 and at $463 in 1910. This is
i
increase of
more
j
years
prepared and published
j
entitled "Realized National Income."
ago
than 19%. The Conference Board
nearly comparable than
v
some
It is, possibly,
other to the current
j
more
series published by the Department of Commerce under
any
the title "Disposable Income."
The Board's
planned and controlled
Such a step, in my
a
economy?
opinion, would be
of
the road
to
a
the
beginning
socialized
Certainly each industrial
properly
tell
can
State.
concern
the
business
facts of its life to its foremen and
other
employees.
industrial
concern
Certainly each
properly can
bring its story to the attention of
percentage
a
of
sales
nearly comparable rates of
do
great deal toward telling the
people of its own community of
18%.
the Real
an
apartment for his family.
in
his
normal
quality of the goods
was
price
or
available in 1929.
such differences
as
Let him try to find
class.
Let
him
an
auto¬
the
services he buys now with what
compare
It would be difficult to
say whether
these made up
for the greater apparent
gain during the past 19 years or not, but little doubt can
possibly exist that they go a long way in that direction.
we
But what about the basic nature of the
have been making? We are
now, or
the past two
a
most
in
a
half.
comparison
have been during
of
us
or
First the depression and then the
an
normal
war
denied
opportunity to keep ourselves supplied
Both
way.
the
New
Deal
and
the
war
enormously enlarged the volume of money afloat. We
are riding the crest of that tidal
wave at the
moment,
and have been
for
two
or
three
years,
and for every
dollar of demand that the New Deal with its
managed
economy has created—if it has created any at all—thou¬
sands upon thousands of dollars have been
generated
by the most expensive war creating the'largest volume
of
potential inflation history has
ever
Those
we
known.
,
current corporate
show us—what
such
can
the New Deal type of managed econ¬
had in introducing an economic millenium, we must
go back to the prewar years. The President's
experts have
provided figures for the purpose. These data are, of course,
subject to considerable margins of error, but they are the
success
omy
best
indications
anywhere
oper¬
ation in United States Steel's en¬
tire peacetime
Many
history.
that
people
a
manu¬
which to
other
pay.
is
costs
the
his
products.
threaten
and
.If
to
costs
exceed
go
his
sales
receipts, or to wipe out
endanger his profit, he has
or
no
alternative other than to advance
his prices, if this be possible of
accomplishment.
Have you even
stopped
to
consider
that, labor
along the whole
of the pro¬
course
duction line constitutes
major
by far the
the entire cost of
of
part
manufactured product? I
any
can¬
not establish the exact percentage
by direct proof, but I
to venture
bor
along
line
accounts
at
the
least
willing
am
the guess that if taxes
left out of the
are
calculation, la¬
entire
the
on
85%
of
production
for
average
the
priqe
of
American manufactured products*
Threat of. Fourth Round
Increases
/.
.
As I
of Wage,
v';'
-1
•
mentioned
a
■
-i
.
moment
V
ago,
direct employment costs dur¬
42%
of
sales dollar.
our
20-year period,
1928 to
For
1947,
inclusive, v the
percentage
has
approximately the same. Any
been
increase
in
the,
ness.
'
Since
;
V-J
Day the industry of
the nation has experienced three
lion's
the
share
the
rounds of
general wage advances,,
of
view
what
a
Let
me
We
as
been
illustration.
an
charged with
profits which
are
"exorbitant"
and
now
characterized
"of
breaking character."
cusation
is
without
fact.: Even
if
we
have
realizing
as
record-
a
Such
an
ac¬
foundation
in
treat dollars
as
being of the same buying value
throughout / the years, which of
course
is
false, the dollar profits
of
the
Steel 'Corporation were
higher in some earlier years than
in
1948.
But
the important
fact,
overlooked by many of our critics,
is that the dollar
today has a buy¬
ing
power
was
only
a
Steel
of around half what it
few years ago.
for
1948.
That figure will not be
until next week.
But
months
that
turn of
full
the exact profit of
me
Corporation for the full
I do have the
nine
I have
figures for the first
of
1948.
Our
period represented
only 5%
year
probably
1948
will
en sales.
the
remain
profit
a
re¬
For the
tional.
of
Taxes
were
taking
cost,
approximately
6.5%
The
dollar.
largest cost item is the amount set
aside for
wear
facilities.
Our
placed when
are
and
exhaustion
plant must be
it
to continue
wears
of
re¬
out, if we
in business.
That
depreciation item took 6% of the
sales dollar.
Interest
on our
term debt represented
taking
there
long-
Vz %. After
of all of these
care
costs,
sary
neces¬
remained
only
5% of the sales dollar for the pay¬
ment of dividends to our stock¬
holders
the
and
Is
that
the
in
lion's
Certainly not.
payments
during
more
reinvestment
for
business.
share?
In contrast,
or
for
employees
nine months were
to
these
than 14 times the amount of
the dividends paid to stockholders.
All of
us
have heard that prices
in general are how too
in
accord
would
that
have
a
we
high. I
mained
at
the
a
lower
high
am
undoubtedly
sounder
economy
today, if price* and costs had
percentage i ever,
the recent trend downward in the
cost of
next
sales
our
the next largest
level.
prices
of
re¬
IIow-
today
approxi¬ simply reflect the higher costs of
living index will
prove
to>
have been of short duration.
in the past a
When
of
increases
wage
new
round
other
and
ad¬
vancing costs has forced the Steel
Corporation
its
raise
to
steel,
prices, the charge has been made
against us that we took advantage
of the
duly
higher labor costs and un¬
raised our prices so as to>
obtain
of
the
will
market
It has been alleged that we
raised
than
that
all
bear.
prices to
was
the
a
greater extent
necessary
higher
to I take
employment
care
costs-
resulting from the wage increase,*
Although plausible to some, sued
an
accusation is faulty in that it.
completely overlooks the fact that
the
total
costs
services which
from
our
others
of
we
in
the
goods
must
order
and
purchase.
to
conduct
business is almost equal to our
total employment costs.
advance
As wages;
the country,
indus-?
in a new round
increases, so do the prices
across
try by industry,
of wage
j of
the
chased
from
goods and services pur¬
by United
States
Steel
these
other
industries.
have, perhaps, and in any event are mately the same. Our
shipments today> as well as the devaluation illustrate, we have all learned
the figures which the New Deal
managers themselves em¬ of steel during 1948 were the of the dollar which has taken experience that higher wages
railroad employees soon result
ploy to make their points.
Turning again to the series largest in our peacetime history. place since 1933.
Certainly the higher
we
is
followed
share
services accounted for 40% addi-
profits.
tion
announced
figures
of
up
r
which he receives from the.
money
sale
source
of
out
and
wages
absurd
.
,
the extent of
Corpora¬
year
as
achieve¬
and
pears to exist about
not before
Prewar Years
really want to know—so far
continuing
and
contention,;* ■'« The
.
the
If
activities
own
take United States Steel
three years, struggling to get goods we
have been obliged to deny ourselves more than a
decade
and
only
facturer has
manufac¬
in
each
instance
byhigher prices for most of the prod¬
ucts of industry.
Press accountsments and of the benefits to the
corporation receives from sales of of the
past few days indicate .ijhat
whole
American
people of the j its
products goes to the owners of certain labor leaders
may bq set¬
American business system.
This the business.
How far from the
ting the stage'for a new fourth
can be
accomplished through vari¬ truth is such an
assumption!
In round.
If they should be success-,
ous
media, such as public ad¬ the case of United States Steel
ful in their efforts to wring a newi
dresses, press releases, advertise¬
Corporation, direct employment round of wage increases from
ments,
radio
messages,
motion costs (that is,
wages, salaries, pen¬ American
industry, I do not see
pictures, and in other ways.
sions and social security taxes)
how this country can avoid a still
took 42% of our sales dollar dur¬
Misunderstanding Regarding
higher general price level with
ing the first nine months of 1948. further
Corporate Profits
inflationary dangers for
The cost of purchased goods and all of our
people.
In that event,..
A general
misunderstanding apits
Story
If there is anyone in the
length and breadth of this land
who supposes that these
figures tell the whole story or the
real story of the
degree of progress in these two periods
of equal length, let him
try to find a house to live in or even
mobile
a
the
was
Representative in Congress. Cer¬
tainly each industrial concern can
Not
;
of
.
smallest for any year of
k
re-,-
—
the Senators of its State and to its
over
false
general
generalwage
thing
j
in
Steel Corporation, as well as any
Naturally the profit of the Steel other'substantial advance in our
Corporation in 1948
a
record
costs, necessarily has a direct re¬
peacetime year for shipments and
lationship to the adequacy of our
sales—was larger in dollar amount
steel
prices.
While
we- would
than in earlier years when our
much prefer not to be obliged to
sales were at a lower level.
But advance
prices and thus mount to
despite this huge steel production a
higher inflationary
platform,,
during 1948, the income of the
we, like all of you, cannot escape
Steel Corporation on the basis of
from the mathematics of our busi¬
capita
figure for 1910 in "constant 1926 dollars" stood at $575
against $681 in 1929. Here we have an increase of some¬
per
how
a
the
(Continued from page 7)
of
peace
an
j
turers
took
Of American Business!
long term series
a
time
ing the first nine months of 1948:;
Spread the True Story
over
j
to
group
such
our
basis, that is. after the same price adjustments, it is
computed at $882 in 1929. This represents an increase
;
time
days both by government of¬
ficials and by labor leaders.
I
hardly need to point out to this
experienced
In the six years ended in 1929
per capita national' income
expressed in constant 1939 dollars, according to the De¬
dollars in
j
from
cent
,
Far
has been about to be abolished.
[. after allowing for price changes since 1947. On the
vanced
To-
by
to>
in
freight rate.;. During recent
Volume
169
Number 4772
each increase of
years
of
quence
increases
by
of wage
been followed
soon
increase of about
an
in the cost of
dollar
a
purchased goods
our
and services.
generally, I should
Speaking
further
that
tion's
say
increases in the
employment
offsetting
na¬
without
costs
price increases
be
can
had
only by seriously endanger¬
ing the life of the golden goose.
Business is
who
risky pursuit. Those
themselves to such
a
subject
risks are rightly entitled to the
expectation of a fair profit, when
conditions
favorable.
are
little
too
consideration
Often
to
seems
be
given by critics of business to
legitimate interests of stock¬
holders.
Their savings made pos¬
the
sible
existence
the
of
American
corporations.
United States Steel
Corporation is a publicly owned
concern.
It has 230,000 stockhold¬
located in
ers,
The
Union.
is
only
average
fairly question that
and the
ers
of other busi¬
entitled
their
respective
ated
in such
reasonable
stockhold¬
our
owners
are
nesses
State of the
every
holding of
stock of the corporation
52 shares.
No one can
common
insist
to
concerns
a
way
that
be oper¬
to show
as
a
profit, if possible, es¬
time when operations
pecially at
No
a
COMMERCIAL
total
Holding Back of Steel
false
How
to
steel
industry
holding
deliberately
production
steel
existing
prices or for any other reason.
Anyone whp takes the time to
look
current
at
can
newspapers
read that the steel
industry, week
week, has been operating at
100% o'x its steel-making
after
almost
1948, the industry
shipped 65,000,000 tons of finished
steel products—the kind of steel
which you and other" manufac¬
turers buy and use every day. I
am happy to say that this consti¬
tutes a record high production for
capacity.
In
wartime or peacetime, in
history of the. American steel
any year,
the
industry.
That production per¬
formance—and I repeat that the
high rate of steel-making opera¬
tions is being maintained regu¬
in and week out—in
all fairness entitles the rhembers
of the steel industry to high credit
larly week
for
job well
a
criticism
industry
steel
the
of
Critics
alleged
insufficiency of the nation's steel
capacity. To the uninformed it is
made to appear from their accusa¬
tions that the members of the steel
industry
are
do-nothings; that
they are blind to the growth in the
population of the country and to
the nation's increasing steel needs.
Let's look at the record.
Since
V-J Day, a period of little more
than
three
years,
the
various
members
of
the steel
industry
have
voluntarily
embarked on
construction programs to increase
and improve their steel-producing
and finishing facilities, which add
length
at
talk
business
to become unattractive
as
investors.
to
future
be
great need
There
will
for capital invest¬
ment in the days to come, that
is,
if American business is to be per¬
mitted to keep pace with what I
believe
is
the
forward
looking
destiny of this great nation^
up
Government in Steel Industry
the
-Since
President's
has
said
been
about
contained
threat
recent
entering
government
much
possible
a
therein
of
the
the
steel
While that may seem to
business.
of you a remote possibility,
I should not be surprised to learn
many
that
of
eventual
the
the
steel
nationalization
industry
along
pro¬
posed British lines is in the minds
of
of
some
critics.
our
should be alert to the
to a total cost in excess of two
dollars.
Can any fair-
billion
State of the Union message,
Industry
possible fir¬
the expen¬
diture of that vast sum of money
on
new
plants and equipment
evidences a do-nothing attitude,
or
a
disregard of the public in¬
terest, or of the steel needs of the
minded critics say that
The
nation?
construction and im¬
provement
program
of United
Steel Corporation alone, adopted
since V-J Day and now being car¬
ried to completion as rapidly as
possible, calls for the
spending of
$900 million. To give
perspective of the material¬
range program for the entry by
ity of that sum to United States
government into what has hereto¬ Steel, perhaps it will suffice to
fore
been
regarded
as
private mention that the net book value
business.
of the entire plant and equipment
We are told that the steel in¬ of United States Steel at Dec. 31,
■
dustry refuses to expand its fa¬ 1947, amounted to $940 million.
ing of an opening gun in
that
cilities;
the
long-
a
industry
steel
purposely
is
holding
duction
as
to maintain present
so
high prices.
What
down
pro¬
the facts?
are
The steel industry does not exist
as
a
unit, which
"no" to any
proposal.
say
can
"yes"
or
nationwide expansion
On
the
contrary,
the.
steel industry is made up of many
steel
independent competitive
companies, each running its
own
affairs.'
separate,
Each
one
of
these
separate steel companies must de¬
cide for itself, in the exercise of
its
own
of
its
its
will
it
not
judgment and in the light
situation, whether or
own
expand
facilities, and if
and
what
to
apparent'to
modernize
or
so,
extent.
anyone
where, how
It
must
who gives
be
any
thought to the subject that there
be
cannot
industry decision
increasing the steel-making
about
an
capacity of the country by
15 million tons
proposed
by
economists
to
a
certain
on
what
seem
be^ purely theoretical
the
Unless
Federal
intervenes, such
only
can
come
10
or
has been
government
year, as
to
me
grounds.
Government
large expansion
about through in¬
a
dividual construction programs by
individual companies adding up to
such
a
total figure.
Steel prices are among the least
inflated
of
all
present
prices.
Prices for iron and steel products
would,
for
increased
above
to
those
achieve
with
example,
by
more
now
have
to
be
than one-half
quoted in order
their* prewar/parity
farm prices.
y
-
.
than
more
you a
So much having
been said loose¬
ly about a shortage in steel-mak¬
ing
capacity, I should - like to
point out that what the users of
steel throughout the country are
interested in is actual steel pro¬
theoretical ca¬
pacity figure.
However, I will
quote a few capacity figures.
In
1929, the United States had a total
steel-making capacity of 71,400,000 tons of ingots. Ten years later,
in 1939, that capacity had grown
to
81,800,000 tons of ingots, an
increase of more than 10,000,000
tons.
And now after a further
lapse of 10 years, this country had,
as
of Jan. 1, 1949, a. capacity of
96,120,930 tons of ingots. Nearly
five million tons of ingot capacity
brief pe¬
summarize,
the steel-making capacity of the
nation
has increased nearly
15
million tons during the past 10
have
been added in the
riod
since
a
1947.
To
growth of 17.5%.
which will add two
Plants
million tons of
capacity are
further steel-making
scheduled for completion in 1949.
About
600.000
tional steel
tons
addi¬
of this
capacity, which is ex¬
pected to come into operation dur¬
ing 1949, will be in plants of
United States Steel.
I am aware
that
capacity f'gures of this char¬
acter may nc? convey a
of
further
ment
meaning to
picture which I
costs
least
at
are
what
steel
new
mills at this time is bound to
they were a few
Maybe
the
taxpayers
you.
ago.
will
asked to foot the bill for
be
steel
new
sume
kinds
supply
will have
been
adjusted.
of the difference between
12 the proposed mills are to be of
they
sufficient size to meet the pro¬
rent.
a
jections of the government
mists,
serious problem must be
a
in
met
the
materials
of adequate
way
and
skilled
of
econo¬
sufficient
a
labor
raw
supply
to
operate these
At times during
large new plants.
ilar
facts
and fancies that
are
are
nies and other industries.
I have
greater respect for the good will
and
common
of the Ameri¬
sense
can
peoplq than I have for
the
stories that reach the general
dustry
reason
unable to operate
plants at full capacity,
the principal reasons for
were
steel
of
one
this
state
of
affairs
being
scarcity of satisfactory
rials.
Construction
mate¬
raw
and
the
equip¬
am
great deal
trying to paint
increase of 15,000,000 tons of
steel-
many
and
duty
are
For that
to
neighbors with
the
and
to
open
businessmen
are
is
of
I conceive that opportunity
American
acquaint
the facts
truth
it
as
their
they
as
is.
I
am
hopeful that the truth will prevail.
agencies operated
will sell longgovernment obligations to
by- the
term
Treasury
institutional investors in order to
prevent
sharp decline in yieldu
a
government obligations.
on
(6) Finally,
since
the
2V2%.
on
long-term
government
obligations
may
be
taken
for
granted, this sets a pattern for
rates on high-grade corporate ob¬
ligations. In view of the fact that
rate
the
Congress has been asked
impose new taxes, it is hard
ernment
almost;
equal
to
the
in
of
rates
obligations
further increase
Government Bond Outlook
to
to
believe that the monetary authori¬
ties will be willing to permit &
further increase
on
which
the
debt
gov¬
will
burden
the government.
Conclusion
And Interest Rates
tivities of the Reserve authorities
This
bonds and that
(Contniued from page 12)
private investors and by
furnish
to
be
can
invested
influence
so
doing
The
elsewhere.
creased
Treasury is even
the
legislative
surplus and it uses
redeem obligations held by
to
supply of capital, short-term
well
as
of the
budget shows
The
that
sums
when
greater
it
with
them
a
through
to redeem
gations
banks
the
held
this
total
the
leads
to
excess
the
commercial
reduction
of
volume
increases
When
government obli¬
by
balances.
reserve
surplus
in
deposits but
is
utilized
to
by
in¬
ac¬
was conclusively proven dur¬
ing the war, when the huge de¬
mands for capital by the govern¬
and the Reserve banks.
used
be
the
can
decreased
or
ment
surplus of the Treasury is
long-term,
as
others than the commercial banks
If the
No matter from what
angle one
envisage
at
present any material change in'
money rates or in prices of gov¬
ernment obligations.
It is, how¬
ever, possible that the spread be¬
tween the yield on government
to
were
which
commercial
banks
enabled
the
were
large
large extent met
a
absorb
of
amounts
to
newly
issuec
government' securities because
of
the open
market operations of the
Reserve
banks.
reason
or
again
be
Should
for
some
another the government
in
need
huge
of
sums
looks,
cannot
one
bonds may
AAA corporate
on
witness
minor wid¬
a
ening, particularly if
of the
large institutional investors should
continue
policy
follow
to
of
not
government
not
there
the
their
selling
bonds.
will
be
present
long-ternv
Whether
or
change in
any
between
spread
and
some
short-term
long-term government obliga¬
tions is impossible
to
cause
to predict, be¬
large extent this will
a
depend on business activity, the
maturing obligations held beyond its revenue, one may take
for
loans
and
possible
it for granted that the policies of demand
the Federal Reserve banks it
the Reserve authorities will' be changes in reserve requirements.
leads to a reduction in
redeem
by
deposits
well
in
as
reserve
balances
as
and
repeated.
The consequence of this
thus prevents too drastic a decline
action need not be discussed here
in
be assumed
of certainty
that the compensatory budget sys¬
tem will be followed by the Gov¬
yields
on
high-grade bonds
actually occurred during the
greater part of 1947.
This
When the
a
deficit
which is not larger than the
excess
receipts
Treasury has
expenditures of the
over
trust funds, it is unnecessary for
the Treasury to offer new securi¬
ties
market
the
in
and
this, too,
affects the supply of bonds. If the
Treasury has a cash deficit and
has
the
obtain,
to
from
the
additional
it
market
capital
and
money
can
funds
influence
markets
Moreover,
a
fair
it
with
in
ernment
may
degree
the
future.
Should
business activity and employment
decline, one may expect that the
budget will show a deficit, that
requirements will be low¬
reserve
ered, and that the banks will thus
be
enabled
amounts
tions.
to
of
acquire
large
government
obliga¬
Again, it need not be dis¬
here
cussed
whether
mercial
banks.
It
is
therefore
Treasury
considerable
money
evident
the money market are very great
influence
on
and capital markets.
It
that they did not hesitate to
them.
and
use
As
that the
and does exercise
can
the
far
the
the
as
cerned,
one
future
policy of
authorities
Reserve
a
can
is
con¬
the
reduce .it,
tions
as
which
and
offers,
can
deter¬
without
them
material
loss
and
mine whether
they will be bought invest in other securities, thus in¬
the
by commercial banks or institu¬ creasing
supply
of
funds
tional investors.
available for investment.
(3)
The
policy of the government
concerning guarantees of mort¬
gages as
well
as
the policy of the
gress
It is fairly certain that Con¬
will grant new powers over
the money market to the Board of
Governors of
the Federal Reserve
Housing Authority and
Should the forces of in¬
other
lending and guaranteeing System.
agencies also exert a great influ¬ flation again become accentuated
ence
on
the demand for capital and the spiral of wages and prices
and
mortgages. ' Many mortgage be renewed, it may be assumed
loans have been made by institu¬ that the new powers will be used.
(4) If business activity should
tional investors during the past
Federal
few years only because they were
insured by the Federal Housing
Authority
guaranteed by other
agencies of the government. With-,
out this insurance and guarantees
it is evident that these mortgages
would not have been acquired by
or
decline
tion
than
and
should
is
now
quirements.
broaden
the
and
of the
The Policies
of
the
Reserve
Authorities
of
forces
defla¬
pronounced
more
envisaged,
one
may
expect that the Reserve Board will
not hesitate to lower reserve re¬
country
investors.
the
be
'This
in
credit
.
base
increase
the
of
the
ability
banks to absorb short- and
the
government
but
also
of
and cap¬ states, municipalities and corpora¬
.n
ital markets were primarily under tions^
the influence of the policies fol¬
(5) A decline in business ac¬
lowed by the Reserve authorities.' tivity of proportions greater than
During 1948 the
ligations, will offer some mediumterm
obligations to the banks.
The stability of the government
bond
market
the
of
fear
obligations
enable
money
and
the
elimination,
that
prices of these
go below par will
may
the
banks
long-range
to
establish
investment
a
policy
suitable to individual needs.
Washington Stock Ex.
Elects New Officers
WASHINGTON,
annual
D.
C.—At the
meeting of the Washington.
Stock
Exchange
officers
President,
Thomas
&
following
the
elected:
were
Joseph
L.
Anglin,
Coe; Vice-President,
Kreeger,
Robert C.
P.
Jones & Co.; Secretary,
Joseph K.
Auchincloss, Parker
& Redpath; Treasurer, Austin B
Rohrbaugh, Rohrbaugh & Co.
Members of the governing com¬
mittee are the officers, Bernard J.
McCammon,
Nees, Johnston, Lemon & Co., the
retiring President and Chairman,
of the Committee, Thomas Mont¬
gomery,
Ferris & Co., and Myles
& Sons.
H. Quail, Alex. Brown
Los
Angeles Analysis
Reelect Fruehling
LOS
ANGELES,
ter! Fruehling
Durst, Inc.,
dent
of
of
the
of
was
Los
CALIF.—Wal¬
Wagenseller &
reelected Presi¬
Angeles
Society
Security Analysts at the annual
meeting,
the
Other
Society
new
announced.
officers
include:
August Slater, Wm. R. Staats Co.,
Secretary;
and
Walter
Podolak,
Stern, Frank & Meyer, Treasurer.
medium-term obligations not only
of
any
only minor
be expected that during the
year the Treasury, in re¬
funding maturing or callable ob¬
will
turn
respect
take place will
in character. It
current
Mackall
supply of
it
this
may
may
is safe in making the
following statements:
(1) Government bonds will re¬
funds as
V
through main pegged.
(2) This
will
enable
holders
fixing the rate of interest, the
maturity and eligibility of obliga¬ of government obligations to sell
increase
well
in
even
change that
this
not
or
policy is sound/ It is sufficient to
materially by the type of security
recognize that the powers of the
it
offers, i.e., long-term bonds
Reserve authorities to
influence
non-bank-eligible or short-term
eligible obligations which will be
acquired primarily by the com¬
But
be
.
making capacity during the past
years
| stances that the
compa¬
public from day to day.
their
as
cur¬
I suspect that there are sim¬
divergencies in other
1948, the members of the steel in¬
Perhaps the
will be clearer if I state that such
10
is expected at present will
by it¬
self reduce the demand for
capital
and create a serious investment
double
years
41
problem for the large institutional
large amounts of steel of the mill construction, regardless of the investors. In this event it may be
now in short supply.
Such soundness and necessity of the in¬ expected that the Reserve Bank:*
new
mills cannot be constructed dividual projects.
| will sell some long-term govern and placed in operation short of
My references to United States 'ment obligations to the institutwo or three years.
Steel Corporation and to the steel tional investors and acquire shortBy that time
I am hopeful that the present un¬ industry have been for the pur¬ I term obligations.
It may also be
balance between steel demand and pose of citing specific illustrations anticipated
under these circumcon¬
and not a
duction
years,
en¬
(469)
about the
^
approach maximum capacity. In¬
dustry should not be so denuded
of
profit during days of good
CHRONICLE
and not to
done,
abuse.
or
FINANCIAL
present capacity of the
Building
is
of
down
sustain
to
it
ridiculous
and
the
accuse
&
tire British steel industry.
Production
as a conse¬
round
new
a
has
dollar ir.
a
employment costs
our
THE
Directors in addition to officers
are?
Hartley Smith, Dean Witter
Co.;''Jack Laznick, CrowelL
Weedon & Co.; Kenneth B. Sam&
sort, Bateman, Eichler& Co.; Rich¬
ard
T.inlr
Rlvth
AJr
fn
Tn<v
/
42
COMMERCIAL
THE
(470)
&
After the Turn of the Year
Business and Finance Speaks
Development of the use of nickel de¬
trical appliances.
other chemical engineer¬
ing items, salvage of worn parts, plating on aluminum
and on non-conductors such as plastics and wood con¬
posits in lining steel pipe and
results.
tinue to show favorable
Nickel Alloy Cast Irons
in the production of
engi¬
neering nickel cast irons has continued to increase.
alloys, known for their strength and resistance to
are employed for components'of machinery.
These
The amount of nickel used
and
iron
The
mining industries in
copper
their consumption of
have increased
ing, milling and other equipment.
martensitic white iron containing
products for shipping drums of nickel, Monel
and Inconel for batch shipments.
As a result of continued research and experiments
of chemical
(Continued from page 6)
wear,
particular
Ni-Hard for grind¬
Previous to 1947, this
nickel had been used
consumed
chiefly in rolls for the steel industry which
75% of the total production of these irons. Although the
steel industry's roll requirements have continued at a
at
Huntington Works
our
in
it is now
West Virginia,
possible to produce extruded seamless tubes in diameters
up to 9V2 inches. Prior to the war the largest extruded
sizes "available
were
5 inches
in diameter.
Nickel,
Monel and Inconel tubing in these large sizes are re¬
quired by many industries, including petroleum proces¬
sing and refining. Among other applications are table
rolls
for
paper-making machines, sleeves for large
diameter snafts, stems for large valves, pump liners,
rolls in machines for pickling pr cleaning steel strip,
cylinders in quick freezers, rolis in glass plants, and
a
diversified number of uses-in chemical, food proc¬
essing and similar plants.
The television industry's expansion has been reflected
in the increased use of nickel and.-nickel alloys in this
field.
Hot cathodes made of pure nickel are used in
television camera tubes and the large picture tube in
high rate, other uses for Ni-Hard have increased so rap¬
idly that 'in 1948 more than 55% of the total production
was consumed in these newer fields.
the home receiver.
Ni-Resist, a nickel-containing austenitic alloy of high
corrosion-resistance, has shown expansion in the United
States and Canada in new fields of application. Produc¬
tion items in Ni-Resist have become more -numerous.
The power, aeronautical and marine fields used large
quantities of Monel during the year. Valve trim, espe¬
piping is being successfully
States and France, and the elec¬
trical grid market for Ni-Resist is also developing in
those countries. Large quantities are being used in the
United Kingdom and on the Continent in oil refineries
and interest has been noteworthy in the textile dyeing
Centrifugally cast Ni-Resist
produced in the United
■'
field.,
interest in the manufacture and applications
nickel-containing cast materials is developing. One
of the main fields is alloy cast irons for use in the ce¬
ment and other industries.
In Indiana
of
"'•
'
■
/
-
'■ ..V
-
Iron-Nickel Alloy Specialties
alloys,
iron-nickel
The
nickel,
in
were
containing from 30 to 80%
materially increased1 demand by
the
electrical, electronic find control equip¬
ment.
Their unusual thermal expansion properties ac¬
count for their universal use lor the low expansion
element in the millions of thermostatic devices manu¬
factured annually, while their uniquely high magnetic
manufacturers of
permeability makes them invaluable to
cations, electronic and radar industries,
the communi¬
(
.7
nickel-containing alloys used for
permanent magnets continued to be employed in in¬
creasing quantities. Powerful magnets of relatively small
size manufactured from these alloys have a myriad of
applications, including loudspeakers, controls, electric
motors, novelties and household appliances. ;■ 77.:?;.7,
The Alnico series of
*
Corrosion and Heat
chemical and ceramic industries.
in petroleum,
as
electric resistance alloys containing 80%
20% chromium have been in steady demand
nickel and
The increasing dependence of the United
Canadian household on electrical energy
during 1948.
States
and
potential growth of the use of these alloys
in a variety of electrical appliances.
indicates the
for heating elements
England, continue to remain the standard accepted alloy
the
for
;;';7
^.77 Coinage
■
.
replacement
into
came
use
countries the return
alloys for subsidiary
tion of the monetary units in many
the
to
of
use
coinage is
nickel
and
nickel
well defined trend.
a
During 1948, three governments adopted pure nickel
for two
or
more
of their subsidiary coins, namely,
Netherlands, making a
total of 41 countries which have used pure nickel coins
to date.
Many other countries have resumed the issu¬
ance of the popular cupromickel alloy coin,
the use of
Pakistan
Hyderabad,
which
and
The
interrupted by the
was
of
aircraft
all
for the combustion chamber
in present produc¬
These alloys are used also
components of turbo-jet and
Inconel "X," which is
produced at the company's Huntington Works, is em¬
ployed in the form of large billets of approximately
1,000
for
pounds
machining 4nto turbine
and
forging
rotors, and also as bar stock for gas turbine blades and
w~:
bolts.
•
Another product which has made important
contribu¬
tions to
industry is Ni-Rod, a welding electrode devel¬
oped primarily for the welding of cast ironsvln the sal¬
vaging of new castings and the repair of old castings,
Ni-Rod is saving many hundreds of thousands of dollars
annually in production apd operating costs...7
war.
for
present outlook is for
nickel, Monel, Inconel and other high nickel
.alloys in rolled, drawn, extruded and other forms have
found
continued
applications where their ability to
enjoy
should again
satisfactory year.
a
chemical
The
of these alloys,
and
allied
industries
were
large
users
general trend toward the use
of
continuous methods of production which usually
requires higher operating temperatures with shorter
equipment life.
These factors place greater emphasis
sharing
a
life rather than initial cost.
on
ucts has led
to the adoption of new processes involving
employment of high nickel alloys. Among these
processes is the recovery of ammonium sulfate for fer¬
the
tilizing
involves
corrosion
moderately
to
be
an
from
purposes
as
elevated
coke
well
gas
as
in
steel
erosion
temperatures.
and
plants which
exposure to
Monel
has
proved
economical improvement over other materials.
There has
been
a
strong demand in the transportation
the
losses
have
socialized
been
sprea<jl
and
•,
large section of the population rather than over
a
single group.
•
international
This
j
has
assistance
created
violent 7
a
affairs. We were faced with the
stupendous problem of rebuilding our own visible and
invisible inventories, but in addition we were burdened •
with the requirement of siphoning a large part of outoutput into foreign channels. The composite result of
these
two forces has extended
our
boom
condition^,
exaggerated a
tendency toward an increasing price*
structure, and, in the aggregate, created a perfect back-* 7
ground for recurring labor demands that in themselves
impact
our
on
own
elation tendencies that
the
stimulated
the
economy
has
experiencing. A wonderful job has been done.
question is whether we have not done too
good a job, or at least whether we have not done a good
job too rapidly,
: v'7 ;v.yy
• 7-'-7•
indications
the
Consultant,--{£hicag:o
given by The
Economic Trend
on the economy wh%h have been
after week for one of the longest
20 years. For three
the pressures
flected
week
accumulating
tired
often
have
We
ourselves
whole
The
As
-
results have been, the necessary 7
achieve these results carried seeds of greatV
impressive
to
as our
.
147 mil¬
people faced invisible inventory shortages of great
moment.
Our closet shelves were bare, but our saving \
accounts were bulging, and a frantic demand to make 7
economic
In the first place,
significance.
our
lion
up the shortages with the funds available showed dis¬
tinctly in the market places of the country. We were1'
not
demand
but semi-dur¬
With this 7
substantial additions for capital goods',:
of consumable materials
only short
ables had
unavailable for several years.
been
facing
us,
creation also had to be faced.
During the past 12 months $18.6 billion has been spen,t77
new plant and equipment.
In the three years since.'*
1945, the total has approached the astronomical figure of
on
Currently," the annual rate of spending for !
than three times the 1940;*
$46.8 billion.
this purpose is running more
level.
far
As
consumables
as
have
inventories
been
,
are
concerned,
built up
so
invisible7
the
that tnis great pres-o
is
is
possibly
substantial,
very
before
ever
experienced.
higher
than
havej
we
Our total visible inventories,*
too, outrank anything the country has ever experienced,,
both in'value and in units, and at all levels of produc-7
impressive
as
preparedness program had to be faced that already has
made and which will continue to make substantial der-7
ductions from our own pool of
These
are
the
production.
*
1'acedA
undertakings that our economy
the accomplishments seem worth while,>.
the balance sheet that has 7.
considered.
Through our efforts we have not i
first blush,
At
by
-ft-
all this is, we had two other musts :
to be added to oar list of requirements.
First, many *
billions of dollars in peace production, which might have ;
satisfied our own wants, had to be siphoned into other
economic spheres, and then, to top the matter, a new
As
Line, it is clearly apparent that the Line J$as truly re¬
is another side to
there
but
using the same remark, and yet, the
decadence reflected by the banking
to
figures has been unmistakable, giv¬
ing us no relief from indicating the
greatly increased our cost structure. As individuals, we
have also added greatly to our liabilities, and we are
conservative
of
need
them
the
which
that
in
we
Line
were
and
down
bank
figures as
The
constructing
Trend
nomic
This
action.
that
we
•
Eco¬
record and in this factor, some
D.
Tripp
change the pattern of re¬
adjustment after World War II compared with the in¬
dustrial activity that followed other well documented
war periods?
Literally the pattern has not been changed,
but it has been extended, and this has resulted from
man-made actions which at the best are only palliatives.
pattern, compared with the period after World
only varies in duration and degree, but the stim¬
ulating influences that have entered the scene in the
last two years have been far more potent in their reper¬
cussions than in the former period.
a
violent uprush in com¬
modity prices after the termination of hostilities follow¬
On both occasions we tried to
the world economy through foreign lending
and giving. At the end of World War I, we went through
a
period of buying the bond issues of many of the
countries that were short of dollars. We bought the se¬
ing World War I and II.
of
both
friends
and
enemies,
it is well
securities
were
eventually defaulted due to the inability of the
borrowers to
procure the necessary
exchange in the
and
world markets to service the debts.
but,
toward
more than is required to keep up the
perpetual boom conditions?
Any tendency *
letdown might relieve these shortages quite 7
they
are
of
illusion
a
Perhaps, some of the shortages them^
only relatively serious even as the boom con^;
substantially.
selves
are
tinues.
....
Following World War II, with the default experience
pattern
than
in
three important particulars.
have been
loans
more or
demanding
changed
our
First, the ad¬
less in the form of gifts rather
service
and
••
*
;
.</
.
v
the need of caution is no longer^
an
academic question. The Economic Trend Line has..,
been warning
its followers of potential trouble for,/a
As
we
enter
period.
long
1949,
Now the maladjustments are a matter.**^
to many groups involved in soft goyas-7
serious concern
production.
Even the semi-durable industries are*low1-*)
ering their sights from those of a few
months ago. The 7
question is whether it is possible under such
to go
whole
the
conditions^
into a period of minor adjustment and not disturb
contraction
economy,
is
a
or
more
whether
a
substantial
rather
reasonable expectation.
Histori¬
cally, the latter alternative would seem to be the greater
of World War I staring us in the face, we
vances
elements of cutback are /
beginning to appear as necessary, and this period of
production adjustment comes at a time when nlost
commodities are in superabundance and when the price
structure is at a level which historically has proven to
be vulnerable.
To be sure, some shortages Still exist,
support
within the memory of many of us that these
!
Our visible inventories are the largest on
with demand.
Chester
reasons.
experienced
negative aspects of the ecori- '
that our "Note of Caution" continues to take form.
Our very accomplishments have, as it were, accentu¬
ated our weakened statistical position.
Our invisible
inventories in most categories are pretty well caught up
least, was in order.
This con¬
traction, however, has been delayed
and
postponed for fairly
obvious
economy
It is in the realm of these
omy
at
Our
in our i
.
,
approaching a let¬
some
readjustment,
Just what has happened to
but we have
tending to find more and more serious shortages
working capital requirements.
indicated
have
be
only greatly increased our price structure
period has been one dur¬
use
curities
Industry's constant effort to recover usable by-prod¬
a
tion and distribution.
Coppermines Corporation
President, Consolidated
From
.
TRIPP^S
D.
and Industrial
Economic
1949
withstand
corrosion, heat and other severe conditions
made them more economical than lower priced materials.
over
into
Thirdly,
years.
deficits),
it
continued strong demand
a
War I.
Malleable
thought were generous 7
we
beginning to relax. What the "figure for our *
invisible inventory is, is impossible to determine, but
the nickel industry in
nickel, in which event
The
Mill and Foundry Nickel Alloys
which
I, have faded into insignificance comr,
the world economy in the past j
following World War I, the aid !
programs were financed for the most part through pri-7
vate channels and the losses incurred by foreign bond
defaults fell only on the investing class.
However, in \
World War II, the rehabilitation programs have been "!
undertaken by the Federal Government.
Thus, to tnJ/
extent that tne.y have been met by heavier taxes (or
three
sure
:7 77'J'';'
Outlook
The
ing
of the emergency coinage alloys
during the war years is proceeding,
and while basic reforms must wait upon the stabiliza¬
The
which
blades
rotor
tion in the United Kingdom.
extended
,."..'7
War
directed
have
we
action
stretches in over
Resistance Alloys
Electrical
advances
pared to the tremendous volume of our production that
The special nickel alloys for gas turbine and jet appli¬
cations, such as the Nimonic alloys and Inconel "X," are
being produced in increasing quantities. The Nimonic
alloys, produced at our Wiggin Works in Birmingham,
full years, we have ended our weekly
Comments with a "Note of Caution."
The wrought
the
World
after
been
were
high strength are required. The alloys are employed
in the heat treatment of steel, as well
use
parts.
ondly,
where low steam pressures are involved, em¬
ployed considerable amounts of Monel. Mopel tubing
for high and low pressure boiler water preheaters has
been found to be a big factor in improved operating
efficiency.
v;;*7
CHESTER
for furnace parts
tubes in the receiver
cially
nickel-chromium-iron alloys.
of
vacuum
nickel for cathodes and structural
Resistant Cast Alloys
recorded this year for the
There also was an increase
in the number of applications of these alloys where
resistance to high temperature corrosion and retention
Increased. tonnages
All the
amplifying tubes in the transmitter
turbo-prop engines for aircraft.
.-7
>. ■'
and most of the
Thursday, January 27, 1949:
CHRONICLE
FINANCIAL
repayment.
Sec¬
probability.
that
the
However, many still cling to the
possibility
stimu-\
continuing effect of the non-recurring
lants, such as armament and foreign relief, might pose
an
orderly
decline.
It
seems
to
us
that
the
country
Volume
THE
Number 4772
169
COMMERCIAL
&
FINANCIAL
CHRONICLE
(471)
toward
will have
of
the influence of
maintaining their so-called gains, either in terms
or take-home pay whichever argument suits
in point. "
The facts we face clearly make it possible to have the
is a necessary requirement to support the economy and
is not an actual inflationary force.
adjustment less precipitous but longer in duration than
might have been the case. It is going to complicate the
The months ahead present serious problems for many
and our conclusions, as we analyze the facts, are about
problems of manufacturers and distributors and is in¬
as
follows.
Price declines are in the offing and some
evitably going to produce some losses, probably sub¬
of these declines will be rather severe.
Some cutbacks ^ stantial losses, for the holders of extended inventory
in
industrial 'production
positions. We think it is a fair assumption that the peak
are
going to be - absolutely
of inventories in all1 positions will be reached early in
necessary
and : in the long run, *;: these cutbacks Will '
check -inventory accumulation, but, at the same time,,. 1949, if it has not already-been passed. As liquidation of
will reduce the national income and curtail consumer
inventory proceeds,,business loans should decline. This
1949 with a declining vigor in its pro¬
ductive-possibilities.
Less is heard of inflation, and
more .and more is heard that governmental expenditure
enters the year
dollars
the
case
As
•
'
tne
realistic.
come
There will be
tend
to
develops,
process
Increased
labor
but
will
demands
and the screening of credit risk by our loaning
will receive progressively more emphasis.
With a return to buyers' markets and growing inventory
The Commercial Banker
combine
soundness with
underlying
attractive yield.
an
an
15)
page
buying securities of inferior qual¬
ity^ under favorable general
ment"
.
to
recommend
of
component
stocks
for
them,
and
leading
the
Undoubtedly
substantial
a
common
defensive
these
investor.
carry'
,
with
assortment -of. financial
an
psychological hazards.
But to
compensate for these they offer a
goodly
of advantages—sub¬
array
stantial
income
yield, probability
of ultimate rise in value, and some
issues.
These
to be
prove
market.
say
It
is
difficult
to
his
own
decisions.
factors:
contain
(a)
the
following
They belong in' con¬
servative portfolios,
they
limited
are
to
(b) provided
a diversified
first
into
moves
a
sis
indicates
general
the
that
are more
high
side.
stock
prices in
the low than
on
So—to
offer
one
enough for true-blue investors, re¬ conservative as they have to be
gardless of what they may portend for safe operation, we will have
for the speculative fraternity.
to continue to look to. the Ameri¬
.
investor's
an
attitude
to¬
sel—let
observe
me
market
wards his holdings.
levels
that
are
Let
me
define
long
the investment habits of
institutions and banks remain as
as
Once
such
of : common-stock
an
attitude.
value which
are
proper
obtain it is by
increasing the com¬
independent of market 'fluctua¬ ponent
of
high-grade
common
tions, and he buys and sells in ac¬ stocks and not i by throwing in
cordance with such standards. The lower-grade senior securities. This
only significance of stock-market is untraditional, and it may seem
gyrations to the true investor is unconservative to some of you.
that they give him an opportunity But it is an axiom of investment
to buy good common stocks when that
securities
should
be
pur¬
they are cheap—or at least rea¬
sonably priced—and at times offer
chased because the buyer believes
in their soundness, and not be¬
him
cause
an
invitation
sell
to
out
at
temptingly high levels.
he
needs
certain
a
income.
If
Government bonds, good taxexempts, and first-line common
stocks comprise the sound ingre¬
The chief hazard of a careful dients of a security
portfolio, then
common-stock program is not that logic requires that the investor
it, may bring unexpected losses, obtain the yield he wants by mix¬
but that its profits will turn the ing these ingredients
only. In sim¬
investor into a speculator greedy ple terms, I advise you not to put
for quicker and bigger gains—and that 30%-40% of a
typical fund in
therefore headed for ultimate dis¬ corporate
bonds
and
preferred
aster. The commercial banker can stocks, but to split it in any
pro¬
help to inculcate a sound and sen¬ portion the investor pleases be¬
'The Chief
sible
investment
common
stocks
among
substance and of
people
moderate
base.
of
tween
and
real
only to the
great
mass
not
more
more
of investors, but also to
security arrangement is no
substitute
for
a
capitalization
which
its
cover
service
debt
and amortization
even
by a comfortable
while weathering the
uncertainties of the business cycle.
A good equity base for industry
is not the
of management
concern
alone, but of all whose welfare
depends on the sound operation
of business.
common
I
think it obvious that much of
the hope for an expanding equity
base for American business lies in
maintaining the
securities
serving
bonds
with
sound
criteria of underlying value.
me
Let
me
recur
portunities the
man
that
ties.
stocks.
briefly,
now,
sustained
requisite
way
In both cases
rience
through
Suggestions
for
the
end
Commission
itself open to conference
and suggestion.
It maintains con¬
tinual studies of the requirements
and of the way they work in prac¬
tice
and
is constantly engaging
keeps
to
security
and
to
op¬
the business¬
native
success.
expe¬
ability
In
are
neither
of additional stock to exist¬
surers
ing stockholders.
decisions
in
contro¬
efforts
Our
with review
VOte.
tions.
For
Capital Maiket
and
confidence
the
and
permanent
A
sensible
man
pig in
a
poke
seeks additional equity
capital its first recourse is, gen¬
company
erally,
of
risk he
wants
risk.
the
to
With
take
his
protection
a
be,
to
which
in
its
the
an
Dow-Jones
flow of
equity
from
buy
gen¬
calcu-
he
these
markets
against
and
abuse
abuse
of
the proxy machinery.
You
cannot
maintain
to know what they
are
buying and are assured that their
rights as security holders will not
be
manipulated
behind
closed
doors.
I
do
be
not want to
understood—I
have
policy, and the laws
we
mis¬
personal
no
administer
policy against honest
and
informed speculation.
Our
function is to provide the means
express
no
for informed decision
and
as
to
buying
selling.
In
open-minded and flexible
as
forthright.
sound
as
well
Over-regulation
which impedes financing without
a
is
and
disservice
a
to
rather
service to the investor. The
administer
we
American
they
protection
significant
investors
^
tate
are
not
of investment;
designed to strengthen
system
to
it.
revolutionize
flov^
the
To
of capital, we must
become
problems
.
stopped
a
live in
a
chang¬
problems
obsolete
as
have
been in
ments
and
with
new
and
reach
ourselves
aware
of
seg¬
interested
profes¬
to be able to
hope
we
which
recommendations
would
not
only protect investors
but substantially facilitate securi¬
ties distribution by doing away
certain
with
securities
restraints
of
which
have
distributors
long
complained.
Taken
the
as
interest
rect
the
to
work
be of
of
di¬
commercial
To mention one phase of
banker.
our
whole the
a
Commission should
work bearing
commercial
directly
on
the
banking function:
companies whose internal
accounting,
auditing,
reviewing
many
reporting systems were in a
and
sorry
state before passage of these
laws
have
forced
been
to
over¬
haul their record keeping and re¬
The path of the
porting systems.
commercial
banker
in
assessing
appraising a proposed loan
has been materially smoothed in
and
cases as
many
quirements
result of the re¬
administer.
No
a
we
commercial banker would want to
see
deterioration of these
a
sys¬
auditing and
reporting.
As an investor whose
transactions are likely to be large
and significant he has an interest
of
tems
accounting,
in their continual improvement.
Because
is
made
complex
our
up
of
so
many
economy
interde¬
pendent factors; because the lend¬
er,
well
as
the
as
owner
and
has a stake in the proper
financing of business and in the
maintenance
„of
sound
capital
manager,
markets I think
that
the Securities and
to
has
our
work at
Exchange Com¬
a
particular value to
I hope I
have, in the short
mission
time
keen
of
committee
a
sion
Only constant vigil¬
new
all
members of the securities
you.
and
touch with
the
of
public interested in
the
operation of the Securities
Act.
As you may have noted we
have
recently
been
conferring
policies
arise
needed.
to
we
Old
world.
policies
ance
not
rules and regula¬
engaged
the
assume
keep these laws useful, to facili¬
are
a
can
who
chance
ing
information, the prevention of
position
steady
and stable
come
only
are
given a
money
investors
of
protection
A
index.
equity
remember that
inside
suc¬
equity holders have
interest in the growing
enterprise rather than a slice of
bought
laws afford through the provision
of
of
rights offering is likely
large part, the extent
a
to
security
measure
tion of these requirements must be
the
equity
that
existing
And the
pre¬
erally, Cf he is being asked to take
a
its
to
holders.
passing let me make it plain,
too, that I believe that administra¬
of
But,
equi¬
our
may
once.
market for
ties by appeals to cupidity and the
desire to take a flyer.
When a
cess
have
of
long time we have
in a study of the
operations of the statute itself. We
laws
opportuni¬ fraud,
training,
dle the details of rights offerings.
The new rule does away with a
versial matters submitted for their
than
a
aggressive in¬
looks for business
by far the largest losses have been
investors
Open
that
t
businesslike
forthright administration of the
requirements
of
the
securities
wants
My experience teaches
markets,
of
in
a
vestor should look for
cre¬
the
By a simple ad¬
experienced men of affairs, can do justment, hedged with limitations
your share in this work by giving we think necessary for the protec¬
open-minded attention to stock¬ tion of investors, we have elimiholders' problems as they are re¬ | nated unnecessary effort and ex¬
ferred to you,
and by assisting pense in at least one field of
your
clients to reach effective, securities distribution. ^
,
adding
and techniques. The
itself, which
holders in matters of controversy
with their managements. You, as
maintain that confidence through
persion of equity ownership
in: accordance
integrity
American public in those markets.
It is the Commission's job to help
would benefit from the wider dis¬
economy
by
can
margin
lated
ated
The
vised
the field of aggressive investment,
without
detailing its principles
.national
SEC
preserve
laws.
practice of many years standing—
finally bestir them¬ but nevertheless not sacrosanct—
selves in this important area, and which resulted in the duplication
take the lead in guiding stock¬ of prospectuses in offerings by is-
laws.
Government
The Business Approach
This would
be a
the
substantial equity
most ingeniously de¬
a
means
throughout this land.
service
for debt than
Hazard
attitude towards
securities
can
usefulness of
others—will
(Continued from page 13)
coun¬
current
attractive
we
have established the can private investor as a market
psychological approach to for equities.
A common-stock investor is one common-stock
investment,
it is
who
regards his common-stock possible to deal more rationally Importance of Substantial Equity
Capital
holdings as a proprietary interest with the problems of "the required
in various businesses,
This is a problem with which all
not as a rate of return." If the fund really
series of quotations in a news¬ needs an overall 4% instead of the of us have a 'direct and vital con¬
paper.
He has rational standards more usual 3 to 3^%, the way to cern. There is no better security
•
the investment
as
funds, investment counsel, the so¬
cieties of security analysts, and
The SEC and the
market
level, and (d) provided
buyer is ready and able to
them
been
piece of concrete investment
take
unwholesome.
is
meet
to
continuing
To
in the past two years. Sober analy¬
of first-line or leading com¬
panies, and (c) provided they are
bought at a reasonable generallist
the
situation
agencies—such
exactly when the market level
•
will
This
problems of legitimate busi¬
and to keep ourselves flex¬
the
what it is all about.
But
There is
a
final
point to be
dangerously
made in the matter of commonAs I read our financial history of
high area. But your own experi¬
stock investment—whether by the
the past 50 years, it strongly vin¬ ence is undoubtedly broad enough
dicates a common-stock purchase to tell you—at some stage of the defensive or the aggressive group.
It is notorious that stockholders
policy based on the investment proceedings—that the stock-mar¬
do not take an alert and intelli¬
approach—-just as it strongly dis¬ ket's enthusiasm is outstripping
gent attitude toward stockholdercourages
all forms of common- its prudence.
management problems. If they get
stock
speculation.
Furthermore,
Thus you are as well qualified
good management—as they gener¬
this history demonstrates clearly
as
anyone
to warn your people ally
do, it is not because of any
that
high-grade common stocks
against "bull-market investing," steps
they take to assure it. Con¬
bought at reasonable prices are which is motivated
largely by versely they have not the faintest
much
more
satisfactory
invest¬
speculative momentum, and which notion about how to determine
ments
than
second-grade bonds
justifies itself by undue emphasis whether their
management is in¬
and most preferred stocks.
on
current favorable
conditions.
competent or is treating the out¬
If you agree with my prescrip¬ As you know, these have not been
side stockholder unfairly; nor are
tion,
your
advice
on
common
the characteristics of the market
protection against future inflation.
stocks
The
weather investments"
You may well ask how, with my
conservative approach, I am will¬
ing
they suspect their existence.
ible
ness
you will agree One
reason, I am convinced,
of
with me, I hope, that it is not the
the failure of common-stock in¬
only, and at function of commercial bankers to
vestment to spread in this country
the first breath of adversity their
act as mentors to others in what
along with the enormous growth
prices tend to collapse. (It is then is
basically a money-making en¬ of liquid assets is the vague feel¬ in reviewing, revising, streamlin¬
that
the
disgusted holder sells deavor. I
am, in fact, a bit skep¬
ing of the public that the small ing, and simplifying them. As an
them
out—often
at
ridiculously tical as to whether
anyone
can stockholder
is at the mercy
of example I should like to note the
low figures—to
shrewd and so¬ with
propriety
profess
to
tell the management. The stockholder recent adoption of a rule which
phisticated operators.) * Next to someone else how to make
money needs
call
the
"document
rule."
help from outside sources to we
this, as a source of loss, is the pur¬ —whether in securities or else¬
arrive at a sound solution of the While in itself not of major im¬
chase
of
really - good
common where.
In the vast
majority of general problem of managements portance it indicates the trend;
stocks at the inflated values en¬
cases, the aggressive investor must versus
owners.
In
the
coming and it should be of some interest
gendered in the upper reaches of stand on his own feet and make
to those who help issuers to han¬
years I hope that the appropriate
a
bull
ditions.
Common Stocks
the
frequent, and they provide a fas¬ proxy machinery is theoretically
cinating field of study. They in¬ perfect, but its practical value to
is
clude business analysis requiring date
virtually nil — because,
insight and foresight, also special bluntly, stockholders don't know
situations of many types, and also
a
wide variety of "bargain-base¬
con¬
"fair-
any way prepared to act
together to correct abuses even if
njain emphasis ■ placed they in
speculative anticipations. Bonafide investment opportunities are
As Investment Counsellor
(Continued from
the
is
case
which
problems, the stimulus necessary to sustain the present
rate of plant expansion will probably be lacking.
There are many imponderables that may
delay or
accelerate the adjustment that we will finally have to*
face.
We do believe, however, that many of the diffi¬
culties that we have been referring to this past year are
actually coming to the surface and are beginning to be
recognized by the rank and file of our population. This
may mean that the troubles of readjustment are appre¬
ciably nearer; but, to close on a note of optimism, it
also may mean that the first steps toward curing some
of our difficulties are being taken.
in the money markets of
The two-year advance that has been slowly
taking place in the short-time interest rate may be
temporarily checked, or at least checked for the highest
grade loans. The nature of the credit risk from now on
on
market than
money
Government in supporting
institutions
the country.
insistent
be
the
on
Federal
years,
decline should show its effect
..
.
unemployment. Labor efficiency will
some
increase
.
people will tend to be¬
economies will be practiced.
our.
the
rates which has dominated trends in the past two
money
.
spending.
greater bearing
a
43
see
at
my
disposal, helped
whv this is
so.
you
44
(472)
THE COMMERCIAL
&
made at the
"What About the Market"
(Continued from page 3)
policies that the Federal
Board, in spite of the fact
eminent
Keserve
that the amount of credit carried
Stock
on
is
owners
of their market
This limitation not only is
market when it should be
our
encouraged.
Obviously, none of
.
another
see
•Stock
wishes to
us
The New York
1929.
Exchange and that part of
business
our
1929
do
it
its
around
and
the
marked
are
of
end
I
eager,
as
an
can
era.
assure
These
re-occur.
conditions
excessive flow of credit,
lation,
an
—
manipu¬
other factors which
speculation—are
and
excited
reckless
absent
today and
reason
to
remain
believe
them
see
We
so.
have every
we
that
do
return.
they will
not
to
want
should
We
ac¬
cept the fact with confidence that,
while the "good old days," as they
known, will
are
we
due
for
we
are
can
That
is,
good
new
fend
good
days.
new
look forward
days if
to
properly de¬
we
liberties and
our
back,
never come
our
recover
confidence in America and its way
of life.
Controlled
tion
of
and
nance
-enemies
When
liberty have
the
last
20
in
I
enemies of liberty, I
say
those
mean
trolled
lieve
made
years.
who
advocate
those
economy;
con¬
a
who
be¬
that the government should
plan and guide the
iness
and
of bus¬
course
otherwise
the
restrict
enemies of
posing
what
America
liberty
has
op¬
produced
the
Amer¬
know
we
are
today.
ican businessmen have always be¬
lieved
in a
free
economy,
free
markets, and have had faith in
competition as the lpost important
principle of regulation. Most of
instinctively distrust control of
us
■economic
life
terprise,
Should
but
greatly
have
nents.
We
have
truth
home
to
of
our
as
en¬
been
not
oppo¬
country,
can
be
exert
can
a
powerful
influence on govern¬
ment.
They should do so to the
end that government, particularly
the
policy-making branches of it,
recognize the vital role of the
private investor and the private
capital markets in the processes
which
create
jobs
and opportu¬
internal econ¬
omy
is concerned, the national
legislature has no greater respon¬
sibility than that of revising the
nity.
So far
tax
as our
with
structure
encouraging
view
the
to
the flow of investor
capital.
would
You
spired
long ago
as
that fear,
think
in¬
1929, would
as
off, but is has not—certainly
the
to
not
should.
it
has
been
fact
but
by
know,
we
it
that
extent
by
kept
fiction.
The depression of the 30's brought
this
in
home
fear
to
United
the
family
every
States
and, since
the war, some economists, poli¬
ticians and irresponsible writers
have given it new life with their
constant
warning
of
"boom
and
bust."
As
of
the hesitancy on the part
to
people
many
stocks,
lists.
common
can
men
in your customers'
answer
A
buy
investment
you
find the
to
public
opinion
survey,
formative
consequently
and
years
easy
are
col-
for
prey
feel
blame
that
lies
at
Industry
sale
of
reality
and
me
in
more
than
finance.
the
financial
whole, in its
services,
products
to
seems
the
part of
own
a
as
does
touch
Investment
with
world
the
houses,
of
for
for
sons
and
rious
types
tions
fagainst holding va¬
of assets. The ques¬
were:
"Suppose
to spend his
-either
bonds
do
it
put
he
or
a
money.
in
He
bank
a
invest
can
de¬
man
it.
or
What
think would be the wisest
you
that
Why do
you
make
choice?"
much
low
question,
to
open
attention.
5%
investment
in
in
vestment
is
attracted
surprisingly
as favoring
stocks,
favoring in¬
common
with
compared
A
reported
was
survey
it
9%
real
estate, 60% fav¬
oring savings bonds, and 32% pre¬
most
part, are trying to ap¬ ferring bank deposits. Fully 62%
those
proach the same income groups of
expressing themselves
which provided
their customers were opposed to common stocks,
prior to 1929, and to approach 30% because they were "not fa¬
them in the
same
way.
It is self-
miliar"
with
them, 26%
evident that these people haven't
they regarded them
got
and
the money they had
the
even
or
they had ten
money
then
investable
There
are
usefulness
markets and
to
the
of
our
in their
thrifty
accessibility
wish
who
financial
to
have
ownership interest in the com¬
panies that provide the products
with which they are acquainted.
are
possibly 40 or 50 mil¬
lion potential investors who were
riot here in 1929.
They are the
farmers, workers and small busi¬
nessmen
•
in
other
Common
an
There
for
because
"not safe"
If
the
North, West and
the South, and everywhere
else,
who have profited from the re■
•-
v
1
*
common
we
much
in
to
say
Good
stocks
investments,
formation.
reasons,
Stocks
new
population with
funds; but too little
our
has been done to interest them in
ihe
6%
as
or
fifteen years ago.
segments of
structure
surplus,
un¬
we
Our
determines
the
tive.
the liquidity of our credits in de¬
There
are
beginning of 1948.
would
have
examples
many
instances in which
stocks
common
been
of
profitable
pur¬
chases for the small investor, but
gentlemen
you
excellent
have
access" to such information through
We
fully justified in taking
are
constructive
a
attitude
stocks and it is
common
toward
risk
afford to put into
can
assets
and
keep in mind
we
termining this relationship." Ken¬
K. DuVall, President of the
neth
First
complex
and the outdated thought patterns
National Bank of Appleton,
Wisconsin, and formerly President
of the Robert Morris Associates,
that have acted
states in his lecture entitled "Bank
to
combat
the
old
as
duty
our
fear
brake
a
on
na¬
research
departments, and tional progress. You who are en¬ Credit in 1948" given at the School
instances gaged in the securities business of Banking, University of Wisconhere.
There is, also, no lack of know that the New York Stock
since, "The time has come for each
liquid savings.
A statistical re¬ Exchange is directing a substan¬ individual bank to determine for
lease by the Securities and Ex¬ tial
itself a formula limiting the over¬
advertising compaign, which
change Commission discloses that, is about ready to get under way, all total of loans it proposes to
your
I
need
not repeat these
from January, 1940, through De¬
cember, 1947, individuals accumu¬
lated $86 000,000,000 in currency
and bank
in
deposits, $55,000,000,000
savings
and
associations
loan
and
insurance and pension
in
re¬
and $57,000,000,000 in gov¬
bonds.
toward
in
restoration
the
confi¬
of
securities
of
our
been
before.
Thus
have
we
a
set
carry."
Because
in two
You gentlemen in the financial
field have the opportunity to co¬
lay
operate
which
with
we
urge
that
to
you
in
us
the
program
about to undertake.
are
do
the
to
so
end
greater number of informed
a
the
American
economy.
the
same
com¬
bination of factors is seldom found
great American enterprises.
I
know,
are, as you
the
dence
available, and the supply of in¬ investors may share in the owner¬
come-producing corporate secu¬ ship of American industry, to their
rities is larger than it has even advantage and to the
advantage of
banks, it is not feasible to
down
formula
a
application.
of
general
The
approach obvi¬
ously, is to keep capital funds in
proper relationship to risk assets.
With
the
rapid
transference
ernment
this
counts,
and
substantial
funds
of
bonds
from
loans
to
ratio
gov¬
dis¬
and
has
changed
rapidly in the past two years, and
is tending to get out of line in a
number
of
banking,
Managing Bank Portfolio in 1949
(Continued from
to
help
pull the
out of
economy
the deflation of the '30s, to finance
the
effort and to finance post¬
war
conversion
to
peacetime
and, yet today, every
conceivable type of pressure is be¬
ing applied to do just the opposite.
war
a
economy
We
first
were
didn't
lend
that
told
if
we
after the
money
deflation
and
war,
unemployment
would result.
of
Now, we are accused
contributing to inflation and an
eventual bust.
bank
loans
Be that
continue
During the
week
commercial,
Federal
it may,
as
increase.
to
ended
industrial
cultural loans of
Dec.
and
15,
agri¬
weekly reporting
Reserve
member
banks
jumped to
as
individual
cases.
In
that
mored
Dr.
Economic
ports
to
the
Nourse's
Advisors
Council
which
President
every
re¬
six
Em¬
months, as required by the
ployment Bill of 1946, is about as
much concerned with the possibil¬
ity of deflation at this time as
further inflation.
present has
The
Treasury at
cash balance.
a
What
policy it follows during the first
as to debt retire¬
quarter of 1949
and
ment
four weeks'
ous
The
Credit
general
management
money
will
banking and
have
put
may
effect
an
in
on
good deal
a
of
pressure
on
deposits. All of
these things are factors to be con¬
sidered in the changing economic
A
Program of Management
the American Bankers Association
Development of a sound pro¬
recently completed its semi-an¬ gram for the management of a
nual survey and reports that the bank
loan portfolio in
1949 in¬
increase in total loans for the first
half
of
1948
increase
of
was
for
the
It
1947.
only 70% of the
six
first
esitmated
is
volves
months
that
basic- questions.
is
solicited felt that loans would
was
continue to rise in the first half of
1949.
It seems to
Today
were
would
inferior
not
program
a
•
have
of in¬
But
emphatically they
are not.
They are good today and
they have been for the past 25
years,
one
with the exception of that
over-advertised
year
of 1929.
For
example, all of the divi¬
dend-paying common stocks listed
on
the New York Stock
today
showing
are
yield
of
about
with,
let
us
called
riskless
As for the
an
7.5%
say,>
Exchange
3%
average
compared
for
a
so-
investment.
past 25 years, a study
that the
me
re¬
lationship between the loan level
at any one time and contributing
is
factors
comparisons
of
amount
important than
changes in the
more
of
lending.
Some
econo¬
mists believe that the money sup¬
ply,
commodity
prices,
income and loans
In
other
roughly the
each other
each
on
they
bear
relationships to
before the war, and
as
that insofar
words,
same
national
about in bal¬
are
they
as
other,
dependent
are
for further
increase in one, as the others have
gone up, is about taken up.
An¬
other way of looking at the pic¬
ture
is
assets
banks
to
of
room
examine
all
the
insured
principal
commercial
reported by the FPIC. In
June, 1941 loans and discounts rep¬
resented 27.9% of total principal
as
•;
June, 1948 they rep¬
In other words, as
ABA President Evans Woollen put
it, "we find ourselves on a mone¬
27%.
keeping with sound
business
adjustment
downward
•
t he
appropriate
largely an indivi¬
problem.
However, a
bank
definite formula
should
be estab¬
lished which sets some seasonable
I
dead
even
telling
am
any
not going to do
otherwise
good
election
have
forecasting stories. We
plenty of assurances from
government
agencies that every¬
thing is fine and that the economy
is
in
a
stable
condition.
On
the
other hand, you know in your own
where soft spots have oc¬
area
curred and I
few
from
a
might mention just
national
namely, shoes and
a
standpoint,
clothing, furs,
all insured commercial
United
States
were
the four to
to
ratio
one
which in
the past has been considered a de¬
sirable maximum. In view of the
thinner
margin of protection. be¬
the higher deposits to
capital ratio there is good reason
to question whether or not loans
should go any higher based on
present capital structure. The in¬
crease in capital has by no means
of
cause
kept
with
pace
the
in many cases, as
figures
for
rise
several
shown.
in
loans
indicated by the
Some
states
which
states,
notably
Pennsylvania, Delaware, New Jer¬
sey and New York, are not as fully
loaned up on
this basis as the
taken
country
isiana has
a
as
whole-.
a
Lou¬
ratio of 4.1, which is
about in line with the average.
Of
in these calculations I have
considered
net
capital—(that
is capital accounts less bank prop¬
erties and real estate). There are
also other risk assets which
prob¬
ably should be added to loans and
discounts.
these
Thus, the ratio shown
be
would
considerably
applied.
the
The Annual Report
Federal Deposit Insurance
Corporation for the
Dec.
31, 1947 states
smallness
banks
of
higher if
conservative estimates
more
of
the
remains
year
that,
capital
a
ended
"The
equities
serious prob¬
lem.
Nearly 4,000 insured banks
Normally, had
capital accounts, when ex¬
against either amined in
1947 amounting to less
the deposits or the capital of the
than 5% of their assets."
There¬
particular institution. The former
fore, I suggest that one yardstick
is a less reliable yardstick now
for determining a maximum loan
than before in view of the great
limit is this national
and
local
growth in deposits during the war
average ratio of net loans and dis¬
as
a
result of government debt
counts to capital accounts.
financing. However, it is interest¬
Any discussion of loan policy
ing to note that outstanding com¬
must also take into consideration
mercial, industrial and agricul¬
the maximum amount of loans in
tural
loans
made
by
member
certain
categories and alsp the
banks average
29% of deposits,
which is
the
same
relationship liquidity of the investment port¬
folio. Specific yardsticks here are
that was obtained in 1941.
maximum
loans
loan
total.
are
measured
Almost
everyone
even
who discusses
the question of how high loan vol¬
ume
tal
should be refers to the capi¬
buffer.
At the
recent ABA
Credit Conference in
center."
certainly
sheet
capital
accounts > on
June 30, 1948. This is very close
of
Determining
level of loans is
the
times
were
this year?
out
the
in
not
Chicago, Mr.
Shippee, former chair¬
man of the Credit Policy Commis¬
any forecasting today, and since
sion in discussing credit policies
my sense of humor has not fully
for commercial loans said, "Per¬
recovered from the events of last
haps the first point for considera¬
November, I will refrain from
tary
3.95
to
to you, it
that net loans and dis¬
seen
banks
course,
(3) What should be the guiding
philosophy applied to
the loan
portfolio in the event of a general
dual
be
counts for
the
appropriate
given bank?
(2) What steps should be taken
assets and in
resented
can
again
passed
was
a
level of loans for
for
whole year the increase will
only 58% of that made in 1947.
Thirty-four percent of the 310
leading
bankers Uwhose
opinion
three
What
(1)
which
are
trend.
downward
Policy Commission of
losses."
Turning
furniture, radios, appliances and
department store sales. It is ru¬
of
in all other business,
the function of capital is to pro¬
vide
a
buffer
against possible
16)
page
a new all-time high of
$15,595,000,000, reversing a previ¬ picture.
ance.
our
feet.
capital
if held until the
management of existing loans?
Although I think the
good
a
capitai,
divided profits and reserves.
amount
at this time in
lectivist doctrine.
I
na¬
tional
be
rea¬
stocks with it?
of
rities business to broaden the
the
reported
their
members
many
stocks
published by the Federal Reserve
of whom
knew only depression and war in
the
generations,
new
brought the
common
Bank early last year,
thing for him to do with money
nowadays—put it in the bank, buysavings bonds with it, invest it
in real estate,
or
buy common
not
better-grade
be related to
.
can
freedom
unusual
Surplus funds
"■■■*■
this
of
increased,
cides not
we
group
ownership of industry—
certainly a most desirable objec¬
More
Have
whose numbers should and
in
good evangelists
as
average
serves,
investors
The
by government.
believe
We
of
which provide an
opportunity for the secu¬
conditions
of
an
ernment
legitimate rights of the individual.
These
to
sections
other
Influence
As
of
progress
essential
labor, business, fi¬
all
Investors
not
it, the
is
population.
our
alive
about
first tasks is to dis¬
our
confidence
of
mistake
no
to
by acts and policies which
create
confidence.
This restora¬
Economy
Make
encouraged
be
bility in which government should
wear
Trend Toward
yet
share
of the conditions which
preceded 1929 is present today,
is it likely that they will ever
not
investment.
so.
it is well to reflect upon the fact
nor
of
the
sipate the fear tnat has been overnanging our capital markets for
these 20 years. This is a responsi¬
section of our national
community to avoid a repetition,
none
For
have
should
in
stake
a
industry.
they
the
One of
you, as any
that
ownership of
habit
part,
They
the
stocks—in
firms, fully realize that the welfare
member
They
which
population
around
centers
most
in¬
Thursday, January 27, 1949
purchased in 1923, would have
yielded approximately 9% a year
benefits and
the
of
in
and
formed
it reduces the vitality
whatever;
know
national
the people who
CHRONICLE
University of Chicago
that
indicates
of 15
•
our
are
satisfactions
business
applied discriminatorily to listed
securities and has no justification
of
should
common
to
of
They
insist
continues
-borrow only 25%
value.
distribution
come.
of such securities may
insignificant,
that
securities
Exchange
' /
FINANCIAL
Lester
E.
tion should be the size of
our
loan
portfolio and the extent of assets
at
risk
funds."
in
.
President
relation
Mr.
of
to
E.
capital
Atwood,
First
National
Henry
the
our
Bank of
ber
Minneapolis and a mem¬
of the Federal Advisory Coun¬
difficult
more
than
for
folio.
the
overall
However,
real
states
estate
to
develop
loan
since
in
mortgage
port¬
some
loans
dare not exceed 50% of total time
deposits, a rough approach might
to keep them down to 35%
be
and
not
let
the
total
long-term
part of the portfolio, which would
include
term
loans
as
well
as
exceed 50% of basic
deposits.
Certainly ;at; this
point in the business cycle, it be¬
mortgages,
time
hooves every bank to keep
vestment account extremely
and
A
of
its in¬
liquid
the.highest quality.'
general
consensus of
cil of the Federal Reserve
cific
in
the spe->
out sound loan
System,
discussing 1949 credit policies
for banks in the north, pointed out
that, "We; believe that the volume
of loans made
and
carried should
ment
limits
steps
to
be
taken
to
carry
portfolio manage-in 1949, after the foregoing
have
been
set,
as
gleanedj
from discussions with bankers and
Volume
from
Number 4772
169
reading
speeches by
many
leading authorities, is
follows:
as
THE
materially since the loan
the books.1
'
COMMERCIAL
went .on
VI
,
Every loan should have
Reappraise loans in certain
cific
spe¬
categories first:
(a) The "War Babies"
(b) Loans in lines of business
in which adjustment has taken
place.
<c) Loans to firms that are not
old enough to have weathered at
least one period of recession.
ir-
Grade
all loans as to quality.
particularly helpful ana¬
lytically, although it may seem
somewhat arbitrary. Give partic¬
ular attention to the following
points in your evaluation:
(a) The industry outlook as well
This
as
is
the loan should
.
be
rated.
(b) As an objective test for
grading, assume a general busi¬
folio
management
sound
Then
posed by the following: (1) Break¬
points;
(2) Inventories;
(3) receivables and the collection
period; (4) debt to worth ratio.
NOTE—This ratio has risen sub¬
stantially in
many businesses • to
point where owners' capital is
•quite thin, due in part to rather
.a
•cold
equity markets. Such
situ¬
a
ation cannot be viewed with
com¬
placency by either the borrower
lender
because
serious
a
set¬
banks cannot be
and
out of business.
cerns
/
I
don't
think
too
from
that
it
any
much
"<;
>
III
•
When
considering
addi¬
new or
applications for loans
fully weigh these points:
(a) Many concerns that
far have not borrowed are
care¬
thus
now
being caught in the inflation spi¬
and
ral
^would
intensify their diffi¬
only
and
position.
which
funds
seek
may
culties
periodic
demanding
customer
to
statements
be
Many companies do not
know their
costs, their break-even
point or how to adjust prices. To
do
.*■'
their
tat the expense
of working capital.
IV
is
just
to
applicable to farmers
as
It cannot be stressed
often
too
:should not be made.
•
V
There are plenty
agricultural statement
and
credit forms available and it
inexcusable not to use them.
is
term
commitments for
isemi-completed capital expansion
Long
Plenty of
for the proper
room
extension
of
credit will
always
Procedures should be set up
exist.
to
review
able
continuously the prob¬
demands
the limits
in
keeping within
have set for your
you
loan portfolio so that
you can con¬
tinue to render the service to
your
community which
you are in busi¬
perform. Only after satis¬
fying local needs should you look
to
ness
elsewhere for loans.
-whether
or
yourself
not the status of the
borrower or
••
O'-.OU'
Ask
industry has changed
J ' '•
h:1'-
v..-'-r':' "•
■
No program
of a bank loan port¬
folio management in 1949 or for
other year in the future would
complete without a certain
guiding philosophy which I think
is of the utmost importance—that
is the policy of sticking with the
loan commitments you
which. have
been
have made
determined
to
be sound after the evaluation
sug¬
gested
by
the
bad times
absolutely
we
ever"
foregoing steps in
well
as
be
reasonably
acterized
tional
as
hope
good.
It will
this
maintain a
to
stable economy char¬
by full production,
in
than
em¬
high level of
a
income.
worse
na¬
Nothing could be
period of recession
liquidation
of
a
wholesale
You
must
-
be
prepared
to
nurse with skill and patience the
problem cases that will inevitably
develop, and you should be build¬
ing reserves during these lush
to
take
of
care
losses in the future:'
possible
!!
that
have
two
three
or
also
bilities
;
in
prevailed
last
The proba¬
years.
are
the
that
com-
some
Dollars in Billions
—
1944
1946
1947
1948
90.4
212.2
209.6
231.6
*255.9
*227.3
72.5
Gross Private Domestic Investment
.
?
V*
'
179.3
202.5
230.6
259.1
256.9 $252.5
9.0
—
182.4
41.9
\
6.4
26.5
*39.0
30.0
1940
•
90.4
10.8
12.8
22.2
26.0
35.6
113.6
110.0
5.0
•Corporate Net Profits
'Total Loans All U. S. Banks——
•
$109.6
18.1
§15.3
43.0
$47.1
109.0
—
235.0
170.0
187.0
jfl96.0
"Wholesale Commodity Price Index
77.1
—
—
'"
•;
Total Loans and
•"i U
m.
•
-
'■
•
be the time for
to
extension
the
care
355.045
The
of
first
in
step
management
bank loan portfolio is to de¬
termine a maximum loan limit.
a
There has been
entirely too much
whether
about
argument
loans
cific
not
or
too
are
suggestions
sonable
level
to how
as
should
a rea¬
deter¬
be
mined.
Therefore, I do not elect
stand on this highly con¬
troversial
issue, but there are
plenty of illustrations, some of
which were mentioned, to the ef¬
to take
a
fect that loans
are
today.
Sumner Slichter points out
in his
new
book, "The American
that, "the volume of
is small
...
relationship
to the national
product—only about 20% of the
national
product in comparison
with 40% in 1929." On the other
hand,
the
weakness
major
one
point
of
to be in the rela¬
seems
tively thin capital buffer against
loans
for
banks in quite a
If the demand for de¬
many
few states.
sirable
loans
maintain
to
tion, then
it
makes
impossible
comfortable
a
posi¬
capital should be
more
raised.
suggest a num¬
which should be taken
ber of steps
in
continuing appraisal of the
portfolio.
Taken together
a
loan
they constitute
a
management pro¬
gram
consisting of effective
trols.
These
controls, I think,
in
objective
con¬
and
nature
do
are
not
represent crude attempts to fight
inflation
of
words
Dr.
Willard
E.
At¬
kins, Chairman of the Department
of
Economics,. Washington Square
College, New York University,
"akin to
erecting road blocks
to stop speeding automobiles. You
may stop the careening car, but
you may also cause a smash."
Finally, one sobering note of
warning. If we don't adopt the
guiding
philosophy
of
making
are
commitments
loan
that
we
are
willing to stick within bad times
as well as good, someone else will
take
of
task
the
over
under
some
governmental controls.
Sumner Slichter, again in his new
book,
American Economy,"
"The
of the
ups
and downs of business
OPERATING
DISCOUNTS
INSURED
As
of
CAPITAL ACCOUNTS
COMMERCIAL BANKS
June
x
All States
com¬
spending, and hence the volume
employment, to be substantially
by a large contraction in
private credit, such
occurred between 1929 and 1933.
Washington 5.6
Texas
Utah
_____
______
Tennessee
_
Pennsylvania 2.6 Nevada
Michigan
Missouri
4.9 No. Carolina- 4.7 Georgia
2.5
4.9
Delaware
5.8
New Mexico- 6.7
___
___
amount
creased
of
money
to
be
in¬
must be
by the expansion of pri¬
during
a
boom, it
prepared to prevent
substantially
spending."
which faces
6.5 Idaho
4.6 Arizona
5.2 California
5.3 Louisiana—
_
____
failing 8%
average.
Mathematically, this rate
5.7
8.8
6.7
4.1
the
a year on
of decline could continue forever.
It
pertinent to ask
there¬
fore which 8% would be the straw
seems
that
breaks the camel's
inflation
should
rate, would
counts
back?
continue
called
If
this
at
readjustment of
a
be
lost 50%,
have
lost
27 years when
87V2%
idea
of
stability, it
two
it would have lost
of its original value?
The
price
to me, carries
seems
implications, both of which
It
false.
are
levels
implies
will
in
though
all
have
that
price
stabilized
be
even
history
our
been.
There
they
is,
of.
course, a possibility that the pricelevel
is
being
stabilized
now
around present levels.
If so, the
time for adjustment is here. .. If
not, making the accounting and
never
mechanism
business
sensi¬
more
tive to economic change would
itself tend to bring
objective
business
of
has
become
pure
fiction so far as
large public corporations are con¬
cerned, the opportunity to report
large profits, whether real or not,
is
rather pleasant.
rare
courage
very
low profits
to
It would take
losses
report
or
time when;
at a
other firms,
operating no more
efficiently, were reporting excep¬
tionally large profits.
Here in
fact is
a
real dilemma.
No single
corporation
can change over to an
economic basis of reporting with¬
out
incurring the not inconsider¬
able risk of
other
of
firms
there
being out of step with
in the industry; ancl
serious practical if
legal difficulties in the way
simultaneous change-over' by
a
are
agreement.
The fact of your pres^
here, however, indicates a
belief or hope that something can
ence
be done.
for
waiting
major
not
75%, or after
or
the
ing profits for stockholders is the
yet
when
years
to
plunge.
Although the idea that maximiz¬
nine
for. after
after 18
or
it would
take
ac¬
when the dollar would have
years
in
about greater
There are many technical prob¬
lems—partial replacements or im¬
provements of existing structures,
properties being depreciated on a
group or composite basis, etc.—
for which solutions would have to
be found.
If industry really wants
recognition of depreciation on an
economic
or
replacement
cost
basis, there is urgent need for re¬
search and
consultation. Congress
Treasury are not going toforce higher depreciation deduc¬
and the
tions
industry.
upon
however, in
They will,
opinion give se¬
my
feeds on the rious consideration to a workable
repercussions from plan for which there is evidence
of support and
acceptance.
policies and actions
stability.
Inflation
fact
the
that
inflationary
long deferred that the peo¬
generally mistake symptoms
so
ple
for
J. A.
causes.
The
that
be
false
second
useful
(Special
implication is
information
accurate
more
in
would
period
a
of
stability than during the turbu¬
period of transition. But ac¬
lent
Hogle Co. Adds
to
The
Financial
?
Chronicle) ;
LOS
ANGELES,
C A L I F.—
Denys D. Shelley has been added
the staff of J.
to
507
West Sixth
A.
Hogle & Co.,
'
Street.
:
.
counting is an indispensable means
communication
of
without
What would
difficult?
of
general
a
ordinates
wbo
not
to
communications
which
try
until
think
one
told
his
-
523
West Sixth
the
battle
Joins Sutro Co. Staff
(Special
Wishful Thinking
and
'
restore
to
LOS
Inertia
Street.
sub¬
over?
was
In addition to inertia and wish¬
to
The
Financial
ANGELES,
Chronicle)
C A L I F.—
George F. Kerins has become af¬
filiated
with
Sutro
&
ful
thinking, however, there are Nuys Building.
some
legal difficulties.
Statutes
and administrative regulations re¬
quire the
of specified methods
use
income-tax
for
other
and
pur¬
but there is no law as yet
forbids
the
reporting of
poses,
which
real
profits to stockholders and
public. And accounting methods
normally achieve legal recogni¬
tion
becoming accepted prac¬
certainly is preferable
by
tice.
This
the
to
postponement of reforms
legal recognition can be
There
reducing
any
the
again
being
This is the problem
us
if
we
are
which
here.
cussed
bility
economic
theless
of
made
the
whipping
our econ¬
.
.
adjusting methods
reporting to current
conditions
rest
it
is
are
must
squarely
never¬
upon
man¬
While there is plenty of
to
change on
accountants,
tally by
dis¬
be
cannot
The final responsi¬
,
not
for
financial
of
some
still
the part
backed inciden¬
good reasons,
very
true
keenly
that
aware
and will make
accountants
of the problem
appropriate changes
(a) when the superiority of some
new
method
is
clearly demon¬
strated,
nomic
tax
is
boys for the vagaries of
omy.
to avoid
other difficulties and
are
obstacles
agement.
of
_____
on. a diminishing bal¬
basis, the value of the dollar
has been
resistance
volume of money and the amount
3.95
or
the
second
no
be the first
to
obtained.
from
30, 1948
annually,
opinion .it is because
company wants
until full
The
subsequent decrease in bank loans
'•
/'
AND
compounded
of credit is intolerable.
tReports.
S "
LOANS
have for eight years been
rising at the rate of about 8% a
the
year
.
States
Hence, if the community permits
-
NET
untenable at every point. The fact
is that price levels in the United
16)
my
the
vate bank loans
whole
costs are found to be out of line,
appropriate action can be taken.
This argument seems to me to be
page
ly in
restricting
bank
With Merrill Lynch Firm
large
enterprises could not be
quality of credit,
(Special to The Financial Chronicle)
managed. Is it reasonable then to
not the
dollar amount,
that is make no effort to eliminate dis¬ ; LOS
ANGELES,
CALIF.—
important.
Arbitrary devices to tortion
during the very periods George G. Gauck is with Merrill
prevent banks from lending in
when
policy decisions are most Lynch, Fierce, Fenner & Beane,
as
Quarter.
fot
45
by
It is
credit.
^October.
^September.
§Total of 1st three Quarters. Esti¬
exceed 20 billion.
fiShown in index numbers not dollars.
2Latest figures are for September.
r
NOTE: Figures are for Dec. 30 except where otherwise stated.
'
SOURCES: Federal Reserve
Bulletin, Survey of Current Business & FDIC
*3rd
mates
permanent level
which prices are to be stabil¬
ized is known.
Then, if certain
are
I have tried to
the volume of
14,730
76,393
102,037
the
at
not out of line
with other elements in the picture
reduced
161.885
54,115
All Other
until
ance
of
54,060
Industrial
them
•conversely,
Conclusions
of
16,627
28,899
and
Agricultural
it would be unwise to make
way
munity cannot permit the volume
1948
29/40
(Continued from
counting readjustments, and any¬
by the expansion and contraction
H168.5
(473)
Making Profit Reports Realistic
year
credit.
of
•
-("••Real Estate
IfLtot
152.1
Dollars in Thousands
153,701
Commercial Banks
Commercial
■;
121.1
Discounts Insured
V
i.-:';:-.
104.0
June
v
Louisiana:
depositors,
points out that "The aggravation
Index of Industrial Production
(1926=100)
in
system
42.3
_____
(1935-1939=100)
bor¬
the
of
seems
The
sound
increasing conservatism and
the
Many bankers believe that busi¬
.National Debt
i
that
losses.
the
meet
needs
but this
the
of
care
must
rowing
necessary to do
ployment and
<Gross National Product
JMoney Supply
take
banks
propor¬
indicates
have to be very large
reserves
in
1939
National Income
to
substantial
of
experience
Economy,"
earnings in 1949 will be more
plans 1 or new plant facilities
tshbuld be reappraised in the light spotty, instead of the more or less
satisfactory
earnings
<of your opinion
of the general uniformly
outlook.
that
so
commercial bank loans
IX
"
banks
high and not
nearly enough in the way of spe¬
VIII
ness
"business
decline
bank
■
times
1
reserves
that
they
are prepared to meet losses which
may occur.
If and when we have
as
else.
anyone
of excellent
loans.
that loans for speculative purposes
their
they must have adequate
financial records and reports. This
.
'There has been a marked tendency
to allow fixed assets to expand
therefore,
so
if
further weaken
(b)
Others have reached the
limit of their borrowing capacity.
;
is
supplied.
be
tional
important,
a
any
'
losses than they have in the last
two or three years.
It is highly
the
in the
position of forcing too many con¬
are going to show losses,
consequently banks, are prob¬
ably going to experience more
tions,
VII
back might force the bank to take
over
this is carried
out.
what problems would be
see
even
port¬
should include
sure
CHRONICLE
panies
build
of
program
steps to make
decline of limited magnitude.
ness
or
A
ask
\
defi¬
a
nite repayment schedule and this
should be -established at the out¬
set.
FINANCIAL
and
'
.
&
a
when so-called
are
recognized
eco¬
for
purposes, or (c) when there
clear mandate from manage¬
ment.
been
a
(b)
costs
That
mandate
lacking.
so
far
For this there
number of reasons,
has
are
but primari¬
Support
Co.,
*
Van
:v
' :
46
THE
(474)
COMMERCIAL
&
,
something I 'haven't the
Tomorrow's
Markets
Walter
^;
Whyte
and
split can
spark to set
price rise.
extra
well become the
off
new
As this
out
broad
being pounded
the
was
the
on
Underwood,
tape click-clacked the
in addition to its
that
news
had announced
and
$1.25 extra
a
stock
its
splitting
was
Steel
Big
dividend
regular
three for one.
*
*
;:
an¬
argu¬
but
A.Z/
The New York market had
there
so
CHRONICLE
was no
higher prices for the fu¬ ings, so that the efforts of the last
three years have
higher prices duced a stalemate.just about pro¬!
rooms
will be based
the
I don't pre¬
on
tend to know.
But
be better
to
long
so
buying I think I
tinues
•
Now, however, the decline in
prices, in food prices, and
mean.
But
Coast the market
on
the West
still do¬
was
ing business and there Steel
was up $3 from its New York
./
the
I wish I could foresee
effect of Steel's action
Now back to the
reasons.
ket:
I
mar¬
little in the imme¬
see
anything
views
article
time
do
in
expressed
not
this
In fact I wish for
market.
lot of
necessarily at
coincide
with
those
any
get. In recent months
wishing has been about the
only pastime I can afford.
But if wishing can't make me
see
around corners, it can't
stop me from having opinions
ever
and I have two
this latest
on
'
;"i
of 1948.
summer
point of
October since
> The
sjs
first
declined slowly to
in
sjs
December
to
and
ending Jan. 11,
1949. The decline has been
steady,
There
of
178.0
by
de¬
a
in December.
The
was
174.3.
about
everything but go up
(or down-—depending On the
current
trend).
Frequently
the catalytic agent that forces
them
a
their
of
out
stage is
there
contrast,
has
been
The Steel
news.
well be the
peak reached last autumn.
breaks
have
news
could
catalyst this time
around.
second
combination
opinion
of
the last
few
days in some industrial prod¬
ucts, such as steel sera©, but these
have been
so
far counter-balanced
by increases in other products.
Retail
prices have begun to
prices
factors
is
a
that
The
Consumers'
the
Bureau
particularly cheering.
The public has always greeted
stock splits enthusiastically.
Why three shares of stock, at
say 20, should be nicer to own
than one share of say 60, is
Price
of
Index
Labor
of
a
The
index
yet
172.2
to
for
but
wholesale
fall
to
November.
December
available,
tinued
in
to
do
we
food
is
know
prices
the
not
con¬
the
end of
and this should be reflected
in the food items of the Consum¬
year
ers' Price Index in December.
Coast
Exchanges
Likewise, there has been ample
clothing sales in De¬
cember and January, the first on
large scale since the
the
index.
This
war.
There has been also,
evidence, indications
of weakening of household fur¬
nishings prices.
same
hand, the rent item
is still held down by rent control.
It has been creeping upward, and
would undoubtedly rise sharply if
controls
long
Schwabacher & Co,
Members
New
York Stock Exchange
New York Curb Exchange (Associate)
San
Francisco Stock Exchange
item
were
New York 5, N. Y.
COrtlandt 7-4150
Teletype NY 1-928
Private Wires to Principal Ojfices
San Francisco—Santa
Barbara
Monterey—Oakland—Sacramento
Fresno
has
the
System.
branch
In
institution. The
connection
branch
merger
"
a
in
in
as
latter
Reserve System reports that both
were
State bank members of the
been
Comptroller i: of
staff
former
the
location
-
the
of
Thp
North End Bank & Trust Co. V: !
v
■
with
established
was
//•/•>:/:'•
•
$
*">
$
.i:V.y.
'/•:
At
'•••:;#
'V "'"'i -
'.y'
■<*J- s-i: ?• " '
4/
' *
Z
meeting of the board of
of the
First
National
a
directors
Bank
of
Jersey
City,
N.
J.,
held
Chief Examiner.
There
ago.
run
prospect
It is
a
yet very
as
the
trends
within
it
somewhat mixed and there
to be no
prospect of
a
are
seems
sharp break.
Employment Situation
Indications of
ployment
early
as
a
turn in the
situation
October.
occurred
At
that
em¬
as
time,
hiring rate in manufacturing
industries
reached
the
Law
Ridgewood Savings Bank in
November, 1938/ On Jan. 1, 1948
he
elected
was
dent of
the
meeting,
elected
First
bank.
Vice-Presi¬
At
Herman
the, recent
Dippoldt.
was
Vice-President
First
Secretary,
small in relation
and
'while
John
Schmid
reelected*Second Vice-Presi¬
was
to the total
Clifford A». Spoerl
Kelley Graham
picture,
While there dent of
the bank. The Ridgewood on Jan. 19, Kelley Graham was
1,475,000 continued claims
Savings Bank was incorporated elected Chairman of the Boards
for unemployment compensation
June 18/3921.
Mr. Graham has been associated
•/.
in the week ended Jan. 8f there
'
* *
with the bank since 1923, first as!
*,
'
were
approximately
45,000,000
At a meeting, of" the • directors Vice-President and as President
persons employed in non-agricul¬
of the State > Street Trust Co/ of of the institution since 1925, Mt~
were
.
tural industries. This trend would
have
to
go
deal
great
a
the development
depression^
a
cession.
Boston, held Jan/17, the follow¬
ing promotions were voted: Myron
further
could be
B.
or even a re¬
.
Day came, industry
immediately to reconvert
to peacetime production.
Hours
began
of work were cut and the
weekly
earnings and the workers'
pay en¬
velopes went down sharply. There
began almost immediately a strug¬
gle of the wage earners to restore
their
wartime
purchasing
This took the form
Young, and J. Stanley Lang to
Assistant Treasurers, and Sargent
S. Howe' to Assistant Trust Offi¬
When V-J
Mr. Young came to the trust
cer.
at the time of the mer¬
with the National Union Bank
company
ger
in 1925.
Mr.
Lang has beerf with
company since 1937
(except
for three years' service in World
War II) and Mr. Rowe joined the
the
bank's forces in 1946.
power.
of demands
of higher wage rates to offset the
declines in weekly earnings.
We
have become accustomed to talk¬
.
;
*
*
#
•
Charles E. Spencer,
man
increases.
In actual
fact, the rec¬
ords of the Bureau of Labor Sta¬
tistics
show
that
these
became less and less of
time went
as
on.
"rounds"
Jr., Chair¬
of the board of the First Na¬
tional Bank
of Boston
Mass., and
retired President of that bank, has
ing in terms of "rounds" of wage again been selected
of
the
to
serve
a
member
Federal
Advisory Council
the current year, it
for
announced
was
as
on
The
Federal
pened is that wage rates in gen¬
meets
eral have increased since the war,
with
some
industries and skills
with
the
at
the
Advisory
least
four
Board
Federal
of
Council
times
a
year
Governors
faster
and- farther,
while
lowest
the
the
Board
time, the rise
same
Consumers'
reflected
the
Price
Index
increased
cost
in
has
of
eral
of
Governors
Reserve
of
System
-
the
that
Fed¬
the
Bridgewater Trust Co. of Bridgewater, Mass.,
a
State member, was
This has roughly and ap¬ absorbed by The Home National
proximately balanced off the in¬ Bank of Brockton, Mass., effective
creases
in wage rates and earn¬ Jan. 3., In connection with th6
living.
of? various*
-
J-
sack Water Co. and the Firemen's:
meet¬
electecf
Insurance Co._ At the same
ing, Clifford A. Spoerl was
Mr. Spoerl was elected
of the bank in
President.
Assistant Cashier
1922,
1925, and-
Vice-President in
First
became
•
"j*
'•
.•/
Effective
in
Vice-President
1944.
Jan.
-
•
,
H»>
•
' ••. iT
•
(
-
v.
the Comp-'
troller of the Currency has given;
approval to an increase in the
capital stock of Tradesmens Na-,'
tional
Bank
from
232,580,
the
and Trust Co.,
Phila¬
$3,993,000 to* $4,permitting the payment
delphia,
of
17,
6%
•
stock
dividend voted;
by the directors
on Jam 14.
'.v'ZZI-///.'--/
Robert
L.
Gray,
Jr.,
appointed y Assistant
Officer
of
the
and Trust Co.
!
been
Investment
Title
Land
of
has
Bank
Philadelphia.'"J
of
According business conditions and to advise
to the Bureau of Labor Statistics, the Board with
respect to money
wage rates in manufacturing in¬ matters and the general affairs of
dustries
have
risen about 43% the Federal Reserve System.
since V-J Day on the average, / ' /■" /.
/*■'./' ❖ /
while weekly earnings have risen
Announcement is made by the
At
^director
a
companies including the Hackenr
Reserve
System in
Washington to confer on general
-
Graham. is
Jan.. 11 by the
pattern Federal Reserve Bank of Boston.
a
What has hap¬
about 30%.
Turn in
Columbia
was
1924.
of
evi¬
that these declines in employment
and
increases in unemployment
are
of
admitted to the bar
After practising law for
24 years he was elected a trustee
in
others lagged behind.
Thus, while the
living is declining to some
extent,
the
School,
rose
important, however^ tQ note
rising
is upward.
cost of
additional
rent
the
for
was
graduate
a
workers
ending Jan. 8 to
The
eliminated.
Chicago Board of Trade
14 Wall Street
Y.,
of the
Board of Governors of the Federal
Auditor since he joined the
Auditor and
dence of part-time in some indus¬
tries. ■'
evidence of
On the other
Pacific
title
ical Bank & Trust Co.
manu¬
unemployment office)
the week
called
by the
on
in
the unemployed
of
ance
at the
postwar peak of 174.5
in August and September, 1948. It
reached
indicate the beginning of a
down-turn in the apparel items of
Orders Executed
-
F/ Oswald,
Assistant
of the Bay side National
N.
Bridgeport^,
Conn.,
was
merged
into
The
Bridgeport-City
Trust
Co.
of
Bridgeport, under the charter and
■
may
Securities
'
'\
1944, Mr. Oswald
non-agricultural employment, ac¬
has had more than 25 years in
to the Bureau of Labor
banking. He was first associated
Statistics, dipped 170,000 from the
with the Equitable Trust Co. and
preceding month.
In New York
later was employed by the Chem¬
State in December there was a
before
a
Pacific Coast
Bank
»fc
cording
Statistics
that
aren't
Effective Jan. 3 The North End
& Trust Co. of
Ruth
'
re¬
particularly of the foods.
declined
The
occurred in
Some
nascent spond to the declines in wholesale
piece of unexpected
bank.
level of about 50% above a' year
By
markets which do
are
annual
Mrs.
1
Bayside,
bank's
in
estab¬
was
facturing industries, from the No¬
an
*
#
has been the drop in the prices of vember figure. Then in January,
The board of trustees of the
farm, products. These reached the 1949, there was a sharp up-turn in
Sayings
Bank
of
pdstwar peak iri January, 1948, claims for unemployment compen¬ Ridgewoqd
when the monthly index was 199.2. sation
throughout the country. Kidgewood, 'N.s Y„ - at a recent
There was a sharp break in Feb¬ Continued claims
(those which meeting elected Walter J. Hess
President of the bank. Mr. Hess,
ruary, and then a recovery to continue after the first appear¬
be the
can
Brook¬
their
at
appointed
to the post
appointed
The major factor in this decline
spark to set comparatively little change in the
off an advance the market has prices of the industrial products
indicated for the past several represented in the index. These
are down scarcely at all from the
weeks, but failed to prove.
news
Bank,
borne out in November when
further decline of 1.1%
although not spectacular.
weekly index for Jan. 11, 1949
this
that
is
one
■
trustees
Cashier.
Cashier
1939.
was
160.2
of
Charles
any
f
lished at Bridgewater.
Bank
*
169.5, several points higher than
the peak of 1920.
Since that time
160.5 for the week
Savings
branch
a
lyn, N. Y., has announced that the
sistant
The peak of the
i
absorption
They are presented d$ board of
those of the author only.].
: meeting
Conversely, lay-offs increased and
quits were down. This indication
cline
*
be
may
Hawley
of Assistant
Secretary and John Vogel to As¬
196.0 in June, followed
development.
shift
a
Gretsch, President of the
Lincoln
the
of
Chronicle.
(Continued from first page)
.
about
a
things, few of which I'll
that
Fred.
Wages,Prices,
the the index has
on
continue, there
increasing attention
be
(Continued from page 14)
[The
sale Price Index occurred in 1948
*
also
the part of both labor and man¬
agement to productivity. The true
in foundation of the American stand¬
prospect, namely, toward a better ard of
living (and it is the highest
purchasing power of the consum¬ in the
world) is the output achieved
er's dollar.
Since many of the
per man-hour of labor.
This out¬
wage demands since, the war have
put
dicates
the
at
*
*
as well as to
security legislation.
News about Banks and Bankers
Bureau of Labor Statistics' Whole¬
close.
will
on
in the Consumers' Price Index in¬
see con¬
than
bargaining
If current trends
farm
as
about what this
would
lective
broader social
selling, I see no point in
brooding about business de¬
The other pessimistic factor pressions.
represents
the
cooperativb
been based upon the cost of liv¬
achievement of management and
stems from an outgrowth of
ing, this may now be removed as. labor. Faced with
increasing com¬
Last
week
I
brokerage
house
opinion.
suggested an important factor in the wage
petition, employers, will be more
Brokers depend on commis¬ Cooper Bessemer, United Car¬ picture.
On the other hand, the zealous in
cutting costs wherever
sions.
Each day's overhead bon and U. S. & Foreign. The thoughts of unemployment and possible.
Hopeful of further long
possible business recession natur¬ range increases in wages,
must be met.
An accumula: first stock was
unavailable
unionjs
will pay more attention to
tion
of
prod¬
United Carbon be¬ ally cause a switch in emphasis
poor
trading days (27-28).
uctivity. It would not be surprls'toward social security.
means that
Thus, the
brokerage houses tween 36 and 37 was, and so
ing, therefore, if this factor became
aren't doing too well. It's the was U. S. & Foreign 21-22. outlook is for increased attention one of the most
important in our
easiest thing in the world for Stop the first at 34 and the to health and welfare plans in col¬ economy in the next few
years., '
a
person
to be pessimistic second at 19.
about somebody else's busi¬
More next Thursday.
ness, if his own isn't too good.
—Walter Whyte
sfe
sjs
reflection of this news, except
diate past to indicate
the exciting chatter in the
board
Thursday, January 27, 1949
ture. What these
So much for the extraneous
already closed
FINANCIAL
.
tribution.
By WALTER WHYTE=
=
know, the
ments for it—greater market
mobility because of greater
public participation, etc.
It
also be the start of major dis¬
Says—
Steel
I
to.
swer
j
On
Jan.
20
Provident
the directors of tl
Trust
Co.
of
Philadel¬
phia increased the quarterly, div-'
idend from 50 cents to 68 % cents
a
share.
Feb.
The dividend
1949
1,
record
to
is
payable"
stockholders
of
Jan.
24, 1949. The direc¬
tors
thus
determined, it is an¬
nounced, that instead of declaring
the regular quarterly dividend at
the rate of $2 a share per annum *
and declaring an extra dividend '
of 50
the
cents
year
during
a
as
the
share at the end of r
has
last
been
two
the
years,
case,'
they
Volume
would
THE
Number 4772
169
inaugurate quarterly divi¬
at the rate of $2.50 per
dends
share
annum.
per
,
Crankshaft
The
,
Perry-Payne
The
promotion
the
of
Harper
of Baltimore, Md., was announced
on Jan. 12 following a meeting 'of
jthe; hoard of directors, it is learned
ffrom the Baltimore "Sun" whteh"
alsb reported:
; "Charles
F.
Reese,
Assistant
tors of the First National Bank of
Executive
of
The
illustrated
of direc¬
B.
Reuben
Hays,
Vice-President, and- ap¬
FINANCIAL
CHRONICLE
plans, benefits and the future, and
is an attempt to personalize and
interpret the bank's accounting
statements.
*
Election to the board
Cincinnati
&
8-page report is
charts
showing
with
(475)
The promotion of A. D.
from
the
that
of
board
office
Simpson
President
of
Vice-Chairman
Commerce
of
the
of
National
the
of
Young
to
of
Bank
Houston, Tex.,
oc-
where
the bank gets its income,
happens to the income, em¬
ployee benefits, and prospects for
what
the
*
William
future.
*
*
stockholders
The
the
of
Bank
annual
their
meeting
on Jan. 15
George, Assist¬
ant to the President of Larus &
Brother Co., Inc., as a new director.
elected W. Brooks
All
directors
former
were
re¬
At the directors' meeting
elected.
Ralph F. Bagwell, uirector o*.
Savings, was elevated to Vicepresident, while Thomas W. Jen¬
kins, Assistant Cashier, was made
•Assistant Vice-President. All other
The
directors
of
board
the
of
Dock
officers
re-elected.
were
official
family of The Bank of
as Director of Advertis¬
ing and Public Relations on Jan.
Virginia
ltjth.
Miss Daile.y comes to the
a broad background
,|>qnk with
of
editorial ex¬
perience. In
1944 she
received
the Virginia
Press Association's
Distinguished Service Award, and
and
newspaper
in
1944-45
was
Joseph F. Parti, who retired
Dec. 31.
which
on
In the Louisville "Courier
Vice-President of
it
Journal" of Jan. 12
Dowd,
stated
was
native of Owen-
a
ton, Ky., and a Kentucky banker
for 20 years, was with the
National
Bank
&
Trust
Louisville
also
was
in
1935
with the
Department
as
an
had
he
addition
Liberty
Co.
of
andt 1936, and
Stlate Banking
examiner; in
likewise
been
while
President
made
was
in
past with several
Kentucky banks. He joined the
First National of Cincinnati four
of
Vir¬
the
Edwin
M. Gidney, President of
£Frederal Reserve Bank of ClevePlSnd, announced on Jan. 13 five
^promotions at the bank.
Wilbur
~D.
Fulton, now Vice-President in
Charge of Bank Examination, will
f
assigned as Vice-President in
of the bank's Cincinnati
■, branch,
effective' March
1,
at
; which date Benedict J. Lazar, who
!;htas been with the bank 31 years,
bev
icfiarge
f plans to retire; Paul C. StetzelLorn Assistant
Vice-President,
burger, promoted
Vice-President to
will
and
be
Examination
Mr.
in
of
charge
effective
Stetzelberger
Bank
March
has
•
1.
in
been
Personnel.
The Persqnnel
functions will then be
placed
under the direction
of
Martin Morrison, Vice-President,
"who is also in charge of the Fis¬
of
charge
Austin
G.
Pritchard
E.
Richard
and
direc¬
elected
were
Sav¬
of Chicago at the
ings Bank
f 'Ray
Agency function; Roger R.
Clouse, promoted from Assistant
cal
Vice-President to Vice-President,
Duff, Cashier, be¬
Vice-President
comes
ier.
H.
and
stockholders'
nual
Austin
is
meeting.
member of the
a
an¬
Mr.
law
firm "of
Sidley, Austin, Burgess &
a director of several
companies. Mr. Pritchard is VicePresident of the bank in charge
Harper, and
if
Banking
Department
opera¬
He has been associated tvith
tions.
of the Fiscal Agency Department
io
Assistant Cashier in charge of
Harmen
B.
Flinkers, promoted to Assistant
Secretary of the bank, in addition
to his duties as statistician of the
Bank Examination Department.
that
department;
.
.
-
>
1939
Vice-President.
as
the
of
member
is
He
a
Reserve
City
Bankers Association, and is Treas¬
urer
of both the Chicago Better
Business
Bureau and
St.
Louis district for
the
Federal
Retiring
from the Board in accord with his
request was William P. Sidley of
Sidley, Austin, Burgess & Harper,
who
the
has
served
for
bank
as
32
a
director. of
*
A
resolution
the
of
name
of
adopted
was
the
annual
Gate
City
Kansas
City,
directors at
by the
meeting
Jan.
11.
As to this action the Kansas City
i'Star" of that'date said:
i
"The
decision
of—the
name
on
shorten
to
the
Traders' Gate -City
bank
originally was planned
shortly after 1930, when Traders
City.
consolidated
At
that
time
with
Gate
Traders
was
housed in the old Bryant building
which was to be razed, and Gate
Traders
needed
was
effected.
will
become
space,
merger
a
The change in name
effective
#
April 1."
Assistant
Vice-Presidents.
Mr
JCyle vjoined the bank in April
JL946 after returning from Army
^rvice,
having
previously been
with the Federal Reserve Bank of
New. York
and
the
Cleveland
Trust Co. Mr. Wild has been with
the
Union
Bank
of Commerce
sfricd its establishment in 1938 and
had formerly been
associated with
^
)
•
v
;Two
to
the
'
new
•
1
directors were added
board of the Union
Bank
of Commerce at the annual meet¬
ing of- shareholders
Jan. 12,
president John K. Thompson am
nounced.
They are William C.
Dunn,
President of The Ohio
on
President
been
and
Mr.
[Dec. 31] an
share,
Friday meeting
extra dividend of 60 cents a
total of $3 for the year."
the annual meeting of the
making
At
a
stockholders of the
bank
Jan.
on
11, according to an announcement
by Mr. Simpson, approval was
given to plans to increase the cap¬
ital stock of the bank from.v$4.-
000,000 to $5,000,000, such increase
being provided for by the sale of
additional capital stock.
At the
January meeting, the surplus, of
the bank
transfer
also increased from
was
$4,000,000
$5,000,000
to
profits account.
These in¬
creases will give the bank a total
capital
stock
and
surplus
of
$10,000;000. The promotions noted
above
were
approved
by
the
ing.
of Kansas
meeting
ceeded
Linwood
as
on
11 meet¬
Jan. 11 and was suc¬
Presidency by his
Edward
from
G.
the
Price,
it is
Directors of California Bank
Kansas
City
"Star," which notes that Mr. Price
of
Los
Angeles, at their annual or¬
ganization meeting on Jan.
12
voted
to
issue 40,000 additional
the outstanding
stock to 300,000 shares, Frank L.
King, President, announced.
bringing
shares,
given
were
scribe
of
Jan.
15
opportunity to sub¬
an
additional stock
this
to
ratio
the
record
of
Shareholders
share
one
ficers
retary to Assistant Vice-President.
*
Directors
Chicago Title and
of Chicago on Jan. 12
Co.
Philip A.
President.
merly
of
the
1921,
a
*
*
of
Mr.
Paulson,
Paulson
University of Illinois in
Mr.
Paulson
came
with
Trust
1929, he
19, 1926 in
Department.
was
Trust Officer.
was
for¬
made
dent and
In
April,
appointed Assistant
On Jan.
Assistant
9, 1945 he
Vice-Presi¬
Nov. 1, 1947 was ap¬
pointed Trust Officer in charge of
Trust operations.
H.
Schroeder
/
*
at
each
for
.
Mi.
*
*
iji.'.V,J'.'*.,
*
Carl
L.
Comptroller,
*
The capital of the American Na¬
Bank & Trust Co. of Mo¬
bile,
Ala.,
has
become
been raised on Dec. 28
from $375,000 to $406,250, through
stock
dividend of $31,250, and
$406,250 to $500,000 through
the sale of $93,750 of new
stock,
according to the Comptroller of
a
from
the
Currency's bulletin of Jan. 3
*
*
*
&
Albuquerque National Trust
Savings Bank of Albuquerque,
capital
solely
from $600,000 to $1,000,000 on Dec.
to
31
be
by
an
of
increase the
stock
from
260,000 to 400,000 shares. Share¬
incorporation to
capital
authorized
holders re-elected all members of
board
the
directors.
of
of directors,
At
the
officers
capital
funds are in excess of $18,100,000,
a
new
high, President King re¬
ported.
meeting
re-elected.
were
$
H:
The
board
Stockton
of
all
Total
*
directors
of
of
the
Stockton,
Cal.,
on
hoit
Chairman
as
Jan.
announces
the
of E. L. Wil-
13
the
of
and R. L. Eberhardt
as
Board
President.
■■
*
*
organization meeting of
izens
National
Bank
of
Trust
Los Angeles
&
on
Savings
Jan.
13,
President H. D. Ivey and all other
officers were reelected. In addition,
has been
dis¬
tributed by the American National
title to the Albuquerque National
Bank and Trust Co. of Chicago to
its staff.
Entitled "A Report to
letin issued
Sherwood, G. E. Weber and Irene
Parsons to Junior Vice-Presidents;
C. N. Erling to Assistant Cashier
and
Assistant
Secretary; E. R.
Tracy, K. C. Moore and Howard
banking
the
ever
made in
circles,
Staff," it deals
with general
and oq
Bank, it is learned from the Bul¬
fice
of
Jan. 3 by the Of¬
Comptroller of the
on
the
Currency.
:
Cashier to Assist¬
E. F. Kirchen and L. A. Wiseman.
Arthur Merkt
promoted from
was
Chief Clerk to
from
ford
Assist¬
ant Cashier.
"One-Way Theories"
(Continued
from page
postwar
years
advocate
lopping,
13)
of
phenomenal
prosperity has raised his voice to
$10,000,-
* say,
000,000 or $20,000,000,000 off the
government's debt, it has com¬
pletely escaped the attention
writer, at least.
of
this
The fanm program known as
the Ever-Normal Granary is an¬
other instance of economic plan¬
ning
that
works
direction.
chiefly in
one
The theory behind this
is both ingenious and
When there is a glut
the Government is to step
in and take the surplus off the
market, feeding it out again as
prices recover and the demandprogram
plausible.
of crops
supply situation returns to
thing
like
balance.
The
some¬
only
trouble with-this scheme has been
that while
buying operations have
enthusiastically
the
government
supported,
has
political
strong
of that
have
when
reversal
a
How it would
policy.
got
into
run
resistance
tne situation called for
from
out
ever
under
the
mountains of grain and cotton
ac¬
cumulated under this program
had
World
War
when it did
II
no
not
come
will
one
along
ever
know.
Any discussion of such "rainy
day" theories
these, would
as
be
incomplete which did not mention
in
passing
that
remarkable
ex¬
periment in "reflation" conducted
In
This
1933.
based
was
Warren
so-called
theory,
on
the
which
held that
by raising the price of
gold the
government
duce
a
price level. If this
might
could
pro¬
general rise in the nation's
be
a
were
true, then
reversal of the
process
to be
corre¬
expected
spondingly anti-inflationary. Yet,
although nearly every conceivable
plan for halting the rise in prices
and
living costs has been put for¬
ward at
the
the following promotions were an¬
nounced:
W. J. Richards, R. P.
the first of its kind
Assistant
Vice-Presiderlt,
F. F. Hahington;
Vice-President, J. W. Crane,
❖
$400,000 stock dividend
the same date changed its
a
fol¬
Savings and Loan Bank
election
At
Mr.
the
to
F. P. Gallot and
ant
From
staff:
from Assistant
obviously
the board of directors of the Cit¬
The
New Mexico, increased its
Share¬
approved
amendment to the bank's articles
$500,000,
having
$35.
at
earlier
had
holders
tional
on
An annual report written
for its employees, believed
and
Schupp;
Assistant
Harry Filson.
Vice-
was
Trust Officer. A graduate
the company on Aug.
the
Clair
fixed
was
and
Vice-President
The subscription
6V2 shares held.
price
Metal
1947.
lowing promotions among the of¬
been
*.
*
State Bank
the
nephew,
■:
.
Pres¬
City, Mo., at the annual
in
undi¬
vided
#
Charles D. Hall retired
ident of the
the
by
funds from the
of
in
announced
also
Pres¬
as
California
Coles
"The bank directors declared at
the
He served
the
Association
Crocker
>
frie Union Trust Co. and its liqui¬
dation.
has
of
Trades
Com¬
California
the
Mr. Simp¬
stockholders at the Jan.
.
elected
to
Follis and G. W.
Assistant Cashiers.
son
and
Vice-Presidents,
as
.
National
At the meeting of the directors,
following the stockholders meet¬ had been Executive Vice-Presi¬
ing, elections and promotions in¬ dent for the
past two years.
cluded the following: Vice-Presi¬
$
*
*
dents: George S. Allen, John J.
The board of directors of City
McDonough, Robert W. Rogers,
Bank
&
Trust Co.
of
Warren L. Fellingham and Frank¬ National
lin O. Mann, all previously Assist¬ Kansas City, Mo., have voted the
ant Vice-Presidents; to Assistant following advancements and new
Vice-Presidents: Roy A. Johnson, officers: Vice-Presidents: John E.
William F. Murray and William Hoffmann and Jack Black; Assist¬
C. Norby, all previously Assistant ant
Vice-President,
Charles W.
Cashiers; and Walter W. Planke Koester; Assistant Cashiers: W. B.
was advanced from Assistant Sec¬ Waterhouse,
Ed. T. Arnsberger,
the stockholders'
meeting, Walter
Buck
J. A.
and
John E. Whitmore and
were
O.
E.
ident
Paraffine
The
ant Cashier and William P. Brad¬
promotions made by the
"Other
the
shorten
to
Traders
Bank
Jr., was
The latter
Assistant Trust Officer to Assist¬
also quote:
paper we
of
Inc.,
Insurance Co.
since 1934.
❖
* -
learned
years.
same
From
Doherty Executive Vice-President
Deposit Insurance Corporation.
the Ravinia
Festival Association..
the
L, Kyle and Louis A. Wild were
advanced from Assistant Cashiers
the
as
the
having served City owned the building at 1111
Cashier,
Assistant Grand Avenue. Both banks were
Vice-President, Cashier, and since about the same size, and since
Trust
of
Chairman
bank.
the
of
board
the
had been senior examiner in
Assistant
Union Bank of
Commerce of Cleveland following
directors
is
Jones
H.
Jesse
er.
board
•
-I;)!
* ' *
* : \
^
..JAt the organization meeting of
bookkeep¬
Cash¬
■
Will continue in charge of Bank
'^nd Public • Relations; Phillip B,
jpidham, promoted from Manager
each having started as
joined the bank in 1946.
Mr. Kirk, who joined the bank as
Vice-President in 1945, previously
He
the bank since 1920,
as
with the bank for 31 years,
been
of
Mo., to the Traders National Bank
tors of the Harris Trust and
ginia Press Association.
"William
National
years ago.
she
1945-46
further stated:
Moore,
is President and General Manager
of Moore Dry Dock Co. and a
connected in the
.the Virginia Press Association for
non-dailies
von
A.
elected to fill his place.
■
Windegger had been Pres¬
ident since 1932, said the St. Louis
"Globe
Democrat"
of
Jan.
12,
that Mr.
\
Miss Daphne Dailey joined the
;
the
of
Joseph
son,
panies,
Mr.
had retired as a Di¬
bank and that his
Co.,
rector
Director
cinnati, in which post he succeeds
National
of Directors of Moore Dry
Board
proposal Associate Professor of Agricul¬
split the bank's stock 10 shares tural Marketing and Finance at
R. P. Doherty
A. D. Simpson
one through reduction in the
Kansas State College.
*
'
*
*
par value of the stock from $100
f'. ■:
curred at the year-end meeting of
a. share to $10.
John R. Kirk Jr. was promoted the directors of the bank, at which
*
*
*
from Vice-President to President time also R. P. Doherty, hereto¬
Fred A. Dowd resigned on Jan. of the Plaza Bank of St. Louis on fore
Executive
Vice-President,
11 as Vice-President of the First Jan. 11, succeeding F. R. von Win- was
made
President succeeding
National Bank of Cincinnati, Ohio, degger, who was elected Chair¬ Mr. Simpson. Both, said the Hous¬
to become President and director man of the Board of directors. ton "Chronicle" of Dec. 31, have
of the Atlas National Bank of Cin¬
First
announced,
following the annual meeting of
the stockholders on Jan. 11, that
Joseph A. Moore, Chairman of the
meeting.
The
quirer" in its
.
of Virginia, at Richmond, Va., at
*
Crocker, President
Crocker
to
*
*
*
W.
Bank of San Francisco
proval of a stock split-up occur¬
red at the bank's recent annual
for
•
the
of
*
*
E.
Secre¬
'
■
..
Cashiers;
Assistant
to
47
tary; R. H. Hamilton to Manager
of Real Estate Loan Department,
and J. K. Britton to Chief Ap¬
praiser,
holders of the directors'
National."
Assistant
to
Keusink
B.
Cincinnati
"En¬ Federal Reserve Bank of Minne¬
issue of Jan. 12, apolis at their, annual meeting on
j Cashier,
was at the, same time in its column edited
by Frank J. Jan. 14, elected Franklin L. Par¬
elected
Cashier
to
succeed
Mr.
Ruhe, said that Mr. Hays, was sons Associate Director of Re¬
ClarkBoth Mr.' Clark and Mr.
named to succeed the late Joseph search, and
re-elected all other
Reese started their banking ca¬
P. Thomas, who was President of officers. Mr. Parsons, who joined
reers in
1923 as runners for the
the U. S. Printing & Lithograph¬ the bank in March 1944 as Agri¬
Citizens
National» Bank,
.Which
ing Co. The advices indicated that cultural Economist and continues
was later merged with the Merapproval was given by the stock¬ in that capacity, was formerly
chants National to form the First
.
•
other
All
Co.
re-elected.
were
R.
First National Bank
of
Treasurer
and
*
Clark from Cashier to Vice-Pres¬
ident of
Co., and Ben P. Gale,
Vice-President
directors
.
COMMERCIAL
one
time
or
ing the past three
another dur¬
years,
the
one¬
time advocates of gold prices ma¬
nipulation have been strangely si¬
lent.
On
such
occasions
have broken into
as
esting to note, it has been to
a
they
print, it is inter¬
urge
further increase in the price of
gold
because
costs
(and particularly the cost of
prices
mining gold) are
now
and
living
too high.
,
48
(476)
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
Thursday, January 27, 1949
Indications of Current Business
The
following statistical tabulations
shown in first column
cover
either for the week
are
or
month ended
Latest
AMERICAN
IRON
Indicated
Equivalent
Steel
AND
steel
(percent.of capacity)—
to—
Month
Week
Ago
101.1
Jan. 30
that date,
on
Previous
Week
INSTITUTE:
STEEL
operations
100.1
in
or,
Jan. 30
1,863,800
Ago
oil
Gas
Finished and unfinished
Kerosene
oil
fuel
18,278,000
17,902.000
(bbls.)
'
2,537,000
2,489,000
7,539,000
7,496*000
9,053,000
8,880,000
71749,000
2,493,000
7,789,000
9,187,000
9,153,000
109,219.000
107,111,000
98,225,000
Jan. 15
22,593,000
23,368.000
25,342,000
70,491,000
73,941,000
81,071,000
44,482,000
85,609,000
85,544,000
87,217,000
AMERICAN
Steel
and
98,751.000
freight loaded (number of cars)
Jan. 15
Revenue freight received from connections (number of cars)--—Jan. 15
.V
,
•"
>
4
.
'■*' 'V':;
»'
.
^
■>
-
\
t
t
*•
'
' v *
•
733,272
'•
''',*
721,507
754,545
803,308
640,012
594,516
666,197
691,953
CONSTRUCTION
ENGINEERING
—
ENGINEERING
of
Private
-Jan. 20
—
construction
Public
State
Jan. 20
60,115,000
59,243,000
111.832,000
!
—;
36,486,000
73,340,000
61,403,000
51,126,000
30,954,000
58,736,000
—
———i——Jan. 20
————
—
129,754
*138,632
133,154
castings
7,755,839
*7,778,612
7,375,641
5,732,256
5,952,008
5,216,990
produced
December——
alloy
$132,583,000
5,532,000
$173,235,000
$118,949,000
14.604,000
reporting
transported (tons)
286
*286
286
,955,292
*3,100,182
2,606,875
construction—.
$1,3917;
*$1,552
$1,320
1,080
*1,178
1,097
550
*600
610
312
330
284
114
*115
134
100
*112
91
38
—
building
*38
22
(nonfarm)__'__
building
(nonfarm)
_
Commercial
_1
'
-
-
Warehouses, office and loft buildings
Stores, restaurants and garages—
40,171.000
11,199,000
Nov.,
ASSOCIATION—
construction
Industrial
•
50,204.000
of
carriers
motor
freight
.new
67,823,000
Jan. 20
—
municipal
and
Federal
$96,601,000
Jan. 20
construction
for
of
pounds)
INSTITUTE:
November:
of
of
Private
NEWS-
construction
10,955,000
62
building—
98
coal
Bituminous
and
lignite
Pennsylvania anthracite
Beehive
(tons)
—Jan. 15
—
(tons)
11,880,000
>11,585,000
15
1,050,000
1,032,000
:—_ Jan.
(tons)
coke
24
Hospital
——_
Jan. 15
—
♦
140,800
11,315,000
13,080,000
940,000
1,210,000
141,000
140,500
7
149,200
and
Institutional———
INDEX—FEDERAL
SALES
SYS-
RESERVE
AVERAGE=100
TEM—:ly35-3D
Other
Jan. 15
245
576
232
Public
public
Electric
(in 000 kwrh.)__
output
22
15
205
226
188
32
55
55
139
10p
*374
223
—
Jan. 22
——
5,768,934
5,726,703
5,503,240
building
naval
or
Industrial
5,436,430
(COMMERCIAL
INDUSTRIAL)—DUN
AND
&
Hospital
BRAD-
STREET, INC.
All
142
—Jan. 20
127
"
116
109
2——2
pother
steel
Pig
(per
iron
•
(per lb.)———•
—Jan. 13
3.75628c
3.75623c
—
—Jan. 18
$46.73
$46.82
Scrap steel (per gross ton)—.
,an. 13
$40.92
3.75628c
"
$40.92
$40.03
$43.00
All
Electrolytic copper—
Domestic
:' "A
refinery
'
•
>7/' 7>
,
at_
'■
'
>■
_!
n
refinery 'at——2—
tin (New York) at——i-..
Straits
Read
(New York)
Read
(St. Louis)
23.200c
,23.200c
23.425c
—fan. 19*
21.200c
23.425c
'
fati.19
Zinc (East St. Louis) at
103.000c
21.500c
21.500c
21.500c
21.300c
21.300c
17.500c
17.500c
number
Construction
14.800c
17.500c
Retail
10.500c
103.000c
94.000c
Commercial
Total
U.
BOND
PRICES
Average corporate
Aaa
:—:.
—
mn.
-
—
:
A
L
:
112.00
.
Jan. 25
Group
_
-
—
_
YIELD
BOND
111.81
116.02
DAILY
v
:
108.52
117.20
110.15
V:
103.80
V
Commercial
Total
116.22
114.85
2.43
3.07
3.12
'an. 25
2.70
2.71
COAL
.
Month
2.77
2.85
2.93
3.16
3.46
3.52
3.63
To
North
3.25
3.34
3.44
To
South
2.99
3.04
3.02
To
Europe
2.79
2.84
2.91
To
Asia
Africa
339.3
3.22
2.99
.
.
2.79
.Jan. 22
Jan.
385.8
•
394.8
449.0
-
,
U.
S.
Foods
and
oils
of
-Jan. 22
236.2
226.8
175.4
•
189.6
282.0
245.9
305. /
of
33U.2
241.2
239.9
171.2
181.5
195.4
195.3
219.4
Fertilizer
materials
All
227.1
147.8
147.8
'143.4
'143.5
151.3
.•
Fertilizers
Farm
190.4
Tan. 22
—Jan. 22
150.8
Jan. 22
155.2
155.2
Jan. 22
214.3
—
drugs,
—
Jan.22
—
——
•
.
machinery
—
combined—-
groups
(net
(net
Orders
received
—
(tons)———
(tons).
1
190.4
-
190.6
161.5
227.1
225.8
In U.
Refined
of
(net
233.3
Percentage of activity
Unfilled orders (tons)
AND
PAINT
AVERAGE=100
STEEL
215.6
155.3
142.8
136.7
150.8
142.9
155.2
134.5
217.1
NEW
S.
DEPT.
,
226.7
.
,
S.
204,405
155,499
Farm
of
:
FORGINGS
158,780
194,503
193,150
15
93
79
96
104
337,149
361.252
323,781
MAGNESIUM
431,880
OF
141.7
142.1
150.6
Shipments
A.
Orders
Metals
174.3
179.4
201.1
fan. 18
161.9
164.4
170.0
153.0
152.9
152.8
144.2
144.3
145.2
148.6
Month
137.1
137.1
137.5
130.4
Shipments
—Jan. 18
Jan. 18
175.3
175.3
173.7
201.8
200.9
201.6
.Jan. 18
133.6
133.5
Jan. 18
166.6
Tan. 18
metal
and
Building
209.0
18
221.0
Jan. 18
;
products.
202.9
v
,
Unfilled
(short
Grains
Hides
-j.
'
an.
-
k
skins
^Revised figure.
i
-
-
and
148.9
.
.
-
.....
«
-
,
»
.
■*
.
it
*
«'•
1
».»
4*
-*»•<(
■>
*
*
•. V A
—
64.088
—
96,117
*58.297
80,954
102,779
108,816
102,292
2,000 lbs.)
COMMERCE
*99,655
113,446
89,756
76,03$
23,772,000
-
'
(1935-39
20,776,000
21,231,000
23,730,000
21,412,000
3,544,000
9,253,000
9,544,000
383
389
402
tl29.1
132.5
532,000
519,000
269,000
,
—
middle
at
23,751,000
tl30.1
COMMISSION
'
of
average—100;
WROUGHT
PRODUCTS
(in
pounds;
of
CASTINGS
IRON
(short
>*
November:
(DEPT.
OF
tons)_
77,234
own
(short tons)
use
less
cancellation,
.
for
STEEL
of
month,
sale
tons)
.
CASTINGS
(DEPT.
OF
158,351
206,510
•
133.5
140.4
Unfilled
170.1
260.1
218.3
226.0
227.8
247.3
Production
197.0
(number
of
240.8
Shipments
(number
of
*152,983
*114,819
units)
(value
146,835
110,275
units)
193.7
(short
orders
use
own
for
sale
(short
at
end
tons)
36,560
130,125
97,143
32,982
*38,164
V
month
of
tons)
TRUCK TRAILERS
'
35,804
146,422
:
tons)_|
sale
producers'
,'Month of
38,654
COMMERCE)—
tons)
For
*
'
■
November:
(short
For
254.1
32,142
'
end
194.7
-
39,969
30,312
orders,
of
72,111
44,305
37,456
V*;
sale
for
81,761
42,241
34,993
(short tens)
217.4
,
(DEPT.
„—
170.1
^Includes 469,000 bar rels of foreign crude runs.
#•
Dec.:
at end of period (tons
154.2
.
,
fOld capacity basis.
of
180.1
(short
Special Indexes—
Meats
of
Shipments
materials
All other
Livestock
Month
lbs.)—
tons)
170.1
——-Jan. 18
materials.
585,818
96,080
booked;
(short
Jan. 13
Jan. 18
Textile products
Fuel and lighting
103,740
604,715
U. S. A.—
2,000 lbs.)_____
(tons
sale
166.5
All commodities other than farm and foods
For
—
2,000
of
producers'
162.5
—
123,161
620,503
(short tons)
customers—
For
160.5
:
OF
COMMERCE)—Month of November:
143.1
..Jan. 18
Foods
-w
-
(DEPT.
200
123,914
COMMERCE)—Month
Shipments
159.3
;
10,162
November:
of
Railway Employment
T*n. 18
products
353,012
162,359
194,092
'•
commodities
411,911
139,308
84
—
lbs.)
INTERSTATE
LABOR—
OF
;•
1926=100:
All
SERIES—U.
492,659
-
—
149.5
172,225
Jan. 15
—
PRICES
765,123
tons)_^
of
For
WHOLESALE
642,129
437,892
—
SPINNING (DEPT. OF COMMERCE)
Spinning spindles in place on Dec. 31
Spinning spindles active on Dec. 31
Active spindle hours (000's omitted), Dec.—
Active spindle hours per spindle in place, Dec.
INDEX —1926-36
PRICE
$48,581
—
Jan. 15
Jan.
REPORTER
$54,430
—
copper stocks
December
Jan. 15
—Jan. 15
at
DRUG
7,467
13,487
31,664
tons;
—
(net tons)
to
MALLEABLE
OIL,
$27,627
8,423
15,223
COTTON
1'
7
(net
tons)—
tons)
(short
2,000
Index
—
—
——.—.—,——
$30,784
$):
anthracite
America
tons)
(tons
Deliveries
RATIONAL PAPERBOARD ASSOCIATION:
Production
of
MINES)—
Pennsylvania
America
(tons
Refined
228.9
172.2
196.0
Crude
261.7
—Jan. 22
and
OF
Central
Copper production in
316.2
250.8
171.7
Jan. 22
208.7
240.2
240.1
—
208.2
233.9
materials
$31,104
8,536
15,605
COM¬
(millions
469,640
and
INSTITUTE
COPPER
274.4
307.8
-
206.6
Building
OF
' $25,499,000
239.2
239.6
313.4
._
.
223.8
169.2
Jan. 22
—Jan. 22
—
1,232,000
$24,416,000
$55,245
DEPT.
Nov.
Unfilled orders at end of month
—
Chemicals
924.000
455,000
$31,731,000
tens)
Shipments
222.2
products
955,000
1,382,000 A
November:
of
COMMERCIAL
COMMOD
:
Fats
Farm
1,908,000
2,396.000
liabilities
COMMERCE)—Month
ASSOCIATION—WHOLESALE
967,000
3,456,000
;
(BUREAU
exports
(net
GROUPS—1935-39=100:
BY
$20,937,000
2,690,000
4,247,000
1
3.14
3.07
*
2.80
J.O
Group.
FERTILIZER
ITY INDEX
$15,933,000
2,184,000
—
To
.
Jan. 25
Jan. 25
RATIONAL
23
317
—
EXPORTS
2.86
2.80
3.05
5<.<M
^
v ■
2.45
3.01
•Ail.
INDEX
26
460
Retail
2.42
„
COMMODITY
123
C'
37
.
V
$21,980,000
liabilities
INVENTORIES,
117.20
3.00
Jan.25
KfOODY'S
33
*>".•
31
Wholesale
2.41
Jan.25
Utilities
112
55
"36
Manufacturing
an.25
.
Public
129
203
531
MERCE—Month
105.17
112.75
Total
-
number
service
112.37
Jan. 25
,
Baa
9
V
V::
64
liabilities
113.31
,
-
;
liabilities
BUSINESS
103.64
AVERAGES:
—
217
l,
liabilities
106.92
,
Average corporate-
i.—
l,
114.46
110.52
104.83
113.31
.
115.82
111.81
,V
105.34
—
_
*■
155
110.88
117.60
117.00
.
109.06
Industrials GroupKfOODY'S
v
100.69
112,93
•
100.96
118.80
5
119.00
117.00
Group.
Utilities
101.16
113.12
.
Ian. 25
-
Public
25
'"an. 25
Baa
Railroad
101.29
Jan. 25
k—2
—
—
—
•
_L_
liabilities
Construction
'an. 25
-
service
Manufacturing
Retail
AVERAGES:
Government Bonds
S.
Aa
DAILY
14
BRADSTREET
—
number
Wholesale
KfOODY'S
8
6i AVI'V-A.,:.'' 36
A
59
number
28
•.
h
-
54
65
43 ,'Vv.
,
v
December:,
___—
17
•126
,
6
12
15.000c
21.300c
Jan. 19
L
103.000c
ran. 19
.
1
21.500c
23.425c"
Jan. 19
at
at
A
8
-A.-
11
12
number—
32
21
-
•
40
Wholesale number
63.200c
Tan, IT
Export
of
25
80'
,
FAILURES—DUN
Manufacturing
!
*61
20
•
,,,
"^2
-
1
V7.V
public
INC.—Month
-.c.:,y--iv-A
8
}'>>
*103
10
■
$41.83
BUSINESS
(E. & M. J. QUOTATIONS):
M1TETAL PRICES
'
•
—
water
other
::V
25
Miscellaneous public service enterprisesConservation and development
:
3.22566c
$46.82
■
60
——
Institutional
Military and naval facilities
•
28
3
-v
■'
106
20
.
'-ft
facilities)—,—
■
—
ton)
gross
>
3
nonresidential—^
and
;'V:
:
than mili¬
_j,
and
other
Sewer
PRICES:
COMPOSITE
Finished
J
■
Highways
OON AGE
120
—
311
Educational
FAILURES
9
*40
construction
tary
*10
■V: 55
r
telegraph
utilities
Nonresidential building
;(::
V
-
'
13
and
Residential
EDISON ELECTRIC INSTITUTE:
>■'>
A-17
30
utilities
Telephone
STORE
13
v
36
.
—_
Railroad
DEPARTMENT
59
28
25
10
types—
construction
Public
-,>•7'.
'
Remaining
Farm
69
103
28
Educat ional
MINES):
74
\
"
Other, nonresidential
Religious
COAL OUTPUT (U. S. BUREAU OF
.10,455
.
.!>
November:, a
(net- tons)—Month
Residential
S.
,
43,959
(DEPT.
products, including
Nonresidential
U.
.
Ago
53,255
CONSTRUCTION—U. S. DEPT. OF
LABOR—Month of December (in millions):
Total
RECORD:
Total
'.
/
54,526
10,263
BUILDING
>.
,<
•
CIVIL
"
•
of
STEEL
TRUCKING
Month
'
■
■
steel
stainless
Volume
Revenue
s
'
,
PRODUCTS
steel
and
of
AMERICAN
RAILROADS:
AMERICAN
AND
tons)—Month
Number
ASSOCIATION OF
'
-
(thousands of
IRON
ingots
(net
51,601,000
»an.
at
October——
Year
„
12,975,000
15
Jan. 15
at
.
shipments
Shipments
Tan. 15
—
(bbls.)
■
WROUGHT
Month
16,236,000
2,762,000
Total
pipe lines—
gasoline (bbls.) at
(bbls.) at
distillate fuel oil
Residual
18,432,000
Jan. 15
and
oil
Gas
15
of
tons, (end of Oct.)
COMMERCE)—Month
5,344,000
Jan. 15
Stocks at refineries, at bulk terminals, in transit and in
-
5,326,13-7
5,695.000
an.
(bbls.)
oil output
fuel
5,645,250
5,752,000
—
output (bbls.)_
.
and distillate fuel oil output (bbls.)
Kerosene
-Residual
5,453,850
Jan. 15
(bbls.)
output
Gasoline
5,428,300
115,721,000
tons)—Month
'
.'
OF
(bbls. of 42 gallons each)——Tan. 15
stills—daily average (bbls.)
<an. 15
to
1
ALUMINUM
Crude oil output—daily average
runs
short
Stocks of aluminum—short
.
.Crude
:
Previous
Month
(BUREAU OF MINES)—
Production of primary aluminum in the U. S.
1,716,000
1,753,800
AMERICAN PETROLEUM INSTITUTE:
(dates
of that date)
ALUMINUM
95.2
97.3
1,845,400
are as
Latest
(in
ingots and castings (net tons)-——
month available
or
of quotations,
cases
Year
.
,
Activity
production and other figures for the latest week
395,013
:
•
\
.
*424,460
493,309
(DEPT. OF COMMERCE)—
November:
*Revised figure.
3,831
3,725
3,853
3,969
$11,932,830
$10,642,563
tPreliminary figure,
i.
■
v"-,
•
• < '# •»
3,241
3,445
$11,129,685
dollars)
in
if
r
»•; -■
•"
,s.. v..
•
*•» •*»'
Volume 169
COMMERCIAL
THE
Number 4772
ise
could
affect
-
these markets materially.
Savings
loan
and
associations
Slave been expanding assets at the
jrate of nearly $1.5 billion annu¬
ally.
Nearly all additional funds
received
tate
invested in real
are
mortgages.
No
es¬
change
is
■
has been suggested by some lead¬
ers in this field that these asso¬
is
and
insurance
Government
likely in this policy, although it
few years.
a
Expanding businesses need dol¬
About half the total of gross
personal liquid savings are now
placed with commercial banks,
savings banks, savings and loan
associations, and life insurance
companies, nearly another quarter
flows into,; the Treasury through
sion
return their savings on
notice—nor, in most cases,
after
even
14)
(Continued from page
companies
to
Short
Funds in 1949
surance
lars they can keep and they can't
expand satisfa cto r il y without
ity, the possibility
investments
ment's notice, and most of them
will not invest without it.
v
It
pen¬
funds, and only the balance
Stockholders need liquid¬
to turn tneir
into cash at a mo¬
them.
this dilemma that brought
was
the Stock
Exchange into being.
As businesses (and governments
invested directly.
The total of savings to be col¬
lected by private financial insti¬
too for that matter)
tutions in 1949 will probably vary
investor
could
for greater liquidity, which would
foe needed in the event of con¬
little from the 1948 total of about
cipal
he
siderable
ment
ciations keep 15 % of their assets
in cash and Government securities
cash from
demands for
The two major invest¬
$7 billion.
outlets
insti¬
financial
for
Were such
policy
a
be
to
if
widely adopted, mortgage
lending might fall temporarily be¬
low the increase in assets for
associations,
some
this liquidity fund
as
is built up.
Conclusion
The
for
volume
of
private
new
channels
the
funds
investment,
into
which
and
these
ship of
ket
in
corporate
volume
in
through analysis
best
of
which
because savings have been very
bonds.
the
quality of these in¬
and
vestments
be
the operations of our major groups
of financial institutions.
This is
so
receiving these savings are
mortgage loans and
corporate bonds.
Savings banks
and savings and loan associations
have been placing the larger part
of the new savings they receive
can
likely to flow,
are
studied
available
funds
that
will
be
available
they
are
influence
to
tions
to
offered,
our
large
a
are
going
financial institu¬
extent
largely institutionalized in recent
choice of
years.
in
the
savings that they receive.
investments for the
new
ready tc
was
(477)
.nvestor
and management merg¬ the proposition that great day3
them into a solid unit of were ahead. It was a time of op¬
ownership.
This function is of timism and growth. Then we had
material importance to the small a War and a long depression, then
shareholder as there is a tendency another war, and somebody dis^in the modern corporation to di¬ covered
atomic
power.
Today
vide ownership and management, many are cynical and pessimistic.
do not choose to join
and this tendency, if unchecked, I
them.
might lead to operations which Rather let us re-dig the wells o£
benefitted the management at the optimism and friendship our foreiathers dug.
expense of the stockholder.
The state of friend¬
in
summary,
the' Stock
Ex¬ ship we have reached in Canada
change's primary and most vital and the United States is an ex¬
function is to provide a. market
ample of what we may expect m
ing
that
mobilizes
the
.
nation's
sav¬
the
ings and channels their flow into
industry under conditions which
fair to
are
both
obtainable
"exchange" of stock between them
as
simple and
possible.
as
After
the
fair
as
a process
widespread
installa¬
tion of the
ticker, the Stock Ex¬
change
in
was
position to supply
throughout
the
a
communication
world, of
ment, of
a
became
the price, at any mo¬
particular security.
It
the
responsibility of the
inform as large a
possible of the poten¬
tial buyers and sellers of a com¬
pany's shares of the current quo
Exchange
to
number as
A
less
citizens of the world.
For
business
efficient
to
has
A bad business serv¬
ing
no
economic purpose may
find the cost so high that it can¬
not obtain new funds.
Under the
publicity of a free market,
prospects
are
rejected or
penalized and good prospects are
rated on their margin of safety.
If a market is not badly handi¬
friendship,
the
If
In
Fair
(Continued from page 8)
far
outrun
1792
through proper chan¬
exchanges didn't
and
He
This
progress.
unfortunate
most
be
progress is sound only
economic progress creates
when
the
•
economic
would
social
as
wealth to pay for it.
ivho
wish
social
of
to
Those
enjoy the blessings
should be
progress
willing to undergo the fatigue of
supporting it.
two
The ability of our
economies
to
bear
under
up
the taxation already placed upon
them by government subsidy rests
upon
the
initiative, force and
imagination
and
the entrepreneurs
of
bankers
democratic
foundation.
They
starry-eyed
created
who
established
capitalism
on
firm
a
neither
were
angelic, but they
strength
nor
industrial
an
markets
the
development
inventions
new
The
vastly
standard
of
greater
living
better
and
we
75
of
discoveries
and
with
compared
which
now
enjoy
ago
years
is
due, above all, to the development
of
the
industries
serving
our
every-day needs.
The expansion
of small
business into large-scale
industry to
bring the telephone,
electric light, the X-ray, the selfbinder into the lives of the citi¬
of
zens
have
the
countries
two
would
been
impossible
without
parallel development of the facili¬
ties of the stock exchange.
All
By
burden
keeping close to the capi¬
by recognition of
profit
motive,
Canada
United States
pered
has
drifting
away
Canada
in
realistic
have
in
the
and
have greatly
comparison
in
which
rope
You
of ; social
pros¬
with
Eu¬
retrogressed
capitalism.
from
have
some
by
been
respects
more
—
you
on
economic progress
savings.
Savings
nomic
better
and
are
products.
indispensable to
eco¬
but they cannot
by themselves produce it. To be¬
come productive, savings must be
mobilized for use by industrialists
who plan new factories, engineers
who
build
new
power-plants,
progress,
favored
a
the
stock
present
does
accent
not
on
social
that
bank
but
Exchange members and
by the law of the land.
To
realize
in
come
available
is past.
In. the
communication, for ex¬
ample, which plays a most impor¬
tant part in world unity, we are
now witnessing the rapid expan¬
field, of
When
J
seen—television.
ever
when
invention
we
survey
of
the
cannot fail to
clusion
that
at
television—
the
march
past
75
reach the
within
the
of
years,
con¬
next
75
ii
.*
partnership is turned
into a corporation in which each
investor acquires a share in pro¬
portion to
the funds he con¬
tributes.
For a time, sufficient
money can be secured from friends
or business associates but,, as soon
be
-
Exchanges Afford Free Markets
<>The
foution
Exchanges'* coritr 1both
economic' and
Stock
to
social progress has been the pro-
willing to sink their savings
manently
others
and
mo
in
the
far
a
business
matter
trustworthy
per¬
run
by
how competent
the
proprietors
After
it.
when the market
goes up and
hate us when the
market goes down.
They are say¬
ing the same things about me to¬
day they said 75 years ago.
My
face doesn't get red. I can take it
People love
and
so can
us
you.
Let responsibility
continue
service
be
expectation regarding the future.
Every school boy was educated on
and like old maa
river—'Just keep rolling along'."
guiding
to
your
star
have
we
information
prospective
in¬
vestor, compare a modern pros¬
pectus with a railroad prospectus
issued 75 years ago.
told then how
was
The investor
large the new
financing was to be, how many
miles of track the company oper¬
ated,
and a few other scattered
inconclusive scraps of infor¬
mation.
No balance sheets nor
and
income statements
There
were
included.
no
regular and de¬
information regarding
dividends.
Earnings were
top
was
When you want to
CIRCULARIZE the Investment
Firms in the United States and Canada, Remember Us!
pendable
One
old
director of
a
gentleman, who
a
leading chem¬
have
We
stencil
metal
a
quarter but don't tell anyone."
a
■
to
The first 75
hardest.
and
up-to-the-minute
unheard of now
•ps a growing business needs to go
contributing importantly
to the health, confidence, comfort further afield for its capital, a
stock
exchange
becomes indis¬
and
well-being of men everywhere.
- )•"
Very few people are
' pensable.
wonders
years
will
•?:
look
we
we
how
making
the
were
body was filled with the spirit of
and
grows,
years
get yom
that I learned to grin and bear
two
This
business
a
the slight¬
pany's board the Chairman whis¬
process,
industrial growth
as
Canada or
States had
United
let troubles
People have-been telling
off for 157 years.
me
doubt about the future of our
est
and vigor offer
youth
Don't
do.
down.
to¬
night, few people in
the
pered to him. "We earned $5 this
account
has
our
celebrating
are
we
expansion out of the
of the proprietor,
can
sion of the best medium the world
mean
years
be fi¬
business
it be¬
comes impossible for the proprie¬
tor to provide enough money. He
must employ the savings of those
who can be persuaded to invest
their funds without taking part
in management.
To facilitate this
progress
75
ol
Canadian
complaints and criticisms, just as
I
During the middle part of the
ical company in the '90's, told me
that at a meeting of the com¬
one-man
nanced in its
The
con¬
of Stock
secret.
tion.
1949
of
by the public, is fos¬
by the strict self-discipline
tered
was
A
exchange
respect
than twice the age
more
great opportunity
but yon
will have your jolts and jogs, your
profits which would not otherwise
to
sionals and
the
drugs.
This task of mobilizing
distributing savings is one of
principal functions of the
Stock Exchange.
this
o£
buttonWail
you
countries or of the world.
I
operators who was a boy then.
I hope you will
advantage of the slow com¬ not think of the time as too long
munication with the public and
ago.
Everyday glorious achieve¬
maneuvered the prices of stocks
ments, marvelous new inventions
to serve their purposes.
Today, were announced, we were coming
clean
dealing, both by profes¬ into the golden age' and every¬
and
proposals now offered for
your
consideration by the
Cooperative Commonwealth Federa¬
wonder
In
spring
Streets in New York.
Broad
"Canada's
moters and market
of
the
wasted,
took
chemists who market
new
few.
trasts vividly with the stock ex¬
change of 1874.
In that day, as
history records, there were pro¬
capital gains tax for ex¬
ample—and less so in others—as
indicated by the radical character
no
This information must
to
friend; has passed
climacteric, so you ca"h
forgive
the loquacity
in these
parting
words
of
advice
from
the New York Stock Exchange to
the
Montreal
Stock
Exchange:
have been made.
be available to all rather than
in
the
spreading
a
me
wise old Knick¬
the grand
might otherwise avoid and
unscrupulous would
reap
porations.
free
of
methods
heavy
legislation.
they
nations
the power of incentive and of the
a
markets
mobilized the savings of the two
vision
talistic system,
tain
sus¬
free
and
the
depends
If the community as
a whole consumed
everything that
it
produced,
companies
would
never
be able
to
enlarge their
plants or scientists to seek better
that has thus far been able to
prices
permit
a
in
born
under
is
his
investors would incur losses which
also require, above all things, the
disclosure of information by cor¬
with another, and
one
conclusion
erbocker
stock
would be misdirected and
as
wood tree near the corner of
exist, good companies would get
the holder might easily sell and less
and
bad
companies might
a fresh investor easily
buy at any get more money than they de¬
time.
serve.
The savings of a nation
Corporate Information
lived
would live in peace.
world
enact the role of
capped by unnecessary legislation
and regulation, it directs the flow
savings
have
neighboring na¬
establish a similar
might
full
of
live to¬
Canada and the
years
States
bad
nels.
to
Would that all
tions
tation for the shares in order that
U. S. Canadian Exchanges—
Bulwarks of Free Markets
134
learn
us
neighbors with only an imaginaryline dividing them for 3,000 miles.
Not a fort, a vessel of war, nor
any other military evidence of ad¬
joining nations exists. ' No pass=ports
are
necessary
for either^
people to pass freely across the*
boundary lines.
There is a free
exchange of postal regulations.
There are no other nations enjoy¬
ing such mutual confidence.
the
reflect
stocks
on
as
United
more.
pay
of
gether
'
company.
A free mar¬
the answer.
The Stock
a
was
preview, if you
goodwill possible
a
the
of
when all
stockholder and
Secondarily,
an
Exchange serves as a guide post
to direct the flow of savings to
the best use.
In a free, competi¬
tive
market
the relative yields
management.
future,
please,
profitability and the prospects of
the businesses they represent.
A
Exchange and its members met good business Which has met the
that need; they brought buyers test
of time in its usefulness to the
and
sellers
together, made an public is able to borrow cheaply.
However,
1949, and the relative yields at
get his prin¬
needed it unless he
take over his share in the owner¬
real
mortgage loans, while life in¬
surance
companies have favored
an
not
found someone who
tutions
estate
cannot ordi¬
narily return invested capital;
in
shareholders'.
business
a
that needs to bujr new machines,
to build new plants, cannot prom¬
Use of Institutional Investment
:
Obviously,
be.
may
CHRONICLE
& FINANCIAL
Anyone who purchased
securi¬
ties 75 years ago, and much later
than that—even when the securi¬
ties
represented
the
most
sub¬
stantial companies—had to depend
on
gossip or blind faith rather
on analysis and sober busi¬
judgment
which : he
can
than
for
of
every
North
firm
and
Cities,
Our
list
charge
States
or
SPECIAL
N.
A.
addressing
We
at
can
a
also
small
Cities
and
D.
S.
or
$5.00
is
by
offers
complete
firm
names.
the
you
most
(main
$6.00
(United
list
thousand.
per
LIST
Cities
"Security Dealers
available.
addressing
for
in
alphabetically by States
the
daily
service
Canada)
selected States
All
within
department
mailing
our
listed
arranged
revised
is
in
bank
and
America"
per
,
offices
only)
v
or
thousand.
completed within 24 hours.
supply
additional
the
list
on
gummed
roll
labels
charge.
ness
exercise
today on the basis of
Today, the Exchange in¬
a
cbmpany's board of
directors ' keep
its
shareholders
facts.
sists
!
that
and prospective shareholders
and
frequent
ports
fully
informed through
reports.
Quarterly re¬
a prerequisite of listing
reliably
are
and are issued
whqse shares
by most companies
are
New York Stock
The
come
Stock
a
dealt in
on
the
Exchange.
Exchange
has
be*
catalyst ! between ^the
Herbert D. Seibert & Co., Inc.
25 Park Place
REctor 2-9570
New York 7. N.Y
50
(478)
COMMERCIAL
THE
&
FINANCIAL
CHRONICLE
Thursday, January 27, 1949
told, must not be longer de¬
layed.
am
[Municipal Bond Market Prospects
(Continued from first page)
to
the
be
latter, it should be noted
that short-term loans of housing
realized,
good slice again
goes for taxes and a
well-bal¬
anced investment position should
a
some
authority issues totaling nearly include
$500,000,000 in 1948 were not in¬ nicipal bonds
cluded in the bond total cited. The
number
total
not
fi¬
short-term
of
amount
nancing, including these housing
issues, was just over $1 billion.
Thus, the total of all tax-exempt
financing was nearly $4 billion.
at
of cases
on
Price
where
they
are
present given a moment's
consideration.
The
bonds
are
years
past
many
paid
the
to
has
of
holders
While
of
such
rates
the
pre¬
us,
dinary volume of new issues with¬ tucky 4y2s of 1969 at 102% in
We
bought
these
same
out the price level being affected 1932.
bonds back in 1941 at a price of
more adversely than has been the
159 xk.
Here was a 50% profit in
case.
Actually, volume did have
a
part in depressing the market practically a riskless investment
in March when New York State as far as security of principal was
sold
March
on
Bonus
Bonds
$300,000,000
Ohio
and
followed
16th with $200,000,000.
March
on
2nd
The low point in the market for
the year was the first week in
March when
isted
market
uncertainty
some
ex¬
how satisfactorily the
to
as
could
digest
these
two
large issues.
The "Bond Buyer" Index on' 20
General Market
Bonds
showed
a
yield
range during the year of ap¬
proximately V\ of 1%.
It is sig¬
nificant
that
for
six
different
months during the year the yield
.
This
averaged better than 2%%.
invited
secured
and
insur¬
some
concerned.
A
substantial
change
in interest rates can, of
course, re¬
sult in a material change in the
market value of any long-term
bonds, but the risk of any loss of
principal or interest in the case
of any reasonably well selected
municipal obligation is small. The
experience in equities in poor
markets
has
been
less
favorable
and this may also be said of cor¬
porate bonds.
As
advocate of the merits of
an
municipal securities and in point¬
ing out the benefits of tax exemp¬
denced
disposition and ability
to take high grade tax-exempt is¬
sues in impressive volume at price
levels
higher and yield levels
lower
a
than
vailing.
in
This
the
ranged
the
now
pre¬
demonstrated
was
when yields
the 20 General Market
1947
year
on
2.16%
Municipal Bonds above-mentioned,
from
1.81%
2.09%
to
the
with
yield under the 2.00% level for all
but
the
last
months
two
tempt to discuss here other than
to
point out that one of the most
important is the high level of Fed¬
The
benefits
tax
of
exemption
widely under¬
are becoming more
stood and appreciated,
there
still large
are
and corporations.
in the
areas
am sure,
cor¬
where
exemption would mean a great
deal in improving net income and
they don't even suspect that there
is such a thing as a bond, the in¬
from
which
is
free
from
Federal income taxes.
In
addition
who
vestors
to
stances
do
many
not know
advantages
for
them¬
exemptions enjoyed
by State and municipal securities,
selves of the
know
host of people who
a
about
tax-exempt securi¬
just can't believe they
but
belong in the
group
logically buy them.
would
go
securities.
seek to deal
issues will of itself force the price
level much below present rates.
related
volume
of
corporate
buyers to continue to purchase at
prices in line with present day
values
an
will, in my judgment, have
important bearing on the ulti¬
mate
trend
prices.
if not
of
an
municipal
bond
ample,
abundant supply, of new
There
will
be
an
The accumulation of needs
issues.
public
stantial
Federal
assistance during
and
the preceding
years, is tremendous.
Added to
these are new requirements such
as
grants
housing and bonus financing,
some
of which is as yet
ized.
unauthor¬
i
The
reason¬
or lack of reasoning,
eral runs—"these bonds
in gen¬
Demands
The
on
State Governments
increasing demands that
are
are
for being
made in some instances,
millionaires," "they are intended particularly upon our state gov¬
for large trusts and estates," "I ernments and the obligations they
need a larger return on my in-r have been willing to assume, is
vestment."
Most of us don't con¬ deserving of both study and atten¬
sider very accurately what our tion.
probable net income will be when
Housing
we purchase some stock or other
The housing problem is unques¬
taxable securities.
make
a
true
risk element
Neither do
comparison
of
present in stock
we
the
or
tionably acute in many areas and
the large amount of public funds
which has been
other purchases in relation to the
directed by both
the Federal and state governments
natural
to alleviate this
protections afforded by a
wide range of municipal securi¬
ties.
Corporate
vs.
Municipal Securities
Buyers of equity securities are
frequently seeking the advantage
of capital gains. While these may
need, has brought
great assistance and long range
relief. Anyone who has seen some
of these larger projects in
oper¬
ation must be impressed with the
constructive
facil¬
health
and
social
operating
necessity
of
Msta|^revenues,
cases
adequately suppor^.;J!tjie higher
costs prevailing tpfray Without a
greater share of state
aidi'^Tbe in¬
creasing difficulty of theVhigher
educational institutions, which to
have
date
.been
privately sup¬
ported and operated, is likely ul¬
timately to place heavier respon¬
sibilities
state
upon
or
local
mu¬
colleges and universities.
possibility exists that some
public assistance to private insti¬
tutions may have to be given if
nicipal
The
our'
educational standards and fa¬
cilities
to be maintained at
are
appropriate level
A
an
.
public policy is shortsighted
that provides acceptable
indeed
physical properties for education,
but fails to support
a; teaching
that
staff
assures
character
a
of
personnel suitable to direct the
reasoning processes and thinking
of
youth today. Some of the
problems that plague us
our
social
due in part, I believe,
leadership and
are
lack of suitable
in
instruction
standards
individual
The
the
levels.
freedoms
thinking
independent
have
educational
our
various
at
and
which
make this nation
great in opportunities1 and privi¬
helped
be recognized as
leges must
quiring
a
individual re¬
measured wisdom
to deserve the benefits of these
and continue to enjoy
them.
I am of the opinion that
with the encouragement that is
given to protect the personal and
civic liberties that we enjoy in
this favored land of ours, there
blessings,
should
of
in hand a form
instruction that will emphasize
hand
go
of
extent
as
benefits
these
related
health.
and
compared with thoise
available to citizens of other- coun¬
subject
of
daily
in
private
semi-private
rooms
charged as much as
and
are
now
be
can
rea¬
is
a
human
"These
the
to
veterans
of
II, he said:
merit
and women
men
banter,
we
be¬
failing
too
fre¬
consideration the State can
show them in gratitude for their
every.
sacrifice, but I
the
majority
class.
convinced that
am
of
do not
veterans
A great many of
told
me
best
bonus
them have
and also that the
can grant
that,
their State
asked,
but
substantial
plaguing, in many
cases, both public and privately
supported hospitals, with no re¬
lief in sight other than assistance
improved public services that will
bring about better living condi¬
tions and open greater avenues of
from
opportunity.
sonably
deficits
are
the
state
government,
as
local-government units are unable
to make provision for such costs
in their greatly crowded budgets.
This trend and dependence of
essential
local
whereby
they
service
agenciei
leaning more
more on
state, and in some
on Federal assistance, should
and
case
are
be recognized as
from the fundamental con¬
cepts of our democracy in action.
away
is
them
better
lief."
and
government
That, also, is
my
be¬
.
Even those
who^may not agree
respNect his
with him will
courage
in
stating thus clearly his views
on
a
subject, which although it
should not involve political con¬
siderations, we know it has and
does in varying degrees.
.
r
.
'
The
unfortunate and
California
of
State
with
dealt
the
question
of
has
vet¬
erans' needs in an
is engendered both financially ana
in volunteer service when a com¬
interesting way.
Recognizing the acute situation in
housing and the establishment of
returned veterans in productive
munity feels that the hospital is
occupations,
its
under the title of Veterans' Farm
A
wholesome
more
project
own
some
local
succeed.
way
it
and
support
in
must
Constructive
veterans loan plan,
a
and Home Purchase
plan, was'fi¬
sale of general
and systematic encouragement for
nanced
joint employer and employee in¬
surance against hospital and doc¬
obligation bonds of the State. This
plan was inaugurated in 1921 and
was
simply expanded to meet
present day needs. Through 1947
tors
of
medical costs is
or
one
means
giving effective assistance.
The
cost
of
long
a
and
pro¬
tracted illness requiring hospital¬
ization and special nursing is a
frightening thing to families even
in a fairly liberal income bracket,
and
where
protections can
be
approximately
World
expanding
use
automobile and the finan¬
cial
ability today of such an in¬
creased proportion of our popula¬
tion to operate their own cars, is
placing a strain on our highway
for
the
government
substantial
states
with
the
all
are
been giving
years
tive and
we
Federal
The
aware.
has
which
of
effec¬
assistance
view
to
fur¬
to
thering greatly improved highway
systems.
This aid will be con¬
tinued and encourage a certain
amount
of
state
financing for
is not confined to the continental
two
Within
States.
United
weeks
I
visited
the
our
veterans of
purchased
most
a
has
aided
constructive
helping them to secure both
thereby meeting
home and farm,
the problem of housing and occu¬
pation.
Furthermore, the loans
Highways
facilities
in
veterans
way,
of the
had
by means of this as¬
This plan has functioned
successfully, and
very
a
constantly
7,500
II
War
sistance.
be done.
The
the
by
properties
availed of it is desirable that this
our
little, ignore and forget "the in¬
comparable value of the priceless
\nd hard won possessions which
are our heritage.
It
bonus
cash
a
World War
desire to be set apart as a special
Patients
costliness
the
and
On the sub¬
State bond issue to pay
a
w:.
shortcomings highway purposes.
of
political
Parking
maneuvering in our democratic
Parking facilities have become
norm of government which we are
so
free to and do criticize as a almost a national problem and it
tries. With all of
ject of
This problem is an in¬
creasingly difficult one because of
greatly stepped up costs and an
inability to make charges that will
cover tor all patients the overall
re¬
and consideration for others if we
are
newly elected Governor
Carolina, the Honorable
William Kerr Scott.
subject, however, is
local hospital operations, which is
a
vital
factor
in
our
national
well
as
straints and
the
by
of. North
costs.
bannoVih.;toariy
government
A
.
before..* Lacal'iuhits of
privileges
The
create
and
cost have
never
as
Prices
we
that should
ing,
capital
made claims upon.
the
improvements during
in¬ the past decade, in spite of sub¬
of the
possible
there is also
It is because of
into equities is
seeking the shelter of tax exempt
for
the
.individuals
these taxes that much money that
should and under other circum¬
tax
come
on
although financing and the
willingness of
field of both individual and
porate investors, I
taxes
more speci¬
fically with the trend of municipal
prices I am not persuaded that the
prospective volume of tax exempt
Appreciated
ties,
for this which I will not at¬
As
Tax Ex mption Benefits—Not
,
which surrounds desirable equity
financing. There are many rea¬
the
of
year.
School
needs and
today
I would not have you be¬
that I do not approve of
eral Income
turn
school
relocated
School Aid
to
sons
in
new
sewer extensions,
roads and parking accommo¬
new
stood.
ance
company and savings bank
stock
purchases on appropriate
buying interest which at the level
prevailing today of slightly under occasions, nor would I deprecate
the value of corporate bond issues.
2.20%, fades away in most cases.
One of the serious
shortcomings,
In spite of the importance of life
in my judgment, in our present
insurance buying interest with as¬
national economy is the difficulty
sets approximating $55 billion and
savings banks with assets nearing
$20 billion, the market has evi¬
projects
for
Large
ities, water and
tion, I do not wish to be misunder¬
lieve
treatment.
housing
needs
in
extraordinary
I believe, who are vailing today do not hold great
actively interested in the mu¬ promise of substantial profits. I
recall very well a sale to an in¬
nicipal bond market have been
rather amazed at the ability of stitutional customer of a sizable
the market to absorb this extraor¬ block of City of Louisville, Ken¬
Most
have appropriately received preferencial
municipal
non-callable
securities.
Veterans and their families
dations.
fact that
benefits
Volume Affect
tax-exempt
mu¬
in a tremendous
sible.
Local Hospitals
past
Insular
are
in
reported
being maintained
as
satisfactory form, thus plaojng
the operation on a sound
basis.
California
While
fornia
speak
ment
by
is
of Constitutional Amend¬
Proposition No. 4 approved
majority
a
Nov.
Initiative
mentioning Cali¬
not inappropriate-to
are
we
it
business
2
last.
the
of
We
have
voters-on
had
very
little experience
with this forrp, of
legal enactment in eastern States
and may therefore not be fully
cognizant of the possible signifi¬
cance of this act.
The true sig¬
nificance is not yet
determined in
the possibilities
a
good deal of
consternation and apprehension, f
California,
but
have developed
It
proposed as a Constitu¬
Amendment and was ap¬
was
tional
possession, Puerto Rico, and I can proved by the voters as sUch.
assure
you the narrow and his¬ Briefly, it provides for an increase
toric streets of San Juan present in pension allowances for persons
parking problem of prime im¬ defined in the Initiative measure
which will add an undetermined
can speak with knowl¬
edge because after attending a re¬ annual charge on the State Treas¬
ception for the newly inaugurated ury estimated to run from $110
can
complain or criticize.
It is
Governor at the Governor's pal¬ million to $163 million. Not only
especially desirable therefore that
were no'specific provisions made
ace, it took me a full half hour to
our
educational program develop
locate
the
cab
that
had
been for these additional revenues in
in young people a respect for, as
thoughtfully assigned to me by the Initiative, but more important
well as an understanding and ap¬
the Reception Committee.
While still is the fact that the language
preciation of, the unusual liberties
this is primarily a problem for was so vague as to raise some
and privileges that we have as
local units of government, it is doubt as to whether this claim
citizens of the U. S. A., as well
against the State Treasury may
one that ultimately will call for a
as an ability to distiguish our im¬
considerable amount of financing not rank equally or even ahead
perfections and constructively to
of the State's allocation of school
in one form or another.
quently to accept as our natural
right the good things of life and
to raise our voices only when we
criticize
our
errors
and
a
portance. I
wrong
aid
doings.
Veterans' Bonus
School and educational costs are
a
big
more
subject and I have spent
in discussing the im¬
time
portance of leadership and guid¬
ance
by
the
teaching
staff than
I intended.
We
natural
by
a
include
ing hospitalization for the men¬
tally ill, and penal institutions
probably need little comment be¬
yond the fact that in most states
little, if anything, was done dur¬
ing the war period in improving
to the subject of
desire
to
the
to
Because
express
of
a
appre¬
returned veterans
specific act, there has been
on the part of both
reluctance
the public at
other
against
those
serve
already
demands, such as
discussed, which
the veterans and the public
such meeds, I
employees
or
governmental
of
unfits,
to State
State debt service.
wages
This sounds too fantastic to de¬
serve
any
credence.
I
claim to have any special
do not
knowl¬
edge on the subject. I feel -justi¬
fied in mentioning it only because
I know that some people in 'Cali¬
When all of the various
public
pressing for atten¬
listed in their appropriate
needs that
are
tic
and
the
uncertainties
are
present.
will have to resolve these.
doubts
are
certainly
well.
as
tion
many
local
large and public of¬
balance the fornia,' whose opinion I: value
essential need of bonus payments highly, are quite concerned about
institutional facilities, if indeed
order, depending upon the cir¬
adequate provision was made- fe>r cumstances and the state involved,
maintenance
and
replacements. one cannot but admire the realis¬
gains which they have made pos¬ Attention to
payment
to attempt to
ficials
State institutional care,
come
financing.
ciation
a
State Institutions
now
bonus
to
the
!
should
Time
If these
in any degree justified,
the
better
country
at
understand
large
fhe
threat of unsound measures being
advanced by a self interest group
by means of an initiative without
appropriate checking as to prac¬
ticability, language used, and si¬
forthright position taken multaneous provision for adequate
v'.f ,1
Volume
It
revenues.
is
important to
early to jump to
sions,
There is
the, munieipalities^pf .absorbipg a
it? major portion of the shock whrdh'
at
come
conclu¬
any
be
to
possibility of
the whole proposition being re¬
pealed by referendum vote.
some
The
better
decreasing
with
State
in
is
far
a
position to anticipate such
by setting aside. reserve
demands
sumed
other demands
are
funds and its
also
are
or as¬
if
Committee,
New - York
voluntarily assumed ampng
other obligations, a commitment
to provide for 80% of the cost of
State
social welfare needs for local units
government.
relief
This
v
embraces
,
(the most important
item), old
age assistance,- aid to
dependent children and aid to the
blind.
The
payments
Social
total
Welfare
the State for the
1947-1948 was $132,-'
by
year
401,431.
1
Federal
The
Government
in
turn matches the costs assumed
for
otate
old
by
assistance, aid
age
dependent children and aid to
the
blina, but not for home relief.
This has the distinct advantage for
for granted even
tives.
by the
Sometimes
I
Mr. Stalin had landed
marine
Long
on
conserva¬
think
that
if
by sub¬
in 1930
me
Island
„
Summary
been done in that direction.
First
I. have
taken
time
mention
to
discouraged
we
the
lending of
homes by im¬
the financial demands private capital on
governments because j posing 4a mortgage moratorium.
believe they will be more varied We made a joke of the idea that
than in times past and more sig¬ the mortgage moratorium was an
nificant in their effect upon our emergency measure by keeping it
economic and social life than may in effect until quite recently when
our economy as a whole was oper¬
be at present fully recognized.
-.
We
It is my opinion in general that ating at a new high record.
the
investment
of
states will not be inclined to as¬ discouraged
money
directly in
housing by
sume obligations which will cause
undue strain on their ability to imposing rent ceilings. Those rent
limited the owners of
meet then
I do feel in some in¬ ceilings
stances, however, that some state housing as to what they might
credits and high grade municipal charge but left them unprotected
obligations
will
tend
to
draw against rising wages, rising fuel
closer together than has been the costs, rising paint and wallpaper
costs and rising taxes.
We made
case in years past.
the owners of rental housing carry
their own cross by taxing them,
along with everyone else, to put
up so-called low-cost public hous¬
ing projects, which in reality are
high-cost housing developments
primarily
state
on
.
Recommendations and Literature
**.'
'
H.:
C.
(Continued from
8)
page
»
Bohack
Co., Inc.—Anal- vpany,- Fuller Manufacturing- Coiiiysis—Peter P. McDermott & Co,; pany^ Black, Sivalls & Bryson,
44 Wall Street, New York
5, N. Y. Inc.yWebster-Chicagpi^rppration, Time, Incorporated, Tennesr
;
Boston & Maine Railroad—New
recapitalization
plan—Price, McCo., 165 Broadway, New
York 6, N. Y.
Neal
&
Transmission
Gas
.see
Central
Illinois
Company,
&
Light
and
Company,
Wisconsin
' Brown & JBigelow.-r- Analysis —
Stanley Heller & Co., 30 Pine
Street, New York 5, N. Y.
A
Celanesc
and
make-work
passed
in
hard,
Cook
&
Co., Fourth and
Streets, St. Louis 1, Mo.
Olive
Central Arizona Light &
Co.—Discussion
"Public
of
—G.
A.
in
Saxton
Stock
issue
&
Guide"
Co.,
Inc., 70
Pine Street, New York 5, N. Y.
A.
C.
f
Rio
&
Grande
Western
&
much
Hickey,
Street, New York 5, N. Y.
Dow
Chemical
&
York
Com¬
Analysis
—
Wall
1
Oklahoma City Ada^Atoka Rail¬
Descriptive c i r c u 1 a r—
George Birkins Company, 40 Ex¬
change Place, New York 5, N. Y.
—
J.—Memorandum
-v
—Fidelity Union Trust Co.,
Broad Street, Newark, N. J.
735
ysis— Eastman, Dillon &
Broad
^pew issue)
—
mu¬
bonds
revenue
Circular
—
list of
a
stocks
mon
yielding
comparative
over
tabulation
15
com¬
Street, New York 4, N. Y.
letin
on
current
8%,
trying
business,
this
be divided
gories:
cular—Hiscox, Yap'Meter & Co.,
lar
&
lar— Raymond
&
Inc.—Circu¬
Co.,
148
State
Street, Boston 9, Mass.
bul¬
a
Bros.
Circular—Loewi
&
Co.,
Co.
external
Street, Milwaukee 2,
Mason
East
Wis.
dollar
is
circular
a
bonds
of
the
on
Re¬
Reynolds
on/,.
changes
Ytork
!KI
in
portfolio
—
Minnesota
—
.
Ontario
and
Study
—
'
•
William
A.
Also
;T- •
available
are
Southern
Indiana
Gas- &
Co.—Analysis—Kiser,
on
.Clearing
Machine
Corporation,
National
Aluminate
Corporation,
Philip Carey Manufacturing Com¬
The
only thing they
M.
that
and
right moment
should wait for it.
you
Since they do not agree as to what
is the right moment, the public
the
does
only thing that they do
mak¬
are
as
our
eco¬
ket
whole
as a
zontal that
whether
was so nearly hori¬
one's opinion as to
no
in
we were
do
available
automobiles
of
and
Motors
Company.
are
if
General
Ford
used, their dis¬
play space for simultaneous pre¬
dictions that prices shortly would
go up
and down?
to
seems
me
that financial ad*-
sin
commission.
of
a sec¬
That
has been the attempt to
sin
capitalize
the mistakes of others and on
on
mistakes of the past.
the
All of
advertising men, will re¬
member an ad showing a man
wearing a dunce cap across which
was printed, "I tried to get rich
quick." I do not quarrel with the
you,
as
have
called
done.
on
my
let
heap a few ashes
head. Speaking as a
me
own
broker, and
occasional
as an
It
would
be
thoroughly sound for General Mo¬
warn people about the dan¬
gers in riding in automobiles. But
did you ever see a General Motors
tors to
mar¬
result of the great depression of
1929-32, when leading stocks lost
90% of their market value in less
viction
that
the
way
to invest
is to hop in and out of the
at
the
bottom
and
top
recurring stock
our
The result of that
Am I
our
urging that
as
brokers and
we
should
the public to buy, buy, buy
all the time regardless of our sin¬
cere
convictions
that
be lower next month?
memoranda
ypu
and v Warner
^vas
to„
answer
prices
will
It is not
that question
might think. If
we
of
1921, March of 1922, and so on
through an the months and all
the years up
to and including 1947
highly gratifying profits on
with
For instance, the
$1,000 in Abbott
purchase.
every
of
investment
in
Laboratories
Open to the
Write."
neath that ad
into
came
a
type of crit¬
same
it
that
was
story be¬
an
investor
brokerage house with
a
hat full
The
of
securities which he
regretfully
long time.
a
and
over
the cus¬
tomer that all of them were worth¬
reported
to
less.
By now I don't need to re¬
peat that I know nothing about
advertising.
You have observed
that for yourselves. But I am re¬
as John Q. Public,
that if American Airlines tried to
porting to you,
a
the
me
crash
take
idea of riding on
me
United
on
its
today. The investment of $1,000 in
Chemical in
Monsanto
November
The investment of
$11,000 today.
1931
would
time
worth
be
today.
$25,000
and
the
in
more
than
I
market
the
at
Might it not be better
for us as brokers, for you as fi¬
nancial
advertisers, and forv the
public which we are both trying
to serve, if we occasionally stop¬
ped this game of musical chairs
right time.
that
playing in Wall Street
are
we
focused
and
values
attention
our
of
instead
price
tions?
on
fluctua¬
t
Basically
business is simple,
mo
matter how difficult it might
be to operate successfully. After
all, what is business? To my mind,
it is making or getting something
any
and selling it to
The great
suc¬
of the life insurance business
cess
the
and
considerable
investment
trust
financial
both
tell those of
us
success
of
business—
activities—should
in the
strictly
more
Wall Street end of finance that the
to
answers
at
least
must
of
part
our
of Proper
Selection of
Investments
Under the heading of the
things
ought to
done, I put first our failure
have mot done that
have
to tell the
Street.
lection
have
success
In
our
of
our
enabled
money no
we
stories of Wal1
preoccupation with
we
have
neg¬
investments would
us
to
of
multiply
matter when
in the last 30 years.
many
you
we
our
started
I wonder how
realize, for example,
invested in Coca Cola
that $1,000
more
$1,000
within
Federal
A
Reserve
last summer showed
young family heads less inclined
to
buy
stocks
and gave as
that
a
found
young
their
elders,
stocks
reason
were
too
recent "Fortune"
sur¬
common
risky. Yet
vey
than
their principal
more
than half of the
people interviewed between
the ages of 18 and 25 in favor of
taking jobs paying
but
involving risk
ing
a
a
good income
jobs
over
low income with
no
pay¬
risk.
In
other words the oncoming genera¬
tion
but
still
wants
that it is a
saw
to
take
a
chance
prudently wants to be shown
a
good chance.
selling job
more
I never
clearly in¬
dicated.
train.
a
Value
we
ourselves.
found
be
I'd
in January of 1920 would be worth
mathematically
1929
than $9,000
more
pictures of
Airlines,
as
secu¬
of
October
worth
would be
Board survey
as
knew what
going to happen in the
rities markets it is
possible to buy a
of 1920, February
ped around a lamppost with the
legend across it, "He tried to get
home quick"?
lected to point out that proper se¬
business.
advertisers
been
troubles
planes by showing
I regret our over¬
timing. Doubtless as
I
stock in January
ad portraying an automobile wrap¬
sell
on
do not
you
by reading
examples,
but
the
accidents.
ket forecaster,
a
has
worth
be
would
today.
bore
such
more
it
1925
$10,000
to
want
mobile
to
First
of
nearly
that people want,
them at a profit.
Hated
easy
B.; Stetson
bear
recent
financial
Exchange Building, Phila¬
or
much. What
think it would do to the
you
sales
catastrophic for
delphia 2, Pa.
John
bull
a
market mattered very
we
done, and
you
June
mention those
pre-1932 purchases because those
were the years now commonly re¬
garded as evidence that the way
to make money in securities is to
be out of the market at the right
mar¬
things we
ought to have done. The fault has
not been yours alone because as
men
or
15 in whicn the trend of the
seems to me,
was
a
ad entitled "A Letter We
have
today,
$4,500
vested in J. I. Case in
$1,000 in Celanese in December of
in
icism,
ought not to
of 1923 would be worth more than
sight, there have been approxi¬
mately eight years out of the last
even
we
have left undone those
in¬
of 1930 would be worth more than
me
seems
those
done
$1,000
which is wait. Actually,
the bright light of hind¬
agree on,
philosophy has been pretty nearly timing, for example,
Byllesby & Co.
agree
is that there is a
Cohn
Strawbridge & Clothier—Mem¬
Also
sell.
on
to
urge
on
soothsayers who always
are telling the public in effect to
wait for the right moment to buy
Elec¬
Shumaker, Inc., Circle Tower,
orandum—H.
DDT
of
things
advertising, it
have
market cycles.
Stock
studies
well
as
respectively of
York.
Paper
Street, Chicago 4, 111.
g
—
Indianapolis 4, Ind.
Co., 209 South La Salle
those who
capital out of our national
pessimism to promote an alien
collectivism incompatible with the
free enterprise system on which
Co., 63 Wall Street, New York 5,
&
\
Company
Company
to
the
some way
financial
with
spray
horde
or
that
or
of that message, but 1
inquire, "What is the purpose
of advertising?" Some 30,000 peo¬
ple are killed each year in auto¬
ing
market
tric
must find
we
do
Consciously or otherwise much
of our advertising has played into
dAr military
market
soundness
■
Harmless.
money
Ira
6, N. Y.
t
Fuller &
Metals
Corporation—Bulletin
Haupt & Co., Ill Broadway, New
living
Wall
advertising could
(2)
Special review—John H. Lewis &
New
Lehman
a
t.'.an three years, there has arisen
in this country a profound con¬
—
225
a
most
as
Positively bad.
the hands of
bigger volume and great¬
our stock
emphasis
available
public of Mexico.
Electric
&
adver¬
readily into two cate¬
"
want
public participation in
er
The broker looked them
Co., 120 Broadway, New York
Also
the
me,
make
that
simply confuses the public, and a
confused public does nothing.
If
had not examined for
;
AMadison Gas
early sharp rise in
Such
advertising
an
prices.
clients, and your clients, of whom
I am one, have been ho less guilty
of doing those things they ought
not to have done, and leaving un¬
done
those things they ought to
5, N. Y.
Hydraulics,
other
stock
we
today
that $1,000 in¬
May of 1924
would be worth $10,000 today, or
that $1,000 invested in du Pont in
top of the other, the top one fore¬
casting an imminent collapse and
attention to the activities of your
developments in
Bonds—Circular—Sutro
to
(1)
Republic of Italy External Dol¬
Lpwis Tower, Philadelphia 2, Pa.
to
seemed
Street financial
have
-Greer
on
the
of 1922 would be worth more than
the financial page, one on
newspaper
ads
or
vested in General Motors in April
Just
a
railroads.
Gaspe Oil Ventures, Ltd.—Cir¬
y;
$2,500
do
$50,000
recently a Sunday
carried three-column
not know.
high
of
Munici¬ grade preferred stocks, and
pal Department, Allen & Co., 30
Broad
has
advertising
J.Ft. Lauderdale, Fla. 4%
recreation
Co.,
Street, New York 5, N. Y.
is
of
State
financial
layman
In
Also available
nicipal
Sunday demonstrates that
we
be
today,
vested in
ond
nomic strength depends.
—
Street, New
the
is
What
it
times
W. Monroe Street, Chicago 3.
Illinois.
Chas. Pfizer & Co., Inc.—Anal¬
5, N. Y.
Co.,
51
worth
nearly
that $1,000 in¬
Sears, Roebuck in March
would
1921
telling them
to wait.
But a glance at the fi¬
nancial advertising columns any
vertising has been guilty of
tising's responsibility for it? Some¬
we
Cohu
for
could ben¬
we
customers by
our
It
Financial Advertising
So
States" Power
N.
any
Responsibility
100
way
unsur¬
;
..
Minn.—Special < write-up—
Allyn and Company, Inc..
Palmyra,
Denver
—Memorandum—Vilas
49 Wall
Northern
pany,
the
in
any
in
Power
current
Utility
practices
industry
country in the world.
Power
Motorola,
Inc. — Analysis —
Hickey & Co., Inc., 135 South La
Salle Street, Chicago 3, 111.
Corporation of Amer¬
ica—Special memorandum—New-
of funds from
out
public 'treasury. We gilded this
communistic lily by encouraging
in the building industry a degree
of labor monopoly, featherbedding
Service
Public
Company.
"subsidized
Union.
: j
efit
'
Dealer Jroker Investment
..
(479)
certain that at times
taken
now
time
Moore
to
vention in that field is
that might be tion,
nevertheless, is one that with unlimited funds and instruc¬
permitted, but .should be noted as a possible im¬ tions to communize housing in
portant
factor
in
the
State's America I could go back and claim
Vv;;^■'■ v;<. the highest honors for what has
As, recommended by the budget.
briefly.
fiscal
revenues
elastic, : The obliga¬
more
I will mention only one, and that
home
of
sources
(Continued from page 4)
;
obligations
♦
discussed
of
CHRONICLE
Why This Pessimism?
time when they are apt
a
wrestling
revenues.
Local Relief—New York State
.•There
FINANCIAL
un¬
derstand 'in this connection that
is too
COMMERCIAL
THE
Number 4772
169
than
$25,000 today.
invested
in
Or that
International
Business Machines in February of
^fe^merieafpRGd^ross^
52
THE
(480)
COMMERCIAL
Thursday, January 27, 1949
CHRONICLE
FINANCIAL
&
in
•
•
Allied
Western
Oil
New York
Corp.,
Jan. 19 (letter oi' notification) 1,200.000 shares of common
stock
Jan.
expenses.
(2/2-4)~
;////*;
& Curtis.
fjon
such
New
the
Light & Traction Co., Chicago
None.
Offering-—The shares
holders
to
United
of
will be offered at
Light
common
$12
t
Underwriter
—Company proposes to enter into a contract with an
underwriter for the purchase by the underwriter of the!/
Foundation,
Inc.,
Buffalo,
N. Y.
participating
chares of
preferred
common
stock
the
public' by
the
to
waiver
by New England Public Service Co. of its pre¬
emptive
rights in the proposed issue and in addition,
purchase by the underwriter at the conclusion
subscription period of those shares offered to
of
.v
the
the
550
Price—$500 per unit
stock
$100)
and
preferred shares and one common.
Underwriters
—Walter E. Armstrong, President, New York, and Kennetn S. Duffes, Buffalo. Working capital, etc.
of
59,579
stock
common
held.
Proceeds—To be used in part for im¬
expansion
and
manufacturing facilities,;
of
Withdrawal request filed Jan. 24.
■///:•;"//'///// T"'
■
Citizens Credit Corp.,
Nov. 1 filed 115,315 shares
"A/ Norwood
Dec.
27
Gold
Lake
Jan.
Underwriters—Leason
&
Badad
Insulating
York City
Co.,
Newark,
development of
For
N. J.
New
Jan.
filed
4
television innovation.
a
early in February.
uary or
&
20
stock
•
.
Bowser
Engineering Co., Baltimore,
.stock (par $100). Price
for
on
the
par.
combination
a
handling
Bradshaw
8
Md.
Jan.
of
motor
of
cars
elevator
in
and
Power
filed
24
$40,000,000
crane
tion
Mining Co., Tonopah, Nev.
stock.
Price—20 cents per share.
—Batkin & Co., New York.
California
24
erence
liam
R.
finance
Electric
Power
expenses
1
Co.
filed
100,000 shares of 5/2% convertible pref¬
stock, 1949 series ($20 par). Underwriter—Wil¬
filed
14
Television
Radio
&
Co., San Francisco, Calif. Proceeds—To
Jan. 12 filed 270,000 shares ($1 par)
property additions and betterments.
/• //-'A/-//'
York.
the
(letter of notification) 50,000 shares ($2 par) 6%
preferred stock.
Price, $3 per share.
R. Shepherd & "Co., Washing- "
To operate company, purchase an excursion
invest in the
amusement
////A '//!/•/
Un¬
stock.
common
Securities
Corp., New
To pay past due debts, to
Price—The
if
the date of
lower, based
ceiling
on
price
will
the closing
or
•
■'
be
$5.75,
New York
To
offered
be
of
one
for
share
new
for
each
Freres & Co. and Newmont
unsubscribed shares, but have no intention
public offering thereof. Proceeds—Pro¬
which company may. increase' its in¬
San Manuel Copper Corp., a subsidiary. \ |
with
vestment in
•
Maxson
(par
less
(W.
L.)
Corp.,
(letter of notification)
New
York
12,533 shares capital stock
Price—Market (but not more than $6, nor
per share).
Underwriter—Eastman, Dillon
S3).
than
$4
Proceeds to
& Co.
Lazarcl
held.
any
funds
Jan. 20
shares
two
Mining Corp. have agreed to
any
making
vide
Offering—
stockholders in ratio
subscription by
selling stockholder. /
Mayflower Co., Salt Lake City, Utah
Jan.
17
(letter
stock.
common
of notification)
Price at
100,000
market.
shares
(lc par)
Underwriter—Cromer
Brokerage Co., Salt Lake City. To liquidate a loan which
was obtained to pay rentals on leases and to pay future
rentals./ / I '//•;/./ ///////-/•/"• /
Mississippi
/" /•;/':/?■■////
Chemical Corp.,
Jackson,
Miss.
shares common stock (par $5). No
underwriting. Offering—Of the total 660,000 shares are
subject to delivery under the stock subscriptions now ex¬
istent.
Price—$5 per share. Proceeds — To construe!;
ammonia
plant.
■■/■'/.-• /
or
last sales on
offering, but not below $4.25 per share.
Gauley Mountain Coal Co.,
Co., 20 N. Wacker Drive, Chicago.
Magma Copper Co.,
:
•
/
•
.
Mohawk Business Machines
Jan. 21
stock
securities of other transportation
companies.
—
com¬
Jan. 3 filed 1,200,000
Corp.
reestablish
corporation's credit position and for general corporate
market
Underwriter—Lawrence
ton, D. C.
First Guardian
The
—
Proceeds
purposes.
non-cumulative
boat and
of Middle West Service
v-'
Farnsworth
Staats
Capita] City Boating Corp., Washington, D. C.
or
first mortgage
$100,000 5-year 6%
bonds,
by
Co. Inc.; The First Boston Corp.; Harriman Ripley &
Co.; Equitable Securities Corp.; Union Securities Corp.,
and Merrill Lynch, Pierce, Fenner & Beane (jointly),
Proceeds—To pay off $1,500,000 of bank notes and for
construction purposes.
Bids—Bids for purchase of bonds
will be received up to 11:30 a.m. (CST) Jan. 31 at office
•
Ltd., Toronto, Canada
bonds
(convertible into common shares at rate of four shares
to dollar, or at a price of 25 cents per share).
Under¬
writer—James T. De Witt Co., New York.
Price—95.
Proceeds—To pay off, in part or in full/ outstanding in¬
debtedness and for general working capital.
Dec.
derwriter
Jan. 4
reimburse its treasury for past construc¬
and to pay off bank borrowings.
Mines
Erndale
Underwriter
To repair and renovate mine
property and for working capital.
«
mortgage
refunding
and
(5c par)
of company and to exercise option to purchase processing
mill and move and erect such mill on the
company's
Jan.
program,
(1/31);
mortgage
&
of
N. C.
Underwriters—Names to be determined
through competitive bidding. Possible bidders include:
Morgan Stanley & Co.; The First Boston Corp.; Halsey,
Stuart & Co. Inc.; Stone & Webster Securities Corp.
Proceeds—To complete part of the company's construc¬
garages.
1,500,000 shares
first
first
30-year
Jan. 25 filed 204,000 shares of common stock.
Ft. Worth, Texas
Co., Charlotte,
$10,000,000
petitive bidding. Probable bidders include: Halsey, Stuart
bonds, due 1979.
No underwriter. To develop
use
(letter of notification)
common
Inc.,
filed
13
purchase
Duke
tion
Oct.
Co.,
17
•
(letter of notification) 350 shares of 5% cumula¬
preferred (par $100) and 650 shares of common
patents
Oil
•
Jan. 18
tive
Montreal, Canada
(letter of notification) 30,000 shares of common
stock (par $1). Price par. No underwriter. To maintain
an
oil company.
/
Co., New York. Proceeds to sellingy/;:/5 > ////' /A r>: /■. !
.).n/.V• //
■
ton
series B. Underwriters—Names to be determined
of
(letter
26
Crader
Jan.
4,000 shares of common
Underwriters—L. F. Rothschild & Co.
—
Price—$10 per share. Proceeds—To erectoperate a bleached sulphate pulp mill with a 200per day capacity.
•
and John P. White &
«
Inc., Brooklyn, N. Y.
Coleraine Asbestos Co. Ltd.,
(letter of notification)
stockholder,
Mfg. Co.,
Aug. 16 filed 200,000 shares of capital stock.
Price—
50 cents per share in Canadian Currency.
Underwriter
—P. E. Frechette.
Proceeds—For drilling operations.
plant ready for operation.
Poison, Mont.
258,675 shares ($10 par) com¬
Tom G. Taylor & Co., Mis-/
Kentucky Utilities Co., Lexington, Ky.
shares of 500
Underwriter—
Cantor, Fitzgerald & Co., Inc., New York. Price—$8 per
share. Working capital, etc."
57,144 shares of 5% cumulative ($21 par)
stock and 57,144 shares (no par)
(par $1).
Underwriter
stock.
mon
general funds of company. A
notification) 37,400
cumulative convertible preferred stock.
Botany Mills, Inc., Passaic, N. J.
Jan.
(by amendment)
and
Aug.
A stock, to be sold in units of eight shares of
each class at $169 per unit. No underwriting. Proceeds
up
Nov. 23
soula, Mont.
Clarostat
convertible preferred
i—To buy equipment and set
Washington, D. C.
Jan.
comomn
(2/2-4)
Proceeds—To develop, exploit and
Expected late in Jan4
Price—$3 per share.
distribute
3
For
Boards Corp. of Palestine,
n:
shares ($1 par) class A stock.
Un¬
derwriter— Cantor, Fitzgerald & Co., Inc., New York,
common
Co.j Inc., and First Securities
Co., Chicago. Proceeds—For working capital.
ii j
(letter of notification) 100,000 shares of capital
Price—$1 per share.
Underwriter—Charles W.
common
&
?/.?/
Corp./ (1/31)
Mines
Hotelevision, Inc., L. I. City, N. Y.
(letter of notification) 2,200 shares of Class A
stock, ($12.50 par) and 2,200 shares of Class B
($25c par). To be sold in units of one share of
Class A and one share of Class B at $15 per unit.
Underwriter—Emory S. Warren & Co., Washington, D. C.
($10 par) 5^ % cumulative
Offering — To be offered
initially for sale to stockholders at tne rate of one pre¬
ferred stock and purchase warrant for each 3V2 shares
of common stock held.
With each share of preferred
purchased company will issue a purchase warrant en¬
titling the holder to buy 80/100 of a share of the com¬
pany's ($1 par) common stock on or before Dec. 31, 1950.
(convertible preferred stock.
;
•j'i'V
A
lawful purposes.
,
.
amendment.
Price—By
Idaho-Montana Pulp & Paper Co.,
Argus, Inc., Ann Arbor, Mich.
N. Y.
shares of cumulative
Nov. 3 filed 160,000
tion of
/
shares
Warshoff
notes, the proceeds of which were used for the acquisi¬
property, the construction of facilities, and other
of five
filed
29
mining properties.
applied by company to reduce its outstanding short-term
(par
(no par).
.
convertible
preferred stock (no par) to be offered common stock¬
holders in the ratio of one share of preferred for each 20
June
stock.
stockholders, the rights to subscribe to which have not
been exercised.
Proceeds—The net proceeds are to be
Jan. 20 (letter of notification) 2,750 shares of 6% cumula¬
tive
sale
for
made
for
Animal
available
shares
-
Heyden Chemical Corp., New/York,
provement
negotiable.
that the subscription rights be
(ji
ceeds—$600,000 to be used for spectator grandstand ami
subscribed shares.
for each six shares of 6%
//A
./■ JV
Underwriter—A. G. Becker & Co, will acquire the un¬
presently held and five shares of common stock
preferred stock?' It is proposed
stock
/A/;/
Underwriter—None. Pro¬
$100). Price—$100 per share.
common
,
Sept. 21 filed 200,000 shares ($2 par) convertible class A
•»tock. Underwriters—Herrick, Waddell & Reed, Inc. and
Sills, Minton & Co., Inc. Price—$8 per share. Proceeds
—To retire indebtedness and for working capital.
Ex¬
pected financing plan will be revised.
o
England Public Service Co., which holds 77.8% of
stock, will waive its preemptive right- to
Inc.,
June 25 filed 5,000 shares of class- B common stock, (par;
balance for related purposes.
pursuant to their preemptive rights in the ratio of one
share of common stock for each six shares of common
Rights will expire March 2.
American Steel & Pump Corp.
;
states that it believes
company
of
-
■
com¬
Company proposes to offer the remaining 67,300 shares
to its other common and to its 6% preferred stockholders '
at:
the close of business Jan; 31, on the basis of one share
of American Light common for. each five shares of
United Light common.
.
shares available
per
of record
However,
(letter
>
purchase 219,196 shares of the total issue, making such;
for immediate sale to an underwriter.
Jan. 10 United Light & Railways Co. filed 634.667 shares
of American Light common ($25 par).
Underwriter—
chare
stock.
27
Heidelberg Sports Enterprises,
Pittsburgh, • Pa. /•••■.„.■/.
.
Offering-—Company's common and 6% pre-'
ferred stockholders have preemptive rights-to purchase
for part of the costs involved in a pro¬
to improve and expand a pulp and paper mill.
///;
notification) $14,000 first mortgage
sinking fund 5% bonds, due Aug. 1, I960; Underwriter—•/
Braun, Monroe & Co., Milwaukee, • Wis.
For working
capital. ///'//" /./•■
//
■' ■ • ;/•• a" /" " • //
//:/
'!/ /,/
Dec.
stock;
mon
Proceeds—To pay off a long-term obliga¬
American
m
(Minn.)! Gas-Co.!/.//A
Hastings
i
,.
Promotional
A !, •
'(by amendment) 286,496 sh'ares ($10 par)
Jan. 10
tion and to pay
gram
company.
■
,
$5,400,000 15-year 4J/4% convertible sink¬
ing fund debentures. Underwriter—Paine, Webber, Jack-
ISSUE
25,000 shares of non(par $10)./. Price, par.
of notification)
preferred stock
Central Maine Power Co.
filed
5
21
PREVIOUS
International, Inc., N; Y.
Underwriters—Directors of the
leases, properties, drilling, etc.
American"'Box Board Co.
SINCE
ADDITIONS
Pictures
(letter
cumulative 5%
Price—25c
York.
Catholic
Jan.
Underwriter—Atlantic Securities Co.,
per share.
Acquisition of oil
lc).
(par
New
INDICATES
•
/•"/'
■'/'•'/ .</
Corp., N. Y.
(letter of notification) 299,000 shares of
'•'■I
•
(2/1)]
common
$10c).
Underwriter—Mercer Hicks & Co.,
New York.
Price—$1 per share. • Corporate purposes.
New York
(par
10,666 shares of capital stock, of which
1,381 shares will be sold in behalf of the company and
9,285 shares will be sold b,y five stockholders. Under¬
writing—None.
Proceeds—Company will use its pro-,
Jan.
19,
filed
ceeds for additional
•
Golden
Jan.
working capital. A
Ensign Mining Co., Salt Lake City, Utah
17
(letter of notification)' 100,000 shares.'of com¬
stock (par 10c). Price, par. Underwriters4-Hermah
mon
Willis T. Williams.
Zobrist, Phil M.
continue
Anderson and
mining operations. ■
Harwill, Inc., St. Charles,
stock
New York
v
.
Boston
Private Wires
to
Pittsburgh'.-Chicago.
Offices in other Principal Cities y - -
-
• -
common
Price, par. /Underwriter-e- Charles E.
(par $1).
Bailey & Co:; Detroit.iuTo
chase property,
capital.
Mich.
125,000 share's of
Oct. >27' (letter of notification.)
To
current liabilities,/ pur¬
pay
building and equipment and for working
•
•
//./•/.
1
..
'
V.:"/: A: ''
/
,';/".
it
Number 4772
Volume 169
THE
COMMERCIAL
&
FINANCIAL
Robinson
Plywood & Timber
Washington
NEW ISSUE CALENDAR
Nov.
filed 271,025
17
CHRONICLE
Co.,
Everett,
27,
shares
($1 par) common stock, of
105,000 shares are to be offered by company, and
166,025 shares by 15 selling stockholders. Underwriter—
Blyth & Co., Inc. Proceeds—To company from the sale
of the 105,000 shares will be added to
working capital,
except about $275,000 may be advanced to a new sub¬
sidiary to be used by it in making part payment of the
option purchase price of one-half of the stock of Conifer
1949
Maywood Chemical Works, 1:30
January
31,
Horwood Lake Gold Mines
(EST)_Stocks
p.m.
1949
Corp...Capital Stock
Kentucky Utilities Co., 11:30
(CST)
a.m.
Bonds
Timber
February
Erie
RR.,
Rockland
Dec.
Light Heat & Power Co.
11
due
(EST)
a.m.
Bonds
......
February
2,
Debentures
Atlantic Coast Line RR
Equipment
3,
10,
the retirement
and
of bank
Anthony Mines Ltd., Toronto, Can.
Pacific
&
'
Southern
Dec.
Trust
15,
16
filed
Union
107,430
Gas
v.-
Northern
February
Pacific
24,
1949
3,
Jan.
Jan.
1949
one
new
share
for
each
10
Inc.,
Lynn,
(letter of notification) 48,000 shares ($1 par)
stock. Price—$5 per share. Underwriter—Mann
Gould, Salem, Mass. For construction of ice arena and
Southern
Dec.
and
17
Equip. Trust Ctfs.
March
Columbia
Gas
15,
System,
1949
Television
..Debentures
Jan. 11
1949
22,
stock
New England Tel. & Tel. Co..________-Debentures
Equipment Corp.,
N.
Y.
(2/3)
(letter of notification) 300,000 shares of common
100). Underwriter—Henry P. Rosenfeld &
(par
Co., New York.
'
Price—$1 per share.
Additional equip¬
Monarch
Machine Tool
Underwriters—F.
Eberstadt
Co.
Mrs.
common
stock
(no par).
&
Co., Inc. and Prescott,
Hawley, Shepard & Co., Inc. Proceeds—Stock being sold
by certain stockholders. Offering indefinitely postponed.
Monongahela
Power Co.
.common
stock
to
be
sold to
West
Penn
Electric Co.
^parent).
Probable bidders for bonds: Halsey, Stuart &
Inc.; Merrill Lynch, Pierce Fenner & Beane and
Hallgarten & Co. (jointly); Harriman Ripley & Co. and
Lazard Freres (jointly); Blyth & Co., Inc. and
Goldman,
Sachs & Co. (jointly); Kidder, Peabody & Co.; Glore,
Forgan & Co.; Lehman Brothers; Salomon Bros. & Hutz¬
Co.
ler.
Bids for
about Feb.
the
bonds
expected
to
be
opened
on
or
i
15.
National
July
14 filed 65,000 shares ($50 par) convertible pre¬
ferred stock. Price and dividend, by amendment.
Un¬
derwriters—Goldman, Sachs & Co., New York; Piper,
Jaffray & Hopwood, Minneapolis. Proceeds—To retire
$3,000,000 of bank loans and general corporate purpose».
Temporarily deferred.
Dec.
21
Bottling Co.
(letter of notification)
stock
common
to
40,000
shares to
shares
to
be
be
be
offered
sold
to
offered
on
of Washington,
31,500 shares
public- at $3
to
behalf
trade
of
a
D.
(100 par)
per
accounts;
stockholder
share;
27,500
at
$3
share and 10,000 options at 10 per share.
Under¬
writer—Willis E. Burnside & Co., Inc., New York.
For
working capital and payment of taxes. Expected about
common
stock and 1,000,-
stock. Offering—To
toe offered in units of one share each.
Underwriting—
By amendment.
Proceeds—For purchase of equipment
com.
and working capital.
•
.
Prism,
Inc., New York
V
Jan. 19 (letter of notification) $65,000 6% debentures
and 2,600 shares 6% preferred stock
(par $25).
Price,
phr. No underwriting. Pay current operating expenses,
etc.
,
Renaissance Films
•••
Distribution, Inc.,
Montreal, Que.
Oct.
29
Foods,
Inc.,
filed
40,000
(par $25) 5% cumulative
convertible class B preferred stock and 10,000 shares of
C stock (no par). Underwriting—None. Offering—Class
B preferred will be offered at
$25 per share with one
shares
Machinery Corp.
selling
stockholder.
Prospective Offerings
•
Atlantic Coast Line
Bids
for
the
purchase
certificates will
include:
be
Halsey,
RR.
of
received
Stuart
(2/7)
$10,665,000
&
Feb:
equipment
7.
Probable
trust
bidders
Co.
Inc.; Salomon Bros.
Corp.; Harriman Ripley
(jointly).
&
&
•
California Electric Power Co.
Jan. 24
officially stated company intends, as soon as prac¬
ticable, to sell 3,000,000 first mortgage bonds, 3% series,
1978, at competitive bidding. Probable bidders in¬
Halsey, Stuart & Co. Inc.; Blyth & Co., Inc.
•
Chicago Indianapolis & Louisville Ry.
The
(2/8)'*■.
has issued
invitations for bids to be re¬
ceived by noon (CST) Feb. 8 at its office 608 So. Dear¬
born St., Chicago, for the
purchase of $4,500,000 equip¬
company
trust* certificates to be dated
March 1, 1949 and to
instalments from March 1,
1950, to March 1 1964. Probable bidders: Halsey, Stuart
& Co., Inc.; Harriman
Ripley & Co. and Lehman Brothers
(jointly), Harris Hall & Co. (Inc.); Salomon Bros. &
mature
in
15
equal annual
Columbia
Gas
System,
Inc.
(3/15)
opened on or about March 15. Proceeds from the pro¬
posed sale will be used to finance part of the
company's
construction program. Probable bidders:
Morgan Stanley
Underwriter—Rauscher,
Co., Inc., Dallas, Texas.
Union
Light,
Proceeds—For general
,
Heat &
:
.
Power Co.
(2/1)
Dec.
30 filed $5,000,000 first mortgage bonds and
20,000
shares of common stock.
Underwriters—Bonds will be
sold
through competitive bidding. Probable bidders:
Halsey, Stuart & Co. Inc.; The First Boston Corp. and
Blyth & Co., Inc. (jointly); Merrill Lynch, Pierce, Fenner
& Beane and Kidder, Peabody & Co.
(jointly); Harriman
Ripley & Co.; White, Weld & Co. and Shields & Co.
(jointly); Equitable Securities Corp.; Union Securities
Corp. and Glore, Forgan & Co. (jointly); W. E. Hutton
& Co.
Stock will be offered for subscription by com¬
of
a
stockholders at $100 per share at rate of 4/94ths
share for each share held. Cincinnati Gas & Electric
98.42%
owns
of outstanding common
and will purchase
its pro rata proportion or
19,683 shares.
Proceeds—For
of first mortgage bonds owned by parent
prepayment
and for construction.
Bids—Bids for-purchase of $5,000,bonds, series due 1979, will be re¬
by the company up to 11 a.m. (EST) on Feb/1.
first
000
ceived
mortgage
United Utilities &
Oct. 15 (by amendment) 125,000 shares of common stock
(par $1) and 33,000 stock purchase warrants (to be sold
named
repay
by
amendment.
Price, market.
bank loans, working capital, etc.
14 company
Proceeds—To
be
&
Co.; Halsey, Stuart & Co. Inc.; Merrill Lynch, Pierce,
White, Weld & Co. (jointly); Leh¬
man
Brothers, Goldman, Sachs & Co., and Union Secu¬
rities Corp. (jointly); The First Boston
Corp.',
Fenner & Beane, and
7,777:
7,-77
•
Jan.
the
21
Underwriters
Waburn
stock (par $9).
—
Oil
Corp., Shawnee,
RR.
:
-..
Corp.
$4,800,000.
Okla.
about
•
February
The
date
March
Erie RR.
Bids
(letter of notification) 980,000 shares (100 par)
stock, together with 150,000 option warrants.
Stock will be sold af 30 cents per share. Underwriter—
Dennis H. Petty & Co., Oklahoma City, Okla. For
drilling
on
an
equipment trust issue of
for
will
be
(2/1)
Y/.'Y.
received
until
noon
Feb.
1
at
Brothers
&
•
(jointly); Salomon Bros. & Hutzler;
(Inc.); Lee Higginson Corp.
Co.
Fitchburg Gas & Electric Light Co.
Jan.
24
company petitioned the Massachusetts
of Public Utilities for
authority to issue
ment
Depart¬
$3,500,000
10-vear 314 % notes.
The notes
to
retire
are
to be dated March
$1,300,000 short-term
company with
Great
Northern
notes
at
1,
Proceeds will be
notes
and provide
$2,200,000 for plant additions.
plans to issue the
institutional investors.
pany
•
Harris,
par
Com¬
privately to two
Paper Co.
Jan. 19 stockholders voted to increase
capital stock from
1,000,000 to 1,200,000 shares. The management said that
were
no
plans at this time for selling the new
stock, which will be held in reserve.
\
there
.
•
Liggett & Myers Tobacco Co.
24
reported
company
planning
details of which will be announced in
equity
a
financing,
few months.
?
common
and cost of
completing wells,
penses.
•
Westchester County
Club, Inc., Rye, N. Y.
Jan. 21
(letter of notification) 600 certificates of interest
offered at $500 each.
No underwriter.
To pur¬
to
liabilities and working capital.
Rye Realty Corp.
be
chase class B preferred and common stock of
Harrison-
■
Probable
3.
company's
office, Cleveland, for the purchase of $6,300,000 equip¬
ment trust
certificates, dated Dec. 15, 1948 and due $630,000 each Dec.
15, 1949-1958. Probable bidders: Halsey,
Stuart & Co. Inc.;
Harriman, Ripley & Co. and Lehman
Jan.
10
7:7.; •
(3/3)
opening of bids will probably
bidders: Halsey, Stuart &
Co. Inc.; Salomon Bros. &
Hutzler; Harriman Ripley &
Co. and Lehman Brothers
(jointly).
be
1949, and will mature March 1, 1959.
Names to be determined through com¬
petitive bidding. Probable bidders include Kidder, Pea¬
body & Co., Merrill Lynch, Pierce, Fenner & Beane and
Paine, Webber, Jackson & Curtis (jointly). ProceedsWill go to selling stockholders. Consolidated Electric &
Gas Co. and Middle West Corp. will sell 120,000 shares
and 34,000 shares, respectively; Copper Range Co., 34,000
shares and several individual owners 11,200 shares.
Jan.
'*
./
Hudson
reported company expects to ask for bids about
middle of
the
common
'77''
Delaware &
used
Sept. 28 filed 200,000 shares of
announced plans to sell approximately
$20,000,000 of debentures due 1974. It is presently con¬
templated that competitive bids for the debentures will
Hall
Specialty Corp. ;
to underwriter at 10 cents each). Underwriters—George
R. Cooley & Co., Inc., Albany, N. Y., and others to be
share of class C given as d bonus with each 4 shares of
class B purchased.
Proceeds—To pay balance of current
Pump &
(letter of notification) 1,000 shares of common
stock (no par).
Price—Market (about $14 per share).
Underwriter—L. F. Rothschild & Co. Proceeds to
Sherman, Texas
Upper Peninsula Power Co.
Playboy Motor Car Corp., Tonawanda, N. Y.
Dec. 29 filed 1,000,000 shares of class A 20-cent
prefer¬
par)
par)
Worthington
Pierce &
1.
r
ential dividend series ($3
G00 shares of class B (50
ers.
Jan.
C.
per
March
Tucker's
mon,
Battery Co.
Pepsi-Cola
Price,
Nov. 26 filed 200,000 shares of common stock (par
$2.50)
of which 80,000 will be sold
by the company and 120,000
shares by certain stockholders.
corporate purposes.
(2/15)
Jan. 18 filed $6,000,000 30-year first mortgage bonds to
foe sold through competitive bidding and 67,000 shares
of
stock.
common
Proceeds—Will go to selling stockhold¬
Offering postponed.
Hutzler.
ment, working capital, etc.
Sept. 13 filed 26,000 shares of
par)
Underwriter—Hemphill, Noyes & Co., New York.
ment
Inc.__l
March
Pittsburgh
(no
(letter of
notification) 17,000 shares (SI par)
stock, of which 7,000 shares would be sold at
$1.12% and 10,000 shares at $1 per share. Underwriter—
Griffin & Vaden, Inc., Raleigh, N. C.
For additional
working capital.
Preferred
1949
Ry
Co.,
shares
clude
commoij
9,
200,000
by amendment.
due
Taylor Food Co., Raleigh, N. C.
1949
Bonds
March
(Edwin L.)
filed
14
Bonds
West Penn Power Co
28
Co. ancl Lehman Brothers
Mass.
other corporate uses.
Minnesota Power & Light Co
8,
basis of
on
common
&
March
Philippine Mindanao Development
City, Philippine Islands
Hutzler; The First Boston
1949
7,
3,
Sport Centers,
Delaware & Hudson RR. Corp._.Equip. Trust Ctfs.
March
well
Cebu
Wiegand
Sept.
held, plus the privilege of subscribing for addi¬
Equip. Trust Ctfs.
March
a
Co., Dallas, Tex.
tional shares not purchased by other stockholders. Under¬
writing—None. Proceeds—For construction and better¬
ments.
,..f.w'.'tV7/
/-v.;//
.___--____Bonds
Ry
Co.,
To drill
Jan. 5 filed 2,000,000 shares of
voting capital stock, one
centavo par value.- Price—25 cents
per share (U. S. cur¬
rency). Underwriter—F. T. Andrews & Co. Proceeds—
To provide funds for
plant construction, diamond drill¬
ing, exploration and repayment of loans.
shares
record
Ctfs.
1949
Monongahela Power Co.....
Wichman
($1 par) common stock.
Offering—To be made to holders of outstanding stock of
1949
Ry._
February
7
Perry & Co., Inc., Denver, Colo.
acquire additional properties.
Jan. 20
shares
Texas
—
John G.
and
series C,
Underwriting—Names will be determined by
1,088,843 common shares (par $1). Price,
40 cents per share.
Underwriter—Old Colony Securities
Ltd. of Toronto.
Proceeds for gold mining operations.
1949
Denver, Colo.
$7,500,000 first mortgage bonds,
Aug. 6 filed
Chicago Indianapolis & Louisville Ry.
Noon (CST)____
Equip. Trust Ctfs.
February
Nyack, N. Y.
Inc.,
(letter of notification) 1,000,000 shares (lc par)
common.
Price, 10 cents per share.
Underwriter
•
St.
.Common
8,
filed
Fields,
53
5
borrowings.
1949
Corp
February
30
1978.
Proceeds—For construction
Equip. Trust Ctfs.
Hotelevision, Inc
_C)ass A Stock
Wheeling & Lake Erie Ry., Noon.Equip. Trust Ctfs.
Television
Indefinitely postponed.
Light & Power Co.,
competitive bidding.
Probable bidders: Halsey, Stuart
& Co. Inc., Harriman Ripley & Co., Merrill
Lynch, Pierce,
Fenner & Beane and Kidder, Peabody & Co.
(jointly)."
1949
American Box Board Co
February
Co.; Fortson, Wash.
1949
noon (EST)__
___.Eqi7.ij). Trust Ctfs.
Business Machines Corp
Common
Mohawk
Union
1,
Western Oil
:
Jan.
which
January
(481)
Maywood Chemical Works
(N.
Bids for the purchase of
J.)
(1/27)
<
6,930y4 common shares (no par),
56,562Vs shares of participating preferred stock (no par)
and 8,081 shares of cumulative preferred stock
(no par);
constituting 23,10%, 29.28% and 32.85%, respectively, of
the stocks, will be received up to 1:30
p.m. (EST) Jan. 27
at office of Alien Property, 120
Broadway, New York.
The company itself has
formally agreed to submit a bid
of $847,500 for the stock/ *" 'V*'
(Continued
on
page
54)
•
54
COMMERCIAL
THE
(482)
Southern
'
(Continued from page 53)
y-
Minnesota Power & Light Co.
Jan.
tificates
14
reported company plans the safe' in March of
$4,000,000 bonds. Probable bidders: Shields" & Co.;
The First Boston Corp.; Halsey, Stuart & Co. Inc.; Leh¬
man Brothers; Kidder,
Peabody & Co.; Glore, Forgan &
Co.; Harriman Ripley & Co. Expected about March 7.
tration
statement
covering
Texas
•
to
1950,
certificates, to be dated March 15, 1949, and
equal annual instalments from March 15,
March
1964.
15,
Probable
Brothers
(jointly); Salomon Bros. & Hutzler;
Kidder, Peabody & Co.
stock
dated
stock to The West Penn Electric Co.
common
on
about March 8, 1949;
or
Inc.; Harriman Ripley & Co.. and Lehman
(bonds only); Kidcfer," Peabody
Brothers; The First Boston Corp.; W. u
Langley & Co.; Smith, Barney & Co.
•
'
and
Wheeling & Lake' Erie Ry.
Harris,
of
one
share
new
Lynch, Pierce,
Fenner
for
each
five
ments from Aug. 15, 1949-Feb.
ders: Halsey, Stuart & Co.
15, 1959. Probable bid¬
Inc.; Salomon Bros. & Hutzler;
Harriman Ripley & Co. and Lehman Brothers
Gas
&
Electric
•
Co*
•
25
Service Electric
reported company
&
Merrii,
head the
under-
Annual
'
Gas
with
funds
utility system.
Inc.;
The
retire
to
Boston
Co.
The
obligations of
Morgan
Corp;
Electric &
March 9 stockholders will vote
issue
to
Stanley
&
First Boston
stock
its
in
units
rights
to
Co.
Co.;
•
nalism,
the
holds that
will first
statement
that
Summary of
stockholders
able bidders:
to
&
Traditional under¬
&
j
Co.
Administration's
a
medium for
Per Common Share
Indi¬
Est.
Some
Appr.
cated
1948-
Divd.
Price
Autos and Parts—
Dividend
Earns.
Since
57
Lite.
—„.
$5.00
$9.50
3.00
;■/ 7.50
General Motors.—_____
60
4.50
9.25
47
3.50
5.50
Building Material—
2.00
National Lead.
33V2
al.25
3.25
Pitts. Plate Glass—
34
1.75
3.25
Brothers
Sherwiti' Williams
55%
3.00
m7.00
Salomon
1912
B.
F.
U.
S.
Goodrich.—
9.00
64
3.^5
7.00
1905
87
5.00!
8.75
1912
Liggett1 & Myers
Utilities-
Central
&
Consolidated
PIUs-
a
Electric
&
South
West Penn
38
Electric
5% stock.
w
f Less
15%
2.00
1.00
Agric,
International
Chemical—.
—
April-11
vote
four-for-one
on
h Plus L share Si 01 New
9
Actual
funds
15%
Actual
Plus Z%
V
.
..'
FIXED
stock-split,
37%
2.00
Metals—
IT
New
2.90
5.00
8.50
1934
Zinc.
66%
4.25
5.00
1882
52
5.00
10.00
1934
Nickel-
Phelps Dodge.:
-
1934
f2.00
56%
Jersey
Oils—
"
30%
Copper.
Kennecott
;
•'
ir
r
.
3%%
($100 par)
cum.
-
Oil
cum.
Solvay American 4% ($100 par)
cum.
Sylvania Electric $4 (no par)
55%
4.00
11.50
1934
69%
g3.00
14.00
1936
5.00
10.00
1918
2.60
8.00
1940
pl.00
h2.12%
4.50
1911
S. O. New Jersey
j
a2.00
'
Paper—
'
*
*
1894
14.00
1882
—
8.00
23.00
,
*
Each
preferred
1, 1957.
share
is
S.
with
,
-
.
-•
-
1940
into
;
%
.
-
each
•
2.353
year
dollar
bonds,
j 1.25
2.20
1944
5.00
10.80
1942
v51
5.0
were
$110%
x
90
83%
f>0%
128%
5.0
4.4
100
zl03
yllO
106%
N.C. "
N.C.
shares
bonds
amount
84%
6.00
15.00
4.9
4.0'
5.0
4.8
3.9J
6.2:
thereafter
y
As
a
39%)
through June 30,
1955;
principal
000
The follow¬
sum
bonds
of
amounts
amortized" during
1948 with the
the
of U. S.
year
$2,531,-
assigned under Law No; 8962
for amortization:
£1,260,000, ,U. £>:
$5,577,000 and Swiss francs, 1,058,500.
These
bonds
retired
were
from circulation.
"Holders
of
bonds
assented
to
Law No. 5580 who do not assent tQ
the
readjustment plan*, will be en¬
titled to receive payment of $11.09
per
Feb.
■
$1,000
bonds,
whole only through May 1, 1951; at 105 through May 1, 1976; less
April 1, 1950; at 102 through April 1, 1953; 101
1958; 100 thereafter; for sinking fund at 100 only after 1958.
I,
1949,
Schroder; Trust
on
.and
,
'
•
4
after
at
the
office
Company,
of
Trust
%
six months thereafter.
Through
an
new
-
.
z
1900
for
of
6.2
;
(price
common
dollar
re¬
ex¬
bonds dated Jan. 1, 1948, and ma¬
ing
*
of
principal
turing Dec. 31, 1993.
5.2
105
81
71
99%
4.9
Through June .14, 1951; at 50 thereafter.
In
each
com¬
"
x
reorganization.
The
readjustment' plan. The
equal
„
convertible
Through June 30, 1949, less
100 thereafter.
de» la
$11.09' which will be
...
at
*
48%
Union
101
92
•
:
v
Railroads—
*.
r
_
t
u
1946
13.50
50%
40
v
tThrough July 1, 1949; at 110 through Jan. 1, 1951; 109% through July 1,
1952; 109 through Jan. 1, 1954; 108% through July 1, 1955; 108 through July 1,
1956; 107% thereafter.
'
..
before July
Amortizacion
r*
UP
14
—
5.00
102
International Paper
pfd
($50 par) non-cum. pfd.
U. S. Rubber 8% ($100 par) non-cum. pfd—
N.C. Non-callable.
an¬
Caja
$1,000 bond for holders
U.
change
N.C.
134
pfd—
pfd— "
Union Pacific 4%
cum.
N.C.
1102%
debenture due 1981.
1922
9.00
4.6
—
(no par) first
15.00
17
105
97
Missouri Pacific 1st & ref. 5% due 1977 "F"
6.00,
32%
3.4'
($100 par) cum. pfd.„
Crown Cork & Seal $2 (no par) cum. pfd—
Goodyear Tire & Rubber $5 (no par) cum.
pfd.
Koppers Co. 4% ($100 par) cum. pfd._
72%
Gulf Gil
Humble
ul05%
Bethlehem Steel 7%
40%
--
Yield
non-
78%
Continental Oil.
Price
pfd._
Southern Pacific 4%%
fw
%
cum.
Atchison, T. & Santa Fe 5% ($100 par)
cum. pfd.
Radio Corp. $3.50
was
the
by
adjustment plan calls for the
Call
(T)
97
Amerada Petroleum
the
to the
SECURITIES
—
International
of
102
pfd—
American Metal 4%% ($100 par)
1918
shares,
100
Price
1902
4.00
1'7
paid to holders who do not assent
3.35
n6.37
de
principal
bonds, it
Jan.
on
the
"The interest rate is equivalent
pared
INCOME
2.25
1.70
the
1948'at the
year
of
announcement adds:
v,..;,
American Cyanamid
4.50
for
tization of the Public Debt).
Appr.
conv.
plan
Deuda Publica (Institute of Amor¬
ended'Sept". 30:-
stock.
of
to $15 per
Electric for each
the
1%%
nounced
ended'Aug. 31'.
12'months
for
of
1935
"
tax.
1945-
38/
3.20
Jersey for each 100 shares.
less
shares Atlantic City
yea*-:
rate
amount
Canadian tax.
j Ih Canadian
announced
readjustment will receive
1944
4.20
:
Phis' 1'share-Texas Gull-Sulphur for each 65 shares.
k Plus
service
Autonoma
1902
27%'
Harvester
1947
<
..
——
Amer.
Swiss francs who assented'to
recently
1910
1.45
'
.
6.50
1934
4.40
0.80*
15%
:
Natural: Gas
Stockholders- will
kl.00
;
11
43
WesL
b Phis'2stock.
c
a
interest
American' Gas
4.25
mSSBT
:
and
,
2.00
and Fertilizer—
Holders of Chile's external obli¬
gations in dollars, pounds sterling
15.50
1904
1918
Chile's External Bebi
.
Tobacco:
1911
m.* :
on//
1943
5.50
4.00
Tobacco^—
n
3.50
,
Interest Payment
1939
61
41
1
Rubber
American
1885
*!
-
1907V
Rubber—
a 1.60
*
<7
4.35
45
Farm Equipment
.
2.50
41%
—
.
45%
W.
m
13.00
.
Woolworth
v
m4.11
.
31
Carbide
our reg¬
v
separate private transactions.
F.
p
Sterling Drug
389
Trade—
Related Products—
—
Bros.
1935
Chemicals and
"Union
(jointly);
keeping with
.,
$2,512,029,545
financing, involving
,5.50
1899
Kodak
underwriting
placements in 1948 with institutional
2.25
1906
Koppers Co..
the
1
investors approximated 40.1% or
of the total new corporate
39%
''
40%
C9.75'
Private
Prob¬
Roebuck
1935
5.25
Johns-Manville
bl.00
of
monthly practice.
Sears
T.
g?
48
ular
4.00
1933
187
list
;
flotations of securities in
invitations
$3,800,000 equipment trust issue.
a
1.50
1935
Libbey-Owens
duPont
Summary, the compilation 'will
detailed
a
23%
1917
Dow Chemical-
include
Grant
1926
42
Chrysler Corp.
Besides this
subscription by present
Haley, Stuart & Co. Inc.; Harriman. Ripley
W.
but
of
STOCKS
on
Retail
ably managed and financially sound companies
whose earnings, they feel, should be reasonably well maintained.
Eastman
for
houses, banks and insurance companies which
participated in the placement of the December
Lehman
if
is
program
and
the employment of funds at an attractive rate of return.
For the
guidance of the investor wshing to obtain a more liberal income,
H&Ile & Stieglitz suggests the following selected fixed income and
Electric Auto
offered
be
financing in the United States for the Year 1948.
The
Hutzler; Harris, Hall & Co. (Inc.).
toward a managed currency and governmental pater¬
New York Stock Exchange firm of Halle & Stieglitz
shares of well managed and financially strong
COMMON
our usual custom, we will publish
Monday, Jan. 31st issue of The Chronicle,'
a
complete Annual Summary of Corporate, For¬
eign Government, > Farm "Loan and Municipal
Company is
common stock.
FLOTATIONS;
For Year 1948 ;;v a'';'-
ill the
through sale, probably in
money
CAPITAL
Following
?
equipment* to be covered' by the certificates will
common
shares
Co.
&
consist of 1,000 steel hopper cars and 25 cabooses.
Com¬
companies, with further growth potentialities, afford
common
Corp.; BIyth & Co., Inc.
new
fbr bids
10
Sees Common Shares Still Attractive
another step
Bear,. Stearns
Virginian Ry.
The
increasing authorized
present
writer—Kidder,:Peabody & Co.
a
and
stockholders.
Feb.
3,021,460 shares.
subscribe for part of the new stock.
Despite
Brothers
May, of 148,000 additional shares of
Gas Co.
on
from 2,021,460 shares to
plans
pany
.vyV*-/'- :'-v\:
Jan. 22 reported company expects to send out
South Carolina
common
Lehman
expected to raise
Kuhn, Loeb & Co.
•
Light Co.
(jointly); Halsey, Stuart & Co. Inc.; White, Weld & Co.;
Harriman Ripley & Co., Inc.; Salomon Bros. & Hutzler;
Probable bidders: Halsey, Stuart &
First
&
reported company is expected to sell $6,000,000 1
to finance its plant expansion. Probable
bidders:
sibly in April, with some $42,000,000 first and refunding
mortgage bonds. Proceeds will be used to provide com¬
pany
21
Power
bonds in April
be in the market, pos¬
may
Utah
Jan.
underwritten.
Public
Jan.
■
writers.
Jan. 21 company plans offering of 754,038 common shares
to stockholders of record Feb. 25 at par ($25) per share
in ratio of one new share for each 10 shares held. Issue
will not be
(jointly);
Harris, Hall & Co. (Inc.); The First Boston Corp.;
UNDERWRITING* AND
Pacific
j;*
purchase of $2,120,000 equipment trust certificates, dated
Feb. 15, 1949 and due in 20 equal semi-annual instal¬
owned.
& Beane- will
(2/2)
The company will receive bids up to noon Feb. 2 for the
Transcontinental & Western Air Inc.
rate
Hall & Co. Inc.);
•
Probable bidders: Hal¬
sey, Stuart & Conine,
& Co.; Lehman
Company is planning to file a registration statement,
shortly for approximately 400,000 additional shares of
stock, which will be offered to existing stockholders at
Halsey,
bidders:
Co.
fi
1949
(parent) and to the public holders of outstanding corhmon stock
against the exercise of subscription warrants.
Present plan is to open bids for the bonds and
preferred
Jan. 27 directors authorized the management to proceed
with the financing program under discussion for weeks.
to mature in 15
Stuart &
(2/10)
one
4,000 hp. passenger locomotive. Probable
Halsey, Stuart & Co. Inc.; Salomon Bros; &
Hutzler; Harris, Hall & Co. (Inc.); Harriman Ripley &
Co. and Lehman Brothers (jointly).
for bids to
ment trust
Ry.
(3/8)
bidders:
reported company will issue invitations shortly
be received Feb. 24 for $6,000,000 in equip¬
12
Jan.
Pacific
GoV
$10,000,000 of
mortgage bonds and $5,000,000 of new pre¬
stock, to be sold through competitive bidding, arid
approximately $2,000,000 to be obtained by. the- sale of
has invited bids by Feb. 10 for the pur$2,250,000 equipment trust certificates series F
of
be
tives
(2/24)
Pacific Railway
Northern
&
Power
first
new
March
bids March 22.
open
Penn
ferred
March 1, 1949 and due $225,000 annually
1, 1950-1959. Proceeds will be used to finance
purchase of four 6,000 hp. diesel road freight locomo¬
to
outstanding first mortgage 5s. Probable bidders: Morgan
Stanley & Co.; Halsey, Stuart & Co. Inc. Expected com¬
will
Probable bidders:
company
chase
regis¬
$35,000,000 25-year deben-;
the preparation of a
tures, to be sold at competitive bidding in March. Pro¬
ceeds will be used to redeem on June 1, 1949, $35,000,000
pany
West
"
additional
•
(3/22)
England Telephone Co;
directors authorized
18
receiyed March 9.
Salomon Bros. & Hutzler.
The
New
be
•
'Thursday;; January; 2% 1949
Jan; 26 directors approved a'
financing plan for its
construction program. The plan includes
$11,850*000 equipment trust cer- ;
Halsey, Stuart & Co. Inc.; Harriman Ripley & Co. and
Lehman
Brothers
(jointly);- The First- Boston Corp.;
some
Jan.
will
■
(3/9)
Ry.
Bids for the purchase of
(3/7)
CHRONICLE
FINANCIAL
&
Department, 48 Wall Street, New
through April 1,
York."
ft
§■
Dull
,
Spot Ahead
Next week has little to offer in
the
of new issues it is indi¬
way
FINANCIAL
&
COMMERCIAL
THE
Number 4772
169
Volume
CHRONICLE
ering
Line will open bids on Feb. 7.
seldom used.
active
immedi¬
business
new
sight.
could
February
ately
in
prove
relatively quiet.
Percy J. Ebbolt Named
President of Chase
revival
activity, provided of
seasoned
markets
provided the proper setting.
The
bond
seasoned
market
is
noticeably firmer
tone, according to observers whose
daily job requires them to keep
developing
tabs
influences are consid¬
work, not the* least im-«
Several
be
not
if
preciably
the
With
avoid such
That
students
fied
the fundamental
firming, but close
the
other
that
basic,
satis¬
the'market lare
of
of
dearth
investors
keen
more
breaking
yifeld
rule,
three
156
DIVIDEND No.
no
for
observing,
were
on
share has been declared
capital stqck of The Borden
per
the
of business February 11,
E.
But they evidently find
faced
selves
problem
in
flow
steady
of
of
income
their
which
put to work.
though portfolio man¬
agers doubtless keep^their opera¬
tions to a minimum in the hope ol
encountering somewhat more sat¬
isfactory conditions as the new
mand,
'
•
along*.
Stock of The
in
1949, to stockholders of
of business February 10,
Company', payable
American Tobacco
March 1,
on
record
the Common
declared upon
cash
share have been
per
record at the close
ary
$50,000,000 new first and refund¬
ing mortgage bonds.
rate the issue
ing out to investors, judging by
'reports of those watching the '
The successful group
making
business
the
Secretary
FRAHER,
E.
a
A
Service
&
Gas
be; in the market for
some
time in April,
gage
Co.
quarterly dividend of $0.296875
on the 4%%
Cumulative Con¬
regular
declared
Preferred
Stock
would
be
for
Directors
of
National
Con¬
Stock
1949
per
the
of
stockholders
to
15,
ruary
of
record
of
as
Feb¬
1949.
Samuel
Kipnis, President, announced that
the company anticipated negotiating a term
lean
in order
to
partially reimburse the
treasury of the company for the unusually
heavy expenditures made for plant additions
and improvements.
be
raised
of
purpose
re¬
outstanding obligations of
operating subsidiaries, several of
which are due at the beginning of
-r
4% CUMULATIVE PREFERRED STOCK
$1 per share
3V2%
CUMULATIVE PREFERRED
87'/a cents per share
■
•
STOCK
PREFERRED
87'/j
of
of
cents
a
37V4 cents
Each
to
dividend
is
Stockholders
o.
•
V
business
record
the
at
of
ers
record
at
close
the
close
of business
16, 1949. Old Colony Trust
Company, of Boston.will.mail checks*
President and
SHOWERS
SHEETS
PEQUOT
Secretary
.
&
fore
CASES
"The
Nation Sleeps on
February 3, 1949.
L. UPSON, Secretary
$4.25 Cumulative
Stock
The
Board
of
March
2,
fore
Stock,
trading experi¬
organizations, is de¬
sirous representing Out-of-town Bank
or
Dealer
For
Box
York
diversified
good
in
Second
Series
Board
of
Railway
of
A,
Preferred
to
Directors
stockholders
close
of
business
of
Board
small
York
New
of
Office.
of
2,
as
Directors
Company
of
February
of
2,
the
close
Hooker
on
of
226,
8,
details
Church
N. Y.
write
St.
Post
Office
Station,
Dept. 5M.
New
as
business
Payment
"$1.25
of Business on :
with
E.
May 13. 1949
Sept. 15, 1949
Aug. 15, 1949
without
par
who
Value of Southern Railway Com¬
been declared, out of the
surplus of net profits of the Company for the
on
record
March
at
the
December 31, 1948, pay¬
15, 1949, to stockholders of
close
of
business
Checks in payment
on
February
of these dividends
on
the
Preferred and Common Stocks will be mailed
to all stockholders
they
of record at their addresses
appear on
the books of the Company
unless otherwise instructed in writing.
J.
J.
by application to Guaranty Trust
Company of New York obtain certificates
giving
particulars of rates of United
Kingdom Income Tax appropriate to all
the
above mentioned dividends.
Lombard
the
London,
made.
is
5%
Tax)
come
next will also
the 31st March 1949.
Coupon
No.
91
National
the
be payable
on
Savoy
C.
for
days
2.,
DATED:
BY
18th January
ORDER
E.
MAHER, Secretary.
Rushman
G.
House,
the
OF
THE
1949,
past
Dividend
for
Considerable
the
rec¬
Final Dividend.
additional
work has been
preparation of consoli¬
required by the Com¬
the completion of
audited accounts in respect of last
has been delayed.
involved
dated
the
in
accounts
panies
year
and announcing
year
ommendation
on
Act
as
1948, and
is
hoped that the Accounts will
completed by the end of March and
to
the
shareholders by
the
It
be
circulated
nual
to
be
of
in which case the An¬
Meeting will be convened
April,
General
early in May, and the Final
(if any) recommended by the
will
(subject to confirmation
held
Dividend
Directors
by the shareholders at the General Meet¬
ing) be paid on the 30th June.
BRITISH-AMERICAN
BOARD
LANGFORD,
the
the
in
preceding
middle
must
be deposited
Provincial Bank Lim¬
Court, Strand, London, W.
examination five clear busi¬
(excluding Saturday) before
payment is made.
ited,
ness
practice of the Di¬
to declare the first
Ordinary Stock for
current year at the time of signing
accounts
of
the company
for the
been
has
Interim
the
half-yearly dividend of 2% %
Preference Stock (less In¬
for
the
year
ending 30th
September
with
Street,
ANNOUNCEMENT
SPECIAL
It
rectors
the
this
for
may
can
Or¬
1949.
Bearer Stock to obtain
32
The usual
on
fiscal year ended
able
the
3., for examination five clear busi¬
days (excluding Saturday) before
C.
payment
per
1,298,200 shares of Common Stock
has today
pany
on
deposit Coupon No. 203
Guaranty Trust Company of
York,
ness
on
dividend
must
the
New
Feb, 15. 1949
1.25
2nd,
Secretary.
dividend
1949
regular quarterly dividend of $1.00
of
Holders
MarT757i949
A
interim
March
31st
on
June 15,
share
WAR¬
STOCK
Stock for the year ending 30th
September 1949 of one shilling for each
£1
of
Ordinary Stock, free of United
Kingdom Income Tax will be payable
1.25
15, 1949.
WILCOX
first
A
follows:
Record at the Close
Date of
of
1949.
ANSLEY
been declared, payable
Amount
1949.
January
14, 1949 declared a dividend of Thirty
Cents ($.30) per share upon its Com¬
mon
Stock
($5
Par
Value),
payable
February 25,
1949
to
stockholders
of
as
January 25, 1949.
To Stockholders of
as
further
4, 1949 will be in time
of dividends to transferees.
be entitled by
virtue of Article XIII(l) of the Double
Taxation
Treaty
between
the
United
States
and
the United Kingdom, to
a
tax
credit
under
Section
131
of the
United
States
Internal
Revenue
Code
dinary
Dividends aggregating $3.75 per share on the
Preferred Stock of Southern Railway Company
have today
Dividend
TO
TO BEARER.
RANTS
NOTICE
New York,
Hooker
record
March
Stock
DIVIDEND
Dividend
January
dividend
Cumula¬
tive Second Preferred Stock, Series A,
($4.50
dividend),
payable
March
29,
1949
PREFERENCE
Company
Hooker
Company • on
14, 1949 declared a quarterly
of $1,125 per share upon its
record
with
30, 1949
dividend of 3%
(less tax)
6%
Preference Stock.
All
received in London on or be¬
April
payment
HOLDERS OF ORDINARY AND
Preferred
1949.
Cumulative
Electrochemical
EXPERIENCED TRADER
25th will be in time for
dividends to transferees.
of
transfers
PEQUOT SHEETS
DIVIDENDS
OF
NOTICE
Dividend
Directors
Company
on
January
14, 1949 declared a quarterly dividend
of
$1.0625
per
share
upon
its
$4.25
Cumulative
Preferred
Stock,
payable
March
29,
1949
to
stockholders
of
record
as
of
the
close
of
business
The
years
Company
'
must be used
for
Ordinary
Stock
and
decided to pay on April
issued
on
BRITISH-AMERICAN
Southern
Hooker Electrochemical
day
tax)
203
the
on
Stockholders
STEPHEN
same
half-yearly
daily dividends of luxurious and
restful sleep.
.
the
February
Also
pay
of
on
No.
payment
Treasurer
PILLOW
pay
91 must be used for divi¬
dend on the 5%
Preference Stock.
All
transfers received in London on or be¬
February
on
to
No.
Coupon
Coupon
RUDOLPH C. DICK
v.
-
January 21, 1949
payable March 1, 1949,
of
to
record
decided
dividend
February 25, 1949 to hold¬
on
held Jan¬
on
half-yearly dividend of 2%% (less
on
issued 5% Preference Stock.
Cotton
February 5, 1949.
share
per
of
stockholders
STOCK ($1 par value)
(47th Consecutive Dividend)
.
Cumulative
LIMITED
Directors
18,
pay
Also
January 19, 1949
of Directors of Naumkeag
Company at a meeting
held on January 19, 1949, declared a
dividend of Fifty Cents (.50) a share,
Steam
of
meeting
a
sued
The .board
4.88% Series,
on
payable February 28, 1949
share
COMMON
the
the year.
SITUATION WANTED
15
■m.e.griffin,
Secretary-Treasurer.
ending September 30, 1949 on the is¬
Ordinary Stock of the Company,
free of United Kingdom Income Tax.
MASSACHUSETTS
DIVIDEND No. 223
per
the
share
STOCK
cents per
Common
ence
V?>;-
1949 in London it was decided
March 31, 1949 first Interim
Dividend of One Shilling for each One
Pound of Ordinary Stock for the year
Steam fotton
payable
Electrochemical
There is an expectation in bank¬
ing circles that the company also
may seek additional new money
later in
February 28, 1949, to stockholders
of record February 15, 1949.
to
authorized; the payment
dividend
3Vi% CONVERTIBLE SECOND
The
;.
regular quarterly dividend of
per
share on the Common
Stock has been declared payable
250
At
The Board of Directors has
$42,000,000
tiring
June,
15, 1949.
TOBACCO COMPANY,
ular dividends:
may
via the mort¬
would
record Febru¬
A
share, on the Common
company, payable March
10,
cents
of
1949,
1,
payable March
stockholders
to
ary
of
Board
SALEM,
Electrochemical
the
regular quarterly dividend of
declared
Con¬
National
of
Corporation, payable February 1, 1949
to stockholders of record January 25, 1949.
Dividend No. 5
'
bond route.
Funds; which
New York 4, N. Y.
w° opall i NDL-ST Kit S j NC.
COMPANY
Gas
indicate that the Public
Electric
One Broadway,
A
tainer
Stock 4.88% Series
point
Service Electric &
Reports
BRADLEY, Secretary
CHAS. F.
3iy40 per share on the 5% Con¬
vertible Preferred Stock has been
TOBACCO COMPANY LIMITED
Public
this dividend when
exchange is made.
uary
Board of Directors of Burlington Mills
Corporation has declared the following reg¬
2.88%, instiapparently were in no
take the issue down..
to
issuance of Common
in exchange for their
par)
($1.00
holdings will be paid
CONTAINER
at 102.399 to yield
tqtions
Stock
DODGE, Treasurer.
Cumulative Preferred
The
of
but with the reoffering price set
rush
stock issues of the
of former
Company entitled to
CALIFORNIA
EDISON
CORPORATION
with the
separated the high and low bids,
'
issued Common
($1.00 par) of this Company.
25, 1949
t
of
a
date hold regularly
Holders
CORPORATION
twenty
January
of
payment
Stock
tainer Corporation yesterday declared a reg¬
ular quarterly dividend, in the amount of
©
authorized
quarterly dividend of
The Board of Directors has
NATIONAL
The
Preferred Stock,
offer
an
quarter
to
1949,
of
(
Janu¬
S. F. HALL,
Secretary
January 19, 1949
Burlington Mills
fering 101.43.
a
15,
close
February 9, 1949.
vertible
SOUTHERN
101.45999 and the third bidder of¬
.''1 Barely
the
Stock of MAGMA COPPER COM¬
PANY, payable March 15, 1949, to stock¬
holders of record at the close of business
was
Harvey, Treasurer
Dividend
bid 101.69
interest rate,
,
February
at
as
Magma Copper Company
ADDING
1949.
January -2 5, 1949
of distribution.
3%
DIVIDEND
cents
($.50)
per
share payable
March 10, 1949 to holders of Common
Stock of record February 25, 1949 who on
.
will be mailed.
Edmund A.
'
a
Stock
15c
1949.
H.
the close of business
at
Detroit, Michigan
was re-
pprted somewhat slow in mov¬
runner-up
of
fifty
payable
shareholders of
to
February
Treasurer.
BRITISH-AMERICAN
have set their sights just a
trifle too high in going after Con¬
solidated Edison Co. of N. Y.'s
progress
dividend
a
3s
may
At any
•,
stockholders
on
Common
on
cents
twenty
1949,
10,
31,
that the bankers
are
payable
record
4,
EDWARD
COMPANY,
MACHINE
March
Notice
Consol. Edison
Indications
for
($1.00)
Dollar
One
CASH
BURROUGHS
of
even
year wears
of
Company
the outstanding Common Stock of
Company,
holders
this
of
declared
1949,
on
February
Directors
($.20)
has been declared upon the
share
dividend of
share and an extra
1949. Checks
This, it is observed, generates s
certain amount of investment de¬
21,
share
the
of
Board
that
Treasurer
of
dividend
stock
of Seventy-five Cents
regular dividend
per
a
Extra Dividend
an
(75$)
aid
Dividend
C. BECK,
Company
1949.
DIVIDEND
to
business
of
United States Lines
Y.
NOETZEL
L.
CONSECUTIVE
192nd
N. Y.
A
thereby
and
New York 3,
Fifth Avenue
174tii Common
serious
a
form
invested
be
must
with
the
N.
Dividend No. lOO
;
them¬
4,'
NEW YORK
Capital
111
1
STREET,
Company, payable March 1, 1949,
to stockholders of record at the close
of
1949,
15,
W.
Board
January
per
(600)
on February
record at the close
1949.
On January 24, 1949, a dividend of Twentyfive Cents (25c) per share was declared on the
than
few months ago.
a
the
INVESTING COMPANY
BROAD
dividend notices
A
they
a
on
1949.
dividend of sixty cents
January 25.1949
cent,
per
1949,
clared
payable
The
this type is ex¬
pected to roll up to goodly sized
figures in the months ahead. Next
they appear
which
been
have
to
moment
the
at
the:
are
Vice-Presi¬
of the Board of Directors of
Company held today,
January
dividend of $.25 per share was de¬
Common Stock of the Company
Gamewell
The
21,
an
meeting
a
of Directors of this Company on
1949, declared the regular quarterly
dividend of $1,375 per share on the outstanding
5l/a% Series Cumulative Preferred Stock of the
Company, payable April 1, 1949, to holders of
record as
at the close of business March
17,
^cnlcnA
following a
relatively quiet period late in 1948.
Institutional
Assistant
as
GAMEWELL CO.
THE
At
January 21,
of the year,
the turn
He returned after the
war
The
interim
Vice-Presi¬
dividend notices
dividend notices
since
issues
but
Captain in the Army
as a
CITY
An
a
as
Park
1913
Air Force.
25
elements,
new
in
York
military service in World War I,
serving
notices
Not the least of these is the verit¬
able
New
National
5,
turning their
firms
more
Financing
almost
having their effect
are
in
the
1930
of
porate material on which to bid,
it looks as though competition for
such financing will continue keen.
can
be
may
in
factor
of "term" loans cov-
dividend
railroad equipment
trust issues, in lieu of other cor¬
development.
a
the program
toward
eyes
and
Treasury
one
Equipment Trusts
ap¬
Federal Reserve Board
the
as
harden
to
allowed
During the 1930's, he was
of the bankers who developed
least three
though at
as
dential election in November.
parently is accepted as making
it certain that money rates will
with
the
dent,
areas.
will be represented.
groups
of the Democrats ap¬
his banking
Ebbott started
was
after mergers of the Sea¬
board
and
the Equitable Trust
Company into the Chase.
compete for New England Tele¬
it 'looks
portant the outcome of the presi¬
Victory
of
(Continued from page 5)
phone & Telegraph Co.'s projected
$35,000,000 of new debentures, due
out the third w£ek in March and
ment issues.
ered- at
are
now
together their syndicates
getting
to
movement of invest¬
the
on
bankers
Mr.
in 1923
Vice-President of
appointed
to Chase in
Re¬
of
dent of that bank, and
left his desk in 1917 for 18 months
National Bank
the
Investment
a
mer
Bank
in
course,
Association
the
55
Seaboard National Bank. He came
City Bankers and is a for¬
President of that Association.
career
March, however, shapes up as
likely to witness something of a
in
Mr. Ebbott has been
serve
And there is not much in the way
of' actual
a period of years, a type of
bank credit which previously was
sizable offering is $10,665,000 cer¬
tificates for which Atlantic Coast
the calendar.
cated by a glance at
(483)
Secretary.
Egham, Surrey.
TOBACCO
COMPANY, Limited
January 18, 1949.
£6
COMMERCIAL
THE
(484)
FINANCIAL
&
CHRONICLE
Thursday, January 27, 1949
do not appear to be
BUSINESS BUZZ
that
their
minimum
ished
•
•
about
And You
.
between
is
effort
be of
may
no
greater ultimate significance than
back
to
Harry Truman in his
up
.request
number
p6wer
for
of
effect
to
the
economies
to be able to launch his
called
now
a
better
New,
own
Deal.
"Fair"
would abolish the Recon¬
group
struction Finance Corp. For an¬
other it would make the Federal
Deposit Insurance Corp.
sub¬
a
Federal Reserve
Board. The reading about what
sidiary
of the
of lending
practices in some of the twofjcore government lending agen¬
cies is not only droll, but will
goes
in the
on
way
arguments,
unlikelihood
stir up many heated
the
of
regardless
lending
with the rec¬
sion will go along
lending functions.
There may
be
loans
fact
that the
ivhich
has
made
Commission,
public several
other task force reports, has
kept
this one closely to its own breast.
All task force group recommenda¬
tions are only task force recom¬
mendations. They may or may not
foe adopted in whole or part in the
overall Commission recommenda¬
tions
being drafted. However,
now
is
there
that
presumption
a
Commission
looks
those
task
made
public
kindly
the
upon
reports hitherto
group
Commission
by the
finance
to
in
tenants
task
with
borrowers
evidence
is
respect
task force feels that
the
RFC,
the
as
an
agency
making direct government loans,
it should be liquidated. The group
praises the
the
RFC's
depression
chief
the
agency
on
re¬
a
duced
basis is that it shall be
Land
to
ency.
In the opinion of tire task
meet
force the present
«re
not such
lor
some
time,
on
emerg¬
functions of RFC
to
as
future
train its
staff
the
emergency,
duration, and character of
ivhich
the
offers
group
RFC,
will
stir
be
to
It
is
Federal Re¬
that the
Banks
tbority
the
controversy.
up
task
the
substitute for
substitute
a
and
proposed
serve
time
same
granted
:iu-
certain
guarantee
loans for commercial
foanks. The type of loan which
types
of
be
would
guaranteed
capital
long-term,
is
the
loan
for
productive purposes, which is
a
marginal
nature,
inas¬
of
much
•
as
particular
tire
of liquidating the agency and to
least, the
still
99% of Washington, including the
functions
service
afforded
It is
that
noted
strong is the
for
Farmers
Administration, that it was
impossible to get favorable
political
Home
so
backing
committee action in 1948
to
that
merge
for
services
che
would
»!•
\
clientele
of
the
in
FDIC
such
the
endanger
a
way
which
very
appearance
recommendation
Federal
itself
at
Reserve
advocates,
and
report
from the Senate Banking Com¬
got
a
favorable
mittee during the 80th Congress,
but without action
*
*
,
In
to
sys¬
the
days
Among its other proposals, the
force proposes that all gov¬
task
ernment
*
lending
of
on
the floor,
*
Rexford
Guy
corporations
should have similar charters with
of
the
corporation
provisions
Finally, and in
rection,
the
a
up
mortgage
ly,
would
in¬
that
require
agencies reperfe to Congress each
the
year
capital
sidy.
losses
Then
asked
to
deficit
the
Congress
reported.
advanced
to
group
avoid
of
which
for
last
task
perhaps,
revealing
delay
a
until
the
recommendation
would
program
known to
ing-slum clearance
be
made
new
housr
group
on
things,
the task
government
lending
loans
from
Farmers Home
Administration, an
.agency of the Department of Ag¬
riculture.
Its theoretical job is
provide
credit
for
farmers
whose rating credit wise is so poor
sale
The
of
Na¬
after the Home Loan Bank
real
merely
would
for
seek
cents
the
set
mortgages,
in
not
home; mortgages,
and
be accessible to all types
estate
bill,
final
above
the
higher
it
sian
probably
and
until
bill
the
is
passage,
minimum
the
less
than
how
of 75
It
wages.
figure at $1.00
gress will probably
approve
less.
'.
It
for
■
was
a
.
«
1
are
couple
a
of
side
twists in the Administration-written
wage-hour bill
now
pending
before the Senate Labor Commit¬
This is the bill which is de¬
tee.
the President's request
new
minimum of 75 cents,
expressed in his annual message
to
Congress,
things
which
created
with other
impression
the
that Mr. Truman
was
somewhat
"moderate" in his requests
had
of
the
^
^
is
twists
that
♦
.
-•
the
been
anticipated.
apparently is backing
minimum
hour,
of
wage
subject
to
He
actual
an
$1.00
industry
ap¬
so
report this
are
correct.
minimum
new
Others/
more
so
recommend, the
Secretary of Labor may set a
higher minimum wage for any
particular industry. Obviously if
the bill is passed
of
in this form, the
Labor
may
be
ex¬
of
"industry
will
lean
which
committees"
toward
a
higher mini¬
the
Rus¬
backward
cynical,,
President
this idea
development,
as
some¬
a
la
could
keep
inflation
alive
On the other hand, if the Presi¬
■
dent
is
serious,
Another
into
the
twists
his
Administration
from
minimum wage.
ex¬
the
statutory
The farm group
although the
Wage-Hour division of the De¬
partment of Labor has been hack¬
ing away at this exemption and
has been narrowing its scope by
administrative interpretations.
and to lend all aid and com¬
At
the
as
inaugural1
much
of
the foreign aid program.
Until
the
President
reveals'
of his
tions.
(This column is intended to
re¬
flect the "behind the scene" inter¬
pretation from the nation's Capital'
"Chronicle's"
coincide with
own
views.)
Trading Markets:
Ralston Steel Car
1
Oregon Portland Cement
Riverside Cement A & B
Spokane Portland Cement
won,
moment
farm
groups
LERNER & CO.
Investment Securities
10 Post Office
Square, Boston 9, Mass.
Telephone Hubbard 1900
Teletype BS 69
govern¬
ment
agency to another be abol¬
ished and that such requirements,
if necessary, be met by appropria¬
tions by Congress.
That
several
all
jurisdiction
Bank
Board
be
lending
activities
have
placed
of
for
Hill,Thompsons Co.,Inc.
Firm Trading
Markets
NEW
minor
agencies
whose
ceased, should be wound
should
Teletype—NY 1-971
HAnover 2-0050
up.
the
under
Home
purposes
the
Loan
of ad¬
ministration, and that the regional
Home Loan banks be used
as
field.
FOREIGN SECURITIES
All Issues
YORK 5
Executive <ft Underwriting Offices
70
WALL
STREET
Tel. WHitehall 4-4540
GAM. MARKS & CO- INC.
Trading Department
foreign securities
'■
,-v ;
50 Broad Street
i.
specialists
'
120
New York 4, N. Y.
AFFILIATE: CARL MARKS & CO. Inc. CHICAGO
——
a
thinking and planning;,
however, it will not be possibleaccurately to appraise his inten¬
more
wage-
the
dairies, canneries, and other food
ostensibly
prove
slipped
of
hour bill is the removal of the
processors,
may
harbinger of a whole new Ad¬
ministration program as the Mar¬
shall speech at Harvard was of
the
wage
committees"
think:
counter
and may or may not
emption from the bill's terms for
isn't securely pegged at 75 cents first processors of food and dairy
Some 10 years ago the
per hour.
In some cases it may go products.
farm lobby fought bitterly to ex¬
substantially higher. The bill has
a
provision that when "industry clude the employees of cotton gins,
proposed
Others
to
indefintely in the U. S.
7
per
proval, if those informants who
signed to raise the statutory mini¬
mum
wage from 40 cents to 75
One
eign
speech
v
•#.
.
than
There
the
about
of
up
of
one
''
more
mortgage field.
,
this
nothing
hunches
penetration
prosperity
is
hour. Con¬
per
been
than
bait
that
New
thing which, by subsidizing for¬
reported that the President wants
that
have
affairs.
dreamed
specu¬
World
Some think
Truman
is
think
is
Secretary of Labor can
minimum
new
Sys¬
do business
estate
of institutions in the real
mum,
one
to
settled
high
count Banks would be patterned
pected to encourage the selection
agencies recommended:
That
through
securities.
pri¬
System of Mortgage Dis¬
Secretary
program.
&
other
tional
were
Congress and the public
in the Administration's
with
raising
cents per hour.
is liquidated.
followed, there would be an an¬
nual casting up of the losses of
Commodity Credit Corp., in price
support operations, and in the op¬
eration of the public housing set¬
up.
Only part of the subsidy
losses of the proposed public hous¬
ing
capital
of
the
be
ready
of
be
pro¬
the
in
banks,
discount
capable
own
the
This
by
or
system
sub¬
would
subsidy,
might
this
If
of
years,
delay
hidden
agency
forms
appropriate
so
is
posal
interest
in
other
or
labor
into
won't
wants
group
government capital initial¬
but
ten
different di¬
a
task
national
their
all
of
to
areas.
tem, but would
uniform provisions.
One
That the Federal Savings and
Tugwell the Federal Government
jset up the Rural Resettlement Ad¬ Loan Insurance Corp., the Fed¬
ministration, which later became eral National Mortgage Associa¬
the Farm Security Administration, tion (now a part of RFC), and the
which
finally has
become the Federal Housing Administration,
to
minimum. What hasn't been writ¬
op¬
as
banking
that
ties.
some
dual
the
serious
sudden
the first ring!"
on
fort
set
fears
might
phone
foreign
tem.
certain
his
agencies for these merged activi¬
non-mem¬
FDIC
that the Reserve Board
erate
found
ever
controversy in banking
up
circles, since the large
ber
faint if he
•
Administration of FDIC by the
not
great deal of
a
about
may
more
"I'd
!u." *
.
.
Federal Reserve Board is expected
to stir
talk
;
$
-
to
Deal program.
Home
Farmers
of
•«*
■-
lation
subordinate
Administration.
j
There is
bill
a
with FCA,
agency
FCA
fear
on
mystery
a
State Department, Congressional
leaders, and government agencies.
His taking flight along that linein
his inaugural address was a*
complete surprise to the town.
to
borrowers.
Among
in
the
Hoard
any
may-
partment of Agriculture the free
to take the en¬
case
is,
which
bank
in
unwilling
itself.
risk
This
commercial
a
be
would
h
Truman
other service agencies of the De¬
decades
unpredictable.
are
At
•
future
a
it
President
have in
mind
in
promising tospread throughout the world, the
benefits of the U. S. New Deal, is;
the Federal Land banks the job
The
emergency.
usually advanced for
reason
continuing
the
What
"So it is proposed to turn over to
during
record
part of the regu¬
which overtime is--
as
$
problem.
J;i
to
upon
figured.
vate
With
hours,
pay
improve¬
itself.
t'fi
situation,
"regular" rate'
in such a way as to avoid
computation of premium time for
making
any
tenancy
the
overtime"
of wage
to
economic lot
or
effort
own
in
seemingly
with
the
away
It appears to define
lar
its
does
do
on
draft
includes,
cision
unusual
of
it
to
bill
created by the Supreme Court de¬
on the longshoremen's case.
the
it is improving the
ment
Administration
twists,
support the agency's claims that
by its
the
"overtime
supporters
j-j
wage-hour
propose
itself
finds
group
unimpressed
Administra¬
another.
one
the
these
job is to lend and insure mortgage
found
significance
some
the
to
first
Administration
While
of
Farmers
particular
group.
Administration's
Home
that the entire Hoover Commis¬
ommendation to wipe out whole
the
i|c
purchase of farms.
thing, the task force
one
in
against
agencies or from the Farm Credit
Administration, another govern¬
ment
and
presumably backing a proposi¬
which will pit its farm andi
labor
accommoda¬
either from private lending
tion
crowd
this issue.
that they cannot get
The
For
labor
tion
Capitol Hill when the text of the report is published.
This is true notwithstanding the<4)
whole
the
tion-drafted bill, the White House
WASHINGTON, D. C.—There is enough political dynamite in the
""secret" report of the Hoover Commission task force on government
lending agencies to rock all the big, polished brass cuspidors on
probability, as previously related
column, that the Commis¬
it
the farm crowd will be renewed
Thus,
sion's
Administration
draft of the bill. Those who had
on
in the
the
would be abol¬
the
expressed
the
opinion that the grand old fight
Behind-the-Scene Interpretations
Capital
aware
from
wage
in
heard
from the Nation's
fully
exemption
BROADWAY
Tel. REctor 2-2020
@FedFRASER