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JAN 3
0 1948'
ESTABLISHED 1S39
Reg. U. S. Pat. Office
Volume
Number
167
No
Magic Formula to
Cure Inflation, Says
George Whitney
will
only aggravate
problem with further distortions
and
black
true
remedy is greater enterprise
and
markets.
production,
greater
with
by government and public. Sees
drastic deflation more dangerous
than inflation.
In
his
IsSoundnessoftheDollarAffected? Government Bond
By WALTER E. SPAHR*
statement
annual
stockholders,
Co.
to
lars,
ing
vices
as
quired
buy
to
say¬
such
buy0
wage
alloca¬
tion
of
com¬
modities
short
ra¬
in
further
Whitney
as
in
purchasing
be¬
Walter
E.
tween
Spahr
1940
1947.3
and
A
1947,
measures
harmful
likely to be
subject to
are
trol than inflation.
statement
his
of
these
more
less
and
con¬
In the section
dealing
with
problems, he stated:
"The
great international prob¬
lem is restoration in the war-torn
countries of the world.
the most liberal
Even with
interpretation, it
(Continued
what
cost
$1.00
in
March,
1939
in other words, that the
consumers' dollars, in so far as
—
those food items
were
concerned,
had declined 61%
during that pe¬
riod and that each dollar could
purchase only what 39 cents would
buy in March, 1939,
In terms of wholesale commod-
(Continued
on
32)
page
36)
on page
to say
::An
address
by Dr. Spahr at
meeting of the jVTortgage Bankers
Association of America, New York
banking and credit de¬
on
three matters concerning which it might
a few words.
First, I know you are all interested
or
in Government securities and that most of
your
Estill contain
these
As
We See It
securi¬
The Fed¬
Reserve
with
Russo-German relations from 1939,
just
prior to the outbreak of World War II, to the attack on
Russia by Hitler's
^legions in early summer: of 1941. To
many the facts revealed appear to have been
extremely
.
the
broad
us
these records merely exhibit
outlines
of
which
scarcely have failed to
any
a sordid tale,
informed observer could
long ago. Why any one should
anything in any of them is quite beyond us.
their publication at this time should serve a
guess
be surprised at
But
useful
These documents now available to
the world over may or may not effectively
accomplish
the
evident
objective
sought
in making
them public—i. e., to take the
punch out of the propa¬
gandist^ efforts of Russia to cpnvince the world (in¬
cluding, perhaps, especially Russians) that "the West,"
under the leadership of Britain and the
United States,
is bent
class aggression arid imperialism.
upon
(Continued
City, Jan. 28, 1948.
on
page
also
an
in¬
in
the
terest
governmen t
security mar¬
ket, and their
portfolio con¬
sists
entirely
of government
securities. For
a:
long
and
the
as
Allan Sproul
time,
late
as
;
middle of last year, our con¬
for orderly conditions in the
cern
government security
directed
dency
toward
prices
of
(Continued
"An
of
New
address
York
was
ten¬
a
government
yields to decline,
on page
48)
;;
Mr. Sproul at
Meeting of the
by
Mid-Winter
the
market
damping
bonds to rise and
purpose.
every one
as you
know,
have
In the battle of words which
shocking. To
1
of
eral
Banks,
do
a
a
ties.
World Politics in the Raw
to
investment portfolios
—
amount
°1940d
also warned that drastic deflation
bank
over
only lead to further
useful
sometime reporter
two
substant i
$1.65
distortions and black markets. He
trol
credit would
be
as
are
EDITORIAL
in
study by a Congressman of
typical food prices in Washing¬
ton, D. C., revealed that it re¬
quired $2.56 to buy in November,
con¬
capacity
—:—:
what
power
tioning and
George
1
have
in
supply,
consumer
3»
In my
velopments there
constitute at least a part
and
that the
°f
S0"Called cold war now being waged, the Administraconsumers'| tion at Washington opened a barrage last week of docudollars h
a^d ments taken from the captured German files. These papers
declined 39,0
de¬
and price con¬
trols,
gen¬
New York
requirements of Reserve Banks and sterilization of .gold imports.
1940, that it re¬
control
inflation,
in
of
on
dol¬
much
as
Sproul, in reporting
banking and credit developments, dis¬
cusses Federal Reserve
policy in relation to support of government
bond prices. Asserts withdrawal of Federal support might bring a
"""bottomless market," followed by more serious business collapse
than inflation can produce. Warns against deflation attempts by
creating "a little depression," but advocates changes in present
"outmoded" bank reserve pattern. Says Federal Reserve can do
good job with present powers, and opposes increasing gold reserve
interest rates.
on
eral, would
buy only 61%
di¬
rectly
con-
sumers'
legis¬
to
the
1947
Inc.,
lation
\
Currency depreciation in terms of goods arid services is pro¬
nounced in this country, and it has been relatively rapid since 1940.
The general cost of living at the end of 1947, as compared with the
average for 1940, had risen some 65%. This means that at the end of
warned
against
Mr.
Monetary Policy
George
Whitney.
president
of
J. P. Morgan
&
on
Spahr traces declining purchasing power of dollar and its
effects.
Holds maladjustments from inflation eventually hit all
groups.
Proposes return to gold coin standard as inflation safe¬
guard, and characterizes our monetary system as circulating "dis¬
honorable and dishonored promises to pay." Lays much of infla¬
tion to defective currency system and advocates reduced govern-"
spending and removal of curbs
Copy
Support Vital!
President, Federal Reserve Bank
Committee
Dr.
ment
a
By ALLAN SPROUL*
Professor of Economics, New York University
and less spending
saving
more
Says only
Price 30 Cents
York, N. Y.,,Thursday, January 29, 1948
Executive Vice-President, Economists' National
President of J. P. Morgan & Co.
Inc. tells shareholders legislative
measures
New
4668
State
Bankers
Asso¬
ciation, New York City, Jan. 26,
1948.
They
34)
Slate and
Havana
Municipal
Lithographing Co.
R. H.Johnson & Co.
Established
Bonds
1927
INVESTMENT SECURITIES
HlRSCH & Co.
Members
York
New
Stock
64 Wall
Exchange
"
BOSTON
and other Exchanges-
25 Broad
St., New York 4, N. Y.
HAnover 2-0(100
>-T
•
Teletype NY 1-210
Cleveland
Chicago
v Geneva
London
Troy
Bond Department
Street, New York 5
PHILADELPHIA
Albany
Buffalo
Harrisburg
(Representative)
OF NEW YORK
Springfield
Washington, D. C.
the Government in
Head
Branches
Office:
$2.40 Conv.
Bishopsgate,
London, E. C. \
in
Colony
India.
Burma,
Aden and
and
Ceylon,
90c
Conv.
Reserve
The
Fund
conducts
every
Trusteeships and Executorships
also
undertaken "
Y.
HAnover 2-0980
NATIONAL BANK
»
Montreal
Toronto
OF
THE
CITY OF
NEW YORK
Preferred
Established
1899-
Chicago
Columbus
Service
Company
Conv. Preferred &
Members
120
on
request
Buffalo
New York Stock Exchange
Broadway, New York 5, N. Y.
Denver
Toledo
New
England
Public Service Co.
Telephone:
r
-
Bell
Hardy & Co.
Members New York Stock Exchange
Members New
York Curb Exchange
30 Broad St.
New York 4
REctor 2-8600
Teletype:
NY
Analysis
upon
request
Common
Reynolds & Co.
CLEVELAND
New York
Cincinnati
Brokerage
and Dealers
90c
(Incorporated)
cf
Bond
for Banks, Brokers
Corporate Securities
——£2,300,000
description
banking and exchange business
Bank
Company
OTIS & CO.
£2,000,000
N.
Teletype NY 1-395
$1.25 Conv. Preferred
*Prospectus
£4,000,000
Subscribed Capital
Paid-Up Capital
i
WILLIAM ST.,
New York
CHASE
THE
Security Dealers Attn.
^Universal Winding Company
and
Kenya
Zanzibar
Preferred
Twin Coach
Distributors of Municipal
26,
Dept. Teletype: NY 1-708
Solar Aircraft
Underwriters and
Kenya Colony and Uganda
r;
52
York
Bell
Bond
of INDIA, LIMITED
Bankers to
New
Raytheon Manufacturing Co.
NATIONAL BANK
•
HART SMITH & CO.
Members
Syracuse
Scranton
Wilkes-Barre
Woonsocket
THE NATIONAL CITY BANK
1-635
Tel. DIgby 4-7800
Tele. NY 1-733
IRA HAUPT&CO.
Members
and
111
New
other
Broadway, N. Y. 6
REctor 2-3100
Boston
York Stock Exchange
Principal Exchanges
Teletype NY 1-2706
Telephone:
Enterprise
1820
Thursday,; January 29, 1948
FINANCIAL CHRONICLE
&
COMMERCIAL
THE
2
(486)
Abnormal Capital Market
Causes of the
'
WIDENMANN *
By HANS A.
Pennroad Corp.
Partner,
,:r
•'
Asserting investment market
taxation of dividends; unfair
PRICES
AT NET
,-Vm*
!
1
Hanseatic
Corporation
New York
BArclay
capital markets to
perity and that at
sion
President's
demand for industrial venture capital. Scores
revision proposals.
tax
Steiner, Rouse &
situation is that we have
i
Savoy Plaza
Savoy Plaza
Class "A"
Franklin Process
Vanderhoef & Robinson
York Curb
Members New
31 Nassau
Exchange
Street, New
York 5
7-4070
Teletype NY 1-1548
Telephone* COrtlandt
Bell
System
Longchamps, Inc.
Mr.
120
What's Ahead in Government
Stock Exchange
Exchange
BROADWAY, NEW YORK
Tel. REctor 2-7815
5
Com. & Pfd.
Bought
of government
On
Manufacturing
Porcelain Steel
Manufacturing
(Continued
R.R.
Steel
Electric Bd. & Share Stubs
General Aniline & Film "A"
Tobin Packing
Hoving Corp.
several
i n
Vice-President, first National
Bond Market?
S'V--
in
,
mercial
steady
a
Steel
and price supports
ability to support
64
Trust
United Artists Theatre
V
United Piece Dye Works
U. S. Finishing com. & pfd.
n
normally
trend
low
was
with
the average
war
John
in
SreeuecaxACompaniji
Security Dealers Assn.
•"
Hanover 2-4850
H.
Grier
interest cost was ap¬
proximately 1.965%, as compared
with 4.196% in August, 1919, at
which time we reached the peak
of World War I debt. The com¬
$25-3 billion is
by Mr. Grier be¬
the mid-Winter Conference
of
the
other than commercial
the
The
sary/
successful con¬
ciation, Milwaukee, Wise., Jan. 16,
clusion of the war,
1948.
of
the
Treasury
confronted
funds through the
the objectives
Joseph McManus & Co.
Chicago
v'';-
INCORPORATED
Wholesaler and Retailer
months
after
in
the
of
the
to-
country
(Continued on page 42)
Department and
Department.
We Maintain Active Markets in U.
limited, number of copies
available
Abitibi
Bulolo
Pow. &
Paper
United Kingdom
4%
PUBLIC
'90
Rhodesian Selection
Gold
Minn. & Ont.
Placer
Paper
Development
Canadian Securities
Established 1856
Department
H. Hentz & Co*
Members New York
Stock Exchange
Stock and Commodity
Exchanges r
and other leading
.,
;
60 BEAVER STREET,
Chicago
•
NEW YORK 4, N. Y.
Pittsburgh
•
Geneva, Switzerland
stocks, title company and
and
participation certllicatea.
-
150
'
Detroit
'
Gaumont-British
Common
*Air Products,
SERVICE
Securities
Deliverable)
•
V;
Memorandum on Request
-
115 BROADWAY
Telephone BArclay 7-0100
NEW YORK 6. N. Y.
Teletype NY 1-672
;
Members New
NEW YORK 5
120
ESTABLISHED 1890
Tel. HAnover
2-9300
Tele. NY 1-1815
Lumber Co.
>
request
York,Stock Exchange >:;•
Broadway, New
Telephone:
-
.
v. ■:.'u i
Reynolds & Co.
INCORPORATED
STREET
;;
>' *■
Corp.;>
Common
•Prospectus on
37 WALL
1
Common
'
J-G-White 6 Company
and Other Principal Exchanges
*
"
Co. Com. "
Emery Air Freight
Department
Goodbody & Co.
Members TV. Y. Stock Exchange
:.
^Georgia Hardwood
.
Corp.'
Inc. Com. & "A"
Detroit Harvester
Scophony, Ltd.
British
Philadelphia
-
■
\
Common
(When
.
NEW YORK 7, N. Y
BROADWAY
Boston
CENTRAL ILLINOIS
S. FUNDS for
.
A
Department
specializes in real estate bonds
few
a
that the deposits
find
banks
all
1945,
the ending
31,
Dec.
war, ^we
of
T r a d 1 n g
Our
/banking
bank
of
of
Investment Securities
*ABC Vending
just been completed by our
Research
; New York 6
V Teletype NY 1-1610
Amott, Baker & Go.
and a
FORECAST FOR 1948
has
York Curb Exchange
Stock Exchange
'
39 Broadway
Digby 4-3122
'
'
New
Members
system.
As
Fiscal Policy
the
Mgr.
Asst.
banks, we
probability have
with a situation
as unfavorable
as that currently
existing. Unfortunately, however,
we
did not do so but raised sa
substantial portion of the neces¬
been
2.144%.
Postwar
Following
Wisconsin Bankers Asso¬
KANE,
would not in all
address
*An
fore
Security Markets
$278,600,000,000,
December,
1941, as at that
time
the objectives of both the
Treasury
Department
and
the puted annual interest rate on our
Federal Reserve System became present, national debt of about
Teletypes—NY 1-1126 & 1127
ANNUAL REVIEW of
to
WALTER
in
absorb such
1945, amounted to
entrance
the
a fiscal policy des'grer
prevent to the fullest possible
undue inflation of com¬
to
purchasing power of the dol¬
enable that system
offerings as were lar, conditions naturally resulting
from
over-monetization
of
the
not purchased by individuals and
debt. Had we been successful in
other investors. These objectives
financing a larger percentage of
were fully accomplished as is evi¬
our war expenditure through taxes
denced by the fact that on our
or direct borrowing from sources
total debt, which as of Dec. 31,
sharply accel¬
into
Telecoin Corp.
MICHAEL HEANEY, Mgr.
debt, and
modity prices and a decrease
to
This
level.
our
Warner & Swasey
\.
NEW YORK 0
HAnover 2-9470
WALL ST.
Securities
extent
an
necessary
forcinterest
g
erated
Taca Airways
Merchants Distilling
Business and the
Co.
Exchange
Curb and1 Unlisted
System naturally
became management of our huge
banking system with the reserves
reserves,
rates to an ab¬
Time, Inc.
Title Guaranty &
An
York Curb
Teletype NY 1-1140
Federal Reserve
orderly government
bond market and to provide the
thereby
i
finance the war at
maintain
expansion o f
bank deposits
and
Punta Alegre Sugar
Wall St., N. Y. 5
:-■
Established 1923
Members New
outlook for the Government bond
the lowest
/possible interest cost, to take such
steps as might be essential to
to
banks resulted
International Detrola
Kirby Lumber
Bell
•
Fiank C. Masteison &
Bank, Chicago
market should prop¬
preceded by a review of the market and the factors influencing it over the past
years.
Beginning in the early '30's the influx of gold coupled with deficit financ«>of the probable
through
g
co m
Hood Chemical
Members N. Y.
'
prove
erly be
Clyde Porcelain
37
-
Detroit Int'l Bridge
25)
page
on
1-1227
Detroit Canada Tunnel
resumption
a
Exchange
WOrth 2-4230
government spending, the
American enterprise system
would
be
threatened,
and
so
and postwar fiscal policies with reference to interest rates
bonds, Mr. Grier expresses view that Federal Reserve System has
A discussion
Boston & Maine
Taylor Wharton Iron &
Pacific Telecoin
Quoted
Bell Teletype NY
other level. Holds there may be doubts of wisdom of this policy, and it
desirable to withdraw supports. Sees difficult factor in possible redemption of $51 billion
savings bonds. Advises banks not to' get "too-heavy" in long-term issues, and warns substantial
redemptions of National Debt may lower bank reserves.
might
Artcraft
N orthern
—
l£o Broadway; N. Y. 5
Baltimore
Manufacturing
N ew England
Sold
price levels at par or any
Standard Engineering
American Time Corp.
Aetna
Newmarket
—
Members Baltimore Stock
of
After reviewing prewar
Bates
branch offices
Elk Horn Coal
GRIER*
By JOHN H.
t
UctuaA. "IWarketa
our
Common
Members
York Curb
with
hand
hand in
Widen¬ capacity, the market is not going
to get anywhere and
the next.
mann given before the Conference
on
Finance
of
the
American major move is going to be down.
In this kind of an atmosphere it
Management
Association,
New
is obviously not going to be easy
York City, Jan. 15. 1948.
by
address
McftONNEU.&rO.
New
to
,
r
*An
New York
wires
Direct
to
float any sizable volume of
fact that new equity
new
equity issues, and yet the
requirements are running
apt
to
capital requirements of American
in excess of the savings of the
be
transitory.
industry are -enormous.
In the
people and that as far as pre¬
As far as the
•satisfaction of these requirements
viously built up liquid funds are.
stock
market
1 es hape—-the.cnly hope of a conconcerned,
they ' remained
re¬
is
concerned,
inuaticn of the high level of busir
strained by the existing and
this has been
ness
activity and employment in
prospective deterrents to capital
the prevailing
the
United States on which
in
investment and have been going
a t mosphere
turn is pinned the hope for peace
ipto
the
market, in quantities
ever
since
in ihe world.
So here we are
barely sufficient to absorb foreign
May, 1946.
faced with a dilemma; behind a
selling,
estate
liquidation and
In retro¬
failure to. solve it lies the "threat
such private placements as have
spect the mar¬
•of a resumption of insidious govr
taken place.
This is still the situ¬
ket has been
ation. and
the impediments ! to ernment spending. to supply the
wrong on this
investment and to the freedom of funds to keep the economy going,
because
the
Hans A. Widenmann
for a recession such as would be
the market place are a market
recession
in
factor, just as much as the widely brought about by :a failure to sup¬
business
ply the capital privately would
which the market supposedly an¬ spread feeling that maybe we .are
in a position where pur prosper¬ presently be found to be socially
ticipated
has
not materialized
,and
politically intolerable.
In
even today.
In a broader sense, ity is never going to be .reflected the return of wholesale govern¬
in
stock
prices and therefore,
the market has merely been rement
planning which would go
since we are already at physical
Bought—Sold—Quoted
La.-Birmingham, Ala.
money
fore
3/6s, 1956
NY 1-1557
HAnover 2-0700
New Orleans,
<s>_
fleeting the
there¬
StM New York 4, N. Y.
25 Broad
earnings
were
Co!
York Stock Exchange
Members New
the same time the
ahead because the
was
Bought—Sold—Quoted
been enjoying a tremendous pros¬
country has been afraid it cannot last—that a reces:
economy was out of balance, and that the good corporate
paradox of the present
The
Teletype NY 1-583
7-5660
accommodate the large
new
York 5
Broadway, New
120
Louisiana Securities
York Stock Exchange / >•
has been cut to fraction of normal, Mr. Widenmann lays cause to double
capital gains taxes; excessive income taxes, together with severe margin
requirements and SEC regulations., Attacks Administration's easy money policy as an "anti-equity
philosophy." Urges amendment of Securities and Exchange Acts as aid in revitalization of the equity
BOUGHT—SOLD-QUOTED
•'
Alabama &
Rhoades & Co.
Carl M. Loeb,
Members of New
;
vj: ;:v
<,
York 5, N. Y.
REctor 2-86C0
NY 1-635
Bell Teletype:
Volume
THE COMMERCIAL
Number 4668
167
INDEX
Causes of the Abnormal Capital
—John H."Grier
■
__
_
_
_
l
_
2
Problems and Opportunities of Aviatiori—Ralph
1
_ -
2,J
- _
-
■
Col.
S. P. Fink Answers Friedman
Inflation
Gold
Military
on
Standard
Government Spending Check
as
1
—Rep. Howard B uffett
Our
'
...
-
-
-
-
-
-1 -" '
;7j
Gordon.
10
—
_
J
-
Wendin__ 11
;•*
Requirement
effected
was
THE SURVIVORS
How
stocks
let
us
and
better days
seen
away in your
not
and support of
old
many
that have
;
public interest.
_
are
bonds
wast-
security box? Why
worry
about
them?
.
our
financial statements filed by brokers and deal¬
a rule promulgated by the Securities and
pursuant to
Exchange Commission should
Monetary and Credit Problems—M. S. Szymczak.l-
Controls Affecting Investment Policies-—Sigurd R.
llCHTOTfin
"
power
\)'There has been widespread approval
ers
3
AND COMPANY
under Rule X-17A-5. Argued
that if Commission can inaugurate the filing it has power to accord
these records confidential treatment Failure to do so
contravenes
i(•'''45'S: position that
-
What Lies Ahead for Business?—Benjamin H.
6i;-'
(487)
affirmative provision requiring annual
fiiing
no
by SEC thruugh its rule-making
4
Training:^ 46
Product of New Deal Blundering—-John W. Hanes ?
a
?
Damon— .-•••.try*
Monopdy Controls and Keynes' Theories in Prospect i
:x; —Max J. Wasserman__._____—-_-_—~_k"__t> 4 i';:;
;•
Securities Acts have
f
%§ 4 of financial reports by broker-dealers.
•^
~i—.---—_
CHRONICLE
Self-Made
-
Marketr-Jlans A. Widemann
What's Ahead: in the Government .BondMarket
FINANCIAL
SEC Abnse of Small Dealers Is
,*•.'-'Pate*;;-;
Government Bond Support Vital1-~-Allan Sproul_
-Cover J
Is Soundness of the Dollar Affected?r~ Walter ,E. Spahrr-.. Cover:
^
&
99 WALL
STREET, NEW YORK
Telephone: WHitehall 4-6551
receive confidential treatment
at,the hands of the Securities and Exchange Commission.
We have received a number of communications establish.
Europe's Hope of Hecovery— John J. McCloy—12
Need of
Venture Capital for, Defense—Nathaniel S., Chad wick 13 -
Taxes—Their^ Influence
•
j—Lammont! du Poni_
Venture
on
_
_
Capital
-
-
*
"
----—_y-_.16
Peaee—Bernard'M.
The^ERP—A New Adventure in
-
,
—-
_
Barufch let
The Marshall Plan—Operation Rathole?
—Sen. C. Wayland Brdoksi.^
Current Bank Credit PoHcie^DeWitt
What's Wrong With Our
Rev. William J, Smith
I?.---
A. Forward-20
Economic:Set-up?
our; editorial views on the subject' have been called
tb; the; attention of members of the
Congress. and also to the
^ttehtibn of the SEC by our readers who^ in .each" instance,
approved those views.. ! . '.
\
",
Particularly,, we condemn making available this informatiori for the purpose of
stimulating the circulation "cam¬
paign of
>7S
LJ
.23.;4
4
ers
Wages, Prices and Inflation Controls—Herbert A. Johnson._ 23
Inflation—Roger W. Babson.
'—
:
39
:-
WhitneyICoyer
-
____
JNo Magic Formula to Cure Inflation, Says Geo.
-SEC Abuse of Small Dealers Is Self-Made (Editorial)_______
3
Winthrop Aldrich Looks for Higher Interest Rates__l___
Business and Finance Speaks After the Turn of the Year
7
(Statements
^.
ANNUAL
Committee
received
REVIEW
too
late1 for
NUMBER)
publication
in
__
14
-Inflation
■
Franc
Stock vMarket Setbacks Laid to Politics^.
_
_
_
1^
_
_
_
i
-
_
_
_
r- - -
Snyder Reports
-
and then drew the
J_—
Mid-Winter Meeting
414
■—
Bank
(Editorial)
and Insurance
Business
Man's
Canadian
Bookshelf.
22
—__'
Coming Events in the Investment Field
more
__;
v
8
Indications of Business Activity
Mutual Funds
N ST A
Our
Reporter
Prospective
54
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DIgby 4-2727
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we
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to wit:
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25 Broad
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may neither be
20
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"
Chairman
11
of
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our
by this Commission and. the rules and regulations
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A - 20
Nation's Finances and Says U. S. Bonds
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on
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Eccles Succeeded by McCabe as Federal Reserve Board
(Stubs)
Engineers Public Service
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.
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Finishing Com. & Pfd.
Electric Bd. & Share
What has the SEC done about all this?
Might Paralyze Outpufi 15',;
Devalued...-
U. S.
In response to communications
addressed to it
readers the Commission called attention to Rule
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John K. McKee Warns Credit Curbs
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succinctly contains the objections that we-, as an association
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pleased by the action taken by the Maine Deal¬
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Exchange Commission
~~
World Bank Seeking New Lending Opportunities.
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Federal Reserve Board Sees New Curbs Needed to Combat
Dorset Fabrics (w.d.)
financial magazine.
a
were
this nature should be
•
9
——
PubiicvDebt Policy Reports Savers Now.
Under Triple Squeeze_»■£__
We
capitalization of dealers.' We do
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on
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:ing that
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Problems and
! ""
.
& ,FINANCIAL-, CHRONICLE
THE COMMERCIAL
(488)
'
•'
•
Keynes'
Theories in Prospect
Opportunities of Aviation
S. DAMON *
By RALPH
,
'
^President, American Airlines
...-y.
\A y■' ;y-\
■ •
Thursday; January 29, 1948
back but two decades, Mr. Damon points out its failure,from
Economists Discuss These and Other Issues
profits standpoint is analagous to situation of other new forms of transportation. Says problem is
;
By MAX J. WASSERMAN *
not success of industry, but whether companies in
commercial aviation participate in this success, y
k Economist, in reviewing recent Annual Meeting of American Eco*
Lays industry's losses to oversupply of equipment and over-expansion of routes, and holds 15% trans-,
nomic Association at Chicago,-notes decline in
importance ol
portation tax hampers air travel patronage. Concludes outlook is not gloomy, and industry hopes
to lower break-even point and increase profit opportunities.
Analyzes
:. '-;-v : government economists with fading of "New Deal."
Recalling commercial aviation
goes
'
.
dealing with American Aid
papers
transportation is the concern of everybody in the United States,' Schoolboys and
housewives depend upon it for the quick transportation of mail. Business and pleasure trav¬
elers depend upon it to travel from city to city. Shippers require it for speedy transpor¬
Air
tation of parts ♦'——w■—
~
;
;
materials.) and appeal to permit it to grow
I so much and so fast. Its failure to
make, money in. spite of these
come
to
ex¬
pect overnight qualities is reminiscent of most
and
.
..Retailers, have
deliveries
m
o
f
items.
any
-An d
iev.e r.y
citizen*; has a
r
Stake
-
■:r
Ralph S. Damon
•
to
their
face
small.
abused and-mishandled.
monopolies
therefore,
away
have
special
a
But
Economic Association held in
a
up
in-
the
of
understanding
to
nometric
from
c
form
healthy
few conclusions that will help
to understand its problems and
opportunities.
a
the Amer¬
noted for accept¬
good job it will, for
ican people are
ing readily a -better devise or a
service, whether it is trans¬
:,
better
Growth of Commercial Aviation
is
youthful—barely twenty
years
portation, radio, electricity,
phones or motibn pictures.
still
old
aviation
business
to
hand.
at
We
business
rather
in
than
have
each
overburden itself with
and
we
older
some
transportation;
st'll
growing.
$80,-
From
sists of nineteen certificated trunk
airlines
lines
and
sixteen
serving
States and 229
communities in other parts of the
world. And
cities
not
approved for service but
are
has
*An
Economic
the
work
tremendous
a
on
degree
lic, dyring the ; war, years,
war drew to a
close, we
scheduled
flying
estimated
The
of
the part of the pub¬
As the
in the
business over¬
ready-built market.
we
anticipated was
our
boom
travel
full
in
are
Figures
reveals that
economists
today
of
future
the
of
eco¬
in
attempting to forecast
future events, especially in view
of the fact that the authority and
influence
of
6ur
economists
has
steadily through the New
grown
Deal and
war years.
the
*The
•
fiijst half of 1947, Pullman
dropped'an esti¬
mated
45.5%, coach 36.5%" and
bus 4.7%. In this period air pas¬
author
Trade, U. S. Depart¬
Commerce, and Visiting
of
ment
Professor
10.15%.
ard
126, 1948.
handle
down;
Economics
at
How¬
in this article
author
the
and
the
Federal Agency.
sarily
reflect
do
not
views
terminals were
ex¬
those
are
neces¬
of
ness
ing and
:
'•
•
r
'
the
the long-range and day to
day work of the Federal Govern¬
ment. It may also mean that our
children
will
leave
any
•
\*
'
V ;
,
1
economically less naive that
you and I did.
The program itself this year re¬
in
the
return
to ascendancy
thought of the aca¬
contrasted with the gov¬
economic
demic,
as
ernment, economist. Nonetheless,
the program itself did not lack
luster and the
attending members
treated
were
to
las,
President
past
who has
year,
University of Chicago afterserving in the Marines with con¬
spicuous distinction, represented
twenty years of reasearch on the
laws of production.
Professor Douglas and his asso¬
ciates have verified' for a long
period in American economic his¬
and
colonies, the theory
marginal productivity. Briefly
theory, discovered by the
\ ;
of labor and the interest
In
general,
22 East 40th
Corporation
in the period 1889-1919
have been expanded beyond
the point of maximum efficiency
with reference to the plant in¬
may
Electrol, Inc.
Professor
diligent
Crude
Title
Guarantee
&
the
Trust
NY
dictum
1-1286-7-8
of
'the
School, that there
laws
which
time
Seligman, Lufietkin
2-8700
laws
the
work
&>
and
veyed
Co.
laws
INCORPORATED
of
the
are
are no
to
PHILADELPHIA
&
41 Broad Street
LOS
j
New York 4, N.
counter
Y.;
Historical
economic
His paper
impression that
place.
economics
to
are
con¬
the
universal.
believe, runs
readily avail¬
certain
able facts.
ANGELES
.
J
be
universal in both
_
Association
ecof
This point ,of view, I
1936
Members New York Security Dealers
of
Unfortunately, Professor Dougtis apparently no partisan of
Broadway, New York S
REctor
T
las
Bought—Sold—Quoted
Phone:
pa
scientifically established.
Oil
DuMont Laboratories
Wires
Douglas'
shows that by ingenuity ant
nomics can, in some instances,
Foundation Co.
General
earn¬
factories
Teletype: NY 1-2948
March I,
on
TEXTROY Inc.
Direct
the quantity
as
capital increases
or
This extremely able presenta¬
tion, also, indicated the possibility
that the production of'Americah
Street, New York 16, N. Y.
\
capi¬
ings tend to decline.
vestment.
Tele.
on
tal tend to conform to the output
of the last or marginal unit util¬
per
Established
British do¬
for certain
and
.
120
returned
now
to the
ESTABLISHED 1927
Telephone: LExington 2-7300
Ward & Co.
during the
relatively to the other, its
-
;
American
the
of
Association
School, maintains that the wages
Central National
dorset fabrics
one
One of these, pre¬
sented by Professor Paul H. Doug¬
TRADING MARKET IN
share for share basis
than
more
brilliant paper.
of either labor
a
universi¬
the
ties
ized.
To stockholders of
universities.
this
6% Cumulative Preferred
on
in
economists of the English Classical
Queens Borough Gas & Electric Co.
To be distributed
quality of teach¬
ies to
of
Bought—Sold—Quoted at Net Prices
•**
to
research
minions
'
:
and
ness
tory
big
a
passenger
of
University. The opinions
of
to
economist
an
ternational
pressed
ities
is
the staff of the Office of In¬
on
In spite of traffic and revenue
the first
a fortunate industry in that
postwar
years.
This was increases, the industry as a whole
had the youth and vigor partly due to the inability—un¬ went deeply into the red in 1947.
foreseen by many of us in the in¬
(Continued on page 43)
address by Mr. Damon be¬ dustry—of the fixed airway facil¬
Conference
the- government re¬
dounds to the advantage of busi¬
Economic
But
only partially achieved in
Mid-Winter
econo¬
from
flected
since
two
the
mists
the application of these discover¬
policy
the
of interest to American busi¬
ness
the
miles increased
employees for anonymity.
The exodus of many top
country.
was
passenger miles
senger
sire of many present day Federal
Above all, it will increase the lag
between economic discovery and
nomic
of
for
available.
not
abler, more imaginative and
hitting economists; the de¬
harder
Therefore, the meeting this year
volume
ether businesses were
even going into re¬
declined.
year
expense; to the departure;
from the Federal service of many
of the
planning and assistance to busi¬
history
becomes
often
transport has
shown a healthy and fairly steady
growth since its inception. It grew
during the depression of the early
traffic in¬
of the New York State Bankers crease.
Airway aids were inade¬
Association, New York City, Jan. quate; air traffic control bogged
fore
i
additional 184 U. S.
yet being served.
It is
it
an
reached
at-
govern¬
both to the future of government
of economic power.
large scale the job
air-; acceptance
communities
473
:within the United
feeder
from
and the universities, both of
which, and especially the latter,
displayed a renewed vigor at the
meeting.
The
consequences
of
this shift may prove far reaching
that air trans¬ V-J Day. In 1947, 13,200,000 pas¬ Decline in Importance of Govern¬
ment Economists
000,000 of assets ten years ago it portation had been doing on a sengers traveled on the domestic
has risen to some $600,000,000 to¬ smaller scale in prewar years. In airlines and
1,400,000 on the in¬ ; A. contrast with the Annual
day. It is an expanding industry supplying global fronts with phe¬ ternational airlines. The interna¬ Meetings of the Roosevelt period
whose gross income ten years ago nomenal speed and efficiency the
tional increase over 1946 was 35%. was the decline in the attendance
was $37,000 000 and last year was
and influence of Federal econo¬
air transport services seemed to
Domestically this increase was
i
$550,000,000. In both its branches, accomplish the impossible. The only 8%. But it was
accomplished mists, Out of approximately one
domestic and international, it con¬ consequence was that flying at a
time when railroad and bus hundred members presenting or
—and
economists
ment
lies, trusts and the concentration
company
grown
Government.
due, in part, to curtailed
Federal
budgets which prevent
coming years
to a growing
development
of purchasing power
economics
and a new drive against monopo¬
air
ceivership; and it has
look
can
Wasserman
Max
manner,
forms
ative,
forward in the
of traffic that does not yet exist
Unlike
Federal
were
is
tendings the meetings at
resent
in
with the
a
the
This
government
If this meet¬
equipment
to handle
expense
from
—
but nine
papers,
and
ing can be re¬
garded as rep-
have
orderly
an
Meeting with the
—
discussing
Associa¬
the
two
American
erican
m
Marketing As¬
sociation.:
subsiding, and
a
So-
y,k the
•
the
were
of the
tion
got
keep selling the growth of that
"tele¬ 30's, when
II dramatized on
War
World
t
e
power
Meeting
A
manner,
money
succeeds
transportation
of
i
tory
grow
economic
Chicago, Dec. 28-31.
the Eco¬
were
'
Keynes and public policy towards
of
i sts
e c o n o m
~
....
our
orderly and
an
.The
and
problems
Commercial
.
Equipment
Much
dustry has continued
succeeded.
and has
outlook !when it has its own unique utility.
will be needed for a long time to The big utility of air transport is
come.
its Saving of time. Will the public
Therefore, I hope we can delve accept air transportation in great
briefly into the industry's history enough quantity and in time to
tonight, review some facts, ex¬ make the present enterprises
If we do
amine some problems and arrive sound and successful?
at
V.
•
question,
then,
is not various companies over-reached
air transportation system.
Your whether air transportation will suc¬ themselves and have had
to step
financial participation has been ceed, but whether the companies
backward to let business catch up.
not an ir significant factor in the and individuals in commercial av¬
So I would list the biggest prob¬
growth of the airlines, and it is iation at any particular time will lem of air
transport that of learn¬
evident that your help and con¬ participate in its success.
A new ing how to make
tinued
concentrations
.,
Economic His¬
Too
too
history- shows
markets
interest in the
dustry's
and
airplanes in remarkable numbers.
In
Monopoly and Competition;
and Keynesian Doctrines.
principal themes of the Sixtieth Annual
Pas¬
lo fly, when they had chosen fly¬
ing to save time.. They became
discouraged and stayed
Europe; Economic Stabiliza-
Business Concentration;
The economic theories of Lord
often wasted time trying
sengers
of reckoning.
days
.Patents;
war-generated enthusi¬
that no
asm most airlines
announced the
try as a vital basic new form of transportation
in
the' United States has failed.: purchase of too much equipment
p a r t o f our
and have been going through the
national de¬ Companies and individuals may
disheartening process of cutting
fense
system.' nave failed, but each new trans¬
back on those commitmen's. And
But as bank¬ portation medium has gained pub¬
while the air transportation in¬
ers
you
men lic acceptance, has broadened its
in^us-
"airline
-
the
in
Histiory .shows that most of oui* canals,
toll highways, railroads, and their
respective carrier companies had
early forms of transportation.
The public;
too
was
to
tion; Working of Taft-Hartley Law;
•
-
.
.
,
.
.
Those laws of economics which
;
(Continued
on
page
28)
Volume 167
Number 4668
THE COMMERCIAL
&' FINANCIAL
CHRONICLE
(489)
5
Oscar Stass Now With
Steel
-
'
Production
Barclay Investment Go.
Electric Output
•
Carloadings
Retail
State of Trade
Price
Auto
and
Industry^
t
CHICAGO,
Commodity Price Index
Food
•
•
Trade
has
By A. WILFRED MAY
Index
Business
Failures
Is
LaSalle
Anything "The Matter" With the Market?
with
For many months now
among
A
past
.
moderate increase
week
with
in overall
noted
was
manufacturing operations
industrial
output the
scheduled at
generally
near-peak levels.
Substantial
.busy for
order
backlogs
time to
some
*n keeP*n£
'twt
with high
Motor Car Co.
experienced
asice from
this,
adequate for
the state of
of
keeping
industry
employment and
pay-
production held steady and high. Hudson
labor trouble
during the week, but
few labor-mangement disputes occurred. Wi'h
very
respect to the
promise
gave
and
come
some
supply of most
current
materials, they proved generally
raw
backlogs, the January monthly
the National City Bank of New
on
economic conditions of
York has the
following to say: x
of
to
unfilled orders
have before them
-for
1948 is
huge, and most industries
seem
accumulated demand for all they can make
time to come. Premium prices for second-hand
considerable
a
into
an
offerings of steel, which many buyers willingly pay rather than wait
■their turn at the
mills, demonstrate the strength of the steel demand.
In
automobiles the position is the
for
tion
with
is in
Recent awards of
same.
contracts
construction
new
have been unseasonally high, and in conjunc¬
housing needs indicate that another big building year
the
its
tence
is
these fallacies
Ore of
Street's insis¬
Wall
sight.
'
"The public utilities are in the midst of an
expansion program
which is
necessary to meet the demand for service and to restore a
safe margin of reserve
term outside factors
been
in
the
"investment"
well
as
be cyclical.
speculative
the
as
vestment;
capacity, and the oil industry is in a similar
urgently need equipment. Farmers urgentlv
the means to buy it. On top of all this is
the demand from abroad and the
strong likelihood that the export
surplus, while probably smaller than in 1947, will continue huge."
"It is hardly
conceivable," states the "Letter," "that a general
state of
activity which is so strongly supported by demand for pro¬
ducers' goods at home and abroad can
change much in the near
future, for even if this demand should drop, the effects on produc¬
tion, employment and incomes would lag by a considerable time. The
need
The railroads
machinery and have
fear that price and income
loss of purchasing power
than
prices,
be
can
have
subsided
somewhat.
These
disparities
expected to make trouble when the situation is ready to turn
for other causes.
run
to
appears
disparities would end the boom, through
by groups whose incomes have risen less
But
the
on
despite them.
on
The
showing of the past
lesson of. 1947
is
the boom
year
confidence
in
can
consumer expenditures at
high levels is justified as
sustained activity in durable goods and exports holds
up the
income totals."
long
as
Papermill operations were' scheduled last week at a
level and demand for paper and
paper products remained
moderate decline of unfilled orders for
paperboard
tributed
to
very
high
large.
The
was
partly at¬
decrease in new orders.
However, the production of
paperboard rose nearly 9% to 193,150 from 177,964 tons.
Manufacturers of clothing reported a sufficient volume of orders
to maintain high
production for several months. The output of men's
clothing was slightly below that of a week ago, but production at
a
hosiery mills
steady and
was
high
with
producers
some
reporting
24-hqur work schedules.
Iriclement weather in many sections
some
of the country discouraged
shoppeTs, but stimulated the demand
for
heavy clothing and
rubber footwear. A fractional rise in retail volume occurred
during
the week.
While dollar volume was moderately above that of the
.corresponding week a year ago, unit volume was somewhat below.
Basement departments continued to attract considerable attention as
There
also
A. Wilfred May
ductions
a
month
It is this betting on short-term events, investing in news rather
th^n in values, which gets to a reduetio ad absurdum of long establi hed companies halving or doubling their market prices within
24-month
periods; and brings about bull market fever
price, if only the news be good enough.
This
buyer
the
is
off
stock
arrived;
or
will
news
at a
that
his
wholesaler-to-retailer
of
sort
a
assumes
of
buying
hands
conversely,
cause
the
technique,wherein the
less .well-informed "sucker" will later take
some
a
more
at higher prices after better business has
seller hopes that coming so-called "bearish"
slowly-informed later to sell it back to him
too-low price—that is, below its permanent investment value.
were
were
small.
reduced
*
.
Redemption of City of
City of Brisbane
that
'i
these
''.4,
Thus it has
became>axiomatic, if fallaciously so, that "the market"
with the news—perhaps ahead of it as "a barom¬
eter," perhaps on occasion like a registering "thermometer." But the
correlation
with
events of relatively
short-term effect is main¬
tained
K'» ;• HI
.
neither
shares.
1, 1948 at 100%.
Zi
.
on
page
an
offer to sell,
offering
New
York.
Fanger With Geo. Eustis
Stock
Exchange.
Don
Beane, and Westheimer & Co.
Charles
L.-
Uhlho'n
i
A
'
come about that those who, with great
insight, cor¬
rectly foresaw the 1946-47 economic situation of unprecedented peace¬
time industrial activity and resulting profits in the corporate till,
nevertheless
amazed
well
find themselves
now out on a limb and out-of-pocket,
triumphant in their business
predictions, but with the,matket,price structure fallen away instead
of raised "in.reflection
o£ the boom."
Now
are
the
writer
market will rise
know
or
is
as
not
as
expressing
annoyed
(Special
NEW
to
The
$1.00
Pennsylvania
L. Uhlhorn is
Chronicle)
associated with
now
Schweickhardt
Landry
Hibernia Building.
&
Co.,
opinion
any
fall from these levels
on
(nor does he
on page
Bulolo Gold Dredging, Ltd.
whether
as
an
Smelting
Noranda Mines, Ltd.
the
investor
49)
Consolidated Mining &
HART SMITH & CO.
52 WILLIAM
ST.. N. Y. 5
Bell
HAnoter 2-WW
Teletype NY 1-396
New York
Montreal
is
per
American Maize Products Co.
SOYA CORP.
Bought—Sold—Quoted
OF AMERICA
FREDERIC H. HATCH & CO., INC.
Established 1868
MEMBERS N.
63 Wall
Y.
SECURITY
DEALERS
Street, New York. 5, N. Yj
SIEGEL & CO.
ASSOCIATION
Bell Teletype NY 1-897
3i> Broadway,
N. Y. fl
may
be
solicitation
made
only
by
Prospectus.
For
Gulf Oil
3
share)
•.
...
"M
;
1
obtained
from
NEW YORK 7,
Digby
'
f
:
Kingwood Oil Co.
Corp.
A
Net
crude
has
had
over
Trading Markets
the
oil
producer
continual
past
that
jr
earnings4
seven
years.
J
Corporation
the
1
Prospectus
on
Market
Request
9-^224. z
! r
Members N.
f
N. Y.
-.k
74
Y.
HA.
4
I
Security Dealers Ass'n
Trinity Place,
Telephone:
2%-%
Analysis Available
Troster, Currie & Summers
undersigned.
MERCER HICKS & COMPANY
BROADWAY,
■
Banks, Brokers, Dealers and Investment Trusts Only
*
,
-a:
of offers to
Underwriter
150
DIfby 4-2870
Teletype NY 1-1942
a
v
Toronto
ACTIVE MARKETS
Offering Price: $1.50 Per Share
Copies of the Prospectus
...
Financial
ORLEANS, LA.—Charles
to
care); but is merely offering the thought that the market's
or
,
■
Joins
Schweickhardt, Landry Staff
The' Market's Perversity Toward the Boom
American: Cladmetals Company
'
D.
Thus it has
Stock—Rights
v
In
the past he
Kuemmerling,
Merrill Lynch. Pierce, Fenner &
with
was
37)
nor
Common Stock
(Par Value
.
:
•
of¬
course
The record Christmas buying of the
inventories considerably
and the
were limited largely to single items
The
,
.
.
The bonds
at the head
rate of steel
Time Inc.
,;1,000,000 Shares
*J
•-
»
being
principal
throughout; a sort of glamorous medium for betting on the
of events ranging ; from the oncoming of war tcr the
production.
future
.
_*
(••it
of
any
are
$94,000
;;4: ■; HkHHH >•
puy
i
Bonds
will be redeemed
retail
(Continued
.
This announcement is
....
also
will go up and down
(Continued
Railroad Revenues Show Increase for December
1 Railroad operating revenues of 85 Class I
Railroads in December,
4947, increased .24.1% above the same month in 1946, reflecting the
iiYterimrinprease of 8.6% in freight rates, made effective in October
.*♦:
Richard R. Schlichter has
joined the firm's staff.
stocks at any
high level during the first half of January.
not as numerous as a year ago and price re¬
yearrend clearance sales
small groups of goods.,.,-
T-4
25-
a
Eustis & Co., 18 East Fourth
January Remains Brisk
usual
or
on
very
generally
previous
over
Mr. Stass is well-knowi;
LaSalle Street.
year span,
Street, members of the Cincinnati
Betting-on-the-News and Market Distortion
-
apparel, home furnishings and electrical appliances sustained
Mark-down sales
extending
concerns,
in
will, automatically follow their course with pluses
(Special to The Financim. Chronicle)
minuses—irrespective of how temporary such conditions may be,
CINCINNATI, OHIO—John C,
and without any thought whatever as to the amount of realistic in¬
Fanger has become associated with
vestment return that can be expected.
Geo.
The continued high consumer demand for
many goods including
at
connections
various investment
a
Retail Buying in
retail volume
his
of
vidual securities,
lar volume
men's
and
Co.
fice of The National City Bank of
slight rise in wholesale volume with total dol¬
moderately exceeding that of the like week in 1947. Re¬
tailers were generally reluctant to make
long-term commitments
and some resistance to high prices continued to be evident.
was
Because
March
life of the in¬
'
sought low and medium-priced goods.
consumers
&
or
the
maintenance of
formerly
was
amount of these bonds have been
drawn by lot for redemption on
Instead a large part of the financial world still concentrates on
forecasting the outside economic or industrial conditions, under the
bland assumption that somehow the price of "the market," or indi¬
.
that
He
Bar¬
South
39
O'Brien
J.
Chicago- with
notified
•
position;
Co.,
Wayne Hummer & Co.
of the
The
com¬
attitude cf evaluating the present price of a stock
ds the capitalization of earnirgs-and-income to
reasonably expected over the
Stass
sinking fund
5% gold bonds, due March 1, 195.
munity still refuses to adopt the real investment
be
Oscar
—
Holders of 30-year
when such factors have
even
proved, to
past
Street.
John
Brisbane
evaluating individual stocks, industries,
a who1e, on the basis of short-
on
and the market as
"Any inquiry into the outlook for 1948 should start with recog¬
nition of the momentum under which
business is moving. The carry¬
over
MARKET?"—on the ground that
persistent dullness and decline are inconsistent with the prevalent ob¬
viously bullish business and economic elements, and that they can
be justified.only by a full-sized Depression.
To the writer this prevalent reaction seems
not only to beg the question that the market is
behaving illogically; but also, and of greater sig¬
nificance, to take it for granted-that the market
should always act in accordance with some basic
matter of order
letter
THE
WITH
MATTER
traditional fallacies.
production needs.
Returning to the
in inner stock market circles as well as
generally, the plaint has been voiced, "WHAT
investors
THE
IS
Investment
clay
Production
ILL.
associated with
become
2-2400.
New York 6, N. Y.
Teletype NY
PETER MORGAN-& CO.
^
31 Nassau Street
1-376-377-378
Private wires to BUFFALO—CLEVELAND—DETROIT—PITTSBURGH—ST.
LOUIS
Tel
BA 7-5161
:
New York 5, N. Y.
Tele NY 1-2078
6
THE COMMERCIAL &
(490)
Donald M. Gaily Willi
A. G. Becker Co.
(Special
to
The
Letter to the Editor
Inflation,
ILL. —Donald
G.
La
Salle
Mr.
Becker
&
Co.,
Street.
Gaily
has
By
120
South
manager
Trust
.Prior thereto
Co.
he
of
was
accelerating dearth of investment capita! and
as
additional government controls would handicap
Holds government "managed"
enterprise.
Never
when
so
has
Prior
with
RIt.
time when there
a
problems
Federal
Street, Boston 10
Tel. HUbbard 2-3790
and
tion.'
certing, to.
the
t
of
the
Murphy Chair Company
Reliance
Varnish
one
now
*An
IE BANKERS BOND ^
Incorporated
Both
fore
thing I
the plain
address
the
certain.
am
It
duty of each and
by Mr. Hanes be¬
Rochester
Chamber
of
Commerce, Rochester, N. Y., Jan.
26, 1948.
1st
Floor, Kentucky Home Life Bidg.
LOUISVILLE 2, KENTUCKY
Beil
^ong Distance 238-9
Republicans and
alike
gin to define what the Plan is.
is
ples.
ST, LOUIS
we
LYNCHBURG
Trading Markets
Stix& Co.
INVESTMENT SECURITIES
Bassett Furniture Ind.
309
olive
?•
"•
..
•
'
!*.v
f
key
to
present
Exchange
which
certain
aftermath
have
been
inexorable
a
temporizing
facts.
law
one
available upon request
would
We
after
have
another?,
we
EDWARD L. BURTON
like
to
cite
on
page
it* Now, -Mr. .Friedman;; why mix
up
A
red
(pardon me) herring
haps?..
Most
myself
oppose
SYSTEM
TELETYPE
units.
;
ready
are
expecting
you
transport
to
them and their
supplies and ho
longswHI that take.^"
-
of
those
UMT
any
ed
per¬
who
like
victim of the pacifists.
want
be
to
that
strength.
weakens
OIL
capitalization
It
neutral
UMT
shares
3.
Her
a
no
real
fill
the
,
manpower
shortages
now
existing
in
the
because it's not part of the
army
It
would
take
from
the
as
cause
of UMT she would have had
the courage
army.
•
She served
purpose for all sides,
she sells munitions to any
side that can come and get them
and pay for them;
Her interest,
for instance, in the last war was
conveniently neutral and profit¬
able and perhaps if she had the
vaunted strength you give her be¬
national
."
all
between
passageway
definite
a
just
half-baked
'
10 minutes.
European combatants.
thing' to
anything, 7 it
If
serves
cannot
to do right instead of
trucking with the Nazis, the Fas¬
cists, the Communists and any¬
army
25;000 officers and 102,000 enlisted
body else who had money or val¬
out the UMT pro¬ uables to
deposit; with her for
gram {Army figures), thus drain¬
safekeeping or to buy from her.
ing away /more manpower from
Switzerland is a. republic, but I
the already short army.
'•
■
am.
afraid >;that^ spiritually j and
r The period .and type of training
militarily the Swiss were not oply.
is totally inadequate as the Army
unprepared
^pi^nqipled^ab
has testified,; but they are willing Well.
->{7.
to- take anything as a compromise
1,1 do not .want:, to take up ; trie
and- to get the principle of con¬
positive approach to; national „se¬
scription to be part of our national
curity other than to say that what
pattern'.',
\
^
1
we
need is a striking force in
{'Trie;contemplated program of being that: cah. really1 reach out
training is one that in wartime and strike back 7 in a matter of
was
given in 8 to 13 weeks and hours, not months. Nor do I want
this was quite an efficient pro¬ to
/take up the new concepts de¬
men
tp
carry
,
.
-
*
gram.
if
in
went
men
an
five
the
emergency
not
veloping
4,000,000
years
through
could
(the
once
or
call
way
could)
you
even
if they
army
TIMBER
2C9,473
2,
happens to be very
conveniently located to provide a
damn
a
it's
and
us
program,
out
Sole
1,
Switzerland
Of course,
strong,, but
doesn't contribute
turned
Common Stock
Switzerland, she
fallen
with their spitball weapons, could
says
CORPORATION
over
have
not defend the country
defense, but, it's got to
realistic,, not hog wash.
We
who/oppose UMT are not pacifists;
it is. you who are the unconscious
couldn't
464.
take
mert7paffollihg:^^^bridgesj^^ etd;;Ketb!^
.
you
CENTRAL COAL & COKE
to
would
strong for
are
If
of. th£ warring' nations. want-'
he
at
SU
as
were ' all
national
and
51)
1899
160 s. Main Street
Salt lake City 1, Utah
BELL
if --they,
/Now for the Swiss 'argument.
argument with pacifists?
your
etC*.
program
1,000,000,
to
Jan.
all
were
to
be
Editor's Note—Colonel Fink has
will
re¬
the United States with¬
launching
big
a
j
"Chronicle" that he
txie
shortly send along an article
elaborating
on
his reasons for op¬
building posing compulsory military train¬
7
•
ing in peacetime.
camp
program.
York, N. Y.
16, 1948.
informed
present
our
warfare,
S. P. FINK.
.
New
not
the propaganda
because we
house
atomic
of
out
1182 Broadway.
arose
war
alone 4,000,000, men to active duty
SPOKANE. WASH.
,
.
of
•
NORTHWEST MINING
Botany Mills
Empire Steel Co.
For
Empire Southern Gas
Immediate Execution
Pittsburgh Rys. Co.
A.M.,
Sterling Motor Truck
Pac.
Std.
Time:
stock
of Orders
Quotes call TWX Sp-43
of Exchange from
10:45
or
common
Since
SECURITIES
Floor
on
to
11:30
Sp-82
stock.
1936,
.
■
-
all
clebt
retirements
at
Byllesby & Company
Teletype
73
$14 53
'
share.
77
Present
drilling
operations
nolia
Petroleum
on
this
•
per
...
'/
7
J
.
7 :
by
-
•
'
.
'
.7-
'.
'.V
•
Nekoosa-Edwards Paper
i
■
'i ' t
*
i
A
J *.
Co.
COMMON STOCK
Mag¬
corporation's1
holdings in
Parish.
Louisiana,
have
possibilities.
:.
1 '■
Bought
Beauregard
interesting
V* •
J
f-
A
.
.
.
Sold
New Memorandum
.
.
.
Quoted
Furnished
on
->
.-j)
Request!
...
Approximate Market 21
CORPORATION
Members Standard
'
of
OFFICE
Stock Exchange Bldg. Phila. 2
preferred
common
Nazareth Cement
Standard securities
and
equalled
substantial
other hours.
Warner Company
PH
of
some
& COMPANY
ESTABLISHED
Even
names.;
Even
(Continued
Private Wire System between
Philadelphia, New York and Los Angeles
such
*
Pittsburgh, Pa.
Hagerstown, Md.
N. Y. Telephone—WHitehall 3-7253
Telephone
be
began a series ^of.
designed to spread
"public purchasing power."To
raise prices by creating artificial
scarcities.
To take, if you will;
quarts out of pint bottles—all in
the vain hope that government,
somehow, could defy the laws of
I
Los Angeles
Rlttenhouse 6-3717
peace¬
time/^ They called it
economics.
Street, Philadelphia 2
PHILADELPHIA
of
to
/
'
1933 down to the present
we
with
bound
were
experiments
Analysis
Request
American Box Board
had UMT in
or
present-day standards.
fiscal policies
our
With the fears engendered by the
1929 deflation dominating public
Amalgamated Sugar
Member o;
New York Curb
Exchange
H. M.
of
lies
political
solutions - for.
problems economic in their origin.
Also
-
situation
seeking
BUCKLEY BROTHERS
»'■,
.we-'- have
to
or
pletely trained and equipped, how
others; C /"not-
v
management of
psychology,,
Members New York,
Philadelphia and
Los Angeles Stock
Exchanges
■'
difficulties
the
fiscal
for 15 years. Bo.th before the war
and during the war we utilized
day
SALT LAKE CITY
'
/
security purpose; it's un-American
by " tradition and Fascist undei
the
-
DuMont Laboratories
Walnut
said
cold
be
passed
New
1420
a
it is unfortunate that it has
fought in the midst of a
hot political campaign. /. v
to
eourse.
PHILADELPHIA
New York
been
,
IIIIIIIIIIillllllllllllllllllllKIIIIIIIIHII
on
It has
in the midst of
device to escape unpleasant
reality and to postpone the grim
street
Members St. Louis Stock
LD 33
Data
itself.
are
From
Scott, Horner &.
Mason, Inc.
Portsmouth Steel Corporation
Buffalo Bolt Company
Gruen Watch
Company
princi¬
that
every
St.LouisI.Mo*
;
in
not
is
war;
results
;
1
§
r,;'few'-7;
far in the past. We are confronted
with the consequences which have
arisen
from
reckless
and
loose
American Furniture Co.
Lynchburg, Va.
deal/in
we/lose
basic factors in the
sight of the
that
to
Difficulties Due to Past Mistakes
'Mllilillliiiiliiiiiiiiilllimiiiiiiiiiiiii
Tele. LY 83
and
The result
problem
Democrats
inclined
personalities
our
Dan River Mills
too
are
The
-
Fink
P.
w
we
Tele. LS 186
S.
units
reserve
tually start to train
ac-
of
doing
these
things,
you know, the
;
Col.
717
men;
limelight,
John W. Hanes
be¬
even
Of
Co.
only
out of ten
one
can
would
established
to
nations
use
ks
these
newly organized units would itself
take months before' they could ac¬
'
AM
As for using
by other
i
They: didn't .seem to get //AIF
culties we now face is^fhatywe; security by having UMT, and look is; phony pi^pagarvdaw will provide
at jus,; more secure than any oi people like you, with a false sense
must try and find
solutioireririfar
them and, we never even had a of security^and/do^ oup .counfryc.
year like 1948, Wheri political con?
(JMT to protect us.:
siderations
take
the
]
77)7;^*/- irreparable harm. ///? /://
Marshall
American Turf Ass'n
tpograye1
to approach these problems: in a
partisan spirit. One of the. diffi¬
Plan is about,
that
the
you
..
rifles which organized
the or¬
ganization work of assigning them
v
of
one
them with
equipment
and
production. ;•///•
v
bilt
now,
every
.
do'my.
by
Well, ' don't
••
happy to come tq
a part of this process
The situation is much
ten
and
as
others,
/look
financial /problem
into clear focus.
what
,
This
•
equipping
weapons
pilot
plants could expand, but it would
take a long time to get enough
leadr
ers.
for
units would need—well, your
op¬
"NOT WE."
As
aside from
and
position
national,
our
only
American Air Filter
Consider II. Willett
shoot
part to bring the fiscal aspectsnof
a
people
know
am
'
modern
elections,
hang their
hand in their solu¬
a
with you—as it were—arid
Gallup
four
I
Rochester
to
from
recent
ou
free
-v'-v;-:
of discussion and to think out loud
say
least,
Poll that
LOUISVILLE
govern-
greater confusion and
take
to
•
Financial Chronicle":
ments, destroy
of us to study the im-;
plications of these grave problems
and
learn
Tele. BS 128
was
Says
interesting to notice that Mr. Elisha M. Friedman, in
e iin
e."Chronicle" of Jan. 15, points out why tVe need
by elaborating about other "NOT WE" who commit acts of
aggression, break pledges re: boundaries, employ fifth columns, de¬
pose
existing I —-—
•—i—
—
• ' —•
illusion, and
standard.
&
defense.
.
TT-n/r^A.
UMT
every, one
It is discon¬
24
Editor, "Commercial
should pursue, both in dealing
we
questions.
Walter J. Connolly & Co., Inc.
proposed
says
Swiss plan is ineffective.
7^7
;
military training;"
contribute to
not
the
to the course
as
with domestic
Traded in Round Lots
■
grave
inter national
Preferred
I8 pLofly propaganda and v/fll
been a time, either in your lifetime or mine;
difficult problems confronted the American people.
uncertainty
more
Maine
Col. Sol Paul F„nk hclds
proposal for universal
.
v?'-
there
many
Never has there been
&
N. jD.
functioning of free
currency an
abandonment of gold
scores
&
';\
v
greatly to government expenditures, thus creating cumu- f
lafcive inflation forces. Attacks President Truman's tax proposals
BOSTON
Boston
HANES*
and added
Domi-
nick & Dominick.
B
W.
Trust Co., Winston-Salem,
Prominent banker lays present -economic ills and inflationary pres¬
sures to New Deal
policies dating back 15 years., Lists steps taken
since 1932 which have expanded unduly
government activities
of
Cincinnati.
with
&
Former President, American Bankers Association
,
the investment department of the
Central
JOHN
President, Wachovia Bank
For many years
been
Product of
a
M.
Gaily has become associated with
A.
Thursday, January 29, 1948
Chronicle)
Financial
CHICAGO,
FINANCIAL. CHRONICLE
Brokers
-
Peyton
Stock
Exchange
Spokane
Dealers
-
Underwriters
Building, Spokane
Branches
at
Kellogg. Idaho and Yakima, Wn.
COMSTOCK & Co.
CHICAGO 4, ILL.
231 So. La Salle St.
Teletype
;
Dearborn 4501
CG 955
.'
Members:
v
225
EAST
MASON
PHONES—Daly 5392
Chicago
Stock Exchange
ST.
Chicago: State 0933
-
MILWAUKEE
;
(2)
Teletype MI 488
I
I
Volume
167
Number 4668
THE COMMERCIAL
Washington
Ahead of the Neivs
-
.
hope
complish
the
comment
of
the
as
to
whether
they
will
able
be
to
ac¬
complish it
or
not.
Under
the
circumstances,
nothing
be
can
more
meaningless
than
whether
they
succeed
cutting the
in
Carlisle
Bargeron
budget
;333;33333333;
50' cents.
b i 11 i
In
the
end
five
o n s
we'are
or.
go¬
ing to find, government; expend¬
itures
than
more
the1
budget, not
'
less.
The
;
country
mood and
is
in
spending
nobody has caught the
a-
gay spirit more than- the Bureau¬
crats.
•
;-,3 Consider
the blandness with
which "Cap" Krug comes" forward
with a request lor a $9. billion
program to make oil out of : shale
coal. We are
and
fuel
experiencing a
People are quite
shortage..
annoyed
about
it.
So
why
not
spend $9 billion to set up a syn¬
fuel industry?
thetic
Only
few days previously,
Presidential committee, which
have
-a
previously; mentioned,
ported- unblushingly,
quite
a
1
nothing at all; that $15
additional, above present
military outlays, should; be- appro¬
priated for military aviation.
'
r Senator
Wherrv, a Republican
stalwart, was telling a, group of
close
friends
other
about
the
up
itures
the
just
was
.
This
Now
than
run
over
Project,
billion
a<
before
story is finally told, yet it is
doubtful if this alone is a serious
consideration of the Senate.
^
The
man
in the street is that
which is
being made- to satisfy
whim; the erection of
on
the
south; side
House.
have
man
•
only, expenditure
which
really to have provoked the
seems
This
a-
ities.
But
to
'v
,,
; f
•
r
;
White
doesn't
many, ciphers- on it so the
in the street .can
compre¬
-
Incidentally,,
the
Republicans
have just increased the retirement
so
-Undoubtedly,
bring
You
hard way.
soundness
are-
islation
ex¬
into
the
na¬
"Cap's"
than,
of
manv
be
anticipated
10%: of
etc;
These prck
fatal weakness,
which This discus-
posals all have
the
revenues;, that
be set aside for
revenues
debt ! reduction,
,
nature
of
a
lion may make clear., 3
.
will
it would cut drasti¬
large-scale
mostly made
list.
A
book could
spending,
%
nrifior that control
invre-,
requirements' wilt tend3
number
had
-1-
lending rates.
Tn response to aV question "put; to
him at the annual
meetings of the
stockholders of the Chase National
Bank on Jan. 273
A 1 d
i
r
h
c
Winthrop W.
3:"- 333./3'
>
,
the
of
Board
the
view
the
that
trend
would
you see many new faces payments.
However, about two
in, much further to the Left, million G.I.'s are included who
politically and financially, than are going to college or getting onthe present membership?
I won't the-job training.
try to answer that" question di¬
Leaving them out, the payroll
rectly, but I hope that this- discus¬ list is about
12% million or 60Q%>
sion- may
give you some idea of what it was in 1932.
come
At
votes
You recently heard
dent's
message,
heard
about
Harry
Hopkins
the
or" at
it.
It
Presi¬
least
almost
you
per
rates
charged
short
be
outgo could account for 25 million
votes.
in
made
memory
Old
governments.
no
of
o n
Federal,
had
the
chance.
And
he
might
be right about it at that!
of-
There
in
way of
school-
State
estimating the numbev
teachers, -? county and
employees,
etc.,
in
thin
category.. Beyond those on the
regular Federal payroll, there are
the
multitudinous
larly
promoting
legislation.
groups
special
regu1-
benefit
and'
'
'
-
consideration
poration
accelerated by
the recent act i
Business
Politics-
profit, and the loss may be so
large that it will put you out of
business—why,
youwould
get
Hy commercial
will
two
payrollee, this- monthly-
Besides these 14% million vot¬
look ers, who. receive a direct check
Scrooge himself.
Tru¬ each month from the
public treas¬
man's "pie-in-the-sky" State of
ury, there are the beneficiaries of.
the Union message was
probably temporary payments and also a
perfectly logical1 under a man¬
large number of State, county, and
aged currency system. So far as local
employees who have a direct
he is concerned, his continuance
financial interest in Federal sub¬
•in public office depends
upon the sidies and
grants-in-aid To Statepurchase of sufficient political al¬ and local
like
So
out
interest
banks
total
a
-
Directors,
expressed
to
14,416,393' persons. This 14Y:
million figure does not include a
_
•
Chairman
of
increased
of
you? are counting on Con¬
gress to stop ruinous
inflation, but
Nothing occurs more frequently
Congress is no longer strengthened in
political oratory than the prom¬
There
is
a
parallel
between by the bulwark that compelled or¬
ise to achieve "a drastic reduction
business and politics that may thodox financial methods prior to
in unnecessary governmental ex¬
help you visualize the political as¬ 1933. That force was the right of
penditures." The difficulty comei.
pects of this problems
: the American citizen to have cur¬
when the action is attempted. To
Iit business a concern is organ¬ rency redeemed in gold,
every beneficiary, Federal spend¬
ized, to make profits. If it does not
Congress is constantly at the ing is his bread and
butter, and.he
make profits, it goes out of busi¬
mercy of minority groups seeking usually can and will
spend full 3
ness.
If you were to take a prod¬ free
benefits
from
the
public time if necessary to maintain hk
uct to-a businessman and sa5% this
treasury.
.The.pow.er of these governmental meal ticket.
Dol¬
item is splendid for the
customer, blocs stems out of the fact that lar payments to individuals
by the
but you will have to sell it with¬ their-bloc-votes can
represent the
Parallel- Between
accelerate upward movement in;
bank
is* the right to
gold by the citizenry at large.
own
on
plight.
1932, there were 2r
people receiving regular
monthly checks from the Federal
Treasury. On June 30, 1947, thin
Higher Interest Rates
states recent increase
written
couple of million receiving either
think that a majority of those temporary unemployment
bene¬
voting would be re-elected—or fits or soil conservation benefit
The only way currency deteri¬
legiance. And as that goal re
oration in America can be halted :quires more dilution of the curis by restoring control over the
frency, probably he can persuade
At meeting of - stockholders of
that
the
; public purse to the producers of himself
Republicans
Chase National Bank,, the Chair-: wealth. The only effective weap- would do the same thing if they
serve-
be
current
our
196,151
i
man
de¬
"Communisf*
go
have,
the
official.
by the cor¬
Business must
profits.
-
-
vital
of
in
power
almost any
Issuing
-
government are estimated at over
21 billions for the next fiscal
year.
Congressional district;
On the other side of
No Effective Restraints
With
Ip politics votes have about the
same
Re¬
balance
erating
New
Congress is
the taxpayer who foots the bills.
Unlike the tax-eater, he cannot*
on
Money
spend full time to get Federal
effective restraints op¬
on
the issuance of new
no
importance that prof¬
ex¬
penses reduced .; The office-holder
in the middle generally responds
to
whichever element puts the
money, tije way has been opened
minority groups to play strongest pressure on him. ; Actu¬
exists,, one party against the other, and ally perhaps he must do so.
Social Security head, are
re s e r v e
press¬
w. w; Aidrich
probably
generally no even play the Executive Branch
:
3 Why have I detailed this pres¬
ing fori, increased -olcl age- and against depos■
T ,f -3 one gives up power willingly.
against the Legislative.
sure
group
problem at length?
survivors payments and the "ex¬ its of member banks \ in- New
Y"ork H And so because those gaining
Despite - much general discus¬
tension^ of social
Simply because it gets at the core
security cover¬ and Chicago from 20 to 22%. public office usually endeavor to
sion, little factual data has been
age.
of this problem—the inability of
"Generally speaking,"; Mr. Aidrich make a' career of office-holding, revealed? about the
benefits of government
employees.
Both Truman and
Altmeyer; the
serve
its do in
Board in
is
lifting the cash
far
business.
That situation
from
ideal,
because
but
Last'^spring
writer
and
summer, this
with
the
House
worked
Appropriations1 Committee trying
to
•
effect
,
economies
ernment/The
•'courageous
House
job,
in
the
did
a
remarked,
rates is
"the- trend
quirements
"will tend to increase the upward
movement.". Mr. Aidrich also ex¬
notwithstanding
votes
:
to
have
the
same
importance
that profits
dq
in business.
3....»
to
re¬
gov¬
right
,
growth
of' interest
upward," and the step; of
the Reserve Board to- increase
for these
it
.
;
they
On June 30,
about it.
familiar with
adopted prohibiting
Congress from appropriating more
great fuel project would be gov¬
cbfttrolied;
/>
••3
Aldiieh Looks foi
During
for debt reduction; that leg¬
year
it would be much bet¬
ernment'
the
in Congress, I have
years
clare
over¬
who
,vou
,3
those ; proposals: • That
a
fixed
amount of revenue be used each
have "some:' bureaudratiq
meddling.
Buffett
tion's- fiscal affairs.
try is quite alive to the1 possibil¬
ter
Howard
mainte¬
is
up of na¬
tional defense demands, the Mar¬
shall Plan, the veterans, etc.—do
amined many proposals calculated
to
1V^9ue^i°!0a^ly3 th^3cO^Hndus-1
of
.'
my
the year is out. They've budgeted
hundred- millions. for the
t
a
the
you
1948
all
which
the
to
sound currency.
had an economyCongress right today, and
that for
cally
is politically the
only
possible method of ending mone¬
tary deterioration. I came to this
several
'
f
coin
conclusion
a
Suppose
standard
ago..
is
work.
why
public
only discussing
governments
that aspect of
essential
of
minded
be
to
gold
from coal well underway and
my understanding that they
expect to. be in production before
it
balcony
the
expenditure
return
mora
the
over
alien
seas
are
people
endeavor
to show
control
we
tomorrow morning if Uncle Sam
takes them off his free support;
nance
currency.
my
gas
upward
so
hend- it;
year
o
of the people to
power
that
by the gold redemption right
ended, the Congress was de¬
prived of the strength from the
the
/ will
that
was
*
It
the
afraid
am
purse
gen¬
ioration
it, but I
exercise
that
is
note
domestic pressures—not the
hold
when
agree-
our
Pittsburgh Consolidation, out in
Pittsburgh, has the construction of
a
pilot plant to extract oil -and
Truman
a
of
a<
actly that belief. I would still like
importance of
ending deter¬
'
try moved in this direction;
payroll.
to
our
ment "on
the
on
in
paramount
synthetic fuel in¬
dustry for which- "Cap" Krug. has
asked for a. little pocket change,
it so happens that- the coal vindus-
to
The expenditure involved in
the
would
eral
'33'f 333
•;
in-
o n a ry
assume
there
3.
;
alone, for health, edu¬
cation, housing, will run into the;
billions, he pointed out.
!
the
I
A penny saved here is offset by
an
outbreak
of 3 spending Telse-
where..3
t i
economy. Also
money. It must be disheart^
ening to these fellows to-see the
results.
statement of increase in government
existence
highly
a
factors
save
'Expend¬
Republican
Lawrence
f 1
Commerce,' by industries and the
like,
again
honeycombing
the
government
bureaus " trying
to
programs
pending- St.
of
ac¬
30
some
countants,
researchers
and
the
like,
loaned
by
Chambers
of
day, that
prepared
by
the
last,
as
3;
coming to Congress in 1943, I spent 16 years investing other people's money,
was then and am now a
disciple of the capitalistic system. That results in being
lonesome at times in
Washington. I assume that there is general agreement here on
rather
the
just
year,
S. Congressman from Nebraska
Before
they
asked fo^
sponge:
proposed
what
if
as
it meant
he
i-
should try
re¬
billion
throw
to read in
House and
and :L
House committee has
1
Government Spending Check
as
U.
spent that Truman had originally
editors
(491)
Asserting only way currency deterioration can be battled is by restoring control over
public purse,
Congressman Buffett argues citizen's right to own gold is only possible effective offset to
inflationary
pressure, as this will enable those who supply public
treasury to fix limits on its outgo. Says a cur¬
rency redeemable in gold on demand is right on which all
oup freedoms ultimately rest.
Furnishes
ac_
and
V
'
s
CHRONICLE
By HON. HOWARD BUFFETT*
By CARLISLE BARGERON
one is likely
the newspapers these days has. to do- with meetings' of the
Senate appropriations leaders to discuss how much
they
to cut the President's budget, and their statements of
FINANCIAL
Gold Standard
From
Just about the most futile stuff which
&
22%/ from ;20%, (
them
to
;
-
a
man
press
nowhere
seemed
3 to be in favor of economy.
They
were for it as a
general term,, but
they pounced on practically ev-
pressed
in
himself
agreement"
■*
you,
gardless of what
budget
by
find' that
was
Congress,
.re¬
done to the
more
was-
ness
loans
loanson
1.25%.'
••
for
in
of
spending and
Congress
passing, please
to
effectively
(Continued
on page
stabilize
38)
as,
Announcing the formation of
with
averaged
securities
•:
And
3 3
that.busi¬
expenditures
pressures
Perhaps right now you are say¬
ing to- yourself, "That's just what
•I have always thought. The
pol¬
"substantially
are
thinking of votes
the higher iticians
reserve requirement.3
when they ought to think about
/
reply fq anbth^r- 3qUestiqh:, .the
\yelfUre of the country. What
.jery thing the House did. %, •;T3;3.y:'- Mr. Aidrich 3 stated1 "Ther Chase
!we need is a- Congress with some
The Senate, under
pressure, put National Bank has not adopted
so much of the House
reductions any minimum rate for loans;." "The •'guts.',. If we elected/ay Congress
back in the bill, "and there was so -bank's
policy is to set. the rate at with intestinal fortitude, it would
much maneuvering with methods- the time
a
loan is made,"3 and
stop the spending all right!"
of
bookkeeping
that
no
man
added, "I don't think we want-to
3; I went to Washington .with ex¬
could say just how the
President's be concerned with the fixing of
i budget- was
reduced./yAnyway, any minimum rate."3 " 3. f 3 ;.":_.;3 ..-3
when you total up the fiscal
}3. *Remarks by Congressman BufMr. Aidrich estimated
year's
.\that The
these
handouts.
'*.
f.97 %;i3 and
were
-
at
about
3;-
-••/»
;£ett
at
panel, session? of National'
Industrial Conference
York
City, Jan. 22,
Board, New
1948.
It. r>. TAYLOR
Members
New
120
New
York
York
Curb
Stock-
III
Exchange
BROADWAY;
& C<>.
Exchange and
(Associate)
NEW
Telephone WOrth 4-0076
YORK
5
Teletype NY 1-2427
B. L.
TAYLOR, III ;
LESTER S. GREENWALD
SEYMOUR N. SEARS, JR.
Member
New
York
Stock
Exchange
8
(492)
;
:
of
assets—we arrive at a total
ous
$26.50
$227 million or about
over
Dealer-Broker Investment
share.
a
basis North
is currently
earning about $1.85 a share, but
this
does
not include the full
On
a
forma
Company
pro
American
utility analyst of Eastman, Dillon & Company,
interesting eight-page analysis of North American
Company. In compliance with the Holding Company Act of 1935,
the company in 1947 divested itself of its entire interest in Cleveland
through - a ♦
Illuminating
—
—
without
and
mated,
from North
Electric
and Wisconsin Electric.
However,
it still retains full control of the
the consideration of the
largest system subsidiary, Union
Electric of Missouri.
The stock of
assuming of course that the com¬
esti¬
mates, is worth about as much as
estimates
has
riving at this figure he capitalizes
Union Electric (well over half the
der, Peabody &
this
Potomac
in
interest
its
own
SEC."
North American stock is now sell¬
is broken up?
Mr. Young
$26.50 a share.
In ar¬
Kidder, Peabody & Go.
Co., 135 South La
lation
dividend
tion to
subsidiaries
(now
re¬
duced
to Union
Electric), also
controlled
two
utility
holding
erating
costs! are definitely
and
Washington Railway & Elec¬
tric and North American Light &
Power.
with
a
of litigation, now
appears to be close to dissolution;1
while the final plan has just been
appealed to
a
higher Federal
court1 (with respect to the amount
assigned to public .holders of the |
common stock), it appears to be
stipulated that the plan can be put
into effect, with some assets es- I
crowed or reserved to satisfy any!
might allow
.
Subject
,
to
such
reserve
the important Kansas
Light and the much
smaller Missouri Power & Light.
&
tial
block
of
acquire
Illinois
a
substan¬
Power, but
possible that this might
initially be segregated pending a
final court decision on the North
it
seems
A
to be acquired
Light & Power is Central
American Light & Power plan.
smaller property
from
Terminal
Company, owner
warehouse in St. Louis.
of
a
and
a
Missouri
6V2%
on
a
basis
7% basis, ar¬
$29 million
and
respectively
(about nine times earnings). Cen¬
tral Terminal was valued at $3
million, the lower figure named
by the SEC.
Including Illinois
riving
•
at values of
$4.7
million
value,
total
ac¬
at
its..market
quired
from
Light & Power
pending plan is
thus valued at
North
American
(assuming that the
consummated) are
slightly over $42
million.
North
fact
that
Union
assets
Company's
include
investment trust, the large
Electric,
-
with. Blair
was
an
office
(New
at
York), and
building
60
With Wilson,
^
to The
(Special
opinion—A. M. Kidder & Co.,
1 Wall Street, New York 5, N. Y.
McMaster
v
Financial Chronicle)
CHICAGO. ILL.—James R. Bur¬
Street. '
Co., 134 South LaSalle
Utilities
N. Y.
Portsmouth Steel Corp.—Data—
Buckley Brothers, 1240 Walnut
Special Situation—Analysis of
Street, Philadelphia 2, Pa.
85-year-old New England com¬
Also available is late informa¬
pany with large dividend accumu¬ tion on Du Mont Laboratories and
lation—Raymond & Co., 148 State
Buffalo Bolt Co.
Street, Boston 9, Mass.
Master Metal—Cir¬
and stocks
of several low-priced speculative
steel companies—Mercer Hicks &
COMING
EVENTS
In
Investment
The
Steel,
cular
Field
N. Y.
(Chicago, 111.)
3, 1948
of
Club
Traders
Chicago
way,
York 7,
at thf
La Salle Hotel.
High & Low
Over-the-Counter
Market—As compiled by District
No.
Association
National
13,
of
Securities Dealers, Inc., Ill Broad1948 (Chicago, 111.)
National Committee of National Way. New York 6, N. Y,
Feb. 4,
Traders
Security
Association
meeting.
(Kansas City, Mo.)
Bond Traders Club of Kansas
Feb. 5, 1948
City annual dinner at the
Meuhlebech.
Hotel
(St. Louis, Mo.)
Traders Club of St
Louis annual dinner at the Chase
Feb. 6, 1948
,
.
Security
1948 (Atlanta, Ga.)
*
*
*
.
Exchange
Firms.
:
(Boston, Mass.)
Asso¬
ciation 24th Annual Winter Din¬
ner at the Hotel Somerset.
Feb.
13, 1948
Boston Securities Traders
Wilford Rowe Joins
Bell & Farrell Staff
(Special
WIS. —Wilford F.
has become associated with
(Milwaukee, Wis.)
Bond Club annual
Feb. 20, 1948
Milwaukee
at
party
the
tric—Analysis—A.
1
Co.,
Kidder &
M.
Wall Street, New
York 5,
with
Raymond
and
prior
thereto
own
investment business in Wau-
1948
27,
Corporation—Analysis
—C.
E.
Unterberg
&, Co.,
61
Broadway, New York 6, N. Y.
Philadelphia
Twenty-fourth
Annual Mid-Winter Dinner
at the
i.
V. D.
With Cannell, French, Copp
to
(Special
The
Coke Corp.—
Late data—Comstock & Co., 231
South La Salle Street, Chicago 4,
Illinois.
Lru-.'.v.r J.V;
-:r' :
Coal
Central
&
Central Illinois
Co., 37 Wall
Y.
N.
7
Street.
49 Federal
With Hanrahan
Co.
Financial
Chronicle)
(Special
The
to
WORCESTER, MASS .—Edward
Street, New York 5,
;/
B.
Sawyer is now
affiliated with
Main Street,
Hanrahan & Co., 332
&
Memorandum
A.
change.
Stock Guide"
Saxton & Co., Inc., 70 Pine
"Public
G.
South West Corp.in current issue of
Stock Ex¬
members of the Boston
,
'
;-~y
.
"'V.''
Utility
Street, New York 5,
With Chiles, Huey
N. Y.
(Special
Benjamin Franklin Hotel.
to
The
Financial-
Curtiss-Wright "A"—Memoran¬
dum— Newburger
&
Co.,
1342
Walnut Street,
Philadelphia 7, Pa
is
Huey
with
connected
now
Co.
Chronicle)
OMAHA, NEB.—John C.
1948 (New York City)
New York Security Dealers As¬
sociation 22nd Annual Dinner ai
March 5,
H.
Bingham has been added to the
staff of Cannell, French & Copp,
Public Service
G. White &
-
Chronicle)
Financial
MASS. —Robert
BOSTON,
Central
(Philadelphia, Pa.)
Traders Association
'
sau.
Y.
N.
Milwaukee
Athletic Club.
J. Plunkett
conducted his
was
Elec¬
—Memorandum—J.
winter
Chronicle)
Financial
The
to
MADISON,
Meeting of Board of Governors
of Association of Stock
6, N. Y.
Amalgamated
Sugar — New Rowe
Analysis—Edward L. Burton & Bell & Farrell, Inc., 119 Monona
Co., 160 South Main Street, Salt Avenue, members of the Chicago
Lake City 1, Utah.
1
,
. ■
Stock Exchange.
In the past he
B.
Feb. 12-14,
/
American Water Works &
„
Hoist—
1947
for
Bids
Shepard Niles Crane &
Report—Troster, Currie & Sum¬
mers, 74 Trinity Place, New York
.
Year End Prices &
Mid-Winter Dinner of the Bond
Corp.—Circular—
Ill Broad¬
New York 6, N. Y.
Reading Tube
Aetna Securities Corp.,
the industry
on
Co., 150 Broadway, New
of
United Public
4, 111.
& Hickey, 49
Wall Street, New York 5,
Jr. and William A. Daniel
now with Wilson, McMaster &
Investment
United Public Service
Bros.,
Inc., 32
Broadway, New York 4, N. Y., and
Board of Trade Building, Chicago
Developments of the
developments in
the industry—Vilas
Corp.—An¬
Lumber
Pickering
alysis— Strauss
Week—Current
gess,
pre
Analysis—Ira Haupt & Co., Ill
Broadway, New York 6, N. Y.
Investment Trusts—
I Open End
Railroad
England Public Service Co.
New
institutions).
Boston
First
Feb.
Commonwealth Gas
Co., Inc., 730 Fifth
York 19, N. Y.—
An
and the
Co.
O'Connor &
Corp.
Doyle,
2, Wis.
was
In the
Co.
&
Hotel.
American
miscellaneous
Broadway
a substantial amount
J-Tansas Power & Light and Mis¬
souri Power & Light are in the of cash assets (after allowance for
debts); Mr. Young values these
same, general
area suggests (ac¬
cording to Mr. Young) "the pos¬ items at over $17 million. Adding
sibility of the creation of an inte¬ together the five items—Union
grate 1
system,
leaving
North Electric, the marketable utility se¬
American Company as a one-de¬ curities, West Kentucky Coal, the
equity in the North American
gree holding company for these
proper'ies. However, we mention Light & Power Company hold¬
ings, and the cash and miscellane¬
this cr.ly as a possibility because
The
y
formerly
past he
with Fred W. Fairman & Co.,
He
Street.
Salle
the
holdings which may be
Power
Special
Paper Co.—
memorandum—Loewi & Co.,
East Mason Street, Milwaukee
225
Materials—
Paper—$1.50 (75d to public libra¬
ries and non-profit
Feb.
yield
New
Avenue,
John N. Faust
values Kansas Power
on
—
New
Building
W. Axe &
E.
produced for 1946 compared
27th position in 1945 and
Light
Co.
Manufacturers
Wallboard, Insulation,
Allied
and
40th position in 1944." In the early
part of 1946 a North American
official valued the company's
stock at $12 million and Mr.
Young thinks, that with current
earnings approaching $3 million
the appraised value might be
&
sidiaries,
It might also
with
Mr. Young
(plus the distribution under the
plan), North American could take
over the remaining assets, which
include two wholly-owned sub¬
Power
coal
Oil
Kingwood
York
New
Fourth Street,
300 North
Mo.
of Roofing,
coalmining industry in amount of
,
any
are
and permit larger produc¬
tion
per
man!
The
company
ranked
19th in the bituminous
which the;
raised to $16 million.
to the com¬
additional assignment
mon.
which
seams
some
coal
thicker than av¬
include
#
or
Nekoosa-Edwards
affected.
erage
after some years
courts
favorably
Properties
substantial in¬
terest in Potomac Electric (now
distributed) and Capital Traction.
North American Light & Power,
American
mines have
from price
in-
years
survey—Peter Morgan & Co., 31
Nassau Street, New York 5, N.Y.
1948 Outlook for
earnings of this company
been
have
North
leaving
year,;
creases,
below average
low cost
most
benefited
The former was dissolved
late:: last
the
as
ones.
"Production
Young remarks:
Mr.
were
smaller
several
and
mines
companies, as well as an impor¬
tant coal company and some other
interests.
The holding companies
re-appraisal
Exchange—Edward D. Jones
Co.,
million
the stock of West
owned by
somewhat
more
of a problem.
The com¬
pany operates three fully-mech¬
anized coal mines, two large strip
10
the
on
a
of the Pepsi Cola Co.
St. Louis 2,
Appraising
in
American,
&
of
record
listed
more
Stock
Kentucky Coal, fully
North
American,
is
addi¬
its directly-controlled op¬
North
5, N. Y.
available is
Also
unbroken
with
stocks
of
Un¬
With
Record—Tabu¬
Dividend
Co.— Invest¬
&
appraisal and review—Kalb,
Voorhis & Co., 15 Broad Street,
New York
nearly
close to $17
because
Kidde
Walter
ment
York 5, N. Y.
Stocks
Common
broken
the re-
they were scat¬
geographically.
But
Operating Earnings and Ratios of
20 Stocks—Laird, Bissell & Meeds,
100
Products
Tennessee
and
Chemical.
Engi¬
Wellman
Stocks—
Bank
120 Broadway, New
Power, Wisconsin Electric Power
quirements of the Utility Holding preferred arid common, Pacific
Company Act to divest itself of Gas & Electric and Capital Trancertain
operating
subsidiaries, sit) have a total market value of
tered
&
City
analyses of
are
Co.,
neering,
New York
associated with Kid¬
become
available
Also
Foundation
CHICAGO, ILL.—John N. Faust
$135 million. The
ord of managing and financing its ' relatively small holdings of other
subsidiaries since incorporation in utility stocks (Potomac Electric
worth
conservative and successful rec¬
merely
New York.
Co.,
Inc.,
Kentucky
Building, Louisville 2,
Kentucky.
Chronicle)
.(Special to The Financial
Corp.—
Motors
Graham-Paige
Analysis—Seligman, Lubetkin &
Co., 41 Broad Street, New York 4,
times
While North American has had
1890, it was compelled by
Bond
Home Life
total
other assets.
a
York
"Local Notes"—Current data on
ers
Street, New
Inc., 41 Broad
4, N. Y.
Co.,
data
Dallas banks—
Kentucky investments—The Bank¬
portfolio value) at about 14
earnings, with a modest
amount of market seasoning as¬
sumed. This would make the stock
ing for, despite the fact that North
retains
substantial
American
the four largest
Rauscher, Pierce & Co., Mercan¬
tile Bank Building, Dallas 1, Tex.
John N. Faust Now With
value" of
North American's entire portfolio,
pany
Banks—Statistical
Dallas
on
dividend rate).
What is the "break-up
Young
Mr.
company,
return
that the
company may continue to pay $1
a share (the recent quarterly cash
at this stage the plans of the cornpany have not crystallized and no
program has been presented for
to its
offering
any
America L. & P. hold¬
stockholders, and by several dividend
distributions disposed of most of
stock
interested
send
to
Mr. Young thinks
ings)
firms mentioned will be pleased
parties the following literature:
It is understood that the
share (esti¬
ning in excess of $1 a
Harold H. Young,
has prepared an
Electric
Recommendations and Literature
equity in minority stock earnings.
With the corporate income run¬
North American Company
Thursday, January 29, 1948
CHRONICLE
THE COMMERCIAL & FINANCIAL
;
V
Schutz
Chiles,
Co., Omaha National
Bank
Building.
the Waldorf Astoria.
Southwest Gas Producing
March
1948
12,
Canada)
Annual
Bond
Gilbert J.
29
Postley & Co.
BROADWAY. NEW YORK 6, N. Y.
Direct
Wire to Chicago
(Toronto,
—
Dinner of
Traders
the, Toronto
Association
1948 (Dallas, Tex.)
National Security Traders Asso¬
ciation Convention.
B.
Circular
DuMont Laboratories
—
Ward
&
Broadway, New York
Co.,
120
5, N. Y.
at the
King Edward Hotel.
Nov. 15-18,
Allen
Ont.,
,
With
Murphey Favre, Inc.
(Special
John
of man¬
hydraulic control
Electrol, Inc.—Analysis
ufacturer
of
equipment for aviation and indus¬
trial uses—Seligman, Lubetkin &
to The
WALLA
R.
staff
of
Spokane
SnnkariP.
Financial
Chronicle)
WALLA, 'WASH.—
Woiblet
has
Murphey
and
Eastern
Wash.
joined
Favre,
the
Inc.,
Building,
Volume
Number 4668
167
THE COMMERCIAL
v
Business and Finance
President, Phillips Petroleum
the
petroleum industry faces tremendous tasks in 1948. It
ing
the
Likewise,
war.
increases
of
last
the
have
year
on
finance
for
the materials to erase the
deficits in field development and in
of all kinds which accumulated dur¬
construction work
phase, the airlines
been;!
of
there
several
our
ANNUAL REVIEW
Thursday, Jan.
appeared, starting
hundred
of
22,
on
in which
few
18,
page
equivalent comments.] ^
replacement costs.
large part of
a
Projects
S.
K.
Adams
When the current
of
pro¬
now
construction
under
planned
or
for the
future will largely overcome in 1948 the transporta¬
problems which have been responsible for the short¬
in product distribution which have occurred in
parts of the country this winter.
With the completion
ages
transportation facilities, full utilization of avail¬
materials will be possible for the f.rst time
beginning of the war.
raw
since the
Relatively free from hampering restrictions, the oil
industry has done a commendable job in the postwar
period in providing a supply of products now more than
35% higher than in 1941.
Continued freedom to operate
according to tried American principles of free enterprise
will be the best assurance that the public can have of
abundant
President, The New York Air Brake
■
.
group
"■
■
•,
•••.•
■
It is well known that
facilities.
Despite this, our figures show that our break¬
even point on operations is much higher now than pre¬
war.
How long a favorable balance can be maintained
is anybody's guess.
Nevertheless, the record of Grey¬
hound, beginning with the humble start of its predeces¬
sor companies thirty-odd years ago, is one of continuing
growth. Because of this and because our fleet of buses
is now the finest in the history of Greyhound, we are
confident, in view of the present business, outlook, that
1948 will provide even
greater opportunities for the
development of our service to the nation.
J.
•
.
'
'
' •••■''
-
•
'
-U
in this country there is a
facilities, although it is not
acute here
as
Company
^
as
in
other parts
some
of the world.
The
the
business
outlook
product this
limited
for
as
and
books
our
demand
year
would
for
seem
our
to be
by the ability of the
whole and ourselves
only
industry
in
on
a
particular, to secure raw mate¬
Many of the worst shortages
in
the
industries
must draw
from
which
supplies and, con¬
sequently, the deliveries are to a
large extent beyond our control.
Orders on our books and in sight
we
equal to
are
a
L.
is
Burch
R.
year
some
we
ORVILLE
facilities for almost
our
ahead. Therefore, unless there
unavoidable
cataclysm,
extremely active and,
our
we
are
and
hope, profitable
S.
unforeseen
faced
year
with
an
in 1948.
CAESAR
President, The Greyhound Corporation
If,
many
as
economists! prophesy, employment
and
continue at high levels during 1948, there is every
reason
to believe that passenger traffic on Greyhound
buses will equal, if not exceed, the record peaks estab¬
lished during the past two years.
wages
The
1947 passenger/
than
200
Lines
is
1940.
million
;
ebunt of more
oh> Greyhound
four times- what
it
was
rapidly enough to keep pace with
gain in the number of passen¬
the
;•-!>.
able
>
were
we
Orville S. Caesar
substantial number
the highways or
to get under way on many other phases of our plans to
advance the standards of Greyhound service. However,
before this year is ended, delivery will have been com¬
pleted on 2,000 new Silversides coaches which represent
an investment of approximately $55 million.
Hundreds
of other buses are being completely rebuilt and restyled.
<of
>
to
summer
new
put
:
any
buses
on
Very soon the newest and most modern coaches, embodying recent developments for comfort and luxury in
Highway travel will comprise nearly half of Greyhound's
nation-wide fleet.
\
This
year
will also see further progress in our program
understand
To
ress
fully air transport's direction of prog¬
in the future, it is necessary to digress momentarily
industry's immediate past. Airlines did not
intentionally over-expand during the
as many critics are quick to point out.
The end of the war brought a sudden period of read¬
justment for a large part of the population. Travel was
essential to the majority in order to settle down to
normal living.
At this time, air travel had come into its own.
War
priorities had been removed, and people who never be¬
fore had been inside an airplane kept reservation offices
busy 24 hours a day demanding airplane space. Con¬
scientiously, the airlines made every effort to accommo¬
date the deluge of requests for seats.
Equipment was
purchased. Facilities were enlarged—new facilities were
added.
Personnel complements were increased to cope
with the situation.
Everything possible was done to
unwittingly
postwar era,
meet
this
or
new
the
When
in
j that brought about almost equally
} great expansion of our services.
But
1 until now, because of shortages and
wartime restrictions, we have been
V unable
to V improve
our
facilities
last
As
traffic
with
but
able
and
single
was
as
order
CAMILLE
I
believe
continued
a
the
as
a
high
level
of
further appreciation of sales volume can
over—September
1946
may
during 1948 in the chemical fiber industry.
appraisal seems a sound conclusion on the basis
of the situation prevailing for virtu¬
ally all of 1947, during which de¬
mand far exceeded supply.
an
There will be substantial increases
<
in
the 12 month* I
which, together with
expectation of a normal gain in
productive efficiency, should be o;
some help in bringing the supply of
plant
ahead
capacity in
this
of
the
part, Celanese Corporation of
at
Rock
now
under construction
Hill, S.
C.,
new
a
acetate
filament
yarn-producing plant witl
capacity
of
50,000,00c
pounds annually. It is expected tha
initial
an
this
unit
will
time
some
into
come
in
the
production
quarter of
third
Dr- Camille Dreyfus
the year.
One of the
sobering influences in the entire chemical
fiber industry is the wood pulp situation.
For some
time now a tight supply situation has
existed, with a
drastic
effect
prospect of
on
the
price situation, and there is little
betterment of the condition.
Celanese Corporation of America has plans under way
any great
for the
building of a wood pulp mill in British Columbia
supply a part of the cellulose requirements for its
plastic operations.
to
textile and
.
Production
the
of all types of
950,000,000-pound mark, a
last
rayon
of
methods and efficient control of
streamlined
operating
performance in
every
crossed
year
high record for all
to register an in¬
crease
over
the immediately preceding year, with the
acetate section of the industry reporting the
greater
proportion of gain.
time
the
and
10th
new
consecutive
WALTER D.
year
FULLER
President, The Curtis Publishing Company
The
two
factors
that
loom
most
importantly
Advertising
volume
continuing
relatively
counterbalance
the
tional
market
that
tend
>
high
will
certain
almost
costs.
Our research tells
and
the
on
horizon of the magazine publishing
industry in 1948
to stabilize the outlook for the immediate future.
be
result of the elimination of many
introduction
demand and a
be confidently
expected
Such
will
n;i
that the
us
continue
manufacturers
na¬
active
and
mer¬
chants will recognize new
sales op-<
that national
portunities. I believe
magazines will continue
offset
Now stabilized
DREYFUS
rise in production
shortages, the airlines moved at a
steady pace. The logical expansion which had taken
place to accommodate the vast increases in traffic soon
was
termed "over-expansion."
An untimely reduction
of passenger fares affected over-all revenues. Expenses
rose
meteorically whereas income declined. Inevitable
losses ensued during the time most airlines were re¬
quired to make a second adjustment—a return to pre¬
war conditions in the midst of an inflationary economy.
Insufficient equipment and facilities made it impos¬
sible to handle every demand for space during the period
immediately following the war, leading many inexperi¬
enced travelers to feel that the airlines generally were
incapable of operating on a large scale. Overlooked was
the fact that other transportation media were encoun¬
tering similar difficulties. Other industries were failing
to provide consumers with their products in accordance
with demands. As if to accelerate these difficulties, a
series of airplane accidents received widespread pub¬
licity, discouraging many would-be travelers.
The recovery for airlines is to be a slow process
requiring patience and determination.
expenses,
grow—cautiously
Chairman, Celanese Corporation of America
airlines
to
will
of providing safe, depend¬
transportation to the traveling
comfortable
an
in—the
airlines
purpose
public.
demand.
rush
the
grows,
the
approximate date the decline in traffic
suddenly found themselves without
huge volume of traffic that had beset them since
VJ-Day. While other industries operated at top speed
Most of Greyhothid's gain in
volume resulted from the
expansion of travel demands
during the war years — demands
until
many airlines are now using—the rigid standards
safety pursued by all scheduled airlines will be greatly
strengthened.
of
the
.
Not
the
to review the
set
great
gers.
Capital
and
enced in the past.
picked
in
passenger
1
a
ciles and
Combined
and it is safe to predict that a continued trend toward
air travel may be expected. As new devices are
adapted
—such as the Instrument Landing System which
America has
degree of permanency"in their jobs and domi¬
general restlessness created by the war is
being gradually dissipated. As a consequence, the air¬
lines—and
transportation in general—find themselves
returned to a relatively normal condition from which
point a sound, steady growth can be expected. Certainly,
the problems now facing the aviation industry are en¬
tirely different in nature from the difficulties experi¬
reached
travelers.
chemical fibers closer to the demand.
CARMICHAEL
During the past few months the air transport indus¬
try has entered a stage in its development which might
well be called a leveling-off period. The poctwar span
of mass travel has somewhat subsided, Americans have
rials.
occur
H.
to attract a larger
air-steamship vacation
tours on a time-payment plan are being introduced.
Add to this the fact that passenger fares are generally
still lower than in 1941, despite a recent 10%
increase,
of
For its
even
of transportation
shortage
has been in constant supply at the same low price
through all the war years and during the present infla¬
tionary period. When all other costs are rising, a grow¬
ing number of travelers recognize and appreciate the
real savings that can be made in bus travel.
We know, of course, that the maintenance of low fares,
in face of higher operating and wage costs, is possible
only because traffic remains almost at wartime levels
and because of the fuller utilization of equipment and
President, Capital Airlines
BURCH
R.
on these premises.
New sales techniques, im¬
proved passenger handling facilities and increased ser¬
vices have been adopted by Capital
petroleum products at reasonable prices.
LOWELL
■:
stations.
This, we believe, is as important in the overall
picture as the front page news of voluntary
price reductions announced by large corporations. It is
difficult to think of another service or commodity which
viding funds for the expansion necessary to meet grow¬
ing demands will he a matter of major concern for all
units of the industry in 1948.
able
of
economic
far short of replacement costs that the matter
of new
modernization
years.
from the produc¬
plants are reflected against
income, present prices will provide only a fair return on
capital. Charges for depreciation and depletion now fall
tion
and
(
costs of new production and
near
construction
restrictions and inflated costs may slow this
temporarily, yet many millions of passengers will
experience improved accommodations in hundreds of
.depots. .:
1 ..■*!.'■
The pride we feel in this improvement of facilities is
matched by our pride in the fact that intercity bus fares
are still at the low level maintained for the past-several
ing of reserves and the use of facili¬
ties acquired at far below present
so
the
Building
Both production and eanrngs of
the industry will reach all-time highs
accrue
Y.v'
'■
work
products.
However,
■
aviation.
program
for
"
income will
but
must be made available to every one.
Its
acceptance by the public as a practicable mode of trans¬
portation is essential to the
success
of
commercial
Specifically, Capital Airlines has formulated its 1948
tial materials will provide the means
for meeting new record demand for
this year.
equipped to enter the New Year
operation.
are
economic program of
an
Many airlines have tightened belts and are now pre¬
a more profitable operation despite rising
costs.
Capital Airlines believes that traffic must be
generated by appealing to larger groups of people. Air
travel can no longer be considered a
luxury for a select
prevented
by steel shortages from
effecting the increases in production
which they normally would have.
Prices this year will give greater
incentive, and the promise of some
improvement in the flow of essen¬
9
pared to show
during 1948 were received too late
publication in
issue
with
the outlook for trade, industry and
NUMBER
price
(493)
Speaks Alter the Turn of the Year
ments
Company
With continued growth in demand for its products,
nor
CHRONICLE
[EDITOR'S NOTE: The accompanying state¬
K. S. ADAMS
has had neither the time
FINANCIAL
&
as
the lead¬
ing media for reaching this profitable
market.
With
costs
respect to rising production
there
causes
is
us
some
an
uncertainty
concern.
that
There
is
believe that the peak
is still not in sight and that through
1948 the trend will continue steadily
higher. The sharp increase of last
every reason to
,
Walter D. Fuller
that cycle even a
left the industry with many
problems; if costs should continue in
relatively small shrinkage in revenue
year
would harm the industry.
0
However, there is no cause for pessimism.
problem over the past few years has yielded
to
those who worked
of book
so
hard to resolve it.
One
a
sore
solution
The
supply
so scarce during the war years and im¬
after, should be much nearer requirements
in
1948.
New equipment coming into service makes
this possible.
Y Another bright promise for magazine publishers is
that the demand of a growing reading public will con¬
tinue at a higher, though possibly more selective, level.
(Continued on page 44)
paper,
mediately
10
THE
(494)
By BENJAMIN
Chief, New York
it
•
.
indicators
to
Department of Commerce
-
,
..
rose
of
with
nual
tion
the territory
the
an¬
produc¬
reaching
$231 billion, a
record
never
in
country.
achieved
this
of High
Production
Indicators
/
Level
will
;
business indicators
also lead to the opinion that the
immediate outlook is for continu¬
probable. This
part from
should also be curbs
;
not
consider
this
a
and changes
cost
Gordon
million, with a mini¬
unemployment.
Personal incomes in 1947 ap¬
proximated $197 billion, up about
11% from the 1946 figure of $177
billion.
So insistent was consum¬
er demand for goods and services,
ceeded
58
V>-a
by
increased
share of Consumer spending may
be diverted from dty' gpotjls to'
housing and durable products and;'';
is
food this year.
anticipated
that
*
food,
increases
substantial
in
construction as well as our
this
year
aging.
A joint estimate by the
Department of Commerce and the
Department of Labor indicates
that total new construction- in the
con¬
t h. o.r i ties
which. I
sociated
are
A; also reflected
A ' in the • prob-
A
continues encour¬
u
h
c
'have been as-
1
ing high levels
of retail trade.
tion
problems
h i
with
•'
an
'
' A:r~r-^-~•;
mortgage financing were not com¬
pletely adequate. We ^ad the. no-..
front the cen- tgblc failure of traditi6nal mort.-,r
V tral A,banking <?age financing methods iri a the
controls is the policy:
conservative
It
building A
place—changes in
loan associations,
and the organization .of
society.^———-A;,-A .-'"'V
o u r
w
followed by the more
retailers
in the operations of
changes have taken
many
arid activities of building and
The
Rapid turn-over, restricted
forward buying and more strin¬
sign.
gent
market. Also hints there
»
~
^
mortgage credit.
in the operation of our economy
*V! A A.•/
of production and
New Construction < -;t VA
Our huge outlays
You are, of course, vitally, in- *
for capital equipment estimated at
physical, unit
•
terested
in
construction; home
volume over the excellent busi¬ $4.1 billion during the first quar¬
building has had a spectacular rise
ter of 1948 for American business
ness year, of 1946.
As was to be
since the slow start of last spring.
exclusive of agriculture, the large
expected with this record pro¬
The outlook for new construc¬
unsatisfied demand for consumer
duction, civilian employment , ex¬
Benj. H.
loan associations,
the number and size
healthy
on
.Since the days when I was active
.
and
higher prices and not from greater
number of unit sales.
Merchants
do
credit expansion, and upholds restrictions on con-
credits and credit in securities
sumer
;
in A large
come
some
Traditional
a
half of 1948 seems
retailers.
repre¬
gain of
about 15% in
dollar volume
and an esti¬
mated 7% in
sents
Regional Office of
vorable.
before
"T h i s
covered by the New
the De¬
partment, the outlook based on
reports which we have received,
and
from
personal interviews
which I have had with many of
the
important
manufacturers,
wholesalers and retailers, is fa¬
York
over
billion,
$237
System
Board Governor, in analyzing present monetary
monetary and
on
of what businessmen may
annual
an
rate
.
official gives factual data
a
year
SZYMCZAK*
Member, Board of Governors, Federal Reserve
Federal Reserve
reasonably expect to look forward to this
must take into consideration the momentum of the business activity of the past year,
year of tremendous activity. Gross national production during the latter part of
was
the
Regional Staff, U. S.
•/
of high level of activity
Proper discussion
year
By M. S.
H. GORDON*
1948
of business progress during last year and. states i:- p and .credit problems, points opt central banking and fiscal policies
reasonably assures continued advances in current year. / Enumer-'r
have lost much of power over money supply and can do little, under i
of high levels in production, credit, retail trade and building construction. Sees certain >
present authority, to stem inflationary forces. Supports recommen- '
goods in greater supply and better situation in construction materials.
dation for additional special reserves for commercial banks as check
Commerce Department
ates
Thursday, January? 29,
FINANCIAL CHRONICLE
Ahead for Business?
What Lies
momentum
COMMERCIAL &
with
e m s
ywhic b<
have
you
to
cope.
In 1914 the
United States
A;,
*
was
S.
M.
.
Szymczak
*
•
r
v
national
a
nation;
debtor
a
sub-
stantial part of
development
had
been
crash.; 1 V^
^uf.'/vgreaf "bust" Apf 192$ ;hajd ;
been particularly severe a id its
Florida "boom" and.
was widespread bankunemployriient . and pov- A
aftermath
ruptcy^;
ei^^Thc economy's
lem of that period was
"idle men,
Jdle • money." It
was determined to solve the problem on a national basis.
Fiscal
policy and central Ranking- policy
became, more.; dmectly than for-v
merly^ the instruments of national
economic policy.A Many new agenidle imachines,
c es
were
created to
complement
major instruments of
national 1. policy.
In mortgage
large prospective A foreign trade
r
We were
contribute to the ; basis of opti¬
credit, -the. Federals Home Loan
ing from a predominantly agricul¬
Bank System was giyen the'form
mism.
Large personal incomes
tural .nation to a predominantly
country will probably reach $15.2
we know today, and provision; was
and expanding credit both from
industrial and urban nation.; Ou>
made for chartering federal say¬
business
and consumer
sources billion in 1948 as compared with
conventional patterns of finance
an estimated $12.7 billion in. 1947.
ings and loan-.associations.
The
however, that
consumers spent may be expected to see business
drew no distinction between the
Of the 1948 total about $11.3 bil¬
activity in high gear.
As you
fiscal position of government anc" Home Owners' Loan Corporation
larger fractions of their higher in¬
lion will be financed privately, as
was formed to take over "slow"
know, earnest efforts are being
comes than in 1946. Personal sav¬
that of individuals arid busin esses
with $9.7 billion in
made to prevent excessive infla¬ compared
There were about 6,600 organi¬ mortgages and strengthen lend¬
ings dropped from $15 billion or
1947. These figures are predicted
tion and there is every likelihood
ing institutions, and the Federal
zations of the type we think of
just over 9% of disposable per¬
on the assumption that no Serious
sonal income in 1946, to about $11 that with proper support these
as
building and loam or savings Savings and Loan. Insurance Cdreconomic recession will take place
billion or just over 6% of dis¬ will succeed.
and
loan associations,
as corm poraLon was established to insure
1948;
that construction
share accounts A in building and
In view of the
carryover of during
posable personal income in 1947.
with about 6,000 today.
costs will rise only moderately pared
huge orders in the durable goods
These
associations, through the loan and savings and loan asso¬
current levels,; and that thrift and saving of their mem* ciations. At the same time, under
Pressures of Credit Expansion
lines and the increasing demand above
construction of a total of 950,000
the Federal Housing Administra¬
Additional demand pressures for many of Jhe non-durables and
bers, had accumulated total as¬
privately-financed family-dwell¬
stemmed from the expansion of the greater .availability .of ma¬
sets of $1,360 million, as -com; • red tion, the program of mortgage in¬
ing units will be started during
bank credit as the volume of com¬ terials, as well as expanded pro¬
with about $11 billion today.
At surance was inaugurated, and this
1948.
mercial and industrial loans, re¬ duction facilities, it is possible
the same." time, there were about prograrii made use'of much of the
As to housing costs, our Con¬
experience with mortgage credit
that.. production in many lines
ported by member banks rose by
26,000 commercial banks with to¬
struction Division points out that,
which had been acquired by build¬
may exceed the record-breaking
a fourth, from $11.4 billion at the
tal deposits of about $17 billion
while costs have "reached new
ing aridloan associationsin their
.
"
end of 1946. Consumer credit was figures of 1947.
compared with about 14,003 banks
many decades of operation.
Steel; for instance, in which high and hence might be expected
also up more than one-third dur¬
today with deposits of $140 billion
there
has developed
a
strong to exert a retarding influence, The Federal debt was only $1 bil¬
ing the year, reaching a new peak
market - strength, arising chiefly
py-y A New Period
A;'A|A.p,
lion. Today it is $254 billion,
of$13.3 billion. Inventories at the "gray market," due to heavy de¬
from
the
still
severe
housing
Once more we find ourselves in
manufacturing level rose to about mand far in advance of current
Our pre-World War I economy
a
new
period.
We have again
shortage, will more than counter¬
$23.7 billion, at the end of the supply, will probably continue to balance in 1948 the forces working was a composite of regional econ¬
gone through a great and devas¬
be in short supply, despite an in¬
year, representing approximately
omies. Perhaps the heart of our tating war. The waf has changed
Of this huge
in
ingot production of toward, decline."
a
20% increase over the corre¬ crease
central banking problem at that our
position in international af¬
building program, private resi¬
sponding period
in 1946, and about 1,000,000 tons during the
dential
building
(exclusive "of stage of the country's develop- fairs, and we Lnd ourselves over¬
marking a record high inventory year/ Availability of scrap iron,
merit was to reconcile the mone¬
farm buildings) will make up the
whelmingly a creditor.
,
;
coke and transportation will be
point.
tary and credit needs of major
The balance of power between
Inventories of most wholesale the determining factors in further largest share estimated at $6 bil¬
Passenger lion as compared with $4.8 billion regions and to maintain a balance capital and labor as different from
and retail lines at the beginning increased production.
these. needs.
It was what it .was in 1914 of 1935, and
in 1947, a prospective increase of between
of the year, were in their normal car production in 1948 should ex¬
You may be interested in largely, with this end in view that is still changing/ The relationship
ceed last year's output of 3,500,- 25%.
condition, although many retail
trie .Federal Reserve System was between creditor and debtor has
Truck produc¬ the following comparative figures
stocks showed signs of more than 000 by 1,500,000.
established. At that time there also. changed/ hi important part
on other
types of private; con-;'
normal post-Christmas depletions, tion also should reach 1,200,000,
did riot seem to. be any necessity because- hatter financial arrange¬
an increase
of about 20% over struction (1947 figures are actual
particularly in nationally-branded
for separate provision to balance ments and techniques have been
Farm machinery pro¬ for the first 10 months of the year
merchandise. Prices, as we all last year.
and estimated for the last two special needs of the various re¬ worked out; Hanks make one" kind
know, increased substantially dur- ; duction should exceed substan¬
gions for mortgage credit.
of arrangement with farmers for
months).
,
ing the year and were largely re¬ tially last year's figures, with rec¬
When the Federal Reserve Act the repayment of loans and a dif¬
sponsible for the record-breaking ord-breaking output, v
Private Non-Residential Buildings
was reyised substantially two dec¬
ferent;' kind .qf• arrangement > with
dollar-volume of retail sales
Electrical appliances, the output
(In Millions of Dollars)'..
•
1 ades later, between 1933 and 1935,
mahufadturirig concernsl aach iar<!1948
which totalled $118 billion, a rise of which last year equalled the
1947
'
the nation had becpnae a great rangement Calculated: to fit the
1,350
1,695
of $18 billion over 1946. Prices of
1941 peak, will be in "free sup¬
Industrial
creditor
country, internationally operations of the borrowers. Rela¬
industrial products were up al¬ ply" this year according to trade Warehoue office and loft
260
A 275
and a great industrial economy tively little mortgage credit is ex¬
buildings
most
a
fourth; prices of farm
sources.
Production of radio and Stores, restaurants and
domestically. Our. monetary and tended .today for the Chort periods
850
620
products were more than a fifth television sets will probably equal
garages
credit problem had changed from of
ripe, thred, or. five Ayqars .which
higher, and foods about 30% over last year's volume of 17 million Other non-residential
'775
590
the problem of distributing funds Used to" he ''conventional," Most
buildings
500
1946.
Incidently, New York City units. The outlook in the Textile Farm construction
450
among regions—which had been
1,625
mortgage lehaara have adopted the
1,315
was reported to have had the third
and
Apparel field is distinctly Public utility_^___i__
solved fairly A well—to the prob¬
practice A of A writing A Ibpg-tefiri
Produc¬
highest living cost of major cities favorable in most lines.
mum
of
home
and
was
being financed abroad.
in the process of! sh'ft-
these
two
,
.
'
.
.
■
in
the
country,
with the cost of
tion level in the
living of a typically moderate-in¬
come family (including two young
is
estimated at $3,200, of
which $1,100 was spent for food.
shown
prewar
year.
TOTALS
textile industry
currently higher
The
than in any
demand,
-■
♦Estimated.
4,930
"
as
.
'5,375
•. "
The probable increase in Com¬
apparelmercial
buildings,
as
well' as
trade openings which have been
churches, theatres, hospitals and
held since the first of the year, is
So much for the 1947 record.
the like, will be largely offset by
heavy, with many mills refusing
As of 1948, while our Department
a
substantial decrease in indus¬
to
accept additional orders for
does not attempt to forecast busi¬
trial buildings.
:A;
ness conditions.
Indications point 1948. ;
It is estimated that public con¬
to another good year in almost
struction will reach $3,825 million
Favorable Retail Dollar-Sales
every American industry, assum¬
in 1948, as compared with $2,935.
The outlook for large retail dol¬
ing that there will be no serious[
in 1947.
You will be interested
international upsets nor serious lar volume sales is favorable, but
to: learn that public residential
domestic labor management diffi¬ merchants report that high oper¬ construction is
expected to drop
ating costs and mounting prices,
culties. In New York State and
from $175 million last year to $100
New Jersey particularly, which is resulting in consumer resistance,
million in 1948.
may
cut profits.
While .recent
Total new construction activity,
trends in the New York Region
*An address by Mr. Gordon at
in the U. S. increased from $2,901
indicates some early declines in
'the Annual Meeting of the Coun¬
million in the second quarter of
cil of Insurance for Savings As¬ the rate of sales increase for de¬
1947 to $3,662 million in the, third
sociations
of New York
State, partment stores, a moderate in¬
(Continued on page 38)
crease
in sales during the first
New York City, Jari.;;23, 1948.
children)
at
the
various
,,
lem of
controlling the total sup¬ amortized
ply of money and equating this
supply to various national uses.
In addition, the economy had gone
and
loan
-
loans whi^hbuilding
association^ were pio¬
AAA':'..
neering in 1914. Ayy:, A':A;A I,
The Government is no longer
through a great war, two great
"booms," ;and A,two great "busts."
merely another borrower in the
market. It; is'
far the largest
war.iltheAl'baoms,''. and the borrower. The Federal debt ac^busts!':Awere A national 4n Arppifi^ jDouhts for tieiafly three-fifths of
cation. While, regional differences the A entire indebtedness
of the
in economic .organization still; ex-; country, and interest, on the debt
listed,A the. reality of regional in¬ •is a major: item in the Federal
terdependence was a more fully
bti<fediAc a^riritirig A tb jhorri Irian
.demonstrated fact than ever be¬
$5 billion a year,-; In this situation,
fore in our history. During these
special arrangements have had to
two decades there were indica¬ be made for selling and managing
tions that traditional methods of
the public debt.
TThe Treasury
The
~
'A *An address
by Gov.
Szymczak
and
the
Federal- Reserve
work
Stockholders Meet¬ closely together in issuing, retir¬
ing, Federal Home Loan Bank of ing, and refunding the debt.A This
•NoJr York, New York City, Jan. 22,
(Continued on page 34)
at the Annual
1948."
THE COMMERCIAL
Volume 167 " Number 4668
Committee
(
CHRONICLE
high taxes and lower interest rates are severely
Calls for fiscal /policies to encourage sayings and risk capital.
penalizing sayings.
and
'■/' :•
Committee
and abroad, the
at home
'Debt and Our
•
at¬
// ■
"
y—
Britain today, the people are being
tributed to the ;fact that; both1-.in¬
urged to be frugal in the interests
dividuals -and
rec¬
the
ommends
American living
adoption
of
living." .;V
which
The study
savings
are
is
headed by W.
Randolph
.Burgess, Vicer
Chairman
0
f
the
W. R. Burgess
National
City
Bank of
York,
New
are
monetary "policies
.
fiscal
and
will
which
inflationary expansion
the
money
of
the
Federal tax
supply;
a
revision
system to en¬
saving and investment,
rapidly as is consistent with
sound
fiscal policy, and an un¬
freezing of the rigid wartime in¬
courage
as
terest
•'V
rate
"•<'/-
industrial
invested wisely a
policy.
.'•••
Savers Hit Since 1930's
Policies
pursued by the Govern¬
early'thirties under
pressure of the depression and the
war
have brought about a sharp
ment since the
reduction in the return
;■ ;■
.
F-F
>
finds that American
not' only
urgently
f Emphasizing
States
United
the
tors ./
countries to assist in the- restora¬
tion
and
Lower interest earm^
explain' iri large measure why life
insurance companies have been re¬
quired to decrease their dividends
to policyholders and to raise pre¬
development, of their
Through the employ¬
.
economies."
our savings, if wisely in¬
vested, not only will foreign coun¬
tries move to higher standards of miums
substantially.
Likewise,
living, but we shall also experi¬ because, of falling rate people are
ence an improvement in our own
compelled to make larger contri¬
living standards, and, more im¬ butions to purchase pensions and
ment of
wars
of
peaceful
in
and move
a
"The
only
study, prepared jointly by
J. O'Leary, the Com¬
mittee's director of research; Mrs.
Dr.
world.
Eleanor S.
for any country
way
James
since
as
thus cutting the pur¬
savings,
and
accumulated
of
the
reduced
have
ability of people to save by the
imposition of high personal in¬
come taxes, coincident with rising
Committee finds. It
adds the warning
that "savings
are still sorely needed for further
improvement of living standards."
the
prices,
The Committee voices
of
approval
t h
will
ere
•<$>
'
demands
be
for
government, we shall start bymentioning the three basic plans
-further
on
true
as
talist America.
of
the
Russia
communist
of
socialist Britain
prewar
it is
The very
controls
gardless
whether
ness
of
Bagley, research asso¬
The
Co.
Mutual
Life Insur¬
New
of
York, and Dr.
Stephen M. Foster, economic ad¬
viser, New York Life Insurance
Co., - was reviewed in its various
stages of preparation by the com¬
mittee
members
and
published
or
of capi¬
essence
five-year plans in
is
of
busi¬
good
bad.
for credit control which are urged
on banks by the Federal Reserve
re¬
economists.
plans
(1)
or
'
concerned
banks into
proposed
rather
than
existing
to
trols, and it is
ev¬
eryone
is
miliar
Reserve
with
fa¬
many
of the
present controls, although it imight
be
said that every
government
regulation and every law directly
and indirectly is a form of conV
trol. Our primary interest /today
is
a
cial
discussion of how
investment
and
be modified
it
Since
of
because
our
finan¬
policies
will
is
generally accepted
our
the
difficulties arise
fiscal
and; com¬
building with their approval. Its studies,
modity control policies of the
of productive capacity at the ex¬ designed to evolve a sound plan
pense of consumer goods. In this for
management of th^ Federal
*A talk by Mr. Wendin before
case, saving
was forced
on .the
debt, -are- financed
rounds the National Affairs Section of
Russia
was
the
planned
.
Russian
people by the central 'in¬
granted by the Maurice and Laura
dustrial planners, but it was sav¬
ing
the Economic Club of Detroit, De¬
troit, Mich., Jan. 14,
Foundation of Pittsburgh.
Falk
in
Likewise,
nonetheless.
banks.
or
plan
in effect, force banks
reserve
Board
Chairman
marketable
term
commercial
authorities away
c o u
This announcement:is neither
cn.
%
an
The
offer to sell
nor a
of
amount
credit.
of
one
these
funds
available
itself, any
proposals would be
deflationary
The
rate
on
Federal
was
raised
Reserve
from
-investments.
risk
with
Committee
New York
personal taxation, the
reports-that tax rates
heights
further
be expected, and would
(Continued
on page
solicitation of an offer to buy any of these Bonds.
-
Telephone ('ompany
Refunding Mortgage 3'/s% Bonds, Series E
scale that the heaviest burden has
placed on just the individu¬
als who normally would save and
invest their funds in risky enter¬
been
prise.
'.
'
' ■'
.
:^
■
Dated
'
Attacking the theory that pri¬
vate
ings
investment
outlets
for
Due February 1, 1978
February 1, 191,8
••
•
t
Interest
payable February 1 and August 1 in New York City
sav¬
likely
to be large
people's
American econ^
has .reached its maturity, the
not
are
enough to absorb all the
savings
omy
because
"Today, at least,
quite contrary to;
facts of current demand. There
Committee says:
the theory
the
Price 101.43% and Accrued Interest
runs
is every indication that a large
volume of private investment will
be (required in the next several
yiears to fill the backlog of con-'
sumer and producer demand built
up during the war, to. satisfy hous¬
ing needs, and to exploit new in¬
ventions.
s
^
Copies of the Prospectus may be obtained from only such of the undersigned as may legally offer
tHes-e fBonils In .compliance icith -the securi ties laws of the'respective Stales,
•
,
.
'
:*"3eyond, that time, in the face
of .the shattering ^scientific dis¬
coveries .of the
war.
period, there
seem,good grounds for confidence
that private investment outlets
will readily absorb our savings.
We
do not need an
expanding
frontier -and
a
rapidly -growing
to provide sufficient
opportunities. Further
development of our country in¬
tensively, and rising living stand¬
population
MORGAN STANLEY & CO.
,,
f
•-(
I
;
'.V
GOLDMAN, SACHS & COIF
'
t
'
1
HARRIMAN RIPLEY &
;Incorporated
LAZARD FRERES &
CO.
*
TEE FIRST BOSTON CORPORATION
.
LEHMAN BROTHERS
investment
ards
the
for the
.basis
people, can provide
huge capital em¬
for
ployment."
'
The
rapid
improvement
in
UNION SECURITIES CORPORATION
January ,28,191,8.
GLORE, FORGAN & CO.
KIDDER, PEABODY & CO.
CO.
-
114%
proposals to increase this
rate may
steep
ascend the income
we
as
such
to
ascended
have
discount
to
short-term interest rates continues
ing to the committee, is in need of
recasting, for in its present form
it bears heavily upon the savings
process and the willingness to go
forward
1
Jan. 11, and if the pressure on
Responsibility of Tax System
Discussing
for
Taken by
Our Federal tax system, accord¬
•,
hold
basic
reasoning
behind,
proposals is to reduce the
The
these
1948.
offer is made only by the Prospectus.
any
Id
against its demand deposits.
from the freez¬
ing of interest rates at excessively
low wartime levels, asserting that
these steps will give them greater
freedom to combat inflation.
that
bonds
bank
steps taken by Federal
recent
Eccles
in.asking for new legislation on
the subject.
(3) Limit the amount of long-
bank
by future events.
that most of
permit,
commercial
from
reserve
secondary
A
>
plan
short-term
to hold very substantial amounts
of short-term government securities. This is the plan proposed by
con¬
assumed
_(2)
* basic
reserve
shift
would
governments
;
three
primary
A
which
with
These
;
:}/." '/.//.VV• v/V
are:
/; The subject
is - primarily
Sigurd R. Wendin
The
direction
the
living standards is through sav¬
ings and investment. This is just
power
to say that "control-itis" is a disease
get worse, and will not be cured until politicians and
government officials recognize at least a few of the economic facts
of life. As long as the medicine is given without correcting the causes
annuities."
portant, adds the Committee; "we
Shall help to guard against future
ance
re^-
start I would like
will
-
ciate
savers
At the
which
Government's
"easy
but
recent Anti-
are
,
the adverse effect
the
of
savers
on
money" policy, the study
are "needed; to i provide ;funds, for
points .out that "falling interest
reconstruction and industrial de¬ rates penalize the saver directly;
velopment in other parts of the regardless lof the form his savings
world. If we are to lay the basis take. • Declining returns .011 in¬
for a lasting world peace, some vested funds explain why savings
of our sayings should, when conr banks have sharply reduced .in¬
ditions are ripe, flow into foreign terest payments to their deposi¬
in
needed
the globe to enjoy progress, in
1940,
saving
Jlnjury From Easy Money Policy
7
ceive, have fostered a rise of more
than
60%
in the cost of living
chasing
Thus,
system.
proposed by ABA and the
programs as
rigidly inter-j preted, industry would slow down and deflation set in. Says we are
"at a critical point,".and councils investors pursue middle
ground
course, balanced between high grade bonds and common stocks.
qf restoring and developing their
concerns
anti-inflationary
•
j Inflation Act. Holds if proposed credit controls
substantial part of their incomes.
of
•'
of
business
have saved and
the committee,
the
standards is
wisely employed is the universal
to work," says the Way,;"to progress in living stand¬
three
reme-' "Sayings put
dies. These, as Committee, "provide the key i to ards/'■V!'.
outlined
by, our steady march to higher planes
'
check
Mr. Wendin outlines existing and proposed controls and
analyzes
their effects 'on our financial and investment
policies. Discusses
'M:
X;f7;k FffJ /,';•/
j>——^Sff;■
Saving s,"
made
public
•
11
By SIGURD R. WENDIN*
Jan// 28,
.
;
President, Ileber-Fugin-Wendin, Inc., Detroit, Mich.
j
Public Debt Policy in a study of "Our National
on
(495)
Controls Affecting
Investment Policies
Declaring that Government fiscal and monetary policies growing out of the depression
the war have tended to discourage savings, needed now for economic progress both
-
I.
Public Debt Policy declares rising prices,
on
FINANCIAL
&
SMITH, BARNEY & CO.
47)
r
.
12
(496)
THE
/
COMMERCIAL
World Bank
Bank and Insurance Stocks
New
CHRONICLE
FINANCIAL
&
Seeking
Thursday,' January 29, 1948
1| Europe's Hope oi Recovery
Lending
By JOHN J. McCLOY*
President, International Bank for Reconstruction
By E. A. VAN DEUSEN
This Week
Opportunities
Insurance Stocks
—
119923454038205-;
million
now
; y
Bank reports first
'
President John McCloy, in dis¬
steadily deteriorated in value and
purchasing power for a number of years. This fact was pointed out
recently atfheTfre Department Instructor's Conference in Memphis
by Horatio Bond, Chief Engineer of the National Fire .Protection
Association
If measured in terms of relative physical destruction, he
stated, 1947 losses are less than 80% of the previous peak year of 1926.
It may be of interest to review the record of annual fire losses
in the United States over the past 35 years, taking into account the
lending operations in Africa
and the Near East* "
y y
since 1913.
Loss
Total
Annual Aver.
Fire Losses
Phi u.pita
(Adj'ti Basis)
Adjusted Total
Fire Losses
Year:
Value of $
203,764
141.4
1914„_„__-
221,433
,139.3
1915
172,033
137.9
1916_
Population
(000)
($000)
($000)
1913
288,122
ipot observations closely looking
nto the possibilities for construct
.
This is likewise being
128.4
258,378
308,465
98,700
t 100.100
101.500
331,757
:
1917
289,535
1918____„.
353,879
93.0
329,107
1919__...
320.540
80.3
257.394
102.900
104.300
447,887
69.8
V
109.2
I
:
•
316,172
that
' "
Questioned y as ; to- the future"
of the Institution's bonds
Mr. McCloy asserted that the quo¬
tations on both outstanding and
new
flotations, would un¬
doubtedly depend largely on the
any
course
of the entire bond market.
" 312,625
105.711
2.36
387.903
107.400
3.61
the
78.3
quarter ended
Dec.
422.962
109.100
3.88
the
operations
the
439,006
110.800
112.500
3.96
3.99
sulted in
449.133
535,373
82.0
549,0J2
81.3
M
559,418
1926—;
73.7
445,856
114.200
79.1
'444.527
115.900
3.84
381,185
1927......
501,981
■
1931.—..
,'
-
*
history.
122.775
123,650
124.550
125.450
3.43
reserve
and
415,522
92.0
'
410,882
293,712
3.36
3.30
2.34
-•104.5
283.401
126.350
239,733
127,250
266,659
100.9
269.059
128.150
2.10
1937-—..
254,959
97.4
248,330
129,050
258,478
99.2
256.410
129.950
275,102
100.6
276,753
285,879
99.9
285.593
130.850
..131.670
303,895
95.2
289.308
132,520
excess
1.88
1936-——-
penses,
,
2.24
101.9
1.92
1.37
2.12
2.17
12.18
v
314,295
-•
330,235
423,538
1944
1945——
81.0
337,560
404,826
ending' Sept. 30, 1947, the en¬
cost, .of.'. $1:267,903 related to
basis, 1947 fire losses of $692,635,000
exceeded 1946 losses by 23.4%. The
the close
ending June 30,
substantially re¬
pared
1946.
Minimum
re¬
were
1947
been
has
duced
is expected
and
to be
en¬
bring
to
this
out,
as
People at
century were ac¬
with
living
of continuity.
sense
came
dignity
the
wars,
war,
almost uninterruptedly
up to the present.
The cracks
in the old order
first widened enough to be visi¬
ble lo the ordinary citizen during
the
First
World
War.
Brooks
Adams discerned them much ear¬
thoughts
as
shown
book,
by his rather re¬
"America's Eco¬
Supremacy," published in
1900; but few people possess the
genius of a member of the Adams
family and his insight received
little attention. In any event, the
nomic
"normalcy" that was restored for
1948.
follows:
after that
earlier War proved to be only a
a
/yhe Bgnk's total income for the
few
a
resources,
mission, and
a
strong
hectic
a
a
power
tainly
the
it seems cer¬
powerful single
nation in Europe. Intensely con¬
and
most
cerned with her
development,
own
she has associated with her own
welfare
and
widest
the
dissemination
stimulation of her social
economic
with
ru¬
migrations and de¬
pressions that have clouded our
of
markable
—;— tirely eliminated before March 31.
help
Thereafter
mors
lier,
expense.
to
certain
charged to
The deficit existing at
of $561.981 000: this com¬
with $561,478,000 reported
a
the is^ue of the Bank's bonds was
of the fiscal year
on
losses
was
3.17
the unadjusted*1
in the vear 1926. with a ures
previous peak
was
ter
tire
2.60
2.92
140,000
income
the deficit aris¬
during the quarter ending
Sept. 30, 1947, and thus income
exceeded expenses for the entire
6-mo.ifhs pe'riod. During tne quar¬
seven months.
the unadjusted dollar
at an all-time peak, and
basis
<
•
On
figure
136.250
138.500
354,701
72.1
•>64.0
cover
of
ing
2.50
443,286
77.9
455,329
561,478
692,635
over expenses
This net
ufficient to
2.23
135.070
*
of income
$1,317,610.
2.02
134.220
307.990
79.7
1947
were
133.370
269,979
85.9
"
1946-..—.
"•Average, first
of the
turn
expansion was
inevitable.
as
the
420,660
quarter was
Provision for special
was 648,231, and total ex¬
$2,547 853, leaving a net
McCloy
established
firmly
continued
accepted
The income for the
J.
econ¬
seemed
its
and
customed
271,197
1942——
world
omy
of
world
John
The
$4,513,694.
108.2
1943——.
to be a steady
3.10
235,263
1941—
of income over
for the first time in its
draining
fanatical
revolutionary ideol¬
ogy. Politically and militarily the
Soviet Union has become a great
reached
3.24
3.18
102.5
v<
human
sense
devotion to
121,000
271,453
and
powers
balance.
this
Europe, there
hitherto rela¬
tively undeveloped area of Europe,
a new power, with large material
emerged, from
ty stable. The
117.600
119.300
451,644
400,860
1934......
31, 1947,
Bank re¬
with
energies and the disruption
of trade in Western
las
Sa¬
things
rajevo
379,119
.
off of
had been pret¬
3 74.908
*
of
Wa¬
to
Emergence of Russia
;
Concurrent
century.
From
terloo
81.6
80.6
459,446
1930
beginning
our
83.8
484.607
1929..
*
foots go back
81.6
472,934
1928-.—...
an excess
expenses
3.90
561,981
w
of
cf Europe as a whole but also the
foundations of her own well-being.
but because its
what appeared
that during
83.5
/
complexities,
had
Reported
The Bank reported
1
e.\and
scop
great
Profitable Current Operations
2.47
Europe, real progress can be made towards curing the basic disequi¬
libriumof the world's economy.^ The problem is a great one, not only
.because- of its;v *..:f<
<§>:
•
'■ -r
Tv• •••'
at least to the
prices
495,406
;
•' •'*
•'
506.541
'
felt
is
be processed
loans may
some
One of the great issues of our day is now being debated in the
halls .of Congress. That issue is whether, through a reorganization of
!
.
donerfh
it
where
by next summer, •'
$
97,350
237,234
-
America,
South
v
or
| Plan. Promises World Bank cooperation.
-
hve
3.00
•
3.17
2.40
3.31
3.11
"'3.20
95.950
institution
he
accompanying tabulation shows annual fire losses as reported and
expressed in unadjusted dollars, and also in dollars adjusted to the
allowing also for the increase in.population, which approximates 46%
22, revealed that officials o
are
with on-the
Jan.
.
1935-39 average,-as compiled by the U. S. Bureau of Labor Statistics.
This adjusted dollar loss has been reduced to a per-capita figure, thus
moribund
,
changing value of the dollar and also the increase in population. The
•
'
cussing the World Bank's outlook
with reporters in New York or
developments in Europe, maintains recovery and reorganization is
feasible if U. S. and European countries participating in Marshall
boldness, imagination and vigor. Says Europe is not *
hopelessly weak, and has physical capacity equal to
prewar, but points out handicaps in recovery due to deficient food
| production and disruption in transport and international trade,
i Urges an
European organization, whose director and staff should
be independent and courageous, to carry out provisions of Marshall
v
operating profit.
True, this amount is the maximum dollar figure on record, but it
Development
and
after reviewing adverse postwar economic
Plan act with
i
available for addi¬
tional lending.
in the nation's history, and
America,
McCloy reveals $480-
President
amounted to $692,S35,000.<
is expressed in. dollars which .have
possibilities
examining
Actively
in Near East and South
Inflationary forces manifest their effects in every section of our
complex economy, distorting the picture and perverting one's judg¬
ment., An, example is found in the report of the National Board of
Fire Underwriters which states that total fire losses in the United
States in the year 1947 were the greatest
World Bank executive,
At
States
philosophies
attack
an
the
on
same
has
all
and
combined
others.,
time, the United
also
emerged
as
the
other great world
power—perhaps
the
greatest.
Following an en¬
tirely different economic and po¬
litical
course
from
the
Soviet
Union, the United States has, in
a
century and a half, advanced
from a wilderness with a fringe
of 18th century civilization to be¬
come
the greatest producing and
exporting nation in the world. Her
production achievements border
the phenomenal. Her political
on
and
economic concepts are per¬
haps the furthest removed of any
nation from
political
years
There
or
contemporary Soviet
economic doctrine.
other
areas .on the.
and soon will,
474 878.
3.22
Provision for special re¬
1918-1922
play
an
increasingly important
Edwardian security.
'
3.79
1923-1927
serve was $1,070,674, and expenses
part in the reestablishment of eco¬
' 3.27
1928-1932
On the international scene the
nomic equilibrium in the world,
were $5,964,279, leaving a net ex¬
2.10
1933-1937—
change was most clearly evidenced
2.10
cess
of income over expenses of
1938-1942
great undeveloped areas such as
in the relative decline of Western
2.70
1943-1947—«
South America, Africa, the Mid¬
$439,925.
(The special reserve is
2.88
Annual average 35 years——
Europe as the center of world
built up
dle East, Asia and India. But, to¬
from the commission
trade, military power, and politi¬
Thus, despite abnormally high charges which, in addition to in¬
day, the most critical issues, both
cal influence. England, which had
dollar losses during the war and
terest rates, the Bank makes on
political and economic, derive di¬
given the world leadership in in¬
postwar years, the long range ef¬ all of its loans.)
rectly from i the i fact that there
dustry, trade and political thought
fect of improved engineering in
exist these two great world powers,
for the better part of a century
and
building
construction
and
fire
Total Loan Commitments
that; Europe - outside of the
raw herself suroassed in produc¬
fighting is apparently being re¬
Soviet Union^ .-politically divided
$497,000,000
tive power and financial resources,
flected in the loss statistics. But
and economically disrupted, con¬
The total loan, commitments at and during the war lost a good
there is still lots to do, for the
stitutes fpr, th<?(£ia))e being a power
Dec. 31, 1947 amounted to $497,portion of the accumulated assets
economic waste entailed is appal¬
vacuum
instead- of a balancing
000,000, against which disburse¬ by which she had largely main¬
lingly high, so say nothing of the
force. I;
i.'bftr
ments had been made in excess tained her position. She began to
tragic loss of human life.
No
of $300000,000.. The borrowers, draw
wonder, - then,
that the
reavily on her nest egg of
NOTE: Population data is inter¬
France, The "Netherlands, Den¬ foreign investments. Even more thoughts and attention of policy
polated and exterpolated from the
makers* have
been concentrated
mark and Luxembourg,, may still
significant, in the first fights in
U. S. Census figures. Fire losses
withdraw
approximately $197,- Flanders and later in the awful largely on.Europe,. There:is the!
are as compiled and reported by
stage on which is being played the
the National Board of Fire Under¬ 000,000 under these loans in United quagmires of the Somme and PasStates dollars or its equivalent in schendaele she lost an irreplace¬ great drama of today. ' And ft us a
writers since 1916; prior thereto,
drama which attracts'the heart'as
other currencies. During the past able
generation of young men,
"Journal of Commerce" figures
well as the mind of America.'-In-but for those slaughters
are
used.
Value of the dollar is quarter, a disbursement was made which
stinctive and traditional American:
in
Belgian . francs,.. out of Bel¬ would today be available to sup¬
as computed by the U. S. Bureau
gium's capital subscription, to the plement the brains and character generosity—no matter how labeled
of Labor Statistics.
G ran d-Duchy- of
by distorted propaganda—is' al¬
Luxembourg of her leaders.
;
.
5-Year Aver.
Period—
6-months period amounted to $7,-
S3.00
1913-1917
pale
shadow
of
Victorian
and
.
are
globe which
can,
—
ported in 1915 and amounted to
$172,033,000.
Adjusted losses, shown in col¬
umn
three, still point to 1915 as
the year with
minimum losses,
but
the
on
basis
these
dollar
of
1935-39
the
amounted
to
$237,-
unadjusted losses, of
$172,033,000. The year of highest
losses, on the adjusted basis,'was
234,000
vs.
1924 and not 1947; the adjusted
figure being $449,133,000 in 1924,
fend $443,'286,000 in 1947.
When
pressed
adjusted
on a per
losses
ex¬
are
capita basis, it is
year 1924 again
of maximum loss,
capita, while the
Jfound that the
the
was
year
With
$3.99
year
1935
mum
per
per
was the year of mini¬
capita loss of $1.88.
It is
interesting to observe t)iat
adjusted per capita basis
an irregular down¬
ward movement. in national fire
this
on
there has been
losses
over
since 1932.
the
years,
especially
Five-year average fig-
.
-
,
ways aroused by the suffering of
great conti¬
the hungry and the cold; the call
suffered even
strong
The Bank has funds 'on 'hand heavier human and material losses. upon, that, generosity is
when it comes from Europe; from
available for additional lending of And Germany which, under prop¬
which so much of the American
approximately $480,000,000.
>
er leadership, might have contrib¬
political and social system derives
On Jan. 14, 1948, Finland be¬ uted so much to a sensible eco¬ and to which
the United States is
came
the 46th; member of
the nomic and political equilibrium in bound
by many ties of a.common
Bank subscribing to 380 shares of
Central Europe, instead, as a re¬
cultural heritage.
capital stock. This brings the to¬ sult of the fatal misdirection of
tal stock subscriptions to $8,263,- her indubitable talents, destroyed
Postwar America
*
the equivalent
approximately $300,000..
o; v
amounting
Our
Year'End Comparison
Sidney B. Hook With
of
h Operating Earnings
and
Turner-Poin dexter
Ratios
y
LOS ANGELES,
20 New York City
ney
Bank Stocks jy
Circular
Hembers New
.
..
York
Bell
5, N. Y.
Teletype—NY 1-1248-49
fiL A. Gibbs. Manager
..
.
.
,
>-
Trading Dept.)
&
y
629
South
(
Spring
Street,
Exchange, as manager of the mu¬
nicipal
department.
Mr.
Hook
formerly conducted his own in¬
Stock Exchange
Telephone: BArclay 7-3600
Turner-Poindexter
of
;
^
France, one of the
nental
balances,
.
-
„
Co.,
Laird, Bissell & Meeds
120 BBOADWAY, NEW YORK
with
members of the Los Angeles Stock
Request
on
CALIF.—Sid¬
B. Hook has become associ¬
ated
to
•
100,000.
not
The Bank's financial
issued
today, include the balance
vestment business in Los Angeles
sheet
and
ment of income and expenses
prior thereto
Witter, &
Co.
was
and.
with Dean
was
a
vice-
the
as
six
of
Dec.
months
president of First California Com¬
1947, and
pany.
port
31,
1947,
ended
a summary
only the prosperous
stability
statements,
state¬
for
31,
Dec.
financial
re*
v
*An address by
Mr. McCloy be¬
Due to the energies, of her peo¬
ple and a series of fortunate cir¬
cumstances,
the
United 'States
Forecasting emerged from the war with her
of productive plant and trade not
Commerce of -Philadelphia,; ;Phila., only intact but greatly expanded*
!j (Continued on page 26) - .
Pa., Jan. 15, 1948.
: "
fore the
First Annual
Conference,, pf
,
the
Chamber
•
on
the status of loans.
>
COMMERCIAL
&
philosophy
THE
Number 4668
167
Volume
of
build up its
By NATHANIEL S. CHADWICK*
During the entire history of this
country, venture capital from pri¬
vate capital sources has provideo
an astounding national defense as
well
has
has
recommended that approximately an-
recently
more
added
best business year
the
to
year
in history. This
Private Venture Financing Before
the Administration is warn¬
World Wars
-
ing about inflation and the exces
sive
demand
of the
public fo,
.budget pro¬
gram,
all
of
the
going
for
find
ex¬
Now if we,
si-
Almost
has
billions over the next few
years,
there are only two ways
that
this
expansion
of private
to
business
price
quested
allocation
and
controls
other
the
and
Chadwick
S.
N.
which
retained business earnings
controls
war
steel
other
and
coal,
re¬
socialization
for
are
a
able
(which
Motors
is from
sources
venture
that
ity
of
capital
statement,
a
under
controversy, that there are
only ten years of liquid petroleum
and
government
pro¬
If
in
these
the
consider them
tions
merely
would not
were
wind, I
serious
as
interference
of
implica¬
with
private capital system,
our
in
all
hearty
we
rich
as
sive
an
a
Any
we
are
and has
enemy as
19
36
26
19
35
25
20
34
Ray
Bernard!
24
21
34
Root. Wai.t.ce
24
21
33
21
24
28
20
25
25
anc
G. McDonald & Co.r
C.
in fac1
Crouse
High—Three Games_.
,_Win.
C.
High—One Game
Second Team High—One Game—.
Individual High—Three Games
Second Individual High—Three Gan
Win
C.
Second Team
Team
Third
23
has
Pins
._E.
Second
High—One Game
started out
enterprises fi-
C. G:
page,36)
933
(Andrew
C.
NIGHT
Reid
&
&
Co.)
JAN.
OF
7,
Don
tion
and
control
government
thing
one
another,
after
oi
if
statements
believe
we
in
The
It
offer is made only by the Prospectus.
the
we
capitalistic system which
the American Way.
call
strange and somewhat
seems
inconsistent that the President and
Cabinet
members
of
advocate
further
his
399,990 Shares
should
_
nationalization
-
industries
the
of
his
in
when
Shares,
6ffer to sell nor a solicitation of an offer to buy <xny of these
This announcement is neither an
think
I
should seriously consider such
the
of
State
} '
V'*,'/ 'v
'
"
"r'\
\
'
\
^^
i
\ ''
•' J
rI r
*.
4 *
'
*
»
'\
-
-
\
5
country
the
of
*
Union
,
}\[\'
\
1
ft
Bendix Aviation
the President invited pri¬
vate industry to expend $50 bil¬
lion to improve and expand our
message
n
t
pj
' '
s
)' I)
k
4
'
J
_
,
,
.
,
'
,
''
,
r
4
%
Corporation
' A-' *7
et"
'
*
~
1
„
,
\
f-f
!'
; v;
- % j
^ .c ;
o
■>
1
c
*
f
Common
production facilities over the next
years.
In mentioning this
amount of $50 billions, he included
few
(Par Value $5
a
Share)
businesses with pew products
course means the invest¬
new
which of
f -t
ment of venture1Capital.
.
.
Government Hampering Private
Ventured
-
indicate
leftists
The
that
Price $28 a Share
they
venture { with h: government
funds in place pi our past proce¬
will
dure of
pering
.^
it
using private funds.
I ask
to recall the delays and ham¬
you
industries
of
i
defense materials
rials
to
and
produce
mate-
war
result of the interference
as a
and misdirection by
this country's
Copies of the Prospectus may be obtained from only such of the undersigned as
may legally offer these Shares in compliance with the
securities laws of the respective States,
government, in the early stages of
the prewar defense program and
when we were actually at war.
•;
The confusion
it put
i that
a new
we
war
"snafu."
Since
have witnessed
ing but crises and confusion both
home and in our foreign rela¬
h At
'*
j|m
*
the
beginning
of
the
associ¬
1947
ates indicated that we would have
recession
at
address
the
Forum
League,
-
■
•'
,
.
,
,
HORNBLOWER & WEEKS
MERRILL LYNCH, PIERCE, FENNER & BEANE
PAINE, WEBBER, JACKSON & CURTIS
in business that year.
Actually 1947 turned out to be the
:*An
Incorporated
KIDDER, PEABODY & CO:
SMITH, BARNEY & CO. :
HARRIMAN RIPLEY & CO.
-
President and his political
a
PAUL H. DAVIS & CO.
BLYTH & CO., INC.
THE FIRST BOSTON CORPORATION
noth¬
at
tions.
MORGAN STANLEY & CO.
pronounced
word in the dic¬
tionary;: namely,
the
so
was
Inc.,
Jan. 29,
1948.
by
Mr.
Chadwick
of
the
Investors'
Philadelphia,
• - •
:
Pa.,
EASTMAN, DILLON & CO.
January 15, 1948.
•.'
' •
*'
DEAN WITTER & CO.
-
v'-; V
"
''
1
*
■
'
610
253
250
244
—
210
203
202
202
W, Miller
200
is toward bureaucracy, federaliza¬
we
652
1948
P. Bernaidl--———
Carman
Meyer
—______
still
and
663
Co.)
R..y
Bruggeman
.
940
Reid
G.
213
;—
_______
•
2,602
Co.
215
213
;—-—
"
&
Co.
&
(Andrew
2uo
Wallace
MCDonald___.—J
•
Roney
Miller
J.
FOR THE
Sutherland
Horn
2,709
Co.
Roney & Co.
Robert Wallace (Win, C. Roney & Co.)
Paul I. Morcland (Moreland & Co.)
Sutherland (Cray, McFawn & Co.)
Fred Hnb-v iAn rew C. Reid & Co.)
Individual High—One Game..
CLUB
&
but since
been
18
30
the whole approach of the present
administration
22
20
.
15
Huber
Fred
.
Individual High—Three Games
Clarence
on
Crouse
Individual High—One Game
"200"
(Continued
17
Stanko
J.
24
26
,
25
23
.19
Name
Robert
;
M.
_
28
19
17
Bader
Donald Creech
Third Individual
new
Boos
Williams
.
as
Binkley
Miller
Gregory
.
World
to
Miller
McPherson
com¬
stage
J.
Howard
Indeed, there is no need for me
corporations that
Russia with, its
38
26
Smith,
to tell you of the
so aggres¬
16
...
ital.
that is as
country
45
29
.
industry, just hatched
War I, was alsc
financed by private venture cap¬
and financial re¬
Points
12
_C. Zuber
Corp.
must protect our great
human, natural
sources.
venture
that
prior
Our defenses are necessary be¬
Michigan
War.
The aviation
the years.
of
E.
Co-
&
Don
great steel company
played in the second World War.
strong and that our businesses
cause
of
extremely important,
part
agreement that our defenses must
must expand over
shale.
straws
are
be
a
obtaining petroleum from coal
oh
we
that
be inaugurated for research
gram
think
I
in the ground and recom¬
mended
Strong
Defenses Must Be
since
was
Lost
33
Bechtel
Rcid
C.
General
the
was
.Games-
Won
George Walker
First
indispensable, in the first World
War, namely, United States Stee
Corporation.
You all know the
Cabinet members Krug and Har-
1048
Kenneth
Andrew
that had approached matur¬
the
7,
CantMn
Teams—
Corporation. Another out¬
from
was
will be obtained for business.
riman. made
wa;
World
Second
company
pany
these two
the
JAN.
.
company
a
standing example
(2) The investment of the sav¬
ings of individuals.
all investment
program
along the line.
reserves
in
heavily), and
It
I,
by venture capital. The
name
of
this
corporation stooc
high in the first World War pro¬
duction effort, and was indispens¬
That
oil,
Other
over
goods.
quests of the President
further
of
return
a
War
formed
occur:
can
STANDINGS:
example, in the period prioi
World
incidentally he wants to tax more
resemble
capital in the defense pro¬
of
For
(1) Through-the reinvestment of
regula¬
tions
cing
$50
re¬
subject
increase
to
need
war?.
the bud¬
tion, the Pres¬
the
should lay before ps the
private venture finan¬
before the past two world
record
recommended by
as
the
review
to
—
gram—we
../<
President, expand our indus¬
trial facilities in the amount ol
presenta¬
ident
venture
the
ltaneously
with
i
order
hand
at
way through regulatior.
the-'pressure of this, de¬
mand.
air defense.
get
some
to relieve
penditures for
m u
In
merchandise and is endeavoring tc
increase
living standard com¬
with other peoples of the
In fact this country has
expanded industrially in the past
150 years more rapidly than has
any other .* country in
the world
expanded in the past 5,000 years.
other billion
be
our
world.
appropriations which would amount to $11 billion for na¬
The Committee appointed by him to study aviation
problems
almost fantastic better¬
as an
pared
defense.
dollars
Bowling League
,
ment in
of the United States in his proposed budget
The President
-
Brokers'
Detroit
.
ing venture capital.
asked for
must
sinews of defense.
13
pand them so that all of the Amer¬
ican f people
will have a bettei
status of living.
<
A
policy is hampering venture
capital flow into industries and thereby impairing defense program.
Points out private capital has in past provided sinews for defense,
but says now we are faced with choice between philosophy of pri¬
vate capital and government capital in development of our natural
resources.
Attacks recent anti-trust suits and high taxes as curb¬
tional
Communism
(497)
CHRONICLE
Similarly, any country that has
such great resources as ours are,
must find the capital means to ex¬
Vice-President, National Securities & Research Corp.
Mr. Chadwick contends government
FINANCIAL
■
.
TH&
U ' (498)
COMMERCIAL
FINANCIAL
&
following the announcement. Even'
at
the higher
Thursday, January 29,
CHRONICLE
price/ however, the,i
of the issue is<
total market value
1948
Tied
Sees Bond Market
only about $3.6 million. In comrj
parison net working capital.?;>isf
over $5 million.
'
One other development in the; vhALe Roy M. Piseiy Assistant
bond
list was
the report that' ^
tion, says most important,
Western Maryland was negotiate
,
period
many months it did not seem likely that any railroad would have
resort to a call for.tenders practically regardless of how many of
bonds it wished to purchase. At times it has appeared as if there
the railroad bond
The way
of
to
its
virtually unlimited
were
market has been acting for a
supplies^
descriptions avail-'
the open market. A couple
of bonds of all
able in
of .years ago
directors
Chicago Great Western had de¬
announcement
the
of
cided
the tender operation
to
call
for
income bends.
popular with quite a few
reads, but at that time the whole
was
would
that
that
tenders
of
its
The amount of cash
be
utilized
was
not
and
will
probably
considerably mentioned
•different than it is today.
Not largely be determined by the
prices at which large blocks of
many roads have found it neces¬
bonds are offered. As of the end
sary to use this device to further
of 1946 there were only $5,881.5 )0
their debt retirement
programs
market
picture was
outstanding, $296,700
of the bonds
for some time.
heralding a new rash having been retired previously.
The bonds had been selling in the
two roads have
middle 50s but jumped above 60
recently called for tenders of their
bonds. The more important of the
two is that of Illinois Central. For
a
number of years this road has
Perhaps
of such operations,
Columbus Stock &
in an' aggressive
debt retirement policy, largely di¬
rected towards anticipating a for¬
been
ing with certain large '
tional holders of its 4sr
of
the
the maturity novy
problem
would exert
influence
a
on
in
elected the
this manner
*
the
•
Bond Club Elects Trustees
Club has
Co.; John
debt
cates
tenders of all
has asked fofr
pany
bonclshnaturing from 1950 to 1955,
second
Fred
Ralph Elam
Morgan Penn
B. Paisley
Wood, Paine, Webber, Jackson &
Curtis; and Ray O'Connor, Otis & Co.
./
In the 'Financial Chronicle" of Jan. 22, we reported the election
of officers of the Association, Ralph G. Elam, Sweney, Cartwright &
Co., being chosen President; Morgan C. Penh, Hayden-Miller & Co.,
Vice-President;/and Fred B. Paisley,^Freeman* & Paisley, Inc.,
-'..1^
Secretary-Treasurer.
<;
* ,
S.
as
a
Alden,
The
Ohio Co.; Harris
'4.
Reserve Board Sees
reasonable expecta¬
tion.
New Curbs Needed to
Leading article in
says
Indicative
of
the
progress
the
made, there was
than $108 million of non-
local
Le Roy M. Piser
:
'
bond prices,
provide a. power that
large*degree control the
governments to continue to
spend at. a rapid rgte or less wilj/
ingness on their part to go even
deeper * irittf debt.
In addition
barks may. be less willing to con¬
"Federal Reserve Bulletin"
leading
which reviews the
curbs
are
expansion of
imposed.
the article;
law with
order to
require¬
possible
to
gold reserve
Although there is no
v, 'V
that
fiscal and monetaryand concludes,
question as
Federal Reserve's power to
control bond prices,
the most im¬
today's bond
the willingness of tlie
portant unknown, in
market is
Federal
to
government
continue
support prices.
the danger of
encouraging the cashing of sav¬
ings bonds. Complete withdrawal
of support of the market is incorceiveble,
because
it would
magnify the danger of widespread
cashing of savings bonds and
might well end ultimately in a
drop
It would also
to
securities
purchase
and
the
in
run
collapse of business.
Mr. Piser
nonbmk investors.;
issue of the
postwar inflationary pressures
the bond
Federal Reserve banks
could increase their holdings by
an
additional $42 billion.
This
would add to the reserves of mem¬
ber banks and would permit mem¬
ber banks to purchase about $230
billion of government securities
from other holders. This is far in
excess
of the holdings of these
to the
ing selling by present holders in
liquidate before another
to support
Under present
power
respect
"Federal Reserve Bulletin," there is
article; entitled "Demand, Production and Prices in 1947,"
In the January
a
January issue of
fiscal and monetary action to restrain further
bank credit is a basic essential.
ciated
with
•
'»
was
previously asso¬
the
Federal
Bank of New
Reserve
York, the Treasury
Department and, for 12 years, the
Board
eral
of
Governors
Reserve
of
the
Fed7
System., serving
the capacity of
in
Chief of the Gov¬
ernment Securities
Section.
be expected unless new
According td^
put per man-hour may be a more
further price rises may
■
road has already
.
: •
ments, the
I
at least be
appear
total
market.
operation should
considerably more suc¬
cessful than that of late 1945. Suf¬
ficient tenders at reasonable prices
to exhaust the entire $20 million
include less
would
These
tinue to make loans, because of
.prices. v
the increasing risk as prices rise,
Ther" Treasury, Mr. Piser . con¬
because of ,the; decline in their
tinued, could apply its cash sur¬
liquid position, and bdeausc of the
plus to the purchase of its bonds
drain that is made reserves by the
in the: market instead of retiring
Treasury cash surplus.
.'/•V
short-term securities as they come
A lowering of the support prices
due.
This would provide, how¬
would run the danger of increas¬
ever, only a small fraction of tne
grade rail bond mar¬
the present
however, may
expansion of bank
factors,
the
-.
to ex¬
cash.
With the dual influence of the
higher money rates now orevailing' and the unstable condition of
the
the
may
"
haust $20 million of treasury
ket,
Re-
.in ,a*
leveL of bond
sufficient
inclusive,
both
prices
willingness on the part of con¬
sumers,
business, and state-and
with respect to
can
try
creasingly difficult, if not impos¬
credit.
ac¬
'System
however;
with its debt pro¬
sible, to make any additional siz¬
able purchases in the open market.
In the present instance the com¬
Certain
and the Treasury
support
Reserve holds
commodity
moderate
of the
Federal.
Serve*
through open market pur¬
chases, which were largely made
below par value.
The
recent
decision to
once
•
The
tions
present
continue to rise."
lower
prices, Mr.
Piser
pointed
out.
the
the Federal
basket,
point
toward
not
the tender method of
retirement apparently indi¬
that it was becoming in¬
as
forces
to
seem
gram
again
so-called
natural
outstand¬
ingly successful due to the high
prices at which most of the bonds
were
presented. Later with the
sharp
deterioration in general
market
conditions,
particularly
noticeable in the case of second
grade rail, bonds, the company was
able to continue
the
At
City.
at
they will enable member
banks to continue to make loans
in large amount. As long as banks
are willing to do this and as long
price,
4 present time
had called for tenders of
maturities but
was-
securities
Lawyers Club,
New
York
bonds of the earlier
attempt
System
Reserve
.
maturity schedule in the
1950-1955; periods Late in 1945 the
this
depend not only on what may
the policies followed by the
and the Treasury, Leroy M. Pizer of The
First Boston Corporation told the Municipal Forum of New York
members at a
<?>price at which they would make
luncheon
ihese purchases. * If the Federal
meeting on
continues to purchase government
Jan. 22 at the
midable
company
^
Developments in the bond market
the natural forces but also
the
OHIO—The Columbus Stock & Bond
following trustees: Leland Walters, Vercoe &
*
called
Federal
credit
road's
standing.
bonds.
be
highly constructive
COLUMBUS,
engaged
Institu¬
1952 to;
insteadof waiting until the due date. - The1
proposal calls for increasing the
coupon rate to 4*4% and extend-;
ing the principal to 1972.
The
bonds are outstanding at $44,901,-'
865
and it is reported that the
company will go ahead with the
extension if
it is accepted by
holders of $25 million. Settlement!
extend
Vice-President of First Boston Corpora"unknown" in today's bond market is
willingness of Federal Reserve to continue purchases of government
'securities and price paid. Says withdrawal of support of prices
may cause business collapse and widespread cashing of savings
"The basic forces at home and' important factor contributing toincreased output. There continue
equipment debt retired during the abroad which contributed to ris¬
to be important shortages oL ca¬
period 1941-1947, inclusive. This ing prices and credit expansion in
has reduced the total outstanding
1947
show
unabated
strength. pacity to meet current high de¬
mands, however, as in steel and
to
$206,500,000.
Success of the Soihe- have been; accentuated
present operation will bring total the inflationary rise ih commodity petroleum. With the number of
retirements to roundly $128 mil¬ markets in the second half of 1947 meat animals on farms and the
lion, a cut of close to 41% since after a period of hesitation in the supply of feed grains reduced,
the beginning of the war.
The spring. In many instances pros¬ meat supplies are likely to be
lower rather than higher. Supplies BOND TRADERS' CLUB OF SEATTLE
-1950-1955 maturities will be.cut
pective supplies of goods and plant
At a meeting of the Bond Traders' Club of Seattle, held at the
of goods from abroad can show
to approximately $85 million if capacities
which would appear
little increase in the near future,
the full amount authorized is used
Washington Athletic Club on the 16th of January, 1948, the follow¬
ample to meet market demands
to acquire bonds.
Moreover, with with a lower level of income and foreign demands are likely to
^
although below ing were elected officers for the coming year:
finances still strong and the earn¬ seem inadequate to meet-demands be. substantial,
John I. Rohde, President, John R. Lewis, Inc.; Richard H. Adams,
ings outlook good it is expected with incomes high and continuing earlier peaks.
"Under such circumstances the
that this operation will not signal
more
NSTA Notes
increase.
Thus, although the
physical- volume of business in¬ importance of action to limit furin all, it may now be confidently
chef increases in spending,; and the
ventory holdings increased some¬
assumed that the road has vir¬
amount
of
funds available for
what further during 1947, although
tually overcome the near term a large volume of new- equipment spending, is evident.
Continued
inflationary
developments
can
maturity problems.
was installed, and although dollar
lead only to severe reaction, un¬
Even more of a surprise than shortages led to many restrictions
and financial loss
the action of Illinois Central was on imports from the United States, employment,
demand
for goods and services later; and possible direct controls
continues to exceed supply. At the over distribution and prices are
to
the
end
of
debt
retirement.
,
All
Guaranteed Stocks
Bonds
Special Securities
GUARANTEED RAILROAD
25 Broad
Street
STOCKS-BONDS
New York 4, N. Y.
Telephone BOwling Green 9-6400
Teletype NY
1-1063
the
the
problem of preventing further in¬
flationary developments and main¬
taining or increasing production
beginning of yet another year
country is confronted with
likely to be
effective only if basic
taken to limit buying
power.
v;/.. v..
;/
; •;...
\ "Any adequate program, itt is
true, must include a variety of
measures designed to meet a va¬
and trade on a sustainable basis.
"The extent to which additional riety of specific inflationary prob¬
Waldemar L. Stein
Richard H. Adams
lems.
One basic essential of any
John I-. Rohde
supplies can be relied upon to
broad
anti-inflationary program,<
meet the problem is limited.
The
however, is fiscal and monetary
labor force is almost fully em¬
Vice-President, Conrad Bruce & Co.; W. L. Stein, Treasurer, Bramaction to restrain the further'ex¬
ployed, at somewhat more than 40
pansion in the total volume 'of hall & Stein; Robert A. Nathane, Secretary, Merrill Lynch, Pierce
hours
a
week,
and
ordinarily,
bank credit, since under present Fennel) & Beane.
.
•'
" '*<
■' /...
except' with
special
incentives
conditions any appreciable over¬
The term of office for the above officers started as of the 16th
such as those of wartime, the labor
all expansion can lead only to the
force increases at a rate of only
of January, 1948, and will terminate as of the 31st of December,
further bidding up of prices."
about 1 % a year. Increases in out¬
steps
are
1948.
Volume
167
Number 4668
Warns
»
&
r (499)"
CHRONICLE
FINANCIAL
15
6urbs
Might Paralyze Output
John
THE COMMERCIAL
K.
McKee,
President
This is not
Offering Prospectus. The offer of this Capital Stock is wade only by means of the Offering Prospectus.
though registered, have not been approved or disapproved by the Securities and Exchange Commission,
f
which does not pass on the merits of any registered securities.
an
of
These securities,
■
Continental Bank & Trust Com¬
of New York, tells stock¬
pany
holders attempt to restrict
January 29, 1948
NEW ISSUE
ability
2,269,050 Shares
-
to
prov'de ample credit for sound
y
would be ineffectual in
purposes
checking inflation.
Gulf Oil Corporation
In connection with the 77th An¬
nual
Meeting
Continental
of
Stockholders
of
Trust
&
Bank
Com¬
Capital Stock
of New York held on Jan. 21,
K. McKee, President of the
pany
John
Bank,
(Par Value $25)
the following com¬
the general business and
>
.
made
ments
on
situation:
economic
Rights, evidenced by Subscription Warrants expiring 3 P.M., Eastern Standard Time, February 10,1948. to subscribe for these shares
at $51 per share (an aggregate of $115,721,550) on the basis of one new share for each four shares held were issued by the Cor¬
poration to its Stockholders of record at 3 P.M., Eastern Standard Time, January 27, 1948. After the expiration of the Warrants
the Underwriters may publicly offer any unsold Capital Stock at a price or prices not yet determined. Issuance of Capital Stock
upon the exercise of Warrants is not conditioned upon the sale of unsubscribed stock to the Underwriters.
nation's
"The
prod uction
is
machine
geared for
an
output of un¬
precedented
proportions in
The
Subscription Warrants have been admitted to trading privileges on the New York Stock Exchange
and the Capital Stock is listed on said Exchange.
1948. To oper¬
this
ate
chine
ma¬
at
The
ca-
ty will re¬
quire
ade¬
pac
THE CORPORATION
materials
and
credit.
The
problem
producing
of
such
cn
John
K.
McKee
a
creating
constitutes
inflation
their
vast
without
scale
Corporation, incorporated in Pennsylvania in 1922. and its domestic subsidiaries constitute an integrated
petroleum industry, owning substantial reserves of crude petroleum which are located in Texas, Louisiana,
Mississippi, California, Oklahoma, Kansas, New Mexico and in other states. A wholly owned subsidiary of the Corporation owns petroleum
concessions in Venezuela and a wholly owned subsidiary has a 50% interest in Kuwait Oil Company Limited which owns a concession in Kuwait
on the northwest corner of the Persian Gulf.
DeGolyer and MacNaughton, oil experts, have given their opinion that reasonable estimates of
reserves of crude oil and condensate of the Corporation and its subsidiaries, considered
proved as of January 1, 1948, are 1,100,000,000 barrels in
the United States and 575,000,000 barrels in Venezuela, and a reasonable estimate of the reserves applicable to the Corporation's interest in
Kuwait Oil Company Limited, considered proved as of such date, is 5,138,000,000 barrels. [, ■
'
The Corporation and certain subsidiaries own crude oil refineries and natural gasoline plants, pipe lines, tank cars, tankers and other marine,
equipment and in addition have marketing outlets and equipment in thirty-one States and the District of Columbia in the United States and,
through foreign subsidiaries, in many European and other countries.
j
4
*
furchal¬
a
outstanding funded debt of the Corporation at December 31, 1947 consisted of $84,000,000 of \pZ% and 1)4%
payable to banks due in 1949, a $3,000,000 Installment Note, 2%%, due in 1948, held by a wholly-owned sub¬
$100,000,000 Installment Note, 2J4%, payable to an insurance company due in annual installments from 1953 to 1972, inclusive.
The Capital Stock of the Corporation consists solely of Capital Stock, par value $25, of which 12,000,000 shares are authorized and 11,345,250
shares will be outstanding after the sale of the 2,269,050 shares covered by the Offering Prospectus. The Capital Stock has one vote per share,
has, cumulative vorirfg rights in the' election of directors and is non-assessable. '
: .
CAPITALIZATION
industry,
-l&ntf labor, but the objective can
be accomplished if it is approached
^AVith courage^ wisdomv and: a real
lenge
government,
to
Gulf Oil
unit in the
quate labor
i aw
following.is the Corporation's brief outline of certain information contained in the Offering Prospectus and is subject to the more detailed
in the Offering Prospectus and the Registration Statement which include important information not outlined or indicated herein.
statements
for
country
as
whole.
a
to combat
ures
tionary
welfare
the
of
The
statements
produce
a severe re¬
action in the form of
a
C
1939
X
X, 1940
273,078,000
X/:
1942
;.;
337,800,000 •
349,940,000
405,565,000
482,862,000
504,693,000
1943
1944 h V
But
.1945
•
..
"
1946
Sept.
30; 1947 %>7:
especially while .government lend¬
ing, direct and indirect continues,
DIVIDENDS
retains
and
additional
broad powers over our
In
economy.
might
action
production
our
its cumulative ef¬
in motion a dis¬
and
could
such
fact,
paralyze
machine,
fects
the
government
attempts to' acquire
as
set
astrous, deflationary trend."
.With Walston, Hoffman
CSpecial
to
Tjie
Provision for
Income Taxes
$6,565,000
3,363,000
3,964,000
2,903,000
6,064,000
7,544,000
9,468,000
18,465,000
17,782,000
14,626,000
6,619,000
13,548,000
$27,712,000
12,715,00©,
f
Net Income
$248,000
314,000
141,000
205,000
508,0Q0
226,000
694,000
2,025,000
6,053,000
6,471,000
$26,155,000
Q*her
'
Federal
$1,309,000
1,917,000
'
42,309,000
30,632,000
43,074,000
52,191,000
51,257,000
77,056,000
1,894,000
3,548,000
8,232,000
7,425,000
12,797,000
6,363,000
2,000,000
12,300,000
86,376,000
13,800,000
14,568,000
25,903,000
'
10,484,000
12,533,000
22,150,000
33,569,000
22,981,000
"29,583,000
43,803,000
43,204,000
58,285,000
The
~
Gorporat:ion Has paid dividends in each
year
since 1922 except in the
years
1932
to
6,864,000
65,712,000
1935, inclusive, such dividends aggregating
fffi*}|2i75^pw:share in; 1947, A quarterly dividend of 75$ per share was paid January 2,1948.
PURPOSE. OF ISSUE
The purpose
of the issue is to raise additional capital funds to be added to the general funds of the Corporation.
•
•
Included in the uses to which funds may be applied are the
expansion of refining, transportation and marketing facilities.
_
and the
acquisition and development of production properties
..
•
purchase the unsubscribed shares has been made, the several Underwriters have agreed,
i
subject to certain conditions, to purchase from the Corporation at $51 per share such of the shares of Capital Stock as
are not purchased upon exercise of the Warrants. Thus the net cash proceeds to the Corporation from all the shares offered will be $115,721,550
before deducting expenses of the Corporation and underwriting commissions. The aggregate underwriting commissions will be $2,603,735. The
Underwriters have no option to purchase less than all the unsubscribed shares. With respect to sales set forth above the Underwriters may realize
profits or losses independent of the foregoing underwriting commissions.
UNDERWRITING
While
no
firm commitment
to
of the Warrants, the Underwriters will offer Capital Stock, purchased or to be purchased by
offering price which shall be no more than the last sale price of the Stock on the New York Stock Exchange
preceding 24-hour period nor less than $51 per share. The offering price may be varied each 24-hour period
but, it is intended, shall not be varied within any such period except that it may be reduced. Such sales may include sales
to dealers at the offering price less a concession of $1.00 per share or such other concession as may be determined as set
forth in the Offering Prospectus. In connection with such offering reference is directed to "Arrangements Regarding
Certain Warrants," in the Offering Prospectus for information regarding certain Warrants to be made available for pur¬
chase by the Underwriters.
In accordance with the foregoing the several Underwriters offer 1,213,443 shares of the Capital Stock at the price of
Prior
to
the expiration
an
in the last
SAN
FRANCISCO, CAL.—Frank
is now with Walston,
Smith
E.
Hoffman
New
&
York
Stock
Goodwin,
265
Street,. members
gomery
San
and
He
Exchanges.
Mont¬
of the
Francisco
was
for¬
merly with Raggio, Reed & Co.
$59
•
per
Share
subject to change without notice.
Joins Thomson
& McKinnon
IN CONNECTION WITH THIS OFFERING, THE
Special to The Financial Chronicle
j,.
CHICAGO, JlLL,
Palke,
previously
Anthony E.
with Lamson
Bros. & Co., is now associated with
Thomson & McKinnon, 231 South
A
La Salle
—
Street.,
f'
THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE
•
.
THE NEW
Further
•
*
*
(Special
SAN
to
Lynch
YORK STOCK EXCHANGE AND IN RESPECT OF CAPITAL STOCK IN THE OVER-THE-COUNTER
MARKET. ANY SUCH STABILIZING, IF COMMENCED, MAY- BE DISCONTINUED AT ANY TIME,
'
.
-
Three With Merrill
information, particularly financial information, is contained in the Registration Statement on file with the Commission, and in a more
Prospectus which must be furnished to each purchaser and is obtainable from only such of the several Underwriters, including the
I'undersigned, as may legally offer these securities in compliance with the securities laws of the respective States.
FRANCISCO, CAL.—Ter-
The First Boston
Dempsey, Gilbert F.
Qlsoiajfandi-Carl Perry' are now
with
Merrill
&
Montgomery Street,
Lynch,
301
X
Goldman, Sachs & Co.
~
—
—
•
•;
..
:x.
J».!
'
;*
■
Glore, Forgan & Co.
Eastman, Dillon & Cq.
to The Financial
Harriman Ripley & Co.
Kidder, Peabody & Co.
Lazard Freres & Co.
1,1
Incorporated
V
Louis J. JVetter Opens
(Special
BIyth & Co., Inc.
Corporation
Beane,
Fenner
Pierce,
complete
Chronicle)
The'.Financial
renceji M.
associated
UNDERWRITERS MAY EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN
SUBSCRIPTION WARRANTS OF THE CORPORATION AT LEVELS ABOVE
EFFECTED ON
THE MARKET PRICES OF THE CAPITAL STOCK AND
^
Lehman Brothers
Merrill Lynch, Pierce,
Fenner & Beane
Smith, Barney & Co.
Chronicle)
"J
SANTA , BARBARA,
CAL.—
Louis Jj Vetter has opened offices
•in La ArCada Building.
In the
was with C. E. Abbett
Co. and Investors Syndicate.
&
past he
.
,
v
Stone & Webster Securities Corporation
Union Securities
4
Ay-.'..'.X-V;
>
Ended
them, at
Chronicle)
Financial
-
479,384,000
468,195,000
f"«
$6,319,000
3,719,000
3,974,000
5,176,000
4,784,000
4,885,000
7,672,000
5,633,000
6,132,000
8,825,000
417,839,000
441,786,000
561,500,000 ;
Income Taxes
Income Before
Income
Deductions
Other
Income
360,695,000
562,241,000
would .be .completely 'in¬
effectual
in
checking inflation,
long
.Vv.<
.
Nine Months
purposes
as
$227,437,000
228,977,000
240,288,000
249,448,000
294,211,000
316,649,000
'
ample credit fo.r sound, productive
and
...
$255,395,000
241,336,000
X 254,846,000
•
1941
anxious as any
a stable and
any attempt
restrict' its 'sLbility" to pfovide
to
Income
1938
see
economy.
Operating
4 1937
as
to
group
•
-
deflatiorr-
Expenses,
Including
Depreciation
and Depletion
Gross
•
.
Pec.3t
arymovemehtx;>'''£fff
cpfhmerci^l bank¬
other
A
and General
Year
.h ' ^The nation's
ing system is
.
-Ended
■
'
healthy
'"
Costs, Operating
aggrava'te;the! phe^ent- prob-
or even
Xvf..
'X-'vX'
The
but
hasty, experimental action, based
untried ^ economic
theories,
lem,
'
.
'on
'could'
i
following summary of earnings of the Corporation and consolidated subsidiaries has been reviewed by Price, Waterhouse &
Co., independent public accountants, and should be considered in conjunction with the summary of earnings and the financial
together with the notes appended.thereto in the Offering Prospectus.
temporary infla¬
a
]
:;A
EARNINGS
the
Sound meas¬
are-desirable,
trend
<i::\
a
.
cerned
JY' J
V
Notes
sidiary, and
of responsibility' by all con¬
; sense
'
Corporation
':
r
THE COMMERCIAL
(500)
16
Morgan Stanley Group
Taxes—Their Influence On
Venture
In Peace
Co. headed
Stanley &
Morgan
nationwide group of underwrit¬
ers
that on Jan. 27 offered pub¬
a
PONT*
du
The ERP-A New Adventme
Places Bendix Stock
Capital
LAMMOT
By
By BERNARD M. BARUCH*
of Bendix
stock, par
value $5 a share, at $28 a share.
The stock represents holdings of
General Motors Corp. in Bendix
licly
Formerly, Chairman of Board, E. I. du Pont de Nemours & Co.
shares
399,990
Former
presidential adviser, though asserting European recovery
is in interest of world peace, holds it can be carried out
only if European people are prepared to aid, and it is done well.
Aviation Corp. common
Prominent industrialist
explains effects of high taxes in causing
shifts from investment in risk ventures to safe and riskless invest¬
reference to odds that would be as¬
sumed by gambler in his operations; the greater these odds the
less gambling. Concludes private enterprise cannot prosper as tax
rates are too high, and though it is practically impossible to calcu¬
late maximum tax rate that does not stifle risk investment, he
Illustrates point by
ments.
fixes it at
I
neither
am
tax expert nor
a
statement of what
tions
•
Perhaps
refer
they
will
to
appropriate deduc¬
graduated
not
appeal
so
to
in¬
speak of taxes
When I
you.
the
I
taxes
come
eral
taxes,
running up to
maximum of
86%%.'
without
cluding
state
This,
in¬
any
other
or
income
taxes.
When
r:would
I
speak of "ven¬
capital
Lammot du font
work
satisfactorily.
out
would
that,
mean
the
on
the ventures would yield
1/10 of 120% or 12%, as in exam¬
average,
Studios
Win. xhewell Ellis
"risk" cap¬
That
by
Photo
:
ture"
or
opportunity looks like a
long chance; it appears to have
l nly one chance in
10 of working
out; but if it does work out. it will
yield 120% annually. The inves¬
tor may properly figure that if
he made hundreds or thousands
pf such
investments of $10,000
each that 90% would fail and 10%
I
ple
me«n
ital, I
capital invested in business enterprise in the hope and expectation of obtaining a more or less
reasoning
the
hence
one;
so
that
Bendix
feasible.
seem
for
Avia¬
has sold
many years
various of its products in substan¬
tial quantities to General Motors
These commercial relation¬
Corp.
ships have been
an
the
o+'
stock
common
complete .acquisition
of Bendix Aviation, as considered
<'rom time to time since 1929. does
not
on
business ba¬
a
sis not affected by General Motors
trying
history of
America,
in¬
many
deed
of
world.
General
Motors
Corn,
and
other
/
important parts suppliers;. 1 ;
—
Work
they
writing what
history
may
record
as
o
tions
.
When making such invest-
limits.
'
The chances of a business
j ture being successful and
ven-
the
always a good chance yield of earnings, if successful,
of missing the expected income, cannot be calculated accurately, as
and also of not even getting back I have assumed in these examples,
ment there is
porated in the finished products
Automo¬
manufacturers.
of other
tive sales accounted for about
38%
on
What Is the Future Worth?
;
1
Although
alone
;
is
not
sorely wanted, bread
what Europe needs.
must
also
have, faith,
something to believe in. Only the
Europe
Bernard
M.
Barucb
United States
can
fill the vacuum
which sucks
above all,
of hope and courage,
as'
unanimity of opinion, in which I
join, that it is in our interest—in
the.: interest
—
car*
I would like
duction.
izations whichi:
seemed
Thrift
They
this program on
giving of money and
rewarding greater pro¬
mere
more
civil¬
—
—
.■
incredible
man-
the world.
save
the
chap¬
ter, in the aw¬
ful / story
of
the
America.
less emphasis in
a
fateful
follies of
Production
—
made
now
outlook
lot and
whole
magically lifted.
be
would
are
—
the most momentous decisions in
mankind's
which I have attributed to the in
Bendix
Aviation
is
engaged sturdy as ours does now. Or—we
vestor in example two and would
are
writing what may prove the
be applicable to the investor in principally in the manufacture
and sale of various lines of auto¬
beginning of a new adventure in
permanent income as distin- example one, as a result, he could
motive,. aviation, radio, marine! peace, never before attained.
guished from a capital gain, and not possibly justify the investment
and sundry products, many
of
Should we help Europe arid the
when the possibilities of obtaining if
he was in the 86% % top
which are designed to be incor¬
world recover? There-is almost a
the expected income are quite un- bracket.
certain and variable between wide
rate.
v/ar
<3>-
in
commercial relationships between
profits tax at 50% of
one
the
We
you
Yours is
years.
Bendix kind
which
Aviation
Corp., and have been
destroyed earsubstantially
similar to
the lier
civiliza¬
interest
stock
Corp.
excess
honor to be asked to appear before
this Committee whose
distinguished Chairman and Vice-Chairman, as well as other of its
members, have rendered such invaluable service to the nation over
its holdings
-eflects the conclusion by General
tion Corp.
It is
Genera! Motors
all
of
Aviation
Motors
The
5
a
dispose
it affects foreign and domes¬
authority;
lower food prices and an
in
was
Delaware corpora¬
as a
The decision by
Now, consider another example:
Fed¬
of
Aviation
Bendix
tion.
When the Investor Takes a Chance
t
p r es e n
organized
are
shares
Motors
General
by
when
1929
Lo
already has.
under
scale
acquired
shares,
500,000
of
among
raw materials; (2) extension of President's
(3) a political and economic union of European
countries, guaranteed by U. S. and other nations; (4) European
organization to liberate every productive resource; and (5) stabili¬
zation of currencies.
Proposes also domestic reform policy, with
tariff
common
remainder
as
other things: (1) U. S. buy all
policy, and recommends
non-perishable foreign
issue
The
399,990
shares,
which
18.9% of the 2,117,453
The
Be"d:x
in¬
personal
comes
the
to what he
on
pro¬
oversubscribed.
the
added
vestment will, of course, be
sale.
the
Sees dual aspect in European crisis
tic
amount to
is merely a
say
part of the
no
from
ceeds
was
reasonings therefrom, which, to me, seem sound and logical.
or
receive
outstanding
What I
to be relevant facts and
seem
will
program
Corp.
Aviation
Bendix
Aviation.
25%.
economist.
Thursday, January 29, 1943
FINANCIAL 'CHRONICLE
&
world
of
peace—to
We
down.
men
the
make
must,
working
worth
future
bold resolute,
against the claw¬
This requires a
for.
concerted attack
ing fears of inflation
and of an¬
other war.
this
To
United
The
(1)
I reccommend:
end,
stand
States
to buy all non-perishable
materials produced anywhere
ready
raw
the year ended
do so,:.?£■;
and by anyone in the world for
1947, aviation sales ac¬
Caiii it be done without wreck¬ the next five years, and which
counted for another 38%, with
the capital. The enterprise may. yet the speculative investor must
Yes, but only if cannot find normal commercial
sundry products making uo the ing ourselves?
fail.
make a mental effort to approxithe European
minerals, metals and
peoples will help markets:
remaining 24%.
This contrasts
Interest capital
is capital in- (mately estimate the results—and with the 1935-1939 period when themselves and if the American ores, both crude and refined; jute;
vested to secure rate of return ex- he does, perhaps
unconsciously, automotive sales comprised about people are prepared to do what sisal; etc.; yes, even wool and cot¬
of total volume in
Sept. 30,
.
pected by current interest rates at
the risk being small or
the time;
nil, and the return of capital even¬
Obviously, the risk investor does
not make a risky investment un¬
expected rate of return is
greater than the mere interest
far
rate; otherwise, there would be no
justification for assuming the risk.
Now, consider an example;
An .investor has an
invest
in
tor
risk
is large.
With
that
listed
(12%).
The
probability of a higher or a lower
yield is about equal. If his top
tax
bracket
after
return
is
taxes,
income
6% and he
may
his
50%,
will be only
very well say to
himself: "I won't do it—I'll buy a
mortgage or a seasoned common
stock that will yield no more than
that
figure
after taxes, of
of
one
on
yield,
a*
(that is 80%
9.6%
12%), and the investment will
good to him.
look
If 1 is
top bracket is 86%%, he
f gure
can
on
a
he
yield, after taxes,
of only 1.62% (13%% of 12%) and
millions
investors
of
opportunities for
investment
just
consider
more
1,000
over
tive
buy
may
those
of
stocks
You may
national
economy,
sell
must
it
of
because
to
you,
it
were
a
new
investment, for he
who gets your money must invest
consider himself
fool
a
it
himself.
of
shares
2,117,453
common
This stock is listed on the
stock.
New
the
solely
of
York
Exchange
Stock
and
Chicago Stock Exchange.
the
If
he
buys
(Special
to
what is required in moderation,
self-restraint and, if necessary,
sacrifice,
ILL.—Thomas
Ryan has become
Caswell & Co., 120
Street.
In
W.
associated with
South La Salle
past he was with
the
Seattle,
Foster & Marshall in
not
Waddell Co.
With Herrick,
(Special
to
The
ILL.—Harold
BLOOMINGTON,
P.
Chronicle)
Financial
Gardner has become connected
with Herrick,
Waddell & Co., Inc.,
of New York.
.
Yoj may wonder why
case
the
top tax
I
use
in
bracket of
the -'nvestor, rather than the aver¬
age
rate of tax paid by him.
reason
is,
of
poses
Diminishing
This
Returns and
particularly to this
dual aspect of the crisis we face—
how inseparably joined are for^
eign
and domestic policy, like
all the
maze
by calculation or
Inc.,
1948.
Philadelphia,
Pa., h Jan.
-v,
■
;
29,
—
joined
Helen
the
us
K.
staff of
act
point
by any sort of
of diminishing
(Continued
on page
return:
39)
of
two
into
years,
barriers
among
of
trade
them.
(4) That the United States, and
others
such
as
will
join
us,
mu¬
tually guarantee the nations en¬
tering this union against aggres¬
sion. By guarantee I mean a firm
promise to go to war in joint de¬
fense if any of them are attacked.
That the European nations
(5)
liberate and
organize to
productive
resource
use every
of the conti¬
with- those of the the Ruhr
regulated under priorities and in¬
ternational control so as to pro¬
nent,
peaceful interests of Ger¬
many's neighbors.
Stabilize all European cur¬
(6)
rencies
realistic
establish
and
rates'of exchange.
two-year
A
drive
in
peace
this
produc¬
country—to
war—where
hours
and
smash
to
(8)
peace
worked for
feasble, with longer
overtime; where* not,
production bottlenecks.
As part of this work-fordrive, an accross-the-nation
production
rest of the
all-out
anti-inflation program to
for
If, from today until Dec.
ILL.
—
Robert
A.
with Merrill Lynch,
Pierce, Fenner & Beane, Board of
Trade Building.
interruptions,
or
♦Statement
fore
.
strikes,
profit scrambling
of
Mr.
Senate
the
Foreign
D.
for peace
produced for war—all-out—
without
lockouts,
The Financial Chronicle
now
brought
be
1949, we produced
as we
Sigg is
an
This would
lowering
peace,'
stabilize
including:,
Reduction of major food
agricultural prices in ex¬
change for guaranteeing farm¬
ers
an
assured price for their
(a)
and
With Merrill Lynch Co.
CHICAGO,
can
here and in the
31,
to
the
work for peace as we
r
economic
the world without
must continue to
inside
through
drive
world.
Special
—
existence
the
poll to even approximate the con¬
trolling figures of return—the ex¬
the Forum of the Investors League.
ILL.
in
peace
elude
of investors,
investment opportunities and
by Mr. du Pont at
new
has
of
foundations
which
The Financial Chronicle:
CHICAGO,
include
.
All-Out Peace Drive
stability
countries of Eu¬
as are willing—
into a political,
Nations.
United
the
(7)
Siamese twins.
Kidder, Peabody & Co., 135 South
viduals, it would seem impossible
such
to
to
many
themselves
band
tect the
I would like
the
That
(3)
rope—as
address myself
La Salle Street.
With
peace-making.
morning,
Tax Rates
in-
or
special
Callahan
complication of thinking of indi¬
from
*An address
yield.
held.
already made
income
that give better promise of
The
pro¬
to make is in addition to in¬
vestments
The
clear.
individual
course,
the
Investment
global strategy
must develop a
-The
do
ment of funds into other ventures
The
(2) Extend the President's pres¬
tariff authority for the next
ent
tion
& Co. Adds
eac'*
must be accom¬
panied by two further actions—we
must stabilize America for peace;
'
*
Kidder, Peabody
which
bond,
legislation.
ery
If its objectives are
the end.
be realized, it
to
for American
prices, and so reduce the yield,
and continually press the invest¬
tax-free
to be sure to see it
By.itself this legislation cannot
bring peace.
It is a beginning,
we
the same, they push up the market
a
so as
Dual Nature of Crisis
Chronicle)
Financial
The
CHICAGO,
buying
will y'eld him 2% or even 3%.
contribute
listed
a
others
are
through.
stock,
millions of
European
a
Treasury—must
Caswell & Co. Adds
to make the investment instead of
and
we
Recov¬
economic and defense union under
outstanding
Aviation's
Bendix
capitalization is comprised
,
he would
If
organizing the job soundly and
administering it skillfully. It also
means
that each of us—not just
Ind.
the transaction is merely a trans¬
fer from one hand to another, but
the effect is the same as though
thing and not
a
three years.
that
so
undertake
ery Program,,,f let us do it well.
Doing it well involves far more
than merely appropriating money,
however many billions.
It means
approximately 82% of total
The
corporation has 11
plants in the United States, the
largest of which is in South Bend,
the
some¬
cannot do
do it at the same time.
be
of the European recov¬
for
real invest¬
a
the standpoint
from
ment
accounted
tons of
should
This
sales.
on
think that purchase of
We
production
war
any
stocks
vestment in a year, without con¬
sidering at all efforts in indi¬
vidual private enterprise.
listed stock is not
of
made part
750,000
to
up
rubber.
crude
Do It—Or Don't
to
working day of the year, so
that there are literally billions of
opportunities for an individual in¬
one
period
Also
ton.
needs to be done.
other
when aviation products
exchanges and
investor
any
or
are
the stock
on
the
and
about
—
there
total, aviation about
products only
5%, and with the most ac¬
of
31%,
to the
come
risk
of
64%
any
a
If his top income tax bracket is
can
I will
millions
that
much, but will be practically
free from risk."
20%, he
if
even
against him
are
evidence of that later.
chance of yielding him an income
annum
inves¬
an
not if the odds are heavily
against him and if the amount at
of $1,200
per
that
and
cause
chance
a
the odds
chance
a
but
risk
an
take
to
and
he
a
winning;
of
gamblers
take
to
human
of
natural
trait will
knows
opportunity
in
has
element
are
like
all
hope-
even
which
$10,000
thinks
Men
human
project
to
in—an
comes
—men
tually being practically sure.
less the
but there is another factor that
nature.
Committee
Relations,
C., Jan. 19, 1948.
Baruch
:
(b)
be¬
on
Washington,
-
crops
for the next three years,
soil conservation.
with ample
—
i';..
In
return
for
this roll¬
back, stabilization of wages.
(c) Restoration of the excess
profits tax by 50% of the cut
:--i
(Continued on page 31)
COMMERCIAL
THE
Number 4668
167
Volume
&
FINANCIAL
CHRONICLE
permanent controls, loss of liberty
U. S. Senator from Illinois
by $500,
tjx burden
■
and
increasing
family
average
steel
at all.
It
which
idea
was an
everything we had to buy in 1947.
Every time the government an¬
nounced a large figure of export
of wheat, the price of wheat went
supply
carry
out
to
„
ideas.
.their
Foreign Sec¬
retary Ernest
,
B
i
e v
g r
the
up.
This affected the price of
whole food bill in America.
of*
n
did
Britain
Great
with
idea
enthusiasm'.
His
socialist
and
had just dissi¬
year
all
of
Sen. C.
Brooks
W.
the
years' necessities.
.He called together 16 nations in
Paris and they presented us with
their "program." They estimated
imports they wished to have
for four years, then
subtracted the
that
they thought they
ship and presented us the
exports
could
estimated
bill
for
difference.
the
This bill amounted to $22 billion.
The
Truman
experts
present a
figure of $17 billion, but that does
not include the $800 million we
must
annually to feed the
population in the Amer¬
pay
German
ican zone, nor the $500 million we
must pay annually to feed those
in the British zone when we take
it include any money
does
nor
ried by
any people
in history.
The average citizen is now work¬
ing three days out of every ten
to pay his taxes and working the
other seven days to pay the- everincreas'ng cost of living.
This
means
less every year for civic,
charity
heavy burden is
only to support our
own
government, but to support
socialist governments abroad who
foster and follow policies of pricefixing, rationing, regulation, re¬
strictions, unbalanced budgets and
not
false values of currency.
Not only did Secretary
It means that each average
(1)
American
increase
family
its
would
have
heavy
already
draft
not
the
to
tax
payment by $500.
(2) It means higher prices for
original
draft the
bill
ultimatum that
we
take to meet the
all."
The
and
equipment
ing
articles and
in short
many
other
materials already
raw
supply.
(3) It means that higher prices
higher taxes will cause wage
increases and still higher prices.
and
(4) It means greater shortages
and rationing, price controls, and
further allocation and regimentation.
already asked
authority to re¬
The President has
unlimited
for
rationing
on
again
in
and
price-fixing
peacetime, they
will never come off.
We still live
i linden the j New Deal administra¬
tion that has created
and will
create emergency after emergency
£ that will call for ever greater gov¬
ernment control of the lives of the
free American
citizens
'
tinder
the Trhthan administra-
1947, we exported goods
and services out of America at the
rate of $19 billion. We imported
tion in
goods and services
at the rate of only $8 billion.
That excessive export of $11
into
America
*An address
by Senator Brooks
Department
qualified to handle
The
such
a
and
confused
when
we
generous,
were
Then
we
called in the leaders and experts
of
American
labor, agriculture
Elects New Officers
depths of despair of Eu¬
instead of helping her
peoples to rise by their own hard
work and intelligent production.
CHICAGO, ILL. —At the first
meeting
of
District
Committee
We
No, 8 of the National Association
of Securities
subsidizing so¬
cialist governments abroad,
whether we call it charity, eco¬
nomic loans, political loans, an ef¬
fort to stop communism or a guar¬
must
stop
held
blower &
Weeks, Chicago, was
elected Chairman to succeed Paul
antee of future peace.
E. Aim
of
Chicago.
Milton A.
Manley, Partner of M. A. Manley
& Co., Detroit, was elected Vice-
The American taxpayers' money
will not
Europe.
Work and
are
the only soum'
save
production
bulwark
Chairman
the misery of
Rowles
••-v,'*-•■■■■-
against
We have no right
the
freedoms
people,
of
We have
New
American
experts
no
engaged
now
in
challenge to lead and
plants
and
skilled
This
is
saving them.
of
only hope of
It is the only hope
Share
enemies
our
was
to
their
major operation.
a
The problem of
To
It is the
subsidize
and
socialistic plans and
programs, un¬
plan
and
continue yto
a list
govern-
i
s o c
vide for them will be "Operation
Hole."
No matter what we
will
mean
domestic
freedom.
give
that
will
_
them
#
it
will
.
highei
mean
v..&
_
Bond
Indianapolis,
elected to
their terms
Paul
E.
Aim, C. L. Schmidt &
Co., Inc., Chicago, 111.; James F.
(McCloud, Kirkpatrick-Pettis Com¬
Neb.; Duncan M.
Hall & Company,
folly.
It will. Chicago, 111.; Cecil W. Weathers,
surely mean that we will follow City Securities Corporation, Inthem instead of leading them.
It dianapolis, Ind.
is
peace
we
pricps, higher taxes: and tyill lower chains
of
that
we
will
It
lose
will
District No. 8 of the Association
our
comprises
mean
the
_
r
_
states
of
Illinois,
ojjer oj securitiesjor sale or a solicitation o] an ojjer to buy securities.
103,113 Shares
Southwestern Public Service Company
drafted by 16 European countries
and the
bill was
drafted by 14
many
representing
different government bu¬
Common Stock
'
Par Value $l
*
reaus.
If
1*3
European countries and 14 gov¬
ernment
bureaus, it will
doubt
be
dissipated the same as the
$3.75 billion given to Great Brit¬
ain to help
no
not
am
Transferable subscription warrants in bearer form
evidencing rights to subscribe for these
shares have been issued by the
Company to holders of its Common Stock, which warrants ex¬
pire at 4 o'clock P.M. Eastern Standard Time, February 2,1948, as is more fully set forth in the
prospectus. Common Stock may be offered by the underwriters
sure
production in America.
government
and
bureaus
There
set forth in the prospectus.
^
Subscription Price
$21
bureaus
regulation
to Warrant Holders
per
share
Too often
seem
to enjoy the dissipation of Amer¬
control
as
that any
of the
drafters of this legislation ever
made any substantial contribution
to the free enterprise system of
these
Share
subsidize their social¬
istic governmental practices.
I
per
turn
$17 billion of Amer¬
ican taxpayers' money over to the
we
Copies oj the prospectus
by
he obtained Jrom such oj the undersigned (who
ojjer
are
among
the underwriters named in the prospectus) as may legally
these securities under applicable securities laws.
these
too
may
much
themselves.
is
altogether
Dillon, Read & Co. Inc.
talk today in America about need¬
ing
a "third force" in Europe that
is half way between the totalitar¬
ian system of Russia and the free
enterprise
These
system
of
America.
left-wing socialist
thizers call this
new
sympa¬
"third force"
E. H. Rollins & Sons
Incorporated
Goldman, Sachs & Co.
Blyth & Co., Inc.
Eastman, Dillon & Co.
Harriman Ripley & Co.
Kidder, Peahody & Co.
Incorporated
the "democratic socialism."
To
support
such
v a
system
in
Europe
means constant contribu¬
tions from the free enterprise sys¬
tem of America to make up the
continuing yearly deficits of these
European
countries1 while
they
foster
and
follow
policies ^and
-
j
.
j ysyy-y
Smith, Barney & Co.
Stone & Webster Securities
Union Securities
White, Weld & Co.
Corporation
Rauscher, Pierce & Co. Inc.
mgfifl&i
.4.
,
bound by the Indiana, Iowa, Michigan, Nebraska
c qn*t T o 1 s that will and Wisconsin.
be
January 27, 1948
was
com¬
District Committee
on
was
European Plan
L.
and
unexpired portion of a
term to expire January 1950.
The following have completed
politics and prac- | pany, Omaha,
tices that make them too weak ior
,
Rowles, Harris,
or
Rat
was
ments with bad
war
less they go to work and produce
themselves, everything we pro¬
Frank
plete the
blindly adopt the so-called
Marshall
production
ir
Western Europe is another maior
operations. Unless they change their
work
District
No. 8:
creating incen¬
tive,
Corporation,
Mr. Dearth
peace.
It
the
Indiana.
getting them off the backs of
to
of
members
pany,-Cnicago,
111.;
Reissner, Indianapolis
the
the American taxpayers.
M.
William C. Gibson, W. C. Gibson
Co., Chicago 111.; John M. Doug¬
las, John M. Douglas & Company,
Inc., Omaha, Neb.; Michael D.
Dearth, McCrary, Dearth & Co.,
Inc., Des Moines, Iowa; Lee R.
Ostrander, William Blair & Com¬
workers of Europe to produce far
more
than
thev did before the
war.
Duncan
&
enterprise, in labor,
agriculture and industry, who can
the
succeed
>:
American free
this
to
Chicago. John F. Brady
Committee assuming office in 1948
are (terms three years):
right to vote
to
export
American money or
goods in short supply, unless it is
administered by patriotic Amer¬
ican
of
reelected Secretary.
was
to vote away
the
Dealers, Inc., in 1948,
Friday, Jan. 15, at the As¬
on
sociation offices in Chicago, How¬
ard E. Buhse, Partner of Horn-
only
hope
of
effectively
suporessing communism.
It is the
only sure road to recovery and
bring
ourselves.
NASD District 8
the
to
and industry to produce the weap¬
ons, food and materials essential
knees.
or
pro¬
must
rope,
direct
task.
we
the mistake of yesterday. If
do, we shall be drawn down
meet
Department and our
stood startled, stunned
struck at Pearl Harbor.
and
pile the mistake of tomorrow
the
State
Military
to save them
own
our
will be too weak
upon
nor
or
neither equipped
we
He
which
Meeting practices that will make it ;..an
To
©f the National Industrial Confer- endless and futile program.
follow this policy further tmeans
ence Board, New York City, Jan
higher prices, constant scarcities,
22, 1948.
before the 293rd Regular
.
are
gives rise to further governmental
go
'
State
duction until
Marshall
plan.
about it—when con¬
mistake
trols,
*
The
ican wealth and substance which
Ho
'
try, and not be administered by
political hangers-on in govern¬
ment departments or bureaus.
This announcement is not an
establish rationing and price con¬
trols in "selective" forms.
Make
r
employed in Amer¬
ican labor, agriculture and indus¬
requirements of
it
as
way
food, scrap iron, farm machinery,
fertilizer, transportation and min¬
:
now
not
government lawyers,
back to compete with
the American taxpayers for wheat,
■
work
production by a separate or¬
ganization.. manned by. American
the problem or don't undertake
at
their
-
create
strangle and stifle
"either under¬
everything we buy in America, for
these bilLons of dollars will find
V
to
living of the al¬
.
want to continue to be
we
communism.
and
experts
While
give them should
we
administered
of
over-taxed average citizen
in America.
to
Congress and the
people with his abrupt
presented
American
several things:
Whatever
be
they
standard
17
How Plan Was Drafted
not
What It Means
means
on
American
This
carried
to
Asia.
church contributions
or
the part of our average
citizen.
did
be spent in China or
This
only
we are
only 7% of the earth's surface
and in our bumper years we only
produce* 12% of the world's food
supply.
We are already carrying
the largest national debt ever car¬
obligations there,
the British
over
been
charitable
most
But
cupy
$3,750,000,900
(gift — called
a
loan) that was provided for five
the
the
earth.
on
7% of the world's people; we oc¬
in one
almost
pated
taxpayers' money
spent in the last year.
Military
still
are
people
It
all *other
American
again increased the cost
The American people have
government
the
with farm machin¬
same
ery which
of food.
b b e d
a
the
transportation.
These
basic products from
production will
follow.
Everything we provide
will be gifts, for none of these na¬
tions can pay back any substantial
amounts
any
more
than
they
could: pay back after the First
World
War.
Nor can
England
ever
repay
the $3.75 billion of
and
the four
are
expressed in a speech delivered by Secretary Marshall on June 5,
1947, at Harvard, suggesting that Western European nations get to¬
gether, formulate a program to help themselves and tell the taxpayers
.of the United
billion has greatly increased the
States how
cost of our food,
clothing and
much
they
should
we
:■' y;
can help them, but any help
provide should be intelligently
directed
to
produce food, coal,
as
The so-called Marshall Plan was no plan
helpful
We
leading to rationing, price controls and regimentation*
Says unless European countries change their socialistic plans and
programs and go to work to produce, aiding them will be an
"Operation Rat Hole" and as result we will "follow them instead
of lead them." Says taxpayers' money will not save Europe.
wages,
-
to j help
themselves.
Europe needs leadership in incen¬
tive to work and produce above
work
we
causing still higher prices and higher
as
will'
all else.
By HON. C. WAYLAND BROOKS*
as
ready
and
Operation Rat Hole?
Senator Brooks attacks Marshall Plan
the
bankruptcy for America. V
America ' wants to
help those
who love liberty and those who
The Marshall Plan-
(501)
:;V.
♦Vy--';*'
; >.VU
Corporation
G. H. Walker & Co.
The Milwaukee Company
18
ThursdayrJanuary 291948
FINANCIAL ; CHRONICLE
&
THE COMMERCIAL
(502)
the insati¬
the export boom,
were
able demand for consumer durable
the postwar,, human body is now.
:worthtovKyge ift-\
in the value of what pre¬
goods and the sustained high level
creases
of
viously;
capital expenditures.
probable
to
expect
to
continue
to
It i$ im¬
these factors
their
at
operate
^
present pace during 1948.
By HENRY HUNT
Primer
•
Prospect trs
upon
RESEARCH
1
from
or
SECURITIES
NATIONAL
I
request from
investment dealer,
your
&
CORPORATION
120 BROADWAY, NEW YORK 5, N.
Y.
^
another
which
in
year
selection
,
to
referred
he
the
offerings of this sponsor as -'fixed
trusts."
This situation is due in
name,
back to 1924, their greates:
growth has been during the past
decade.
V,, :
.
part
to* advertising
restrictions
placed on the business by the Investment Company Act of -1940.!
Hence, without wishing to
appear?
presumptuous in a publication of
character, we are going to
list a few elementary definitions
this
as
compared with assets of. about
$800,000,000 for closed-end trusts
It
is
be
to
that event¬
hoped
possibly through the Na¬
tional
of
Association
Investment
(1) A mutual fund, .also known'
Companies, nation wide: advertis¬
as
an
open-end or Boston type
ing campaigns will make the. term
trust, may be defined as the pool¬
J
Prospectus
be obtained
from authorized dealers, or
SELECTED INVESTMENTS COMPANY
135 South La Salle Street
CHICAGO 3, ILLINOIS
■:
ing of capital by thousands of in¬
vestors,
both large
and small,
under the management of profes¬
sional securities analysts.
A mutual fund enables the
investor to obtain eco¬
nomically the same type of in¬
vestment supervision as the man
of wealth can secure from a large
(2)
average
trust
•
company
investment?
or
counsel firm.
Unlike closed-end invest¬
ment companies, leading mutual
funds can always be liquidated at
(3)
approximately asset value, or, ad¬
ditional shares can be purchased
at asset value
charge.
-
plus
a
distribution:
I
,
(41 The term mutual fund was
adopted ii) the >e?rly t'30s to get
away from the stigma attached at
that
ment
time
the
to
name
"invest-?
trust."
American
investment
company.
(6) The first step was the for¬
mation
in
'20s
the
investment trusts,
of
closed-end
many
of which
suffered from management abuses
as well as the shock
of the mar-
HUGH W. LONG & CO.
"mutual
funds"
as
familiar;
as
"savings banks" to the American
'.
people.
*47
vs.
will
hdd
income
to
consumer
purchasing
strengthening
-Qtid^ of long-
power,,
and
which
taxes
.
the
term- interest
Nor
rates.:
•
depression
severe
face
of
outlined
that
a
in the
can occur
sustained
well
a
level
of
purchasing power and a substan¬
tial ' unsatisfied need ■ for major
capital godcls~-housing and auto¬
mobiles,
Rather
we
broadening' scale
albeit painful
a
envisage qn
a
readjustment
in certain
in/the
cases,
to
"A
.
at
Rene
ing at the year-end, there are too
many
potentially
unfavorable
to permit us to view the
.
.
one evening not long
During a lull in the conver¬
sation, he adjusted his monocle,
and
prospects for 1948 with equanim¬
ity.
Among the more important
dinary level of
business in
.
"
Notesi,
upon
request
been un-
-
■
New Orleans
—
M
tm
Los Angeles
If eyery
shareholder of Manhat¬
tan Bond; Pund, Inc. Were to at',
;
fend the -annual meeting of share-i
holder £ of the Fund, oveT 600, or
of
out
one
25,
every
would
be
or manager
of
an
estate.
figyre being $48,908,000, up 34%
during the preceding 12 months.
the
Although
measured
by
stock
market
the 5 "Dow"
slightly lower
Dec. 31,
on
as
Was
1947.
than on; March 31^ 1937, $1,000 in¬
vested in
poration
the
latter date was
$1,346 including payments,
wbrth
from:
National investors Cor¬
on
security profits ab the l947
year-end.
214 to dollar,
Minister of the present French
International Monetary Fund, are
time and only
last ; week
French Communique on
Sir
a
Brit-'
The Government,^ at the. time it
assigned itself the task
of stabilizing the French economy.
:
took offiee,
The result could be achieved only
trip to Paris
the
for
SHARES OF CAPITAL STOCK OF
(Series B1-B2-B3-B4)
PREFERRED STOCKS
(Series K.1-K2)
the
Franc
the;Ex-
by putting into operation an over¬
pur¬
all program
consisting, in the do¬
field, of combating infla¬
tion, and, In the foreigri. field, of
provisions tending to adapt the
of per¬
suading the^
pose
taking
BONDS
mestic
Gov¬
yalue of the franc to; international';
drastic
economic realities.
action, SUCh as
Rene Mayer
might endan¬
ger the" present international ex¬
change
position of the
pound
stealing. At the same time, Cav
mille Gutt, Managing Director of
the International Monetary Fund,
of which France is a charter mem¬
and from which it has rev
help, warned the French
Government that a drastic devalu¬
In
,ri
,
'
/
havjng its fiscal and budg¬
etary bills adopted by Parliament,;
the Government demonstrated its.
will to fulfill the
first part Of j its
prograitt/^t (now
remained
make the necessary
arrangements
in the foreign
In this
ber,
field,
regard,
an
ito5
V
adjustment of
ceived
(Series S1-S2-SS-S4)
necessary, to take account of the
rise in French prices/ The. ques-^
without
manifestly
authority from the Fund/ was. a tion was one of deciding whether
violation of the Fund's statutes,, it was better to proceed to a pure
and simply devaiuatipri of our cur¬
adherence to which France had
Prospectus from
1
Keystone Company
the exchange rates was
ation of French currency,
COMMON STOCKS
V '• j.
Series.,:'?;.'V/.y;
given below in order:
for some,
ernment from
m
Massachusetts
■
manufacturing
stocks for 1
and office equipment
isshes ; iri ' its; / Selected
Groups..
household
■'<$>-
chequer, made
INVESTMENT FUNDS
Congress Street
has. substituted ; air--
craft
der considera¬
French
50
-
i.
Research';
&
tion
Certificates of Participation In
Boston 9,
-•
• ;u
Securiiies
Corporation
On Jan/ 25, Rene Mayer, Finance
had
INCORPORATED
of Boston
y
Government, issued a formal statement "in which he announced the
reduction in the official exchange rate of the franc from .119 to 214.392
to the dollar. The announcement was not a surprise, since devaluation
JLord, Abbett & Co.
v
•
National
•
International
of
investing their capital
Mr.
promises cooperation, and CamiDe Gutt, Managing Director of
Monetary Fund, releases statement deploring action
-as violation of France's pledges as member of that organization.
1947
Cf-ipps,
Kinds
scholar.
Jones,' he
drawled, T passed your house this
mawning.'
'
:
; ■■
'Thank you,' said Jones, quiet¬
ly. .'Thank you very much/ '•
' *
Stafford
—
the
toward
y'know,
compared with previous 119. Permits a free internal exchange rate
with dollar and free gold market. Britain objected to move, but
factors contributing to the extraor¬
C ustodian
Tke
leaned
/" 'Aw
Mayer, French Finance Minister, issues communique placing
ish Chancellor
local investment dealer or
dinner
a
ago.
official rate of French franc at slightly more than
factors
Prospectus
Chicago
was
activity prevail¬
Stock Fund
—
lord
The French Franc Devalued
record-breaking
the
level of business
if
..
young-
famous scientist
ities.-
Union Common
your
patronizing;
Wellington
Fund
showed
a
sharp increase in assets during the
calendar year 194.7, the year-end
,
„
.not,
or
guardian,
CHICAGO
New York
it
following
"
K eystone
Believe
seated opposite a
WALL STREET, NEW YORK S, N-.Y.
iCS ANGIUS
world.
opened; up it-is. nearly four feet'
wide.1 *;,/ v
', ,,' . ^ ,,,,,,.
present ^ as a representative of an
more-.normal.competitive condi¬
tions, provided that we do rot institution, "corporation or other'
tinker with large-scale deflation¬ large organization or as trustee,
ary credit measures."
paragraphs are
excerpts from Calvin Bullock's New High for Genus Homo
January issue of "Perspective'1-:
According to George Pu4nam's
"A year ago in discussing the "The Prudent Investor"' "It all de¬
outlook for 1947, we noted that- pends upon the period in which
the greatest element of strength you studied your chemistry—but
in the business picture lay in the the material woith. of the human
extreme ease of credit. The same body' in recent years has ranged,
statement cannot be made.today. according
to
chemists'
figures,
The intervening 12 month period from approximately 63c to a pre¬
has witnessed a marked deteriora¬ war; 98c. Not so today
infla¬
tion in our credit structure which tion has really upped the price of
has manifested itself in a drying what your favorite mystery story
refers to as -the corpus df licti,
up of thp new capital market, and
a
serious decline in the price of According to recent computations
high grade fixed income secur¬
The
the Nantucket "Inquirer and
Mirror,"; the "largest"; newspaper
despite
the- unfavorable; factors
above,
do we
consider
,
..
...
stbry' was culled
*48
"Despite
(5) Mutual funds represent the'
in the evolution of the
third step
48
$1,400,000,000,
assets of more than
ually,
and facts about mutual funds.
may
some
individual
.
Today, mutual funds have
670,000 shareholders and net
(9)
OscarWilde
of
fy"With respect to the stockma r - from
ket," we" believe that 1948 will be
will prove to be of more than
Despite the rapid growth of the mutual fund business in recent
uspal importance. With regard to
years, it is probably a fact that not one person in a hundred outsidethe;market as a whole, we do
of the financial business has ever even heard of a mutual fund. Fur¬
not consider if vulnerable to any
thermore, even among people in the financial business, we doubt if
substantial decline, inasmuch as
more
than one in 10 could give^
-—*—
■
stocks
by
their extremely low
you a clear picture of what a muket decline during the 1929-'32
price-earnings ratios are already
tual fund is.
Just the other day break in stock prices,
discounting a substantial decline
we
were
talking to a partner of
(7)
Fixed
trusts, popular in
in corporate earnings.
Moreover
a
Stock Exchange firm who has l930-'31-'32, proved that rigid rethere are certain potentially con¬
been doing business with one of strictions do more harm than good
structive factors in the outlook
the leading mutual fund sponsors
(8)- Although
mutual
funds such as a probable reduction in
for years and twice during our trace
their
origin, if not thei"
conversation
Shades
The folio wing
T
Mutual Funds
on
were-■? almost : Worthless
chemi£al&/.;^''^
pledged itself.
'
Prospectus
your
may
be obtained from
local investment dealer, or
A
:
PARKER
CORPORATION
ONE COURT STREET. BOSTON 8,
MASS/'-
of
translation
the
French
communique (as reported by the
Associated
THE
rency, or," on the other hand, to
have fecburse to a more; supple
-
k
the
-
In
Press),. 'together with
text.of
statement
fbrinul^; better • adapted f to the;
circumstances. .;r;' v// f■;V:
on
the
the devaluation and
thec'ltatementf of
the present
state of French
Anglo-French' economy,.,it appeared/impossible;
Mr. Gutt, of the
to
the
new
Government
to
define .a
exchange rate satisfactory for
C VoMme 167
z1
I..
»M
I
'
Numbed 4668.
i
i
nr
»
I.
11
I.
/ cial of ririn*commercial;'!*rydZ' .;
■' ^'
Iri seeking prematurely to give
definition' of
a
woilMi have
\ risk: Either
-
the franc
a
ei. a
_
FINANCIAL
&
GHRONICLE/
—
.
from
abroad, moneys paid by/foreigh, tourists.:;//;,.;M^v V/.f.,/
it
Fund:
s
;
•
^
! The /essential
prepared -to concur in a de¬
valuation of the franc to a realis¬
tic rate; which would be applicable
agreed
to transaction in the currencies of
all members of the Fund.- In this
(b) The resources,of the rriar-' plan were the; following:
connection,/the Fund has noted
have been insufficient,:, and would -ket: wiM:- :b€i;. employable
'ilTl^par - value.
tl^:Frfech; With satisfaction: the budgetary
and fiscai measures directed at
3$ np^ ha^^hlev^^ils ^purppsse/or
To pay for imports of comrnodi^ franc/,would
be-reduced; by
it .would have been .too great and ties, to the exclusion o'f some cate¬ 44.444%, which would result in a internal,
monetary
stabilization
i wodfd have inflicted an excessive gories deemed1 essential, tb^pSy' fchange, in the rate from approxi¬ which France has taken in recent
francs
per
United months. Z;:,:/■;//.Z/vv,//;// ■,;
4" rise in prices and impoverishment for which the Exchange Siabiliza-'; mately llsf
The Fund gave careful consid¬
^/dollaf td / appr63f
Kbf'the>$F£ncfr
the devaluation would
;
*
-
tiorr^;Fftrid^^WilPcohi:jriv^ito delWetf
eration to the proposal to estab¬
at the rates H practicesf;
F6r all other payments of•
moVef 4;%Attthe same time* a discrhninar lish a market iri'convertible cur¬
miefits1
of /capital' ffonv'»;?Friance< tory
multiple-currency practice rencies along |he lines indicated
abroad to the exclusion of certain; -Wopld/'be
introduced, whereby above. ThO' Furid had no* desire
Umted States dollars and certain to be rigid or doctrinaire
payments by the
in,, its
{ -m therefore is necessary, to pass
T. through a train siti otf- period during: which at least part - of; the
't off erg- arid.bids of convertible aS-
curiency
•
v
sets
."
balance
market
can
veach: other in
a
'
Where '
Z lished
4
■
v;
'
,
thus defined
will be a free market; iri thfe SCnse/
that r the / currencies' dealt1/With
thereon will be established freely-
estab-
are
raies
freely/Z / z*Z'> ;•'> z • f. S^V
j z The Government's final aim, of
course, is tb-return as quickly as,
possible to stability-^but to *a real
and lasting stability^ ndf tO nh-dr-
(c) The
market
other
currencies
The
to
be
fificiail^ and pdrely appafehtsta^
i; bility4
////z i?:'V-ZvZ/;Z/;Tm ffx: i
^
at
would
monetary.! authorities shall -from the
fluctuating/rates
differ
new
par
the Fund explored
,,///-
t^nditioris/rthi^'is/|P,Say/^fey;,
of aiding in' the
of the: objectives
k adopted by fhb international' Mori-:
,
,
gards imports-only upon delivery
(if IfC6^fitS^S
French authorities.- The Fund
Fund/ agreed
Minister
Mayer,
tiiermore,
of
that it is riot comprom-:
Finance, exchanged views m/Lpriy
isirig or hindering through its ac¬ don on the l6th and;17th of Jan¬
tion, trie efforts mat/olrier coun¬
uary with the Chancellor of ;:the
tries may make in the same direc¬
Exchequer about the monetary
tion
while
employing
different
project of the French
.fti&tns suitable to their-own cir-
•,
cumstances.
It regrets
,
Z
'
that the International
Paris
important parts of the
to-accept it in entirety.
Government
were;
of the
course
tuating
and
necessary*
4-'.
•,
•:
'
,
prp'cp/
control, to take into cori-
siderafion-
the
that
concern.
London
arid
>•'«
»
that
measures
with
might
cause
convertible
the
two countries
./.v-S';
;
.
its
proposal suggested
and has now in¬
Found
posal
Fund that
it has
The Fund
the
objectives
sought
.
by
the
be
for
scope
competitive
trie
Fund's
establishment
"(■'
depre¬
with France in seeking a modifi¬
in
within the - framework of the
on
order- to
meet
French
established
countries
ment.-
maintain
the
parities
by the
,
Fund
vS
1
\
-
•T-Z
'• -Z"
-Z' '•
"p -f »V/-.
^;
•
and Hartford
/;./ ZZ'Z
:
Equipment Trust Certificates
Z
,
annually $4J2,000 oh each February 1, 1949 to, 1963, inclusive.
/ Tc he unc6nditmially %fcdrdjifeed •*§ t6 pdymeht 6f paf vdlue dnd divtdehtfs ky etidorsemeut by
The Neik- Ydrk, New Haveri and Hartford Railroad C&nipdnp
"f hese Certificated
under
Agreemert'f to he dated as of February 1,1948,
which wilf prpvide fof the issuance of $6,480 OOri par value of Certificates to be secured
;
by new staridard-gauge railroad equipment estimated to cost approximately $8,640,000MATURITIES AND YIELDS
'
(Accrued dividends
'
creased
by
26, 1948.
a
Pf: the
bonus starting Jan.
same
character as those put-
I960
2.90
1953
2; 10
1956
2.25
1957
2.73
1953
2.40
1958
2.80
2.70
1961
2,95
1962
2.95
1963
2.95
'
'
by the Chancellbr of the
Exchequer have been presented
to
the Fund. The / International,
Its amount is established
Monetary Fund has today v puby
at 80 %
of the rates practiced
lished a statement ori this subject,,
hitherto. > ■ •
zZ. //
: of Which the two Governments
Th6 new franc rates thereby
have taken note./
;
coirie but to 214.392 for one dollar
The Onited
2.85%
2.60
1.80
1951
.
t
1959
1950
:;Z'Z
'
The bonus applies to all
transactions and is uniform for all
be added)
2.50/T
1952
:Z;V.
,h i
'■
forward
to
1934
1949
Z^'-Zr;
V*>Z
z
.
'
moneys.
'
Issuance and sale of these Certi ficates are
The
subject to authorization by the Interstate Commerce Commission.
be obtained in any State in which this announcement is
only such of the undersigned and other dealers as may
lawfully offer these securities in such StateT
Offering Circular
*
may
circulatedfrom
<
Kingdom Governt
one pound ster¬
ment associated itself with
the
"Zz
V ;Z-: - zZ;: •>;/ /Z Z Z/Z
statement /. by. /the r Iriterriatioriar
parities of the homeland
and 864 francs for
,
ling..'
'
■
The
franc With the other :currericies
the franc
zone
are
not
Monetary Fund.;''".
of
Whatever
modified
tween
except as regards the franc of the
French territories of the Pacific
as
well
as
-•
•,)V
>
French: arid "
insure/ ffet ariy/riieasure//^^
may be / considered t necessary,
un-*
(a)
The
market
will
be
to
the
Exchange
on
rates:;;:.;
.,..
the
the
mutual
cqmpreherisiori;
,
between
tWp
§tritemeri(
the
coun¬
ti of
Monetary Fund
latter's
'■ ;/'r,j
.
w.
The French Government has
■
OTIS & CO.
.■■'^ZZ:
JULI EN
4
THE
'-9/Z
COLLINS
•//'/• ///
'»>•:
-.
f
;
;/
& COMPANY
-
.
4/'
McMASTER HUTCHINSON
['B
*
INCORPORATED
FREEMAN
A
COMPANY
WM. E. POLLOCK
FIRST CLEVELAND CORPORATION
Mr'>,/•/.
GREGORY &. SON
(INCORPORATED)
CORPORATION
f'/THE MILWAUKEE COMPANY
>
A
CO., INC.
SCHWABACHER A CO.
MASON, MO RAN A CO.
VzC-
A, CO.
ALFRED O'GARA A CO.
/
MULLANEY, ROSS A COMPANY
F. S. YANTIS A
CO.
INCORPORATED
To be dated February 1, 1948. Par value
t
and semi-annual dividends (February 1 and August 1) payable in Philadelphia. Pa.
Definitive Certificates, with dividend warrants attached, in the denomination of $1,^00, registerable as to par value. Not
redeemable prior to maturity. These Certificates are offered when, as and if if received by us. It is expected that certificates
in-temporary or definitive form Will be ready for delivery at t"he office of Halsey, Stuart & Co. Inc., 35 Wall St., New York 5,
N. Y. on or about' March 1, 1948. The information contained herein has been carefully compiled from sources considered
•"
/reliable and, while not'guaranteed
en¬
-.-By all moneys having a differ¬ gaged in full and frank consulta¬
origin, : notably/ moneys ac¬ tions with the International Mo.ri-
ent
"
FIRST OF MICHIGAN
in
& CO.
INCORPORATED
HORMBLOWEft A, WEEKS
////
Stabilization
basis of
M
A. G. BECKER
••
tries hasT beeri; decided Upon arid
will ..begin at once.
/// v •; j/ /,
//By half of the proceeds of the
exports, the other half being ceded
Fund
cooperation
technical services of the
sup-
plied:/'./i'/'S
,
of
close
follows:
as
BEAR, STEARNS & CO*
Z/R.W. PRESSPRICH & CO.
Z:
then; :clbsecboparatWriah;^
spirit
>.
British
changed./V
.these new circumstances will nave
(2) There will; be/ot^ateddrit^ only a minimum
repeipussiqri on
mediately, beside the, officialmar-" the
eommercWV yeiatibn/b.etW^ei|i
ket, a free ^market on which the .the
sterling arid the/franq; arpasw:
Tfnited States dollar arid tUd Porj The two Gbyermnents Pave^^^^^
tuguese escudo can be quoted. ..; 4
; samd / Objects»;.inVibw'.Iri/';this
.'eThe features of the free market
will be
f\*
HALSEY, STUART & CO. \HC*
-J
,
two. Governments wish, tpdpntuiUe
the French rupee. Their
the pouridi sterlings .remains:-
.
point of view in this matter, the
rate in relation to the dollar and
>,
the
,,
tlw/differences/pby
January 29,
^AM.£.tiOT86
need3
exports 'to orie' afea while othet ternational montary arrangements
,
sells moneys against francs are in¬
N
cation of these exchange practices I
Country of a fluctuating ratd
(Philadelphia Plin)
■
a
•
fates^^ remained stable and other
.-
To be due
and
cooperation Z has.' been
valuable asset."
z
?«
/
ciation in the application by one
2 %%
They/ have/ expimried//thUt:/tl^
adopting today,' and, iri thug/pre¬ solution^; chriseri by<
paring-the stabilization of French
only one capable oi' meetiri'g Jthe
economy, it is making ' the zbest
exigencies/Of Jhe^economic'sitUa-:
possible contribution to the recon- tion. It does riot constitute in its
..
re¬
'/The Fund will continue to work •
*. *•"
The Fund felt that there would
;
in
whose
;Wa^iingtOli.;/■
/
(1) The rates at which the Ex- icy of the Government.. -'
Z-;:Z
"change Stabilisation Fund buys or 'On the > British side/ obj eetions
de¬
notwithstanding the objec¬
tions of the Fund.
.
structibri of Western' Eurppe,; in interitiori thp
perriianbnt mdrietary;
honformityi with the report of the system of Frarice^ put • ia • step
toy
16 -natiOns.;
ward the stabilizatiori/6f; the \
eqr-/
;
&tichzwere. the circfuiri^tances: in rericy ori the bas^ ef
'ri;single^k^
>4 which the following decisions have
change; rate, which :w, the object;
beep.decreed:
v/:zzzvzz-/z/,; of the financial'and economic pol¬
t
the
IPquipmentlpmst of;19484Na 1 :|||l
/Arietar^Fund^
.
.
of
Fund, without
to achieve the
;
New York, New Haven
and
The French Government have'
tnote especially to ou^ neighbor's
presented vtheir/proposals.;, to the
irr Europe.
/"»*-'
International
.
part; of the
in its judg-
necessary
currency,
/ 1/ -Erie / GovOrhmOrit^?ris/convinced
that' ^ri ,.taking the; stand it,' is
by
'
acter of relations existing between
to. countries
as
French authoritiesv
it
.a'."
"
,
'
The French Government found
$6,480,000
have made
Paris
to
and
that it could not accept the modi¬
fication of
visit
clear the frank and intimate char¬
is
place currencies on a sound
stable basis,
/v' Z'Z
Ppn^■
in jthis
coincide, the con-,
versatiqns which" /topk/placOybo/h*
in
dures of
*
any
fluc¬
being
change
a
indicated
,
matter did not
!; prpyisioris and coordinated
of
with
trade
/.the^^4;/arid^/^ri/:bf
ready,
/.through the adoption of technical
rates
members
in the par value of the franc was
the fnethod to be adopted
stands
found
efforts
cided to go forward with its pro¬
market
a
proceeds of exports,
with/' the
French Government that
Although vthe points ,of
view of the two vGOverrimerits ;qfi
plan,/did not; consider itself; able
The
on
January.
be
must
cooperative
formed the
which Sir Stafford Cripps made,to
Monetary Fund, axtfipuglt approv?
ing certain
in the
solution
GbvefnmeritZ
These conversations
tinued
_
the
Fundi felt
the
Pbftet& wpuld: bp permitted ;tp buy Zment^1 ^hL^xisk'' ,o£:-se<4 grets this action by a country
iridfrih market the desigbated
which collaborated so effectively
Statement
Rene
was
of ' the
the,' difficulties
-position,
inclusion of
*
•
Mr.
hjzing
that
in
result
not, however* able to agree to the
'■
'
r*'" -.5's ■ 'i"A-*/V''''•
rencies needed; topay for non■/> ThpyJburnai (ifficieF- will pulfe ba'sip Commodities.- ; z ->»•«. v/V-vW
etaryFund. v {
z "■ Z.r,
t.," /
lish'a/ kyoiice- oif?>
\ Fof arriving at these ends/ the
//Ini addition, various "invisible"
Government refers to;; the provi¬ ExchangC Off ice detailing thepro- transactions would be authorized
sions that were inserted in' the visions of application of the new' ftu/take
/place in this market,- inBretton Woods Agreements for the System'.
eluding exchange transactions of
-r'':
•::''■£. ? tourists* ' capital
transitional postwar period on be- i'''//
transfers „: and
Joint Anglo-Frerich /
bthernon-cOmmereial remittances,
Bnif Of member"statestwhdse^ter^
tifories were OcdriftiedvZ ?
{ '/The Government ? knows, fur-
;
possible, the objectives of the
as
■■■-
v
a system
exchange uncer¬
tainty and instability and produce
a
disorderly exchange situation
from which all members of the
Jririd Would suffer. While recog-V
Would
various alter¬
natives designed to meet,, in so far
.
consequence
teal i i a t i on
present situation. Despite
reservations regarding a
considerably system involving fluctuating rates*
value.
it
,
in
the
serious
.
■
The Fund feared that the wide¬
spread adoption of such
through
market in¬
a
the real
strength of many currencies
through the apparent discount ap¬
plied to them in the French sys¬
tem.
'
'z\
.;;/
of
France
Such "a
trading country,- would encourage*
distortions and might cast
bought' and sold in
side
Fund.
the
an unwarranted doubt on
readily sold for, dollars would be
only, first,: that all cur¬ / French exporters would be perrency that is to be turned over, to imitted to, sell in this market one(* It knows that: the- -policy it is hem is indeed turned over j sec-/ half$of- .'their export proceeds-in
>r.n
+baf no niirrhscAfi hA mnd^
currencies^, 'the,
following is the best means—con- Ond, thai rip purchases; M/mride tho' ./designated
being
sold Z to
the
^sidering the difliculties our econ¬ except tnrise corifOfrriing ,tP/the other, half
omy» is going through at the mo- regulations authorized by the ;Ex-/ French';monetary authorities at the
official
ment-^-of attaining this aim arid, 'change
Office
par
value.
French imsee
with
French
can
i
system,, operating in ari important
approach to this matter, particu¬
larly in view of the abnormalities
by the play of offer- and demand./ .Which
w
which
V
i
trade
the
of
ID'
N-4-•,
T"\l
■
was
/
features
(503)
—
.
following
.the
run
i"
.
quired from nob-commercial pay-? etary. Fund regarding a plan for
mentSr moneys; corresponding to ex c h a n g e adjustment, , which
movements' of capital into France would require the approval of the
transaction
such
THE /COMMERCIAL
*/
4
as to1 completeness or. accuracy, we believe it to be correct as of this date.
Agree■
\
20
&' FINANCIAL
THE COMMERCIAL
(504))
CHRONICLE
Blames Slock Market
Current Bank Credit Policies
Setbacks to Politics
:
•
captioned "Uncer¬
t—
The editorial
follows:
"When
-
suffers
securities
the
a
market
setback,
it has
financial
explana¬
severe
as
recent occasions, the
on
sharps
ready with
are
>
The market lives in
tions.
a
state
apprehension,-like a
sheep hearing the .distant yelping
of wolves. < It, sniffs the .wind for
of
nervous
the
odor of
kind of govern¬
any
business,,;and. what
terests, of
smells
do business. But YOU
least 75%'of a successful'sales
you can
,
y",
''V.,
;
people who are interested in
more
under such conditions as when
it
sends cold shivers up. and
down its spine/
{"In
in¬
the
mental action adverse to
still
are
•
eoptrolllng - factor this
"q
Presidential, year."
Salesmen)
,
in
Philadelphia "Evening Bulle¬
Jan. 23, lays severe setback
the securities market to poli¬
tics
MIND.
'
-
confidence is in the ascendancy, but
MUST SELL YOURSELF FIRST. At
campaign is iri the isalesman's-OWN
'
vided
of
plenty
foodf for
of
t h
o u
g
a word, this threat hanging
the market is called .'uncer¬
the
done
this.
best Z express
Perhaps I
present-
my
thoughts on this subject by men¬
tioning some of the factors we,
are( taking
into consideration in
h t for
banks in their
This leads up to one objective when you
art of selling a "special situation."
Here
have
us
can
train, new salesmen in lending operais where a man with t.i o n s.
The
tainty;';-;
•'
■;j creative imagination, and the ability to become enthusiastic, will find bond decline
that these personal characteristics will help him to a great extent
"The uncertainty is due to the
wrote
"finis"
There are all kinds of securities. For invest¬ to one of the
fact that the interests of the Amer¬ in motivating others.
ment purposes, they are good, bad, and indifferent. Once in a- while,
ican people are. mot being ade¬
longest
bull
quately served by their represen¬ you can find something that is even more attractive than the average markets in
over
pres¬
inflation, Mr. Forward stresses program of ABA to discourage
bank loans for speculative and non-prodqction purposes. Says,
there is revision of lending policies, and loans should be studied
the future than
in the past. They are the optimists/- What would those of us who
with view to soundness and liquidity. Points out banks have responmake pur living selling securities do without them?; They are the
pepnle wpP still believe in "Tomorrow,;^ despite, socialism,,incentive jsibility to public as well as borrowers, and that cyclical turns, in
killing taxation^ and constant attacks upon ihe stpqkholders of this I business should not be taken for basic credit weaknesses. Say*
country. They are the people who have both imagination and cour¬
;
bank term loans for long-range capital needs should be replaced
age—they have open minds and they;don't try to get something for
"'-■■■
'
/
by equity securities.'
nothing, THEY ARE THE PEOPLE WRO INVEST FOR INCOME,
AND) ALSO) ARE ALWAYS READY TO. LISTEN TO THE INSIDE 'ty js hardly necessary to; emphasize before this audience that;
FACTS REGARDING A SPECIAL SITUATION. They buy "growth"; there have been changes in bank credit
policies over recent months.
securities. They willtbuy non-dividend payers if they think they can
My object is to review briefly why this has happened and, a little
obtain a "capital gain." They are the people who know what is go¬
more fully, what has
happened. Mr. Sproul has already discussed the
ing on in the world—in politics, finance, and economics-. If you know drop
in
the
what you are talking about—and how to say it briefly and in simple
bond market.*
developments
have
served,
to
language—you will find their door will be wide open to you.
This has, of
cause each well managed bank'to
'Mt does not matter how much pessimism is in the air—it matters course, affect¬
re-appraise its commitments: and
not how many will tell you that market^ are down and that investors
ed the market
make any necessary adjustments
are not in the mood to buy securities—you can always do business,
value of bank
in its portfolio or lending policy
if you know people who are in the category of those we have de¬
bond accounts
to assure its being in a position to,
scribed in the foregoing paragraph.; You may not make as many sales
and
has pro¬
meet its lending obligations. Many;
tin" of
in
Denying bank lending policies have contributed materially to
FIFTH ARTICLE (Training of
There
tainty and Politics," published
the
,
Senior Vice-President, The National City Bank of New York
<
ent
.
An editorial;
DeWITT A. FORWARD*
!
By JOHN DUTTON
not
being adequately
served in Washington.
r
Salesma
Corner
Securities
Philadelphia "Evening Bulletin"
editorial lays market decline to
uncertainty due to people's in¬
terest!
Thursday, January 29, 1943
the
bank
tified.
with
which
j'.-
I
\
iden-.
am
/ '/• I
'
,
-
run-of-the-mill situation.
tatives in places of power.
"The
being
why they
reason
adequately/served
romance,
not
are
not'
is
alone that there is want of agree¬
as to
should
how the national economy
onciled and
the
can
bottom
the
of
uncer- i
tainty is politics. /And politics is
a
controlling factor because this
is a Presidential year.
in advance of
sometimes be obtained for release to clients
millenium but such
i
|
.
"That doesn't make sense. And
long
as
is
country
sense,
business of the
conducted without
the
can
have their, money
chart their future
that
fidence
NEW
people who
tied up in it
course
they
-
with con¬
where
know
'
MEN.
Those who have had
the
how
Our lending and
,
money
man¬
agement policies must necessarily
bonds in history and undergo continual revision under
convergence of two present conditions. Many old fac¬
forces
increasing demands for tors which have not been too im¬
funds and action by the Federal portant for some time are now
Reserve and Treasury authorities very much before us. We operated
to put brakes on credit expansion. for a long period when we did not
high-grade
reflected
the
—
retirement of seven
billion dollars of government debt
The projected
have
be
to
about
concerned
liquidity
much
too
had short-
we
—
term governments and liquid re¬
MEN.; If you are a sales¬ during the first quarter of 1948
and the raising of the rediscount serves, through necessity, far in
won't have much difficulty convincing your new man that
what efficient
rate by the Reserve banks are re¬ excess of
money
he has an opportunity to go out AND DO SOMETHING FOR HIS
cent developments in this regard. management
would have other¬
PROSPECTS, FRIENDS, AND CUSTOMERS. For remember, there
At the same time,
banks are wise dictated. With the economic
is no line of business (retailing securities included) that can be suc¬
being made conscious of their re¬ cycle on the upswing, it was diffi¬
cessful, unless the welfare of the customer comes FIRST. If you have
in the national in¬ cult to make a loan which was not
found something, that is going/to develop -into*a profitable money sponsibility
terest
of ; curtailing
"all loans reasonably sure of being repaid.
country
as
A. Forward
you
problems that confront the making opportunity—if you are convinced that your-special situation
are
not being handled, is really as good as it looks—you are not going to have any difficulty
with a view to warding off the carrying this conviction and enthusiasm over to your men.
No one can tell you what words you should use—no one can put
dangers of uncontrolled inflation,!
of stabilizing wages and prices, of
ideas into your head—the only way you can obtain such inspiration
averting a 'bust,' but in the light is through a KNOWLEDGE OF WHAT YOU ARE SELLING. If you
of what moves will be most popu¬ have thrown scores of likely looking situations into, your waste basket
lar and get the most votes.
We for one reason or another—if you have checked, reeheckedi and double
have economic advisers, and they checked—if you have visited plants, met the management, obtained
make
reports, and we
discuss the figures, investigated the past and peered into the future, and
those reports from the standpoint your convictions are based upon a careful conservative appraisal of
all the factors, YOU CAN SELL ANYONE—INCLUDING YOUR
of partisan advantage.
"The
-
DeWitt
YOURSELF FIRST—THEN SELL YOUR
man,
termined upon.
"At
right industry
When you send new men out to sell something that has the ear¬
marks of an outstanding investment or speculative opportunity, SELL
of action de- !
a course
management, a real
financial structure, the
to fit the times, priced right, and even some special
color, growth possibilities, outstanding
general publication. This may sound like the
opportunities can be uncovered at times.
handled; for if there were a
will to agreement it is probable
that differing views could be rec¬
be
situations that have
story of the company behind the issue, good
news
ment among policy-makers
For instance, there are
Revision of Lending Policies
'
individuals
to
or
business
speculation in
real estate,
commodities, or securities," and in
confining, in so far as possible,
the extension of bank credit "to
will help produc¬
financing that
tion yrather.tj^amrperely increase
consumer
demand." -These
are
Experience tells
not
been
that this will
us
always be the
a
period in
were
liberal
credit
lines,
possibly
clear realization
just what long
ligations
were
It
case.
wnich
banks
in
has
many
in
granting
without a
case of
lending ob¬
involved.
.
every
range
.
These days are over. Asx lend¬
taken from the recent
general administrative
joint statement of bank supervis¬ ing and
ory authorities with which you are officers, our first responsibility is,
phrases
always,
as
familiar.
-•
-
either
for
two of
experience in this sort of selling will guard
'
Banks Not Responsible For.
to our depositors.
have the
No
problems
obligations because of the dif¬
or
us
same
against overselling both their salesmen and their customers. No in¬
fering character of our deposits
vestment is perfect—no security can be sold without reservations.. I'l':/,'Inflation
The President previously, at the and of the manner in which they
There is such a thing as overdoing it—even when you believe you
are 99% right.
Watch out for that last 1%. You can put enthusiasm opening of the November session are now invested. In my bank's
and drive behind your, selling. without wrapping it up in a piece of of Congress, referred to the need case, loans are now some 23%,,pf
the "blue sky." Successful selling is inside of YOU. What goes on in for placing — and I use his words our resources, and we still have
"some restraint on inflationary cash, and governments maturing
your own head determines what you are going to say, AND WHAT
THE OTHER FELLOW IS GOING TO DO.
The old saying, "what bank credit." I do not think bank within 12 months, in an amount
—
'
they're going?"
/
.
think determines what you are," is the keystone of every sales¬ lending policies have, as yet, con¬ which should cover calls likely to
career.
Believe in yourself—in your business—in your assoei- tributed materially to the present be made against our outstanding
credit commitments.
^
ates-r-in your country—in the inherent decency of most humidaibe-tv
you
man's
ings—and in what you are selling. Any man who does
and who works and learns while he works, will make
Profit
The- $5
of
you
an
accumulation
of
Earnings
.
depressed and discouraged about the future of the securities business
today, everyone would be better off. So much depends upon our state
of mind. Nothing is ever as bad as it looks—or as good either, for that
matter. But our country is good despite all of its follies. Our business
is constructive and helpful to the nation and all the people—despite
the previous ten
have
years
6hare.
While
•
.<
$77
averaged
/•
share.
a
$21.30
•>
v
a
V
/
our
dividends have been
no
we
paid for a number of years,
earnings in nine of .the past
ten years covered annual divi¬
dend requirements by a wide
margin.
• ;'
Recent
Ten-year
the
price 37
average
Common
$4.07
Recent
wish to make it
so.
MINDS.; ; When
•
"MUST
PRIMARY TRADING'MARKETS
in
ourselves.
Fronrv here
-
t
meetings to lay stress on the
which
This
their
nationwide
a
plans
:
:
Teletype BS 259
-
California
bear
on
seems
more
bank lending policies.
to me
or
.
^
■jr:
tyjyjiT
•<
It
that the situation is
less
self-policing. These
■
Our
our
final
impact
and
Of
correspon¬
requirements
1 See
cover
page
for Mr. Sproul's ad¬
second
;
m,
responsibility is to
borrowing customers, and the
effect
of
our
policy
lending
on
Because of un¬
experiences in the past
public relations.
happy
Company
Building, Denver
Telephone KEystoneJ3101
dents'
the
feel
customers'
and Public
Established l<?29
N. Y. Telephones: HAnover 2-7914
and WHitehall 3-9030
the
Responsibilities to Borrowers
Through these and other chan¬
nels influence is being brought to
dress—Editor.
TeL CAP. 0425
on
President himself.
MACKINNIE OIL & DRILLING COMPANY
Simpson
to
series of
in times of
Association meetings such as this. need, naturally have to maintain
It deserves our full support. The greater
liquidity • and
Tending
program
has been endorsed by power than do many other banks.
Secretary- Snyder, and also by the
IN
B. E.
the date
portance of sound
Association
the
undertake
KINNEY-COASTAL OIL COMPANY
St., Boston 9, Mass.
the type of loans
specified, purely frpfn
standpoint of liquidity. Large
metropolitan banks such as ours
know,
I
148 State
on,
Nevertheless, it was incumbent we make and the investment pro¬
upon
the banking fraternity to gram and liquidity schedule we
recognize the problem—and make maintain must depend on an an¬
a
clearstatement of - policy.
I alysis by each of us of our own
think the program of President position and obligations. We now
Dodge of the ABA, with which have to think more of not only
a
loan
is- good,* but
you are familiar, meets the situa¬ whether
tion
most
effectively.
As you whether it will actually be paid
BROKERS, DEALERS and BANKS
'
'
{.
FOR
share.
s
THEIR VEINS AS WELL AS
you
inflation cycle in which we find
im¬
lending policies.
program will be appropri¬
DO
ately emphasized at all State Bank
This is the kind of thinking that will MAKE
feel this way you
BUSINESS," because others will feel that way too.
price 7
request
Our business is a good business if
critics and detractors.
IN; THEIR
Descriptive analysis of this
special situation mailed
on
many
YOUR NEW MEN FEEL SUCCESS IN
;
earnings
a
Enthusiasm cannot always stay at the boiling-point,
have it in you to believe in the thing you are doing, then
can make others feel the same way about your business as you dd.
If we could take the prevailing pessimism out of those who are
ing securities.
England com¬
has a dividend
over
sell¬
but if you
New
which
pany;
stock
Preferred
85-year-old
these:things^a success
when
some
banker
not take care of
businessmen
do
or
other
did
their needs, some
|not
have
com¬
by Mr. Forward at
plete confidence in the banking
meetfraternity's ability to steer a level
the New York State Bank¬
lending -policy through troubleers. .Association, New York
City,
(Continued on page 36);
Jan. 26, 1948.
'
/
'/ ;
/{a ;'v
:;:An address
the 20th annual mid-winter
Volume
Number 4668
167
THE COMMERCIAL
&
(505)
CHRONICLE
FINANCIAL
This
Snyder Reports
excess
of
budget receipts
budget expenditures, which
will occur principally in the first
21
Nation's Finances and
on
Promises U. S. Bonds Above Par
three months of the calendar year
In
conference at Washington, D. C., on Jan, 22, Secretary
Treasury John. W. Snyder asserted that neither the Treasury
the Federal Reserve Board had any intention of letting the prices
a
press
the
nor
of U. S. bonds go
below par. He stated the recent lowering of pegged
prices by Fed-0>
eral
Reserve economy.
Revenues
should
be
System was maintained at a high level—high
merely to enough not only to balance the
'tighten up on budget and to finance the Euroinflationary oean Recovery Program, but also
to provide a substantial surp^s
press ures."
In his
This
action, for retirement of debt.
Mr. Snyder State of the Union Message on
slated, had the Jan. 7, 1948, President Truman
a pp r oval of
recommended certain changes in
bankers
who
the tax structure which
are neces¬
in order to provide tax relief
"compliment¬
sary
ed
for tak¬
to those who need it most without
coura¬
step." In
cutting the total tax revenues of
the government. General tax re¬
connec¬
duction must wait until the pres¬
us
ing
a
geous
this
John W. Snyder
tion, Mr. Sny¬
ent
der praised the
subsided.
American Bankers Association for
their
program
to
restrict
bank
lending to productive
only and said it was "a
purposes
very
ag¬
gressive step" and should help the
anti-inflation program. He agreed
with President Truman that
legis¬
lative authority should be
given
to
place further controls
but
said
it
on
credit,
merely to imple¬
was
ment
"alertness," and not
sarily
an
indication that
neces¬
new
spe¬
cific regulations would be imme¬
diately put into force.
inflationary
come
of
tax
structure.
revision,
created
be
can
be¬
part of a general revision
a
our
this
have
pressures
At that time it
tax
a
which
maintain broad
In
making
system must
will
help to
consumer
markeR
strengthen the incentives to work
and invest, provide flexibility as
economic conditions warrant, and
treat all groups equitably.
Such
a
tax
system is
instrument
of
economy
indispensable
maintaining
an
an
in
lasting
full
employ¬
ment and abundance.
The
port on the state of the nation's
finances for the last fiscal year in
public debt and
guaranteed obligations amounted
to $258.4 billion on June 30, 1947.
This was a reduction of $21.4 bil¬
lion from the postwar peak which
had been reached on Feb. 28. 1946,
which he reveals
and
Just prior to making the above
announcement,
Secretary Snyder
Congress his annual re¬
issued to
a
budget surplus
of $745 million and
a
reduction in
the national debt
during the
of
The text
$11%
portion
"Fiscal
billion.
of
the
report,
for
the
fiscal
surplus. During this
full
of
the
captioned
Policy," follows:
The government closed its
ations
year
of
year,
ooer-
with
year
a
the firs
fiscal year following the end
the war, substantial progress
was
made
in
the reconversion
of
the American economy to a
peace¬
time basis. By the end of the year
all -previous records of civilian
reduction
a
the
during
of
fiscal
$11.5
year.
billion
The "re¬
the
and
the debt decreases which have
curred up to
oc¬
this time.
The U. S. Government has con¬
tinued to pursue a broad program
of financial aid and cooperation
designed
struction
in
assist
to
of
the
war-torn
and to facilitate the
unions
recon¬
"Events have
actly opposite to that intended by Congress. Many
already used the Act to purge them¬
selves of their extremist leaders, and other unions
which are Communist-led have been exposed to
member¬
ship of most of the countries of
the world, the United States has
carried on a program of direct
assistance through its own agen¬
cies under various acts passed by
the Congress,
t
In the
the
the
International
completed
and
tries,
the
by
most
the
of
Bank
United
Of course, most
The real
States
coun¬
of the predictions about the way
were rather silly.
question has to do with the good it will
as yet no definitive answer.
a
surprising if the mere fact that
with strong popular support enacted
such law, has so far been the most potent
Congress,
some
factor.
1946, the International
Monetary Fund had agreed upon
year
Announces Slight Incr. in Reserve
values for most of the member
currencies; and March 1, 1947,
was set as the date for the begin¬
ning of active exchange transac¬
par
tions.
A
number
through
place in
the
of
the
received
course
purchases of
Fund took
of
the
fiscal
applications from
totaling more
$2 billion; and by the end
the fiscal year, a $250 million
loan
issued
Goods
and
had
been
surpassed
services-were being
order as
an
York
made to France.
National Advisory Council
and
ready at the maximum fixed by at the' maximum limits in all
on
International
Monetary and law, but in tHe central reserve cases except for net demand delike that which had occurred Financial
Problems, established by
cities, under the announced in- posits
at
central; reserve
city
in the last four months of the pre¬
the
Bretton
Woods
Agreements
crease, they will be still 4 points
banks, which, after the present
vious year, was accomplished al¬
Act to coordinate the foreign lend¬
less than the maximum under ex- j increase becomes effective,
will
most entirely by a reduction in
ing operations of U. S. Govern¬
be 4 points less than the maxi¬
isting authority.
the cash balance in the Treasury.
ment agencies, and to consult and
Allan Sproul, President of the mum under existing authority.
By the end of the fiscal year, this advise with the United States
duction
in
the
debt
during
the
year,
source
of debt reduction had been
substantially exhausted.:
Total holdings of Federal secur¬
ities by commercial and Federal
Reserve banks
billion
on
June
ampunted to $91.9
30, 1947. This Was
rep¬
resentatives
on
the
Federal
International
Reserve
of
Bank
New
to
tary Fund, considered all impor¬
questions arising in these in¬
stitutions and gave its advice to
all
a
Board's supplement to Regulation
D, effective as to each member
bank at the bpening of business
on Feb. 27, 1948, follows;
•
;y; Reserves required to be main¬
tained by member banks with
the
Federal Reserve System to
;
J.
supersede
the existing supple¬ Federal Reserve Banks:
ment to Regulation D and to be¬
; Pursuant
to the provisions of
Enclosed is
printed cbpy bf a
supplement to Regulation D, "Re¬
serves of Member Banks," adopt¬
ed by the Board of Gdveirpors of
the
carried
agement policy
the need for the Federal Govern¬
tion in the total debt will be pos¬
ary
as
to pursue an
anti-inflation¬
fiscal policy is at least
last year.
as
great
It must maintain
continued
well-being
of
sible during the fiscal year 1948and
this
reduction, unlike that
which occurred
a
strong financial position to assure
the
which character¬
ized the fiscal year 1947 is still
continuing. A substantial reduc¬
our
in the fiscal
year
will Re accomplished prin¬
cipally by an excess of fidget
receipts over budget expendftufes.
1947,
out
the
mandate
of
the
a
integration of
our
'
Central
fefe Treasury.
hereby
serve
tain
which
each
System is required to main¬
deposit with the Federal
on
6% of its time deposits plus—
14% of its net demand deposits
if not in
serve
a
reserve
or
central
re¬
city;
20%
its
of
net
demand
de¬
posits if in a reserve city, except
as to any bank located in an out¬
lying district of a reserve city or
in territory
added to such city
;
by-the extension of the city's cor-
j porate limits, which, by the af; firmative vote of five members of
the
of
Board
Federal
Governors
Reserve
mitted to
of
the
System, is per¬
maintain
14%
reserves
against its net demand deposits;
22% of its net demand deposits
a central reserve city,
if locafed in
as to any bank located in
outlying district of a central
except
'
an
reserve
city
such city
to
or
in territory added
by the extension of
the
affirmative vote of
members
13
26
.
10
banks
20
<
7
Country banks
14 j
■
■
ernors
; 3
6
f
.
of
the
Board
of
five
Gov¬
of the Federal Reserve Sys¬
tem, is permitted to maintain 14%
or
Against tiihe Sbftosits
classes bfbdnks
city's corporate limits, which,
by
T
Max.
'
All
the iollowing
balances
Reserve Bank of its district:
'
city
_________
Reserve city
prescribes
reserve
member bank of the Federal Re¬
the
reserve
banks
;
!
JOHN W.^NYD®R/^
lation D, the Board of Governors
of the Federal Reserve
System
.
Min.
for¬
'' ■ ?
^
Against net demand deposits
problems and has been instrumen¬
in the
.
section 19 of the Federal Reserve
Act and section 2(a) bf its Regu¬
lowing limits:
ties of United States agencies con¬
cerned with international financial
eign financialprogram.
,
v
of member banks within the fol¬
Congress to coordinate the activi¬
tal
Statement
The text of the Federal Reserve
member banks in the Sec¬
ond Federal Reserve Distrifct:
tant
reduction
problems of European recovery. i----;'
•>
;
Under
present
circumstances,
Board's
Reserve
•
York, issued the following notes
Bank and the International Mone¬
.
ment
System last week
in the cash
■
the
demand
against
"Supplement to Regulation D" ordering an increase
reserves to be held by banks in central reserve cities (New
Chicago) against demand deposits from 20 to 22%.
The
legal
reserve
requirements foi^~
banks in all other cities are al- i
Reserve requirements are now
countries
was
The
Requirements
reserve
,
than
of
cash
increases
The Board of Governors of the Federal Reserve
loan
foreign
Board
deposits of banks in central reserve cities from 20 to 22% effective
Feb. 22. Allan Spronl says effect will be $420 million greater
reserve in New York and $100 million in Chicago.
The International Bank a1 so
year.
Reserve
Federal
the representatives of this gov¬
of $24.8 billion from
ernment on the boards Of these
postwar; peak, and of $16.3 institutions. The Council approve i
produced at an annual ra'e of billion during the fiscal year. The for consideration
loans proposed
about $230 billion, and the accum¬ reduction in bank-held debt thus
by the Export-Import Bank and
ulated
backlog of
demand
for substantially exceeded the reduc¬ formulated
general policies for the come effective at the
•some types of goods was
dpeqipg of
beihg tion in total debt, both during the guidance of the Office of the For¬
business on February 27, 194g.
•
satisfied at a growing pace.
fiscal year and during the entire
eign Liquidation
Commissioner, '" The Board's
press statement for
!;> Notwithstanding the high rate period since the postwar peak. The
Department of State, in financing immediate release
regarding this
of industrial output, full
employ¬ amount of public debt (including the
sales
of
surplus
property action is as follows:
ment, and generally good harvests, noninterest-bearing debt) held by abroad. It also considered credits
As
a
step toward restraining
scarcities of various kinds con¬ nonbank investors was about $3%
extended by the War Assets Ad¬
further inflationary expansion of
tinue to be much in evidence. This billion larger on June 30, 1947
ministration and the U. S. Mari¬
bank credit, the Board of Gover¬
is true of housing, housing mate¬ than it had been at the time of
time'Commission.
It approved of
nors today increased from 20 to
rials, automobiles, certain electri¬ the peak in the total debt on Feb' the extension of the stabilization
22 % of net demand deposits the
cal
equipment, fuels, industrial 28, 1946.
This concentration of agreement concluded between the
amounts of reserves required to
and agricultural machinery, and
the entire debt redaction during
Secretary of the Treasury and the be maintained with Federal Re¬
other products. Perhaps of great¬
the
16-month
period ended on Mexican Government. The Coun¬
serve
Banks by central reserve
est moment is the short supply of
June 30, 1947 on bank-held debt
cil
recommended
an
emergency
city member banks. This action is
steel.
Its
ramifications
extend plus the transfer during this pe¬ loan to
the Philippine
Govern¬ to become effective Friday, Feb.
throughout the transportation and riod of a net amount of $31/2 bil¬
ment, which was authorized by an 27, 1948.
manufacturing industries and are lion of additional Federal securi¬ act of Congress approved Aug.
The effect of this increase will
reflected in turn in inadequate ties
from
bank
and
nonbank
7, 1947.
be to raise the required reserves
supplies of finished goods.
hands, contributed substantially to
The
Council
also
coordinated of
central reserve city banks in
the reduction of inflationary pres¬
.[ The upward pressure on prices,
studies of international financial New York
Gity by about 420 milto i which I called attention in my sures during the period.
It was problems undertaken by its con¬
lion dollars and those in Chicago
last annual report, is more critical made possible by the large sums
stituent agencies. In this way, the
by nearly $100 million. The presthan, a year ago, despite the prog¬ which, were available for trust Council was able to
give its bes' ent required reserves for these
ress* made in converting industry
fund investment during the period,
judgment on the changing inter¬ banks amount to about $4,300 mil¬
to-civilian production and in re¬ the remarkably good record on national
picture, as it developed lion and $1,000 million, - respec¬
filling commercial and industrial the redemption of savings bonds, 5n the course of the fiscal year,
tively.
j
the continued successful sale of
pipe lines. The situation assumed
tt continually reviewed the broad
Under the provisions of section
such compelling proportions that new savings bonds, and the re¬
questions of policy involved in the
19 of the
Federal Reserve Act,
the President deemed it necessary strictive
debt-management
and settlement of War
obligations and
the Board of Governors has auto call a special session of the Con¬ monetary policies of the Treasury
in the financing of programs of
thority to establish -reserve re^
and the Federal Reserve System.
gress to cope specifically with the
world reconstruction.
It has thus
quirements for the various classes
The anti-inflationary debt-man¬
inflationary trend as well as with
production
•
It would not be
that these institutions
position to begin active
operations.
The
organizational
stage of these institutions has now
passed.
By the end of the calen¬
dar
is
As to this there is
do.
so
in
wer,e
requirement
-
this law would work out
were
member
oath
non-Communist
intended."—The Nat'l Ass'n of Manufacturers.
f
subscriptions to
the International Monetary Fund
and
the
achieving precisely the purpose which Congress
of the
payments
Thus far, it appears
bright light of publicity.
that
of the fiscal year,
course
already discredited predictions that
havb an effect ex¬
unions have
Development, which
a
of the protections which
the non-Communist oath would
the International Bank for Recon¬
constituted with
strong and aggressive as ever, and
as
mon¬
stability.
In addition to
participating in the work of the
International Monetary Fund and
were
are
they normally seek from the unions they join.
expansion of
etary
struction and
evidence that the Labor-
no
workers have not lost any
countries
multilateral world trade and
there is
i
Management Relations Act has enabled employers
to discharge workers for union activity, nor is there
any indication that the Act has caused employers to
resort unduly to litigation which some critics pre¬
dicted would drain the energy and resources of
unions "in court action.
On the contrary, labor
which it will make
dollars
total gross
"Thus far,
debt retirement
possible, will
of course, be a farm more pow¬
erful anti-inflationary force than
1948,
Treasury Secretary issues statement U. S. will keep bonds at par
or above.
In annual report to Congress reveals small surplus of
revenues and reduction of $11% billion in national
debt during
year ended June 30, 1947.
Sees need for anti-inflationary fiscal
policy.
of
Of Course Not!
over
20%
mand
reserves
deposits.
against its net de¬
-;*
? v
22
THE COMMERCIAL
(506)
Thursday, January 29, '1948
CHRONICLE
&FINANCIAL
22.
He
the
past
For
Webb had
been President of the Society for
the Prevention of Cruelty to Ani¬
mals. In Mineola, L. I., advices to
the Brooklyn "Eagle" of Jan, 24
News About Banks;
Canadian Securities
CONSOLIDATIONS
NEW BRANCHES
By WILLIAM J. McKAY
NEW
-anticipated since the outset, the idealistic global schemes for
As
and
stabilization
currency
for the
^rehabilitation
been inevitably fore-//doomed to disappointing failure,
nadian
The area of damage was
always
too extensive and deep-seated to
immediate
permit
on
reconstruction
universal scale.
a
The efforts
of the few adherents to the Bret-
dollar.
turn
In
point
this
with other countries whereby ap¬
could be established
basis.
cal
This
practi¬
on a
would
$580,000, or $23.20 per share of
capital stock after payment of $1,179,700 more in interest to sav¬
ings banks on time deposits than
in 1946.
Financial returns to the
represent
institu¬
ton Woods Agreements who have
faithfully endeavored to set a con¬
structive
which is
example have been
tirely wasted.
en¬
On the other hand
other members have found it
ex¬
pedient to take unilateral- action
which entirely defeats the pur¬
and objectives of the
poses
Therefore this country in com¬
with
pany
the
Kingdom
United
and Canada who have been called
universal
should
interest
now
without; avail,
consider the entire
/A A//.' A/A' ■•////A"/
v
•question.
easy
world
currency
desirable ideal that can
a
be successfully attained by
stages.
'
During the
of the Trust Company
ened
fears
ling
Free funds also weak¬
slightly but in view of the
regarding the effect on ster¬
of the- French devaluation
devaluation
*a
idealistic
present
the
time
pound
At the
is
the
lar has also been unable to play
Bretton
ihe
achieve
its
its
failure of
scheme
Woods
objective
of
to
Gould Research Chief
For
multi¬
Having thus an existing foun¬
dation it is logical to proceed to
eliminate the weaknesses that im¬
firm
and
Statistics.
For
the
past three
years
Mr,
Gould
ated
p
strengthen the economic relation:-
financial
way
and
economic
tween
areas
the
and
Sterling
Research
resources
of this powerful bloc would pe'r•mit the freer flow of trade be¬
and
dollar
o
Moody's
Edson
Gould
B.
vestors
ice.
nection
with
would also restore full
confidence in sterling and the Ca-
si
period
which
of
he
also
Moody's
SeryT
His
and
Stock
as
conT
a
account
as
editor
-
Survey,
of
Bond
Survey and Economic Reports.
PROVINCIAL
LOUIS, -
MO.
—-
Tegeler & Co.,
and
CORPORATION
St.
other
Louis
WA Palen
Kleitz.
leading
Committee,
years
Dempsey-
to
on
Barron
A. E. AMES & CO.
TWO WALL STREET
N. Y.
ex¬
Feb.
5.
the
-Executive
company's
rector and
board
since
A
Will continue
1924/
3s£l)j/
NY-1-1045
L. Barrpn
has joined their organr
ization
managed of the trading
as
department.--
.-/•
•- r
bank
B
o
the
by
a
of
d
r
Mr.
Trustees.
joined
Thomas
the
in
bank
wHl/eoptipuev^s
dent /of
a-member of the Board of
•
/
Trus-f A
of
tbe Department / on
by
nounced
-
Dgc. 24. "
v
A
,
J -x
/
.
of the Title
•
John
Billhardt
P.
was
Holt-mann, of the firm of HoltzmannA Wise, Shepard, Houghton
He
elected President in 1934.
&
Chairman of the board from
made
until
Vice-Chairman
1946, he
Committee.
was
he
when
1944,
Ex
.
Jan. 21,
-)'*■ „'
■
■ a
Schpck was
F.
Carl
membership
to
'
Board of Directors.
-
A*-' -W'A
on
•
the
,'
A VAVA .I
The
of Latin
exemplified in win¬
art and literature
America
are
dows of Colonial
in
of
Company
elected
pointments:
* •
Trust
Clinton
New/ York
fol¬
lowing the stockholders' meeting,
made the
following official ap¬
' ^
At the recent annual meeting of
the
The Board of Directors at their
on
Harold W. Hoyt is
President of the Title Guarantee
/./
In January., & Trust.
the
of
elected Chairman of
/ / ,/;.: A: .!/•,
meeting
Kelly, was elected a Trustee of
the Company.
was
the Executive Committee.
annual
W. Nichols,
JrA At the organization meeting
of the Boarc^of .Trustees, Jacob L.
He became .asso¬
'1911,'/Was
Vice-President in 1916, and
#
'
'
*
*
ptg
B. Morton and Charles
member of the Execu-f.
Trading Mgr. for
Exchange, announce that Stephen
RECTOR 2-7231
Street,
Hill, N. Y., has
jyh; Office; George L. Cohen was
;named;* Assistant ;. Solicitor
and
jGarret Sanderson was appointed
a Manager, Banking Department/
All jother. officer's.; were reelected,
At;/ the;;,annual1 meeting of the
stockholders of the Company held
on
Jan. 2.1, the " following were
elected Trustees in the class whose
term will expire in 1951: Albert
•B: Ashforth, Jr., Wijliam Barth-man, Gordon S. Braislin, William
V. Lawrence, Byron A, Long, John
0.-S. McKee & Go.
INCORPORATED
116th
and
Avenue
,v"
'*
i'
Guarantee and Trust Company
Robert W. Stephens,
Mr. McMillan has been with the
Vice-President, formerly Second
firm for some time as manager Vice-President; Reidar E. Gunderof the municipal department.
sen, Second Vice-President, for¬
merly Assistant Treasurer; Percy
Wlesenauer, Trust Officer,forr
merly
Assistant. Trust
Officer;
Robert S, Denvir, Assistant Trust
Officer, formerly Assistant'/ Sec¬
retary; Alfred W. C. Spindler, As¬
PITTSBURGH, PA.—C. S. Mc¬ sistant
Treasurer, formerly Assist-;
ant Secretary; Frederick G./Dunr?
Kee & Co., Union Trust Building,
members of the Pittsburgh Stock can, Assistant Treasurer.A/'/:'/' *A;
CANADIAN STOCKS
NEW YORK 5,
partnership
the
Richmond
National City has
the Board of Trustees
Conway/retjred
of
the
of
Mr. Conway
Exchanges
changes, will admit John S. Mc¬
Millan
other- parts pl
••
^
>/^t/the
pre-/ tariejs;;
of service with the bank.
member
1941
national
Trust
-the world where
Home
under the
Chairman
as
was
407 North Eighth
Stock
of
the board of Gordon S. Rentschler
ashJios.t/ Hh
len, F. W. Charske, Charles E^
Dunlap, Walter S. Franklin,
Gawtry, John A.: Hartford,/Cor/
nelius F-. /Keljey, and. William LI1
made
Street, members of the New York
and
maica
formerly
-SeM/oh/^ jen//22: at tjip' a Trustee in >/
Astor./, Guests numbered 19.41;/'becom- A- Clifton p. Thomas
925,/all of them having served 25 ing5Executive^
years,/or)more, with Chairman of. Yice^President Ah l946. ^Fred^ick i> -
were ■ reeiecfed ; ;fprA h
term of three years: GeprgeG/Al/
ecutive
MUNICIPAL
Ten years latei
merged with
Thomas,
Vice-President
Hill Savings Bark, Ja¬
Hotel/
expired,
was
Admit j. McMillan
ST.
F.
Richmond
over
tive Committee.
Dempsey-Tegeler lo
GOVERNMENT
Clifton
Executive
Company
Mr., Debevoise was a Director oi
the
Union
Dime
Savings Bank
and Oil Transfer Corporation.
A
ciated with the bank in
CANADIAN BONDS
Tius,
was
Manufacturers
during retirement system, after nearly-37
years,
served
executive
f
In¬
Moody's covered
twenty
y
Economic
of
the pooling of the
o u
Director
was
ships of the three countries. AT
and
Co.,
revi
and
by J, Luther Cleveland/ named Counsel in the Manhattan
Chairman of the board, .-th^ fpi-t Office/ and! Harvey L Tutchings
lowing directors, whose terms had was named Counsel in the Brook-;
sided
Barney
&
Vice-President,
Trust Company of New York,
with
Smith
shall Plan and any other arrange¬
ments that might be devised to
this
has
asso.ci-
been
crate within the scope of the Mar¬
In
Gould
Research
a
that bank
as
Al Ahe annual/ meeting of the
of
stockholders of the County Trust
New York held on Jan. 21, Robert
A; Burdick Was/ elected a Vice- (Company at/ White Plains, N. Y.,
President; Andrew N. Burkard/ on Jan. 21 the following Directors
terms
expired were reThomas Pearson end Edward A. whose
Raymond
R.
Beatty, .A//
Minogue were elected Assistant elected:
Vicer-Presidents;/ J. Louis Laipla Chester A. Cawood, Warren W. .
Charles C. Fenno,
At the annual meeting, on Jan.' John N. Lewis and Hugh M. Hous¬ Cunningham,
/
21
of
stockholders of Guaranty ton Were elected Assistant Secre- Thomas F. Foley* Robert Gold-
Director of
as
Chatham
In addition to his connection with
bany; George C. Johnson, PresiA
dent, the Dpne pavings Bahk of
Brooklyn; Edwin Allen Stebbins/;
President,
Rochester Savings
Bank, and Harold Stone,/Presi¬
dent, the Onondaga County Savintra RanL''j ?
'
ings Bank.
Co., 6 Broadway,, New York; City,
has appointed
U.S./United Kingdom/ Cana¬
dian Currency Agreement could
very well mark the return to in¬
ternational monetary sanity. Such
a scheme could be designed to op-
„
Exchange
Edson
Assistant
the
Bank
continued
Vice-President.
the/bank's Fifth Avenue Office
Savings Bank of the City of Al¬
Arthur/ Wiesenberger, &
of
pair its strength.
The Tripartite
Agreement of 1936 constitutes a
worthy precedent, and according¬
ly
Executive
Wiesenberger & Co.
The New York Stock
lateral convertibility.
National
he
Debe¬
Mr.
an
as
with
by the Chase
over
Bank
branches/ dinners were .also held •feeg.
\ •«. ;'r /^
lb ,Welcome//new club members.
Aa A'A/fc A SAA f
f
• A'/A.
Including veteran employees and
/Approval- by .the/ New Yorkofficers in /National City's over-' State /Banking -Department, of -n
.
seas branches, the total member¬ eeTtiHchie Aof r /reclassification^ pi * ///.
ship is 1,363;; of iwMch; 33 income shares of the Patchogue Bank oi
Bank; Robert M. Catharine, mem/ ipg new New York members were Patchoffuo, Long Island. , N. YJf %
ber of the Banking Board of the
greeted by Mr. Rentschler at the providing for elimination of cer- //
State /of NewYork and/I^eSideh^; Hotel Astor dinner and presented tain Tetirement restrictions on 1952
Shares of pfeferred stock "B'Vof ,
Dollar Savings Bank of the City/of v|Vtth/|ilver/1Cays, traditional
the par value of $50 each was anNew York; 'Frederick T. Jeram/ bol of membership. A-AA ;/v
weak link and the Canadian dol¬
full part in view of the
A
taken
was
just
bee n
President, first in the Trust De¬ elected Presi¬
partment and later in charge oh dent
of •; the
meeting ori
At the stockholders'
Ar//A-A;. -A.;./.A/
trend.
by
institution- in
,
pojind it Is /believed that the Ca¬
nadian dollar could still maintain
its existing level.
Inasmuch as
,
dian dollars and sterling.
absorbed
was
that
Deposits at the end of 1947
1923.
He was
were $253,648,600.
*
A■;/ made Assist¬
Of these, $248,- A AAA" A A'"" * ■ *
300.800 were due to savings banks, :A The 12th annual dinner of the
ant Secretary*rV:h<
$2,410,300 to their agencies,, and Quarter Century Club of the Na¬ in 1935, Secre¬
$2,937,00,0 to the Unifed^States tional City Bank pf New York and tary in 1936, i
Government, \
/A'- A A A City Bank Farmers Trust (Dom- and was elect- -/ JHHHHHHi 'AA
the
of
Pavilion.
joined the latter bank as a Vice-
serves.
plans the .market remained re¬
markably steady./ Even in the
of
Co.
and
National
Manufacturers Trust Company, he
050,000 in dividends/ and $14,911,900 in undivided profits, and re¬
market displayed an easier
face
in 1933 are
on
Yorker,
Company in 1922.
when
reported as $33,021,100, made up
of $13,059,200 in interest paid, $5,-
week both the in¬
ternal and external sections of the
bond
Phenix
organization
banks since
sayings
,
started
Trust, Officer
Jan. 21, John AdikesAR^sideni^f
approach having
failed, it is now opportune to ex¬ the establishment of more realistic Savings Banks Association Of .the
State of New York and President,
amine
a, practical
alternative.
values/oh - the J "soft"/ currencies of "Jamaica
SavingsBank/^illar(f
From the very beginning the "Key
would ultimately fapilitat'e, Cana¬ IC.
Denton, President of the Man¬
Currencies" plan has always of¬
dian purchases in-Europe, the Ca- hattan Savings Bank and William
fered the best possibilities for a
successful solution of the problem h^dten ihibalane^ cof trade with S. Rogers/ President of //Buffalo
of currency stabilization.
To all this country would tend to be cor¬ Savings Bank/ were elected- DiA
rectors of
Savings Banks Trust?
intents and purposes, the only
rected. Stocks were irregular/ahcj
Company, and the following..-yvere
currencies on the basis of which
lower with the base metal issues reelected Directors: Henry Bruere/
world
commerce
is
now
con¬
the
downward President of The Bowery Savings!
ducted, are the U. S. and Cana¬ alone/ resisting
The
<
sacrifices/in the
make
to
upon
only
common
a
tendency.
agreements.
rency
'•/;
cur¬
tion of
New
died
Debevoise
Mr.
at. Harkness
native
voise
savings banks in New York
State, reports earnings for 1947 of
the first step towards the
26
Jan.
131
relationships
exchange
stitution.
complete
report
operating
ratios, the Savings Banks Trust
Company, wholly owned by the
further agreements could be made
propriate
annual
an
with charts, tables and
.
From
stated that when the Lin¬
Trust
the Mechanics and Metals Nation¬
of war-damaged
—
was
coln
of aga;
years
10 years Mn
al- Bank
economies, founded as they were on billiant Keynesian theories and
undue confidence in the altruistic side of human nature in gen¬
have
it
CAPITALIZATIONS
on
eral,
Bankers
and
ETC.
OFFICERS,
REVISED
77
was
Rockefeller
Trust Company,
Center,
at 48th
Street,/New York through a dis^
Manufacturers
voise,
a
Trust
the
O'Neill
formerly; Assistant Secre- /;/??;
.tar.y!; arid; John H/ Macdon ald werie ; A A
appointed;.' Assistant/ Vice-Presi- A
dents'.
rA//
Mr. Macdonald has been in
(office/A)
whi^;/te;0?Neill/Ha^ b^en' (ip Ar:
charge (of Tbe :Mt. /,Ki$c6
chaifie of the Mamaroheck office/
>.
Hartihaiin, (who/' Jias %
Louis / ,F.. -
Bank
& County Sayings
pf Albany, ;N. /Y., /for 36 /
years
starting as a/cferk, was,/
ejected Presideht/of/the bank/by''
the /board pf trustees, bn! Jan:
it was made known in the Albany
"Times-Union" :^f 'Jan. 12, which
in part also saidA/A/A-A;'/ •
■'/
"Mr.; Hartmann succeeds Frank
H. Williams, whose application for
retirement was approved at the
board meeting.
/
.
•'
;,*//
(
"Since 1940 Mr. Hartmann has'
been Executive Vice-President of
the bank. Elected with Mr. Hart¬
mann
were
John
Boyd
Thacher
2nd, former mayor of Albany and
former
Children's
court
judge,
who will be a Vice-President; Jo¬
A.
seph
Secretary1940,
Vice-President,
Ehrhardt,
Treasurer of the bank since;
who will also be a
as
well
as
Secretary; and William
G. Livingston,
Assistant Treasurer
1940, who was advanced to
Treasurer// /; • /•/,/•(/ .'/•-?/:/
since
cultural
/ '• Alexander
;
Stewart Webb, for¬
pany
;of New; York, died; on Jan.
;
served/ City
"Americana."
,
'
'
color plates taken from
At
the
annual" stockholders'
Spanish publication
Accompanying each meeting of the State Street Trust
Co.- of Boston on Jan. 14, Everett
page - is the original painting or
W. - Gammons,/' President
of the
statue from which the reproduc¬
tion: was made.:.A
-"• /•' A." .'- A v Franklin Sayings Bank of Boston,
was elected a director,/ At a meet¬
*
/■ *..
;
>.
/• -•.
the
Company
ViCe-President' of the in¬
At
Wilfred L.
Warren/L. Ward.
directors meeting E. J.
and
of
play
merly Vice-President of. the New
of New York announces with- TeA York Trust Company, and Presi¬
dent oiithe: Lincoln/Trust Com¬
gret the death' > of Elliott/'Debe-;
:
Murray,
blatt,/E/ J.
Richardson
directors of the com¬
Jan. .19, .the following
promotions were .voted:, Fred -D.
Harrington*.to .. Vice-President;
ing of the
pany
i,v:
on
(Printinnpd
=
nir 11aee
4ft 1
>%
.
/
'
Volume
167 > Number
THE
4668
COMMERCIAL
Prices
&
FINANCIAL
determined
are
CHRONICLE
(507)
by corpo¬
rate
directors; Wages to meet the
rising cost of living are demanded
by the union leaders. The vicious
V
•;
S.J.*
SMITH,
WILLIAM J.
REV.
By
:
/f *
r
Brooklyn, N. Y.
Director, Crown Heights Associated Activities,
^
—*
»
-'
govern¬
ment
control over wkges
think thai! the
a
piace
pi.ucs/
ana
i do not
Government
effectively con¬
can
trol
Vv cges
and Alices any more
than; L. canripontrpi ..'striicos,si;ahd
still
leave
or
two
is
to
a
tor
democratic order.
all.
control
the
prices,
Wages,
profits,
production,
economy
stop¬
strikes,
pages aresointertwined, ^
>
inter-dependehti
so
connected
a
evident
in
it.
The
have
we
that
found
be
solution
no
class
warfare
insistence
;
solving the problem by legislation
totalitarianism.
leads to
any
Is
can
h
there
answer? Not unless class
fare conflict
be abolished
war¬
or so
keeps down prices and lists 7-point
rebuild on a
principle of cooperation. No form
of human society can work — no
mitigated that
kind of
an
we can
economy can
When
and
sidered of
groups
the
it
objective of industry
economic
vVith
competition,
in ruthless
engaged
and
political
su-
rule and
guide of action. The strongest and
most unscrupulous survive.
The
jremacy
only
the
as
The results of such a
.■est suffer.
so
have
today
final
we
must redefine
evident
is
nothing,
you
would
porting
is
to sustain
means
to perpetuate
ihefe
a
as
a
nation and not
of profiteers,
solution
a race
t.p this human problem. The ahr
and
social influence that syvev rests in the answer to the
with it, than 38 sovereign question:
How human are we
states. Only 10 States in the union willing to be? If the Fatherhood
equal the corporate assets of any of God and the Brotherhood of
disagree, the prob¬
soived either by themselves
lem is
men
goes
voluntarily accepting the respom
sibilitics of settlement, by coming
to a harmonious compromise or a
of these
one
individual concerns,
mere have been 1,800 merger? bedisciplinary - power must torce a
ween
1940 and 1946 in manufac¬
^decision upon both from without,
turing and mining alone. Of the
It Is my conviction that the
.oo
largest corporations in the
-
leadeis
Gabor
oi
v/ith the help of
solve
there
is
mis
problem
no
is
ana
Management,
inemseives,
or
in
,
This is
in
critical
permanently', or almwing th^vronrun
its
J 'V Can
economic
course
into
a
on
r
connection
the
your
.
Is
until it be recognized.
It.. id the
simple tact tnat we are dealing
with human beings.. Human be¬
and
immediate
an
easy
access
The
Temporary
National
Economic.
Committee spent a million .dollars
ings can act only in accord with
and a half just before the war'in
the ideas possessed by their in¬
tellects and the reaction of their an effort to analyze some of the
j,.
human
to
wills
There
stances.
human
is
no
the
,o
field
difficulties
circum-?
solution
the
the
foTm
must
be
How
"of
industrial
society
changed.
can
cooperation
be
at¬
workers in every industry. Organ¬
our
nave
must do two
we
into
subsidiaries, etc.; 106 ize management in each industry.
largest corporations are Supply them with an army of ex¬
jnder the control of eight finan¬
perts. Let government represent
cial interest centers.
What hap¬ the public.
Draw up codes of
pens to free enterprise when you legitimate
competition. The ex¬
jf
any
that
enter
operations of industrial re¬
lations? it .is a .Waste of ^ time to
discuss the isSue. * Both men and
larger plane and is need to set about organizing all
from
largest business enter¬
things:
First, redefine the meaning of prises operating through inter¬
directorates
and credit
competition; second, clarify and locking
jontroiled from central sources?
reorient
the •.•••' objectives
of in¬
.t contradicts the whole theory of
dustry. The funaamenial truth in
..
this whole problem is constantly .ree competition.
An essential of free competition
ignored. There can be no solution
me
to
actual
small
with
supremacy to
Jv
possible, reasonable
suggestion be. offered? It strikes
.
just
prescinds
llict .over
inter¬
no
not
are
of
of
competition.
free
competition.,
Among other things, the Commit¬
of
tee
reported that it is hazardous
perts
representing
Labor
Management set maximum
minimum wages and prices in
various industries. Coordinate
sdal.es
on
regional
and
!•:
;<i;i;•*'* ~0? bar to new
ehterpriS)?^^vf;:r^)^|
hedefinov^hfe leaning ; (3) Market ouiletsmayibe ;cbm
.
fn'eans
•trolled..
efficiency should be the horm and
'
V
v'v
:•
•
/(,4),
<
*;v
Heavy
•
-
told that
•.
inehce In
.
?
no
less.
a- man
of ». prom - .-constitute
labor^eda^ph^thamMr;
George.
.I
me
on
this: proposal.)
? I.
say
The door of opportunity is only
What
is the
natural
result and
reaction among the working' forces
-.the step is necessary for two rea¬ of
industry as an
economic system
First, from the, sociological develops in this way?; A- couqterr
economic force ; rises to meet, it:
angle, wages- .and prices^are; the
Free-born men will fight/it. When
stuff by
their
livelihood ' is
sons.
v:
1.
theoretically open?,;•;
with
.a'lparrier^-^^AHr
-
Really believe
•'
JW, jtfie '^igpity-pf
:
.■,
■
.^An
address
£.)•'V.Y v
maximum
ana
minimum compulsory prices.
The
both
Babylonian business
out
man
regulation^.
these
.
worked
Also, the
over-all price ceiling was tried a«
far back as 301 A. D. when the
Roman
rent
Diocletian, de¬
prices, wages and
Emperor,
over-all
creed
Infractions
ceilings.
national
sult
not
satisfactory and
were
removed
Discussions
tuted
a
as
to
fair price
a
as a re¬
short
what
time
consti¬
beginning with
Aristotle, if not earlier, continued
right through the middle ages
The
Church
Fathers
discussed
Raise production through unionmanagement committees.
Effi¬
ciency becomes the norm of com¬ these problems for- 1,000 years,
petition. It won't work? Not as Martin Luther discussed this sub¬
Tongas U. S. Steel can unilaterally ject in a book entitled, "About
determine .the price of its prod¬ Sales, Merchants and Profiteer¬
ucts,'Not as long as John L- Lewis ing," f English price-fixing is re¬
can unilaterally tie up the nation
ported from A. D. 959 on.- The
with a strike. If profits and eco¬ Guild System prevailed in most
countries from the Middle Ages
nomic supremacy &re the only
standards of competition — there until the period of the American
Leave out the human and
social obligations and viewpoints
beings.
and French Revolutions.
Colonial
America
direct
Even in
price-
fixing was instituted at the begin¬
ning of the Revolution, in Massa¬
chusetts
in
1777
and
later
in
Pennsylvania, but with little suc¬
cess.
the
for
past several
score
\
■
It
.
human from government regulations have
beings kin society demand.Our contributed to economic progress,
Wartime Controls May Be
present ^relationships of Manage^., ic
ment and Labor are based on self-, ! ;
;
Helpful
that the very existence of
threatened; ishness, the survival of the strong¬
their dignity as humap. personal est, pconomic warfare, anti-social
and
/ ^". ignored, the vweitare - oi their attitudes? amoral- practices,
T^noroaj Tne welfare of their
In
the
the manner of the European Car¬
tel System.
For a government to
destroy free enterprise is for that'
to destroy itself.
no higher duty than that
inculcating in the public mincl;
an
understanding of what the
American competitive system of
government
There is
of
free
enterprise
means
is
Our
it
what
and
to the American
people."
Greatness Due to Free
Enterprise
.:
.
•.
The free enterprise system;
which
prevailed in
the United
States for almost its entire historyis the only one in which I have
complete faith.
States
While the United
has
only one-sixteenth of
the earth's population, she pro-'
duces nearly seven-sixteenths of
the world!s goods.
Her people"
46%. of the world's
own
electric
power, 48% of
its
telephones,
its radios, 54% of
59%
of its stee*
capacity, 60% of its life insurance
policies, 85% of its automobile:.?
and
92%
modern bathtubs.
of its
Yes, it is statistically true thai
in the 150 years of her dynamic,
adventurous
life,
America
ha:?
made
more progress
than all the
other nations have made in 6,000
What has she go^.
"Why?
years.
that the rest of the world
She has
has notT
only 6% of the world's*
Other
area.
nations
have
more
-
-might, be: seen tbat through^
Much
more
than
an
eponomic out 4,000* years of' history there
problem, this is a moral problem. seems to have beep some need for
It will be answered when we an¬ controls during difficult, times, but
swer the question: How human are lit was always doomed to. failure*
humar^ nature being what it is.
lwe: willing to be?
: -1 '
cannot have a system that Economic history during the last
Js built on selfishness and expect 150 yeays has established beyond
doubt * that, free
competition
it: to fulfill the social obligations a
self-analysis I came to
conclusion that while price
my
'
land and
more
people.
Some are
richly endowed with natura>
Several
enjoy a gen-'
ofhealth,
education,
political-freedom and
native in¬
-eral
level
genuity
ble
to
will
approximately compara¬
our
parison
be
that the
on
Carry the com¬
own.
down the line and you
forced
one
to
the conclusion,
thing which America
has that the other nations lack
the
L-?
American system of free en¬
terprise.
■
*An
address
Father. Smith families^ injeopardy? theyywiU -almost -a complete disregard of i.
by Mr. Johnson
Before
the ; Economic
Security
a /;■
y
7,before the Economic Security As-,u.iite in self-defense.-: TJhe-giant the -common good, j; j c*
; sociatiori; Br.ooKly.22, trade union-is
natural;coiise- -•-If it-ish't working out, {don't Association' of ^Brooklyn, Brook¬
:,^4quence. Economic -warfarb;isj;onl blame me?; Jhdidn't start iti,«ic b lyn, N. Y., Jan. 22, 1948. , t>
more
resources.;.
.
by
the
have
governmental, free of government,
control or intimidation, free off
trade agreements that would con-*
trol prices and production after
wejre
punishable by death.
Despite this
extreme
penalty, price controls
;
-
known?" to t us
law' were in the
established
the
bases.
,
the
Mr.
later.
{>*•,.>r„v ;&nd the whole world of industrial
initial advertising relations- ceases to be- human.
content of competitipn.'. Wagds and
;costs are often an •impedimenti-J;^
prices should be removed from the
.(5) Large capital requirements
area of competition .^(Ihaye been essential to modem industrialism
rajte which we
years.
and carvec
times -Oi
Hammarabi? King
of
Babylon
more than 2,200 years B. C.
These
laws which were extremely rigid,
lations
were
,
.of Competition.' To .me that
known
versa.
Inattempt-
Johnson
A.
in the
and
the
„
•*/ .^WemuSt;
accelerated
sands of years.
Price controls are
not new.
The oldest price regu¬
and
human problem except in the
mr new enterprise to enter busi-.
willing acceptance of the solution
yiess.
The obstacles include:, :.V
is no human solution to the prob¬
by human; wills. There, is no f661(1) Necessary resources, may be lem;? And the simple reason is
proof automatic answer,- and- that
controlled by existing enterprises; that the norm- is contrary to the
is what I am afraid most people
(2) Patent rights may stand as a natureand the needs of human
are looking for.
any
.
one which will allow
States to progress at
.
tained, or even get a start? if we
really believe in the principle of
tions. They control three-quartefs real democracy, economic as well
jf the combined assets of the 250. as
political, I would say that there
circlhj. and left uhr
solved, it must result either
the G overnment.
jtaitihg over
have
25
locking directorates; 151 of these
nave
interlocking ;; directorates
with at least three other corpora¬
solution. At present it
awicious
only
country,
Government, must
Man
I'fee?
enterprise system is
j. Howard Pew,- President,
;
ing to speak of the Sun Oil Company, hasr
against my personal convictions it stated, "Our American system 65!
would make my words as sound¬ free
enterprise is far more than,
ing brass br a tinkling cymbal, as just a way of doing business. It
quoted "in the Bible in another is a system which as its base com¬
connection.
prehends
good
sportsmanship,
In
preparing for this talk, 1 given free play to the laws oi:
thought I would do a little' re¬ supply and demand and of compe¬
search into the history of price
tition, develops initiative, char¬
and wage controls.
Is this some¬ acter and discipline and in many
thing new which was.. instituted ways goes far toward improving
with the last war or perhaps the the morale and
bettering the liver?
previous one?
Much to my sur¬ of our people.
When I speak oi:
prise, I found that this subject has free enterprise at its best, I mean
been a controversial one for thou¬ free from
monopoly, private oxHerbert
be rio human
can
work.
never
only
United
vice
Unless
acknowledged
the
vored them or
Wc
being is and why.
industry
price
will
trols,
hdye lost the concept of what a
human
that the free
fa¬
•
extreme
influence creating
patriotism as'during a war period,
controls
I
con-
side
sup¬
if
be
may
essary,
and wage con¬
ob¬
viewpoint.
controls
wage
against
get
selfishness
literates the social
not
and
want to speak
competition
ovei
prices except* class
Human
warfare.
trols and unless there is some out¬
certainly
anc
can
I
convic¬
on
subject.
from
and
wages
that
the
the only conditions undei
which I feel they are to be insti¬
tuted are during periods of war.,
Human nature rebels against con¬
own
tions
change the objectives of industry.
It
my
tc
on
competition
s;dered helpful and possibly nec¬
sonal
collapse.' That is why I say
and it plunges
determine
mind my per¬
is
of the
expense
necessary
to
con¬
people.
at the
I felt^-
ctx.aiysis
in
are
to be the exclusive enrichment oi
individuals
inflation.
to fight
program
asked to speak on the subject of "Price
own
.itical
I When
.
was
greater importance than
the lives of all the
If
I
1
and Wage
Controls," the first thing that I felt I should do was to analyze my
views on this subject and come to firm conclusions before
attempting to discuss the subject with you. In the course of my self-
fulfill the
principles of sustaining human life
as long as strategically placed in¬
dividuals
Asserting history of price controls over 4,000 years proves they are
doomed to failure, Mr. Johnson points out price fixing leads to black
markets and discourages production, thus increasing scarcity. Defends governmental regulation of business and cites statistics that
prices have not risen above wage increases. Holds competition
as
upon
proper
with
one
can
order unless majority of the people, the profit
balance between- motive becomes a profit obsession
wages and prices;
That balance Monopoly power reigns as the
oecomes impossible when it is left
supreme norm of the conflicting
.o
the determination of one side, groups involved. We get what we
there is
rel* theory ' are becoming more ; and
more apparent.
the
The trend is against freedom in
other, that I do not believe; that
industry and toward greater and
you can corhhleteiiy cdntrdi ^ari;?
one or ,them
.without eventually, greater concentration in the hands
of few. For instance: We have -47
coming to" Complete control of all;
one-billion-dollar corporations in
The rt^'uit. is S*. totalitarian econAmerica, v Individually,each
of
omyrNoBne wantssthat? But it
these concerns' possesses greater
"leaves us with .only one alterriacorporate wealth and ail the polinked,
ativeiy
Program Director, Brooklyn Chapter, Nat'l Ass'n of Cost Accountants
social
stable
no
oe
To control, one
in
elements
aria
tree
is
It
1
5
-v human beings and the sacredness
jf life, why should the elements
One need not be an Economist,
a
Capitalist rjor a Communist to jpon which men depend for their
very livelihood, be subject, to the
see tricu mere is Something wrong
"in our present <eeonomie set-ub.- greed, selfishness and ambitions of
other men?
Secondly, there can
Tne
ist-'Suouid
little
Inflation Controls
By HERBERT A. JOHNSON*
of legislation.
pose
each industry, with government
representing people. Calls for codes of legitimate competition and
concludes problem is not economic, but a moral one. .
It is proper I think to let your audience know where the speaker
stands xifent from me beginning. I am not an Economist. I am not a
Capitalise. I am not a Communist. Well, what are you? Some of my
frienas, and many who are not friendly, would like to characterize
1
believe, as just a
i
Bolshevik front BrooKiyil. ';.
public
>-
labor and management organized ill
me,
The
Even if enacted,
the black market defeats the pur¬
redefining of competition and a
a
i
along.
Clamors for law.
clarification
and reorientation of objectives of industry. Sees trend away from ;
freedom in industry and towards greater concentration. Wants both*/
Father Smith urges
Wages, Prices and
circle .spirals
Set-up?
Our Economic
23
That you
' >
like in America is cir¬
.
cumstance; but that America lives*
,
.
V.W
as
not. For a century
(Continued on page 38)
;
she does, is
24 '
THE COMMERCIAL
(508)
is even more important,
the mar¬
ket in pound notes is an isolated
market, owing to the restrictions
imposed by Britain on their im¬
port and export
in excess
of
amounts of £5 per traveler.
This
means that even if prices in Brit¬
ain were only half as high as in
the United States it would be im¬
possible to take advantage of it
by buying up the pound notes and
spending them on British goods
Sterling Devaluation Scare
By PAUL EINZIG
Dr.
Einzig, commenting
French franc devaluation, points out
on
pound stealing is not overvalued to extent of franc, and decries be¬
lief in official U. S. circles that sterling should be devalued. Points
out since Britain has more orders for capital goods than can be
filled, sterling devaluation will simply mean "giving money away/'
Says British Treasury views devaluation effect as widening balanceof-payments gap and therefore it may be safely ruled out for present
and services.
made
by
Sec¬
r
p
o
e
inducement. And
"free" franc
is bound to inspire distrust.
The
experience of the exchange fluc¬
tuations in the '20s and '30s, when
there was a franc crisis in the
the instability of the
n
a
currencies
in
general,
the
in
course
his
of
with
market
additional
any
Eu-
of
"free"
a
fluctuating rates does not provide
devalua¬
a
tion
evi¬
Marshall
month and it was
accompanied on almost every oc¬
casion by a political crisis, is still
Plan/
fresh
dence
His
k
in ar
tion
Frenchmen.
'of
most
will probably
They
devaluation that aims at stability,
of
a
re¬
Dr. Paul
not
Einzig
by
the
Department
State
with
ment
Monetary
the
/
difficulties caused to Britain and
this remark w*s a
mere
statement1 of/the- obvious,
read in conjunction with Secre¬
tary Snyder's remark, it conveyed
the
impression that the U. S.
Government would welcome
valuation of sterling.
a
addition, the London
the
French
Finance
announced
was
the
on
de¬
day,
same
followed by a subsequent visit of
Sir Stafford Cripps to Paris.
It
"was
reported
that
the
object of
Meyers' visit
Rene
the
was
to discuss
devaluation
sterling and
Paris
visit
was
franc
the franc
of
Sir Stafford
had
the
same
and
Cripps'
object.
generally known that' the
grossly overvalued and
was
that France had every reason for
deciding in favor of a devaluation.
But, considering that prices in
Paris
are
about twice
high
as
as
in
London, it is clearly unjustified to
class sterling and the franc in the
same
category.
Yet, during the
course
of
Congressional discus¬
sions,
the
than
once
view
that
emerged
both
more
plunges
other countries
with France.
laboration
accentuate
no
reason
to snpoose
that,
by
embarrassing
Britain
through the restoration of a free
foreign
exchange market
with
fluctuating
rates,
the
French
is
in
ster¬
ling, and will make things
more
the
distrust
Britain.
difficult for
Nor is the system under which
about
French Devaluation
whether the rate of 214 francs to
the dollar is high enough from
point of view.
But
in
any
that rate could hardly inspire
confidence
seeing that the French
Government
itself
does
trust
not
This at any rate appears from
the
fact
that
French
exporters
it.
and
other
gold 1
sell
holders
ave now
of
dollars
and
been authorized to
their holdings to the
bidde- at rates much
highest
higher than
the official rates.
The
devaluation
of
the
franc
result in a certain amount of
repatriation of French capital in
may
'the
near
future.
In
the long run,
however, the method of devalua¬
tion
can
fiscal policy between Secretary of Treasury Snyder and
on
Reserve Board.
In
surprise
a
on Jan. 27 nominated
at present Chairman of the
and President of the .Scott
Truman
President
move,
Thomas Bayard McCabe, a Republican,
Federal Reserve Bank of Philadelphia
Paper Co., Chester, Pa., as Chairman of the Board
of Governors of
tc^
replace Marriner S. Eccles, who on the board and because of the
has
held
the
office
since
1936 reasons mentioned in your letter,
under appointment by
the late I have decided to remain with the
board in the capacity you suggest.
Federal
Reserve
System
"Respectfully
uncertainty
the
prevails
price of any currency
helpful to British ex¬
in any way
trade.
port
After
straight
a
de¬
valuation of the franc British tex¬
tile
hardly inspire confidence.
exporters
extent
Government
of
Export
Drive
continues
to
the
exceed
supplies available. As far as cap¬
ital goods are concerned, many
British
firms
have
which
orders
will keep them
fully occupied till
1951
Since prices, have
1952.
or
been fixed in
sterling,
any
devalu¬
ation would reduce their price in
terms of foreign
currencies below
what the foreign buyers have al¬
ready
undertaken
to
pay.
It
would simply mean giving money
away.
The process of the devel¬
in
the lines in which there is an
This
valuation.
does
not
mean,
however, that the government is
dogmatic about the maintenance
of the present
parity, or that it
considers it a matter of national
honor to defend
last
the
sterling with the
drop of its blood. Indeed, in
course
of negotiations
be¬
tween
London
Washington
and
during the last five years or so
would
Cabinet.
be
submitted
But,
the
to
the
present,
at
Treasury's view is that a devalu¬
ation would
actually widen the
a
American
circles
that
sterling
should be devalued lies in the fact
that the free market rate of pound
notes in New York is well below
the
official
rate
of
sterling.
It
cannot be emphasized
sufficiently,
however, that the price of pound
notes gives no indication what¬
ever
the
of
sterling.
intrinsic
value
cf
The market is extremely
Usually it would be dif¬
to
buy
the
stated
of
the
trade,
of
the
price
this
reason,
moderate changes
demand
this
gerated effects
are
comparatively
in the supply or
apt to produce
on
ex&'g-^
the price. What
Britain's
dollar
through
in the terms
an
increase in
price of imported goods with¬
pound notes at any given moment.
For
that
the basis of
It has often
to the adverse change
a
£100,000
on
difficulties have been mainly due
out
even
exported
present parity.
been
corresponding
of
Board
exported
increase
in
goods.
A
devaluation would further
accen¬
tuate ,.this: adverse, change.
Marriner
S.
For
Thomas
Eccles
B.
McCabe
President Roosevelt. The step was
revealed in the publication of let¬
ters
between
Mr.
Eccles.
Eccles
the
In
President
letter
a
and
to
Mr.
the President wrote:
"Dear Mr. Eccles:
.
"Shortly after I became Presi¬
dent
you
offered to resign as
Chairman
the
of
Board
does
not
expire
accepting the post
in
fixing the policies of the
Treasury Snyder regarding
imposition of further credit con¬
trols, thus ceases to be the spokes¬
man
regarding fiscal policies in
relation to
The
banking.
shift
of the
in
the Chairmanship
Federal Reserve
System is
to end the
conflict of views on fiscal policy
in Administration circles, and is j;
regarded
as
generally
a
move
conceded
victory
a
as
for the conservative forces, headed;
Gov¬
of
by
Secretary
of f the
Treasury
the Federal Reserve Sys¬
Snyder.
A short time ago, Mr.;
it was your feeling
Eccles appeared before Congres¬
that the Chairman, who is desig¬
sional committees urging the en¬
nated by the President, should
actment of further credit restric¬
serve at his pleasure.
I told you
tions, chiefly in the form of creat¬
then and on other occasions that
ing a special reserve by member
ernors
of
tem and said
there
was
point in
no
I desired to ap¬
one
your
place.
"You will have completed your
Dresent
term
as
Chairman on
Feb.- 1, your; appointment as a
member of the board continuing
until
1958.
As I
explained to
banks
check
a
as
on
undue credit
expansion.
Mr. Snyder, on
other hand, testified before
same
committees that he
posed
was
the
the
op¬
to the plan on the ground
that it would be
ineffective. More
you
recently, Mr. Allan Sproul, Presi¬
last week, it is now my preference
dent of the Federal Reserve Bank
to
of
appoint
member
new
a
the
of
board to fill the vacancy created
by the death of Vice-Chairman
Ransom, and, when confirmed by
the Senate to designate him as
Chairman.
"This
decision,
I assured you,
as
reflects
no
lack of complete con¬
fidence
in
you,
in
respect
any
dissatisfact'on
or
with your
public
service,
or disagreement on mone¬
or debt management policies,
with official actions taken by
tary
or
the
board
ship.
under
All who
chairman¬
your
familiar with
are
record recognize your devo¬
your
New
also criticized Mr.
York,
Eccles' proposals.
Warburg to Lecture
At New School
The
New
12th
series of six
talks by James P. Warburg, econ¬
omist and writer, on "Secretary
Street,
School, 66 West
announces
a
Marshall's
Year"
First
beginning
on
Thursday, Feb.
tion to the public welfare and the
constructiveness that has charac¬
12 at 6:20 p.m.
terized
reviews
leadership
Federal Reserve System.
"Therefore,
main
in
your
urge
The
course
the
history
you
member of
a
as
I
the
of
American for¬
to
re¬
the board
and to accept the
eign
p o
under
1 i
c y
the
Vice-Chairman¬
leadership o f
ship so that the benefit of your
Secretary
long
experience and judgment
will continue to be available and
that
forward
legislative proposals now pending
in Congress dealing with the im¬
portant problems of bank credit
so
may
you
carry
outlined in the President's
as
eco¬
nomic report to Congress, as well
with other matters in the inter¬
as
est
of
and
sound
a
sound
a
banking
economy.
system
"HARRY S. TRUMAN."
Eccles'Letter
replied
as
follows:
"My Dear Mr/President:
"You have stated in your com¬
plimentary letter the substance of
our
I
conversation of last week.
advised
have
time
decision
altered
you
to
and
consider fully your
this
that
Board
the
should
at the pleasure of
the Presi¬
dent, and I sought to have such
a provision included in the Bank¬
serve
ing, Act of 1935.
"I
have
problems
as
the
Germany,
various
James P. Warburg
pro¬
posals for
so¬
lution
of economic and political
problems, the Far East and Near
East in terms of the Truman Doc-'
Marshall
Plan /and
policy in the United
Nations, American and Soviet for¬
the
eign policy.
Specific lecture titles are: Feb.
"What Marshall Inherited";
Feb. 19, "Military Picture"; Feb.
26,
"Deadlock Over Germany";
March
4,
"Return to
Reason";
March
11, "Period of Deploy¬
12,
ment"; March 18, "We Don't Have
to
Fight Russia."
/
...
I have not
conviction
of
As
then, I desired to
request.
my
Chairman
and
such
covers
American
"Sincerely yours,
Mr. Eccles
Marshall
trine,
1
-
carefully
Kenneth Smith Dead
Kenneth L.
ident
of
considered
your,{.Request.r After consultation
out
withuclose friends and
associates
the
Smith, former Pres¬
Chicago
Stock
Ex¬
change, died at the age of 44.
He
of
ill
retired
this reason; it ipay safely be ruled
for the present.
In
of the
exports
ering of the price of goods which
could be
Governor of the Federal
a
fered in his views from Secretary
pensate Britain for the loss of for¬
eign exchange caused by the low¬
in
increase in the volume of
ex¬
Federal Reserve and who has dif¬
that would result would not com¬
unofficial
belief
in the black market at prices well
above the
official rates.
From
sense
The reason why there is such
widespread
ficult
point of view the establish¬
cock¬
System
Vice-Chairman,
Mr.
Eccles,
dominating posi¬
tion
of
mand
Reserve
who has had the
why a devalu¬
sterling is widely antici¬
pated abroad lies in the partial
failure of the British export drive.
It is known that goods reserved
exclusively for export are accu¬
mulating in warehouses, partly
owing to the fact that other coun¬
tries are offering them at a lower
price.
On the other hand, it is
equally true that in the majority
of exportable British goods de¬
ation
as
Reserve
reason
gap in the balance of payments
instead of lowering it, because the
to
valuation, by selling their dollars
term
as
Failure
the recovery of France ultimately
depends—it could not have chosen
a
more unfortunate
solution.
narrow.
acquire francs with the aid of
so
European recovery—on which
In any case, if Frenchmen wanted
their dollars they were in a posi¬
tion to do so even before the de¬
is
that it has chosen the right
solution. From the point of view
Federal
Chairman."
Chairman of
as
pires at end of this month, but his
until .1958.
can
sure
of
the
which
to
French
Mr. Eccles term
from Britain.
Another
yours,
"M. S. ECCLES,
gives rise to devaluation ru¬
mors.
The Treasury refused to
intervene, however, on the ground
that a higher price for pound notes
would encourage their smuggling
calculate the the British Government has al¬
they have to ways endeavored to reserve' its
lower their prices in order to be
right to devalue sterling if'and;
able to compete with France. But
Government has solved the prob¬
when
it
should
consider!, this
lem it has set out to solve. That under the system adopted French necessary. The Treasury is watch-,
orices will
depend on the ex¬
end could have been attained by
ing the* situation carefully and.
a
straightforward devaluation to change rate of the moment, and should it at any time arrive at thd
there is no way of predicting the
a sufficient extent to
inspire con¬
conclusion that a devaluation
fidence in the franc at the new tendencies on the free market. It would improve the British bal¬
is a complete mystery why the
level.
It
is
ance of payments proposals in that
open
to
question
case
dsipute
and
importance to Britain that ster¬
unsold exportable surplus a deval¬
ling should be isolated as far as
uation would not necessarily help,
possible from the "gamblers' par¬
for the difficulty is largely due to
adise" set up in Paris under the
the inability or unwillingness of
lew currency system.
British ex¬
financially weak countries to buy
change restrictions in relation to
luxuries or. secondary necessities
France will have to be tightened
at any price.
instead of being relaxed. Even so,
It is known in well-informed
there is the danger that the devel¬
circles that the Cabinet has not
opment of a discount on sterling
even considered the idea of a de¬
on the French black market will
sterling and
As to the recent franc devalua¬
For it
of
complete
that
of Philadelphia Reserve Bank, is named
as Vice-Chairman.
Change may end
office, but Eccles remains
to
the ground
notes
sterling
on
by the French ex¬
opment of buyers' market would
periment will create bitter feel¬
have to go much further before a
ings. They will certainly hinder
devaluation of,sterling would be¬
the efforts of closer? economic col¬
come a paying proposition.
Even
the franc should be devalued.
tion there is
Government
h
visit
anj
though
-In
r enc
Minister
International
if
F
into its freak currency
experiment, with utter disregard
of advices to the contrary given
at home and abroad, in violation
of its pledge given by joining the
Bretton Woods Agreement. In do¬
ing so it is endangering the pol¬
icy of collaboration in Western
Europe. For, although the British
Government, having opposed the
French scheme to the last, is now
doing everything to make the
best of a very bad job, it seems
highly probable that the increased
when it
should be found to be overvalued.
Even
Fund
instability.
The
containing a
passage according to which sterl¬
ing would be devalued in agree¬
It
minds
the
with
port
of
in
publica¬
e
gested repeatedly
Federal Reserve Chairman
as
is bad for the prestige of
every
prefer to keep their dollars and
Swiss francs until after another
i d
n c
the
,
re¬
hap¬
to co-
pened
i
average
the
on
for the British
Treasury to raise the price of
pound notes to the level of the
official parity. This has been sug¬
Replaced
T. B. McCabe, Chairman
that the discount on pound
of
ment
retary Snyder
to the subject
of
Eccles
the
It would be easy
LONDON, ENGLAND.-—The vague talk of the possibilities of a
devaluation of sterling, which have been going on ever since the
suspension of convertibility, flared up into an acute scare during the
third week of January. This was due in part to the vague reference
Thursday, January 29, 1948
CHRONICLE
FINANCIAL
&
in
1945
because
President
health, after serving
as
of the Exchange for
six years.
Volume
THE
167Number/
COMMERCIAL
&
FINANCIAL
CHRONICLE
sell
Causes oi
capital, this very important source.' and
Congressman.
Taken
torj
/-]
WntVior
ttio
llirtVl
+QVOO
of supply has entirely dried up: gether,
the high income taxes
If we could bring the Comparison and the capital gains tax have
up to date, it would undoubtedly had a dual effect—they have not
be found that the aggregate in¬ only
served
to
constrict
the
come
of people
called upon to normal well springs of equity
addition,
supply most of the new equity capital, but have, in
useful
to
liberties.
Thus, the
high and it is therefore
'our
are
and
in
the
public interest
have/these panel discussions to
.
analyze
the
problem
and
to
plore possible solutions./.
ex¬
7
U
_£_•
„
stakes
A
v»i
11
v\<
innnmO
of
much driven ' appreciable amounts
It is apparent from already
"Defunctionalizing: the Market r
existing
equity
capital
7/: .7. -7,7 7 Mecha nism / 7 77/,':/7; the figures cited above that the out :of equities into tax-exempt
first prerequisite is to ad- amount of money available f Or bonds—thus adding to the prob¬
mit add to pToye to th6 ; public new: equity investment^ after ; al-.- lems created by the easy money
that a good many things which lowing for living expenses and policy of the past decade, which
have been done—some of them Other forms of savings, falls far I'shall touch, on again later in
another connection.
under the exigencies of the war— short of present requirements."-,
money
has
since 1942.
changed
not
J
»
.
are
In other
detrimental^to 'A the economy/a'rid
structure ;•
will; not
be
must
Street
in
work
•
peacetime,
reversed/
'"Now, /Wall
words,
our
income tax
not only been a
general deterrent to private cap¬
has
ital
abuses in the 20's which cried for
formation,, but, it has been
particularly severe in jiist/those
higher bracketsOn which' the
correction, but it does,'not follow
economy
that cor*ectlons
venture
has
pared
,
of
of
general talk
,
pre¬
there
should
the
were
to the
go
The
have
we
if that
as.
There is
the
,
market.
is that
market,
virtue.
a
that
now
investment
ah
been
defunctibnaliziftg
mechanism
were
since
admit
to
point
long
credit
no
The Severe Margin Requirements
So
much
for
structure.
second
I
obstacle
income
tax
to
the
now
to
equity capital
in which
requirements have been
handled.
'
the
come
financing—the
absolutely v depends • for margin
capital. \ *:
manner
that
sense
such a phrase would
The phrase suggests that
ideal market from
an
which all unhealthy and extrane¬
elements
and
speculation
ous
have
been
removed
and
that
it
enjoys the inflow of investment
illusion—
an
it* just is not so.
This flow has
been cut into a fraction of what
it' would normally be by a com¬
bination of factors which have all
This leads
as
to
to my
me
point.
what havoc has been wrought by
this policy in impairing the use¬
fulness of the security mechan¬
Wants Security Acts Amended
I refrain from
but
(3) Apart from and in addition
just mentioned impairment
market
liquidity, the
in
Washington
Acts when they come
at this session of Congress—;
proposals represent years of
general
the
careful
study of the undesirable
effects of certain specific sections
toward
profit,; speculation
and
risktaking has been a broadly de¬
pressing stock market factor since
in
1933—and thus
an
underlying ob¬
stacle to equity financing.
I re¬
frain
from
further
mention
and
it
of
elaboration
here
citing
only for the
few
a
a
if you urge your Congressman to
support the amendments to the
of
attitude
adding to the list,
suggest that you will be
constructive piece of work
do
doing
Security
to the
of
23
*
up
of
the
tfyese laws by all the elements
the security business.
/
:(4) Let
imjtead turn to
me
an¬
other
phase of the anti-equity
philosophy — namely, the
easy
money policy.
This is part and
parcel of the
Keynesian over¬
saving
and
under-consumption
theory which provided the intel¬
legislative, regulatory and policy
impediments
which
were
born
lectual
out
hand, and for the succession of
government budget deficits which
required eaSy money on the other,
of this
in
turn
philosophy and which
contributed
further
to
constricting the security mechan¬
and
with
the
flow of
equity
cap¬
There is, for example, Section
16(b) of the Securities and Ex¬
change Act of 1934, which deals
corporation
controlling
their
has
practical
effect
of
excessive
accentuating
for
the
the
on
one
The
governmental actions taken
the basis of the premises which
follow from these
concepts—to
wit, that there
was
sumption
too
and
too little
much
con¬
savings,
were
of /income
been
to
advances, thus
fluctuations
the
to
interest is not only not taxed but
pense
of
assets
and
existing
the
at
equity
ex¬
capital.
7(5) A joint product of the tax
structure and the easy money pol¬
icy has been the shift in the char¬
acter
of
savings. Of the total, a
larger proportion that was
true, for example, in the 20's, now
much
speeches of Mr. Emil Schram, the deterrent to listing securities of flows into the market Via institu¬
deductible President of the New York Stock companies on the Exchange. Con¬ tions such as savings banks and
item.
In the case of State, mu¬ Exchange, on this subject.1
I do gress should/be urgedto eiiihinate the insurance companies which by
nicipal and similar obligations, want to emphasize, however, that all the restrictions in this section definition as well as by law must
we go even further.
In addition,' the use of its power over margins/ except the disclosure requirement •place these funds largely in shel¬
a ctualiy
becomes
:
a
income tax structure has be¬
our
come
so
holder that
he must ask himself Whether he
paid
to
would
sizable
any
not
better
be
off
to
sell
the stock before the dividend date
which for
over
at
has
100%,
a
year
held
were
tended
to
reduce
which
if
reported and released
by the SEC should be
promptly
the volume of capital that would
sufficient to
normally flow into listed equities.
As;, between various kinds of in¬
Aiaotlaer
securities.
tered
equity
insurance
which
might
receive attention is Section
11(d)
come-producing property that a which bars the extension of credit
man- can
buy, he wjill broadly on" new issues for'one
year, even
prefer one that he Can, if "neces¬ on Unsolicited
Brokerage transac¬
sary, hypothecate frefely—such as tions of firms
who participated
an equity not subject to this
baii, in an original offering either as
the
of
expense
*Dr
prevent abuses.
section
This
is
the
at
available
amount
investment.
The
f«r«
companies
buy some
stocks, but broadly speak¬
ing the
growing proporti©n of
funds flowing into the insurance
companies and the savings banks,
through most of the thirties com¬
common
peted with each other to find
an
in various ways.
and will be left with somq return
on his. money.
Now, any gram¬
outlet
in ^priorities,
in
bonds,
underwriter; as a re¬ mortgages
or
preferred
stocks.
is no question but that the margin
sult of this clause, many houses as Until
the war came and supplied
requirements have diverted funds a matter of
policy decline to par¬ an endless amount of government
into the real estate
market, re¬ ticipate in
underwriting of addi¬ paper, this put a premium on this
sulting in the very stiuation of tional issues of listed
stocks, lest type of security and was an im¬
which Mr.
Eccles, in his recent they prejudice some of their portant factor in
supplementing
testimony on the need for addi¬ brokerage clients at some later the
easy money policy which was
tional inflation
phoned
mar school, child would
plains,
Worked
in
the
general
same
di¬
rection.
(1) First and
foremost
among
theSe is our income tax structure.
This
has
amount
funds
into
worked
reduce
to
available
for
the
investment
First, it has si¬
into
the
Treasury
off
which
would
otherwise go
the
equity market, and this
has taken place at .ail alarming
rate.
One
of
recent
our
points out that taxes
the
bulk
the
of
otherwise
studies
taking
which
are
money
would
have
become
equity
capital. ■ Permit me
to
quote from our Fortnightly Re¬
view Of Dec, 2, which had the
following to say on this point:
"Roughly $2 billion of
new cap¬
and try to
gone
in
$1.5
billion
1947.
seem
Two
billion
source
billions
large
a
amount
but
economy,
has
will
been
taxation,
/ The
money
for
raised
may
in
its
stock
of
not
$230
limited
a
narrowed
bulk
the
by
new
commitments
originates
probably
be
with
earning $25,000 and
people
Back
more.
in
1916, the 40,000 people who
had pre-tax net income in excess
of
$25,000
income
lion.
had
after
By
an
aggregate
taxes
1929,
this
grown to more than
viduals
with
a
of
net
$3.2- bil¬
group
had
103,000 indi¬
combined
income
of
dividend ~ date
capital gains trans¬
action out of it, he will not lose
as much marketwise after taxes,
blocked any move to change the
situation.
Here is a job to be
done
participants in this
panel discussion and the same is
by the
true of the third facet of the tax
structure
91,000,
but
they
their
it applies to the stock
market—namely, the capital gains
7n
i
The
capital gains tax has not
only been a deterrent per se, but
introduced
distortions
into
market
commodities
or
real estate.
controls
just
as
the
There
now
100%
com¬
margin
requirements helped to create the
bubble in the
in 1946 which
tunate
.
new
issue
had
such
market
unfor¬
consequences.
was
in his annual report called atten¬
tion to the diversion of trading
from
securities into
commodities
in 1929; ■ As
virtually
all of the post-tax income
in this
strata
is available for venture
under
ac¬
I
glad
am
modification
of
this
a
of
is
section
consideration
by
the
Attention
to
should also be given
modifying Section 1022 of the
Internal
deals
Revenue
with
gins,
the
Code,
undue
need of
which
accumula¬
of surplus "beyond
tion
the
rea¬
business," what¬
having contributed to the
big commodity markets Tast year.
ever
that
ness
of this language and the un¬
This
certainty
ism of this
vanced
ing
the
am
tax, such as liquidat¬
already depressed security
to establish
a
tax loss
or
This has
been
bad
to
as
■f^for it/certainly
.
of
the
.
lation
ble
which
for
the
was not specu¬
has been responsi¬
rising
■
commodity
market 'ahd markets—and also illustrates
one
impairing its normal functioning.
The capital gains, tax should be
of
aboli^edvIl'heTruthmf^thejmat^
bued these many years and which
is
ter
that
.
no
capital gains are not
They never have been,
country J ever
/ ot he r
thought that they
until we
such.7 But
were
no
<j>ne
as
has been able to convince
,
•.persuade../:.them-- that
would
out
get, much,
of it if the tax
more
were
the
basic
misconceptions with
which Washington has been im¬
needs
the
/to
be
notion
reversed—namely,
that speculation—all
speculation no matter
Character—is bad
per
what
se.
its
The
they
revenue
reduced
fact, of- course, is that the
of risk-taking money
pres¬
ence
particularly in a second and thirdgrade equity, and that you cannot
tion between long and short-term
Here is another
job to be done; here is something
else to be put up to your Senator
1 Particular
reference is made
to
"Eco¬
Progress," a tax Study submitted
by the New York Stock Exchange, in the
preparation of which Mr. Schranv:.col! lab orated.
'
as
may be
to hpw an individual
treated at the hands
Keynesian-minded
a
bureau¬
difficult, if, not im¬
possible,
a
for
'corporate
particularly in the
a
t i
o ns
governing
depreciation
charges—the depreciation method
chosen should be optional with
the corporation, not the Treasury
Department—nor would the Treas¬
in the long run and consid¬
ering the economy in the aggre¬
gate, lose ahy revenue if this were
done.
Modification by Congres¬
ury
sional
mandate
artd 'of
tions
tional
the
would
Sections
provide
sources
•any open
of
102
depreciation
of
regula¬
two addi¬
capital without
the shoe is
we
this -connection reference is
the excellent statement entitled
Goods
presented
Committee
George
Industries
to
the
on
Machinery
&
Tax
made
"Capi¬
Reform"
House Ways &
Means
17,
1947, by
Mr,
Research Director of
Allied Products Insti-
Nov.
Terborgh,
and
assump¬
would
money
the other
with
the
Now
foot, and
question
whether the present rates will
suffice to produce the capital re¬
quired by industry even if
ume/of
we re¬
It is true that the vol¬
savings
considerable
has
extent
a
been to a
matter of
prudent foresight rather than the
rate of interest, but we now need
much larger savings. Whether an
increase in the interest rate would
induce substantial additional
sav¬
ings, and
if so how much of an
increase would be necessary, has
been fully
discussed by the fore¬
going speakers.
Price Level of Stocks
Abnormally
Low
The net effect of all these fac¬
tors has been to
level
for
stocks
produce
which
a
is
price
ab¬
normally low, as measured by any
of the historical yardsticks, such
as the price earnings ratios, book
value, net current assets, cash po¬
sition.
of
This historically low level
stock
prices which has now
persisted over a number of years
has produced results of its own
quite apart from all the other fac¬
tors I have already mentioned. It
has of itself become a powerful
d.eterfent to equity financing and
by the same token added to the
already burdensome volume of
financing that seeks to be done
credit or the bond and
stock -markets.
When
any new financing is require'd, a
corporation or an individual own¬
er naturally
shrinks from equity
financing once he realizes how
little he would get when in his
(Continued on page 26)
preferred
I 2 In
on
faced
are
by bank
market financing.
erroneous
cheaper
promote capital investment.
of
cism of official capriciousness may
be leveled at the Treasury regu1
the
on
that
treas¬
case
smaller companies, to do
any in¬
telligent planning. The same criti¬
tal
nomic
The very vague¬
means.
crat makes it
to
to, say, 10% and the differentia¬
gains abolished.
case
urer,
Witnessed,, for example, in
September, 1946, exaggerating the
fluctuations
ad¬
quirements, by Congressional ac¬
tion.
It is a typical example of
how one misstep leads to another
econ¬
large, contributing
concentrated liquidation such
at
was
been
additionaT-reason for
as an
necessity of subjecting the
commodity exchanges to stricter
controls,
including
margin
re¬
refrain¬
for the
observation!, has
of
ing
from
selling
because
the
holdings are' not six months old.
omy
as
based
tion
duce taxes.
sonable
.
this/liquidity has been impaired
it retained
that
structure
as a result of the Federal Reserve
Board's high stock exchange mar¬
less
2%
of
SEC.
the Treasury officials of the error
of their ways on this point, much
retained in 1916, ahd only
of the more than $1 billion
this im¬
as
Useful public purpose
no
record
the
now
gressive surtax rates to only $2.2
group
Provisions such
complish
Mehl, the administrator of the
Commodity Exchange authority,
in a
market contributes to its liquid¬
ity,' and the tangible evidence that
VI942, persons with
income of $1,000,000 or more kept
only $21 million after taxes, or
only, 5% of the $400 million this
v
and should be revised.
just the other day that Mr. J. M.
decided to tax them
In
date,
or
pair the smooth functioning
the * security mechanism-—they
to
As for the commodities, it
aggregate Income after taxes had
been
reduced
by steeply pro¬
billion.
dealer
by
inducing
the
people to let their market judg¬
ment be swayed by the mechan¬
income.
numbered
as
tax.
and
still
recognize
,
official
available)
a
that this is economics gone crazy,
but so far the Administration has
$7.3 billion after taxes.
In
1942
(the latest year for which
data 'is
the
cumventing
and making
ital for equity securities; was re¬ has
quired in 1946 and an amount of the
about
ex,
buy it back after it has
in the hope that in cir¬
•
on
justification,
in
deprive the market of the support
of such buyers in the case of un¬
due declines, or of sales in the
case
tactics
has
trading
theoretical
some
the
interests
and
stock; while this section
own
rationalization
soak-the-rich
obviously unfavorable to
equities, because the tax and other
measures taken to implement the
policy when examined economi¬
cally represented a redistribution
officials
ism, but refer you^instead to the detriment iof 'the security onethe recipient, while to the payor, many " thoughtful
and
telling chanism. It has also bfeen a great
warped that a-good divi-,
dend declaration often operates
an economy that is
employing 60,7 as a market depressant on the
"000,000 people and producing a stock on which it is declared. So
gross
national product of $230 heavy is the tax on the dividend
Now this is
well
as
Adverse SEC Regulations
,
by the" tax7 Whieh/j comeS/Of flthe you detract from its desirability
dividend.'
Moreover, .this 'tax and hence from its market price.
fuhds that you might expect from
billion.
investment
next and third
ism
,
discount,
necessafy, has
important deter¬
an
ital.
that /the market is In a of our national pattern Of dis¬
position • viewed from the. couraging venture
capital
arid
standpoint of the economy as a' fostering debt financing, we tax
whole. As a matter Of fact, it is interest
payments only, once—to
it is almost
to
sharp
a
prove
speculation.
Secondly, the incentive to save 7 (2) The right
to
hypothecate
in order to .buy a dividend-pay¬ property is one of its inherent
ing equity 'has been reduced- by attributes and contributes to its
If you abridge this right
perhaps 30-40% oil the' average- value.
prove
sound
not an Investment market in the
rent
purpose
to speak of in the market, to be sure
add Wall Street, as a high Federal
represents the second tax on the This is exactly what has been
Reserve Board official recently
the capricious control
same, earnings which have already,
pointed ^utids;;in4he unusual po¬ been "le vied upon prior thereto by which The Federal. Reserve Board
sition where it cannot be blamed the
exercises over margins.
corporate income tax. /Nor
I will
for anything; K,But that does not is this all.
For one thing, as part not go into details here to explain
imply.
at
that
in itself been
(Continued from page 2)
would
except
should
(509)
\
26
& FINANCIAL
COMMERCIAL
THE
(510)
CHRONICLE
Thursday, January 29, 1948
tal is too low to absorb the amount
Causes of the Abnormal Capital Maiket
(Continued from page 25)
mind
,
his
equity is worth
very much more than the market
would pay. Hence, to raise capi¬
tal, the individual or corporation
own
is
virtually
forced
tive to resolve the present dilem¬
ma is to make the equity market
more•
receptive.
.
the
application of which to new
would only add to
the
existing inflationary
pres¬
sures.
A
plausible case can be
construction
this but it overloks the
made for
Equity Markets Need
Revitalization
priority
into
,
doing it merely
further encourages the continued
fact
\
that
in
lion.
equity financing that we ought
to be doing at this level of busi¬
ness in addition to providing for
funds
the
absorption of foreign selling,
estate liquidation and other sim¬
tribute individually and construc¬
ilar normal withdrawals from the
about.
of
so
market.
stock
for
the
The
moment,
in
to
move
of
some
these
the
into
philosophy—we
tively
real
question
therefore,
is
induce
To
equity
market will require a basic change
all
can
such
bring
to
con¬
change
a
v
Business after all has the
great¬
the whole community
est stake of
whether and to what extent
now
to continued prosperity; it is not
And now we have ar¬
A statesmanlike policy, there¬
idle funds can be drawn into the callous to rising prices, unemploy¬
financing
via debt
instead of
juncture where the de¬ fore, would look to steps to shift
market. There are $13 billion of ment, inflation or the evidences
mand for such priority financing the load from the bond and pre¬ equities, a process which is al¬
of
distortion in the economy—
ready creating pressures and prob¬ governments in the hands of cor¬
is such that it is Completely out ferred
stock
market
and
take
lems; in any event a beginning porations other than financial in¬ rather, the reverse is the case—
of line with interest rates being measures to revitalize the equity
had better be made promptly- stitutions, and $66 billion in the it is deeply concerned with these
paid in the markets which might markets to assume the burden, or
hands of individuals including $52 problems. I submit that a basic
even at the expense of some in¬
be
appropriate to- the situation at least a part thereof. Actually,
billion of savings bonds, of which approach to the elimination of
flationary pressures—though this
were it not for the fact that so
this involves no more than to re¬
Idle these dangers lies in taking steps
would be argued because it will $31 billion are Series "E."
much financing that would nor¬ store the. stock market to its nor¬
take time to restore the equity bank deposits whibh are potential to promote an adequate flow of
mally be done by equity financing mal functioning. As I have just
investment money may be rough¬ capital—particularly venture cap¬
distributing mechanism
to
the
now demands satisfaction via the
stated, from the standpoint of the
point where it will be capable of ly estimated at at least $20 bil¬ ital.
bond market or bank credit. For bond market, there is all the more
attracting some real savings from
financing,
rived at
a
15 years we
reason
way
there is
have gone out of our
to encourage debt financing,
at the same -time
doing
while
everything possible' to discourage
equity financing. The results are
exactly what you would expect.
to do this as, in one sense,
no choice.
If it is desired
s'stently taken
there shall be
Conference
Board3
the
issue' market.
new
provement in the
The
im¬
corporate bal¬
ance
sheet achieved in the twenties
was
drained off in the thirties and
again we are in the process
now
Of
dissipating the
war time accu¬
capital
moving in a di¬
rection where in many individual
mulations
assets.4
of
We
corporate
are
further additions to borrow¬
cases
ings, even if the funds are avail¬
able in the market, will become
difficult and dangerous be¬
both
the
cause
equity cushion has
worn
too thin,
lematical whether all the financ¬
ing
be
handled
without
in an unten¬
situation—that is to say,
able
where institutions in order to ac¬
commodate the market's financial
requirements, sell such large quan¬
tities of governments to the Fed¬
eral that the latter is pressed into
the
position
itself
where
tinue to
buy them at
a
/
.
■
•':
•1
We are now faced with the dual
penalty for
icy
whole
our easy
the
on
and
anti-equity policy
other.
We
our
the
on
confronted
are
pol¬
money
hand
one
with
the Keynesian problem in reverse
—we
now
have too much con¬
sumption and
too
2V2% rate
again to
2 %%
a
should
are
why
done
be
3% basis.
forceful ar¬
just what
or even
many
this
is
these
and
ments have been made.
argu¬
There
of,
any
to
it.
theoretical pros
the
that
vious
tion's
the
from
particularly
new
It
:
is
for
(*
out
this
of
set
forces
of
the deliberate
plus
the
demand
enormous
capital.
stiffening of
rates in¬
spring of 1947
short-term
money
augurated in
the
that the broad shift in bank in¬
terest rates and market levels for
corporate
bonds
and
high grade
developed last
simply reemphasized the dearth of equity
money.
One of the by-products
preferred
fall.
'
of
stocks
This
:
shift
this shift
rate
in
structure
trating the
the
bond
well
as
market
as
pressure to do
illus¬
priority
financing has been the number of
of
cases
loans made
to
corpora¬
next
a
off
and
in turn have
been bought by
the
Federal Reserve System as part
of its open market support program. Since nothing can "be done
,
about
.
the
rather
easy
since
money
the
policy, or
that be
have decided to hold the longterm government bond market,
obviously the only other alterna¬
powers
theoretical
not
table,
Almanac
based
on
mercial
4 See
Bank
of the Economic
1948 of the Conference Board,
figures compiled by the Com¬
&
page
42,
Financial Chronicle.
monthly letter of National
January—page 10.
for
City
measures.
tives
representa¬
announced America's
have
not
more
raising their costs of doing
and
hence
also
making
prices. As the New
"Times'* 'put it editorially
week, forgone who is sup¬
higher
last
posing the very opposite of what
was urging fvvo months ago;
he was on sounder1 ground in his
message to the special session of
Congress in November when he
said: "Every dollar that is saved
instead of spent is a dollar fight¬
he
ing against
In view of
disposition to make still further
through the European Her production of electric energy
Recovery Program, and the great was 130 billion kilowatt hours as
debate on that program is under compared to
117 billion in the
United States. Her shipyards pro¬
way.
The European Recovery Pro¬ duced more than seven times the
gram deserves a great debate.
It gross tonnage of American ship¬
is the most ambitious plan of re¬ yards, and her production of tex¬
organization
recorded in his¬
ever
tory.
Upon its success or failure
many
heavy issues depend.
in terms
in
of power politics,
much
terms of humanitarian consid¬
These
erations.
are
important factors.
politically, nor in
from
will
relevant and
the long run
humanitarian
a
United
States
neither
But
the foregoing I think
will agree that it is Virtually
impossible to say how much new
equity money might be forthcom¬
ing in 1948—the statistical data
is
a
pretty elusive at best, nor could
it
viewpoint,
assistance
be
the
steel
best
output
tons almost
of
pre-war
55
about
equaled the
million
best
very
American
tonnage.
Her output of
machinery, electri¬
equipment and the other tools
of production was enormous. Her
cal
transport
much
as
successful, unless it enables Eu¬
to reorganize its economy
that it will become self-support¬
system
tonnage
carried
almost
that of
as
the
tural
rope so
ing at
time.
In
agricul¬
production,
although
not
strictly comparable with that of
States,
her
and
the United States, was in the same
decent standard of living order of magnitude. Of the basic
a
reasonable
period of commodities, only in such items
as
oil, some of the non-ferrous
a
within
my
judgment, such
a
reor¬
be
States,
There
in
otherwise when
confidence
•
reorganizations
possible to guar¬
few
are
it
which
is
antee success,
but reasonable pros¬
pects of success should always be
the basis of any plan. And success
metals, lumber, and cotton did the
an
investment
whether he does
money.
'
:'i«
ledJ
f«•
-:
'
need
for
war.
replacement
There is
and
mod¬
ernization, but if the existing
pacity
can
management and
All of these
essential elements are, I believe,
either present or can be provided
ca¬
be utilized to the full,
equipment.
good
program,
sufficient
in
new
connection
money.
with
the
proposed
reorganization of Europe.
Let
look first
us
at the
assets
to be dealt with.
Europe Not Moribund
It
as
is usual to' think of Europe
moribund
But
the
facts
or
hopelessly weak.
belie
that miscon¬
ception. What we are dealing with
is an area containing some 270,000,003
with
a
people,
highly
skilled,
heritage of education un¬
paralleled in the world and with
productive know-hpw
if at all, only in the
United States.
These 270,000,000
technical
are
possessed of incalcu¬
lably valuable assets in their tra¬
ditions of
We
for
deferral
some
have, then,
our
great
be
of
investments in capital
as
basic
assets
proposed reorganization a
mass
standing
of
people
with
out¬
cultural
strength, tech¬
nical ability and political moral¬
ity, and with a great productive
plant at their disposal. We have
another
asset,
too,
which
is
equally important—a will on the
part of those people to work hard,
need be to
endure austerity
a
long period of time, in
if
over
order to achieve recovery.
The
astounding progress made by the
European nations since the end
of
the war, despite the vast de¬
struction, the fundamental dis¬
ruption of trade, the loss of for¬
eign investments and shipping,
and the
devastating effects of the
weather, bears eloquent testimo¬
nial to this will to
recover.
personal freedom, par¬
some¬
liamentary government, a rich cul¬
It is ture and other great intangibles
clear, however, that the
am stating pretty
does not want current generation of equity capirequirements
5 $186
million of new money flowed
here because it is afraid the higher
)nto the inyestment trusts in 1947, of
level of stock market prices will Which',
perhaps $120 pillion flowed into
encourage
additional
financing, the «46ck • market.
it correctly, that it
to
lower
margin
the outbreak of the
can
thing else with his
or
via
so,
.
capacity of Europe today isequivalent, if not entirely
to that which existed prior to
new
The
trust5
or
cal
large
people
directly
decisive pro¬
,
there
a commitment in
the stock market actually does so
earnings/justify
a
advantage. .
> >
r\\ '•»
Generally speaking I believe I
am right in
saying that the physi¬
usually does follow from a com¬
bination of good assets, a sensible
a
the
her
years,
of
pre-war
effective unless it is economically
surpassed,
takes
considerably
greater
production.
was
than the United States
United
plays such a large role in deter¬
mining whether a man whose
excuse.
Reserve
tiles
In
Much of tne debate may be cast
inflation.''
you
ban
Marshall Plan
considerably
produced
coal than the United States.
response
bank cred¬
posedly intdr&St&Mn curbing in¬
flation, MrV'Trdfrfkri'has put forth
a
thoroughly^'Inflationary pro¬
posal. The PreSidfeh't is now pro¬
economy of
Federal
Europe
more
Even the plan¬
England permits
switching in the American mar¬
ket in blocked accounts. This is,
of course, only a minor point but
symptomatic—obviously we will
'^ave to go much further than that.
ned
herent strength.
Before the war,
,
States
United
Now
almost
President's
position, and I think I
3 See
made
extremely
generous
re¬
sponses—through UNRRA, through what is still one of the two most
post-UNRRA assistance, through productive areas on earth. Indeed,
surplus property and lend-lease the main reason tq support an aid
credits, through the recently en¬ program for Europe lies not in
acted Interim Aid law and other Europe's weakness but in her in¬
demands.
business
the
even
may
ductive
does
the
it to finance their needs, in addi¬
nothing has
to revitalize equity fi¬
is
the other
To the ap¬
concede that none
countries, includ¬
ing Great Britain, has the strength
to play the role of world leader¬
ship which many of them played
at one time or another in the past,
collectively their assets add up to
we
United;States have
however,
there
the rest of the world.
peals from Europe and elsewhere
the
United
States
has
already
While
of the European
and particularly the Eu¬
ropean participating countries, act
with the boldness, the imagination
and the vigor which the situation
This
tions to resort to
point of view of this discussion.
which
materials and
equipment sufficient at least to
help meet the critical shortages of
provide.
Instead
he wants
to
step up corporate
taxes which will again be at the
expense of the capital available
to the economy, forcing corpora¬
2V2s amounted to
a
mere
3
basic points—that is
from a yield of 2.45 to 2.48—does
for
on
food,
ganization is feasible if the. United
posal
been
a
(Continued from page 12)
with
and
pro¬
sided.
long-term
long-term governments, which restricted margin accounts,
time;
of the scale—tax relief for
venture capital, for job producing
capital against the day when the
inflationary pressures have sub¬
directly by insurance com¬ been done
panies at rates slightly above the nancing. The Federal Reserve has
high grade government bond mar¬ not even receded in such minor
ket, to finance which they have matters as permitting switches in
sold
this
end
the peg bid first appeared.
lowering of the beg prices on
December 24, which in the case
tions
at
rately is tax relief
The
far,
antithesis of
the $40 per capita
bonus will only
our
already
existing
What is needed despe¬
aggravate
problems.
when
So
:
the contrary,
cost of
living
alter¬
from
take
situation requires when
on
tion to
situation
very
consumption
mass
market, which decision, as far as
the market was concerned, was
made as far back as November 14,
the
will
the greatest number. We do not
need another temporary fillip to
made to hold the long-term bond
alter
It
examined from' the point of view
of the greatest ultimate good to
York
not
the
what the
there is
of
will.
might add here that the Pres¬
latest tax proposals are
obviously
year.
decision
at
Europe's Hope oi Recovery
ident's
for
The
on
President's Tax Proposals
I
From the administration's point
of view and the money managers'
native.
capital
produce
time and thought to restore it.
Administra¬
no
has
to
The truth of the mat¬
the equity market is
spiggot which can be turned
not
are
cons
really, therefore,
the
be able
will
that
is
we have
the
the amount of
on
which
money
ter
every reason to
to revitalize the
within
eare
this year.
would
the
taken
surplus shall be applied
markets
require / additional capital
higher Wages - are ; demanded to
at such levels to offset losses on
keep-pace with' the higher prices
their bond portfolios which would
and they, labor insists, must come
out of the profits of industry—at in addition to other things create
a
political
problems.
time when these profits to¬ unwelcome
gether with the savings of the so¬ Finally, of course, there is the
large
short-term
debt-maturing
ciety, are already inadequate to
meet
been
leterious effects
point of view there is
support a policy
equity distribu¬
own
position that
reduction,
foreign com¬
reduction, without any
thought whatsoever of the re¬
quirements of our capital mar¬
kets, which at this juncture are
paradoxically much more impor¬
tant to the economy than the re*?
duction of debt.: Moreover, the
latter
operation—paying off or
debt by applying the Treasury's
cash surplus this quarter if not
handled very astutely by the mon¬
ey managers may have very de¬
of
this controversy, it should be ob¬
and
or
con¬
tax
our
have
has
tax
less cogent arguments against
Without stopping to examine
no
the
no
after
mitments
savings.
tion mechanism if that will ease
tod lit*
tie savings of venture capital in the strain of holding the longMr. Eccles
relation to other types of saving. tem 21/2s above par.
Our inflationary agricultural and himself in his testimony of De¬
fiscal policies have produced a cember 4 pointed out that it would
level of consumption which has require vastly larger support pur¬
chases to hold a rate of 2.60 or
gotten out of line with our pro¬
2.65 than a 2.45 rate for the money
ductive capacities and in the face
thereof the rationalization for the managers would run the risk of
continuation of the short work having to absorb the huge quan¬
week
and
the
featherbedding tity of E, F and G bonds at the
problem is, of course, again the higher figures, not to mention the
old underconsumption theory—» fgct. that some of the country banks
More
little
con¬
if it had not better back away
or
'
Savings ;.4|;■ j; -•.>
ask
it must
it is wise to
whether
guments
*:'■■;
putting
the money managers
Now there
Too Much Consumption, Too Little
be done
that is pressing to
can
The Treasury
that
and
reversed
to be
have
policy, which is anchored to a
long-term 2V2% rate, it can only
be done, if the present pressures
ey
to do bond financing rather than
equity financing are ameliorated.
shows If this is not done, it is prob¬
graphically what has happened in
Considerable legisla¬
people.
tion will
modified.
The chart here based on figures
compiled by the National Indus¬
trial
the
to maintain the present easy mon¬
I
visted
ing the
war
Western
Europe dur¬
and again at the close
of the war in 1945. The European
all progress from the
jungle is marked. They are pos¬ economy was then almost at a
sessed, too, of material assets of standstill, production was at a
such value as to compare most low ebb, governmental machin¬
favorably with the productive po¬ ery was either -non-existent or in
by which
tential of the United States itself.
low
gear,
transportation
was
■
Volume
167
and
Number 4668
THE COMMERCIAL
&
FINANCIAL
CHRONICLE
(511)
that, without increased it requires great faith indeed, par¬ toration of the German economy
production, less food and other ticularly if you are in a position can take place so as to serve as a
When I
revisited the area last consumer goods per head will be of responsibility, to assume that base for the Rotterdam and Am¬
fall, there was a most marked available. At the same time, there the absence of allocations and sterdam trade, I should say that
contrast. The productive machine has been a change in the terms of controls will bring plenty. Even the future of the Dutch would be
Neither of these two
was
turning over, .and turning trade to the substantial detriment the United States did not possess assured.
over
amazingly well, the trans¬ of Europe; prices of the food and this faith when faced with the things have as yet been accom¬
portation system was in effective raw materials which constitute the shortages and needs of war and plished but neither is so remote
as not to
justify hope.
operation, and \ trade was once bulk of European imports have England's present plight is com¬
Finally, take the case of Bel-,
more "moving.
The improvement, risen considerably more than the parable to the necessities of war.
gium.
Belgium
had
relatively
Yet with all the question marks
to be sure, is attributable in good prices of industrial goods which
little physical destruction.
The
part to postwar credits by the Europe exports. Again, foreign in¬ that face the English recovery,
invader
ran
over
the
country
vestments have had to be liqui¬ none
seems
absolutely
insur¬
United States, Canada and a few
other countries, and to the ex¬ dated, resulting in the loss of sub¬ mountable in the light of the dis¬ quickly and was run out of the
stantial prewar foreign exchange cipline,
character and political country quickly. He did not have
penditure of Europe's dollar bal¬
time to tarry long with destruc¬
Similarly, the destruc¬ maturity of her people.
ances, but by far the chief con¬ earnings.
tion.
The Allied Armies spent
tribution has been made by the tion of merchant vessels during
France, Italy and Holland
large sums in Belgium toward the
the hostilities has meant that, in¬
energy, the ingenuity and the de¬
end
of the war which enabled
Take next the three countries
stead
of
earning dollars from
termination
of
the
European
shipping as in prewar days, Eu¬ which suffered most from war Belgium to accumulate dollar and
peoples themselves.
devastation and enemy occupa¬ sterling; balances and .the use of
Let us look at some of the ac¬ rope how must spend dollars for
tion, France, Italy and Holland. reserve manpower had much to
complishments since the end of shipping services. Perhaps most
In each there are important ele¬ do with the rapid recovery of
the war. Of the some eight mil¬ important of all, the extent of
ments of strength, and their prob¬ Belgium after the close of the war.
war devastation has been so great
lion displaced persons found in
Unlike other European countries
that a substantial portion of Eu¬ lems, while serious, certainly do
Germany,
Austria
and
Italy,
Belgium's ability to capitalize, on
not appear insoluble.
rope's productive output must be
nearly seven million have been
Perhaps of all the countries in the products of her colonies was
diverted from current consump¬
repatriated and the resettlement
unimpaired but the Belgian lead-:
tion to reconstruction of the basic Europe, France has the greatest
of the remainder is proceeding.
ers showed great courage and de¬
stocks of wealth—housing, trans¬ reserve of valuable material* as¬
Vast areas of arable land have
in
the
manner
in
sets. Her food problems in normal termination
been cleared of mines and war port, plants, tools, machinery and
which they set about cencentratyears are minor; she has the pos¬
raw materials 1'•
£' sibilities
wreckage- and restored to the
of a good balance be¬ ing on the production of coal and
These inherent economic diffi¬
plow. Despite the unprecedented
tween her agriculture and her in¬ the rehabilitation of the currency.
destruction of railroad bridges, culties have been aggravated by
dustry; she has iron and coal, and V Drastic monetary reforms were
marshalling yards, cars, locomo¬ the disruption caused by the war though her political situation is put into effect, incentives were
in the normal flow of interna¬
tives, trackage and other facili¬
unstable her people are industri¬ established, and though the cost
tional trade. The shattered nerv¬
of living went up its rise was far
ties,
the
railways,
ous and tenacious. Given a normal
European
ous system of European trade is
below that of France.
She has
through
intensive - effort
and
crop yield, a period of political
the most difficult thing to repair;
striven hard to avoid controls and
rapid turnover of available equip¬
stability,; increased
imports- Of
the normal routines and systems British and Polish
restrictions on imports, and she
ment, carried
more
coal and a sta¬
passengers
scarce
trade
halting,
flow
the
almost
was
of
means
freight in 1947 than in 1938.
In
other
been
encouraging
the
At
fields, too, there has
improvement.
middle
of 1947, Marshall
shipyards
had
under
construction approximately 3,340,000 gross tons of merchant ves¬
sels, almost 50% above the mid1939^ level;
1,540,000 gross tons
were
launched in 1946, as com¬
pared with an average of about
Europe's
million
a
before
tons
Production *
shows the
the
electric
of
war.
power
improvement,
same
an
of such trade can be reestablished
low¬
are
value that confidence in them is
once
steps
again restored. All of these
are possible, but they take
took the necessary
ures
balance
to
internal meas¬
her
budget, free
and stabilize
rency,
external -assistance would
not
necessary.
still
below
even
levels,
pre-war
this
in
field
strides have been made.
ing
the
output
but
remarkable
of
Exclud¬
the
United
Kingdom,
production of coal in
Europe increased from
41% of prewar in 1945 to 88% of
Marshall
in October, 1947. In the
United Kingdom the output was
80% of the prewar in 1945 and by
November, 1947, had reached 92%
of the prewar level.
^
x
I could give you many more
similar figures, but suffice it to
say that, despite all obstacles; in¬
dustrial production in the United
Kingdom, Belgium, Denmark,
Norway and Sweden was running
at a higher level in 1947 than in
1937, that France and the Nether¬
lands were approaching pre-war
levels, and that only in Italy, Aus¬
prewar
tria
the
and
Germany
a
Western
was
Zones
of
production still at
production
the
reveals
zations
strength of Europe and gives
sonable
of
of
assurance
the
the
rea¬
success
reorganization
plan now proposed. It does not,
however, detract from the need
for that reorganization.
For the
improvement to date has, as I have
said, been due in part to foreign
aid, in part to drawings upon the
European dollar balances. It has
also been accomplished at the ex¬
pense of depleting Europe's work¬
ing stock of fuel and raw ma¬
European
terials. And
even
it
factors,
apart from these
be
must
remembered
that European industrial produc¬
tion must far exceed the prewar
output
if
Europe
self-supporting
life
even
at
There
For
one
a
standard
that
of
en¬
practices, reduction of trade bar¬
riers, including steps toward the
achievement of
a customs
union,
others. Not all of these
reforms can be accomplished over
night; many of. them, in fact, can
be achieved only as a result of
gradual development. They will
Production
many reasons
for this.
thing, agricultural
pro¬
duction is, and will for some time
remain far below that of prewar
overlook
Of
Italy, reconstruction is
pro¬
basic
the
eco¬
server
is
will
by
the
of
work
the
I
mistakes
have
men¬
is
I
there
have
larations
ruptions
curred
own
of
borders, the dis¬
that
these
Belgium
indication
an
Western
would
trade
that
result of the
as a
have
war
oc¬
deep¬
already made reference
to substantial losses in her foreign
investments and it was her foreign
investments and her income from
services
now
largely impaired
on
which England relied for approxi¬
mately 25% of her necessary im¬
port costs. Due to many factors
her
coal
production, perhaps the
chief basis of her nineteenth
cen-
tury economy, has seriously
lagged. Today England is making
very
determined efforts to im¬
prove
her coal production
again to export coal to the
tinent.
"
V-
and
con¬
'V
Another
large item in England's
balance of payment picture is the
rise of world prices in foodstuffs
and
raw
materials.
the pattern
the
future
tions
are
Recovery
was particularly hard
the war, bqi in her efforts
to recover she has given the world
an outstanding} {example of cour¬
age,
character and hard work.
Holland's cities, ports, transporta¬
tion systems and even the land
itself were ravaged by the in¬
vader. Her great ports of Rotter¬
dam and Amsterdam were heavily
damaged and the continued occu¬
pation of Holland by the Germans
made it impossible for the Allies
of her
It
has
been
economy to
port foodstuffs and
raw
im¬
materials
and export finished products. The
of finished
products have
not gone up as much relatively as
have the cost of the imported food
to use Holland as
a
base.
In addi¬
tion her colonies, due to
political
and
military disturbances, have
for the time being become liabili¬
ties rather than assets.
No doubt
because of these heavy inroads on
her economy and the drains im¬
posed upon the nation, heavy con¬
trols were instituted to which the
people have responded with a
discipline which is comparable to
that of the British.
Holland, particularly due to the
of the German invader, is
fury
having
hard time.
But despite
their low rations her people are
a
and
materials, yet without these working extremely hard and they
imports the Island is really grip¬ have made great advances in the
ped by the throat and her econ¬ reclamation of their land. If mat¬
omy
comes
sidies and
has increased by about 10%, which
but
is
to
maintaining
in
a
dead stop. She
important sub¬
her controls
rigid
periods of great scarcity
are
ters
can
be
straightened
Indonesia- and
a
oujt, Jn
substantial
vivarof the. exports from that
can
re-
area
be resumed, and if some res¬
will
measures
be
some
accomplishment. In my
judgment, .the European Recovery
Program should be so framed and
administered that it will provide
such inducement and means of
■
". ■ ,v "////
;
should be made in the
the plan to encourage
pressure.
/Efforts
of
course
trade with the
ern
■
countries of East¬
That line
Europe.
normal
is
and
of
trade
vitally important
the
of
were
their
may
trends
economic
in better order.: ;
related
to
another.
one
may
to success of the program.,
■
of
4
Europe's
or
unrealistic but would involve self-
defeating economic regimentation.
The need is for
ambitious
something at
and
more
once
basic—
adoption of sound principles
of
reorganization and strict insis¬
tence
upon
adherence to those
principles.
/
The main
principles
sense
that
distributed.
a
There should not be
repetition of the experience with
the
recent
British
loan,
where
both the giver and the taker lost
the full benefit of the loan
through
the apparent lack of any immedi¬
ately available information as to
the
ip which the money
being applied and the bene¬
was
accomplishing. Both
sides of the Atlantic gained the
quite erroneous impression that
the loan was /totally ineffective
and each Side was prone to blame
manner
was
fits
it
the other for it.
It Is
nonsense to
argue that arv attempt to follow
the proceeds of a loan or of a
grant constitutes
an infringement
sovereignty of the taker.
contrary, the recipient
should
economy
5 years.
Such
programming would not only be
the
fillly supervised in the
those who give and those who re¬
ceive should know for what the
aid was given and how it was
plan, I do not To
of course,/blueprinting all
the next
less
I believe it to be of great im¬
portance that whatever assistance
is given to the reorganization of
Europe in the form of new money
from the United States be care-
upon the
the
sensible
a
mean,
the details
for
the
to
al¬
has
in
paces
By
Holland
to
for their
The economies of all these na¬
/
hit by
ly affect her.
have
in
of Europe.
intention
of them will in¬
jure strong and articulate vested
interests, and all of them will be
misrepresented by partisan oppo¬
nents of the program.
It is im¬
portant, therefore, that there be
a constant incentive-and
pressure
European nations
follow ^ if
situations
the
constructive /role
good
essential
unpopular,'
heartening sight. Indeed
case of Belgium may
most
a
other
people, by their desire to forget
economy
of
accomplish them. But good inten¬
tions are not enough. Many of
v
within her
Paris Report is encourag¬
The
think the
be
energy
Italian
past and forge a new and
brighter future. By last autumn
production had revived to about
accom¬
ing in its recognition of the neces¬
sity for these steps and in its dec¬
deficit.
have
of
other areas.
Though we
have fine schemes for chang¬
ready
given
of her
financial ing the axis of the European econ¬
soundness,
her
willingness
to omy from East and West to North
adopt politically unpleasant but and South, it will be a long time,
necessary measures and her vig¬ if ever, before such a fundamental
orous instinct for a free economy
change is satisfactorily achieved.
Every recent ob¬
struck
to
difficult
and
directions.
to
be made and will have to be made
in the future no doubt, but the
from abroad, and the troubled po¬
and
hard
plishment but if the proposed re¬
organization of Europe is to suc¬
ceed, I believe it essential that
real progress be made in these
had
dollar
compromises
example
of Europe.
litical situation.
substantial
a
Some
be
*
years, necessitating heavy imports
of food. The population of Europe
In
rest
has
and many
proceed at different
different countries, but
basically the recovery of each de¬
been plenty, but to portray those three-fourths of prewar, and fur¬
pends upon the recovery of all.
mistakes as the dominant factor ther advances were prevented only
That is why I have spoken of a
in the situation is to distort the by the lack of imported raw ma¬
reorganization of Western Europe
picture completely. That becomes terials and fuel. The Italian Gov¬ as
a
whole
and I why
I have
clear if we look at what has hap¬ ernment, under intelligent, coura¬
stressed the collective strength of
pened and is happening in certain geous leadership, has instituted the assets of this area.
1 /, / •
of the major European countries. vigorous and relastic measures to
restore financial stability. The in¬ /
Accomplishing Reorganization A J
Case of Great-Britain ■ !
creasing economic importance of
How can such a reorganization
First take the case of
Great the Middle East creates prospects
be brought about? Assets, human
for increased trade of substantial
Britain.
In
many
respects her
and material, are -basic but they
Given a are not alone
problem is more difficult than that potential significance.
enough. There must,
of the other large Western Eu¬ revival of Italian trade with Ger¬
in addition, as I have $aid, be a ropean countries. Being so heavily many and the Balkans, and a rear sensible
plan, good .management
dependent upon her foreign, trade sonable solution of her surplus and sufficient new money; Each
for subsistence, having so rela¬ population problem, Italy should of these elements is fundamental
be able to plan an important and
tively few agricultural products
prices
war.
Agricultural
are
become
to
approaching
joyed before the
Reduced
is
cur¬
Such generali¬
difficulties
tioned.
I
inherent
be
nomic
low ebb compared to prewar.
This improvement in industrial
trade
her
her
lions in 1947.
the
ceeding well, in spite of the great
physical destruction that occurred
One
frequently hears it re¬ during the war, the disruption of
peated
that
Europe's
present much ci her prewar trade, her
weakness is due primarily to her
shipping losses, the falling off of
own
mismanagement, that if she tourist receipts and remittances
hours
1938 to 170 bil¬
Coal production is
all
time to accomplish.
increase from 130 billion kilowatt
yearly in
bilized
budgetary and monetary
position, France not only would
ered, restrictions are removed and recover but would be a powerful
currencies become so stabilized in
stabilizing influence throughout
only after trade barriers
mone¬
tary stabilization, drastic anti-in¬
flationary measures, elimination
of inefficient business and labor
.
and
include financial-and
ures
non-existent.
27
seem
to
me
be the first to insist that
procedure be set up to enable
the proceeds to be readily traced.
a
This
procedure
is not advocated
as to insure that
every dollar
is most efficiently spent—there is
so
no
procedure
there will be
which
no
can
insure
waste in such
a
large enterprise—but to shed light
on the whole process so that all.
see and learn the effect of
this business of international aid.
may
Money carelessly furnished
or
simple and obvious.
<
carelessly accounted for usually
Every effort should be made to has
poor consequences and this is
stimulate the basic productive re¬
particularly true of transactions
sources of the
particular nations between nations.
And certainly
or area to be
aided, rather than, the
prospects for further credits or
at the outset at least, to invest
grants are impaired where infor¬
huge sums to uncover entirely mation
is not available regarding
new resources or to develop new
the utilization of past assistance.
productive enterprises. The latter
It would seem obvious that fi¬
are
slower
of
accomplishment,
nancing on the scale contemplated
more difficult to achieve, and in a
and for the type of things needed
situation where means are lim¬
ited and needs vast, are not likely should be afforded, in the main,
both
to
yield
or
the most effective results.
either the most prompt
The furnishing of external as¬
sistance
should
be
conditioned
.
the cooperation of the recip¬
ient nations in taking those farreaching measures of economic
upon
.
-
unification and reform which arealmost
universally accepted
These
sential to recovery.
as es¬
meas¬
in the form of grants rather than
loans.
now
Financing in the amounts
needed, if provided primarily
in the form
of loans, would im¬
intolerable burden on
many of, the participating nations
and would create a very difficult
transfer problem.
Unpaid, loans
are
bad things to have around
pose
an
(Continued
on
page
28)
£8
COMMERCIAL
THE
(512)
the program.
Eniope's Hope of Recoveiy
*
the time when
private financing can take over tion, the director and his staff
1 he
field.
If Europe is choked could serve to supervise the use
grants will speed
with loans there will never
financing
private
that
prospect
be any
should be given
latitude
appropriated funds
for the use of
so-called off-shore purchases,
for
of
between
and Europe,
America
South
The re-
States.
trade
United
the
than
establishment
countries
other
from
purchases
and
Europe and Indonesia
Asia, for example, are very
between
and
important factors in the rehabili¬
Europe but of
the world.
With these off-shore
tation not only of
purchases the so-called Marshall
Plan for Europe becomes in real¬
rehabilitation plan for the
Such
off-shore procurement is bene¬
ficial not only in the case of, goods
which can be more economically
purchased elsewhere than in the
United States, but also in the case
of goods in short supply in the
United, States.
So to distribute
purchases would not only reduce
the
inflationary
effects of the
program on the United States but
would also help to remove the
present disequilibrium of world
trade.
vV'
y./'v" '/;/ /: !
ity
a
world economy as a whole.
supplies granted un¬
to coordinate
participating
The director would not
der the program and
efforts
the
Will resume.
Wide
of funds and
countries.
the
of
mouthpiece for the
or for the Eu¬
ropean ; Committee
which
ap¬
pointed him and which would
presumably give him over-all pol¬
icy directives.
His strong rela¬
tively independent position would
enable him to serve as the focal
merely
be
a
American agency
American
the
with
agency
would ordinarily be
that agency,
and
therefore
recommendations
acceptable to
scarcely hope to prevail
be long maintained.
see
in the
advantages
many
establishment of such
European
a
organization.
In brief, I believe it
would
to
tend
few
A
words
about
now
the
management aspect of the pro¬
posed
European
reorganization.
We have heard much discussion
form
the
about
of
which
agency
with adminis¬
tration of the program on the part
•of the United States. That discus¬
should
be charged
around
.such questions as whether the ad¬
ministrative agency should be in
corporate form, whether it should
sion has generally centered
partisan
disarm
should
foe. It is inappropriate for one who
is the head of an international
State
Department
to
attempt
advise
to
the United
States Government how it should
organize to distribute its benefits.
The
vigor of the debate
the
on
form of the American.administra¬
tive
agency
what
scure
other
however,
may,
believe
I
to
be
ob¬
an¬
Upon the initiative and
coopera¬
of European govern¬
nationals; and it would
real
integration of
wards realization
to¬
of the
potential
•collective strength of those econ¬
omies.
The United States
help
easier but
can
and make the hard way
in the end it is a task which Eu¬
rope
'
alone
can
achieve.
a
continuing
organization.
I would urge upon
them to give serious consideration
to the creation of
which
group
organization
an
is something
more
than,
a
of national representatives
who usually are unable to accom¬
plish more than a series of politi¬
cal compromises.
sential,, in
foe
at
the
my
Rather, it is
es¬
judgment, that there
core
of
the
European
eorgtinuing organization
an
no
national government and
beaded by a European director of
recognized independence, courage
?md ability. It is my thought that
the director and his staff would
make the initial recommendations
with respect to programs and al¬
locations,
based
evalution
of
the
the
on
a
continuous
performance
of
participating governments in
aid
have
been
induced
that
hope
to
great collective strength
able
to
take
batile
ground of
wars
continuance of, objective is worth
a
energies which
the
existing strains and want will;
afford a more likely climate for
the adoption of political and eco¬
nomic systems which they favor.
These distortions may be supple¬
to
a
grandiose
rant the expansion.
According to Professor Hoover,
times the
contemplate to
objective
The
expend.
is
not
Professor Hoover
will be able to
and
obtain sufficient crude oil to war¬
stable
many
we
Pro¬
the
doubts that Europe
a
of production and peace, the
area
is the most
of
and a 20% increase in the
output of steel was likely. The in¬
crease in oil refining capacity was
and
from
area
feature
gram
advantage of
thus to transform the
possibly will
cooperative
the time when
speed
is
her
United States
trical power program
tp
rehabilitation Europe can be
she
deficits.
gad
in addition
If
and
food
will
materials
raw
be
the
principal ' commodities
re¬
quired from the U. S.,\for Europe
a
will-of-the-wisp, it is, a worthy
and, I believe, one within
reasonable prospect of attainment.
will
goal
able
be
to
its
perform
own
processing and manufacturing op¬
erations. Among the more impor¬
tant
improvements fostered by the
Professor Hoover sig¬
the
proposed
European
customs union, standardization of
Program,
Monopoly Controls and Keynes'
Theories in Prospect
(Continued
laws
physical
on
natural
validity.
or
universal
have
do
depend
from
upon
man
equipment, the free movement of
labor from labor surplus to labor
European monetary reform.
generate could be held down.
may
spite
proposals for
shortage countries,
.4)
page
In
nalled
of
this
aid,
Stabilization
Economic,
Professor
i
dolj-
Harris felt that the European
the
and
Federal; Government,
Among the questions of current
lar
shortages would not be over
by the end of the Program in 1951.
import treated at the meeting, the
this principle
If
paper
demic interest. If
gress
time
and
change
o ve r
The validity of
space.
the
funds
allocated
by
Conr
of Charles O. Hardy of. the
Congressional
Committee
the Economic Report: is of spe¬
on
ion the
cial interests
Program must be such as tp
fire
the imagination of Europe
and
coordinating and
strong
a
ery
appeal to the idealism of
to
and
youth. I know of nothing which
would serve these purposes better
than the successful operation of
its
such
I
European
a
suggested,
have
organization as
for in it lies
tial ingredient
for a successful re¬
I believe, that the Congress
lows.
approach the question of
the amount of assistance to be
furnished from much the same
should
standpoint as that of a banker
asked to finance the reorganiza¬
commercial concern.
Once it is decided that a reorgani¬
zation is possible and is economir
cally sound, the issue is not how
little new financing might con¬
of
tion
a
Europe in an amount so small
it would, enable her to sub¬
to
would be
to recover
taxpayers' money,
which in the long run would act
to the detriment' rather than to
the benefit of all. On the other
real waste of
a
of course, assistance must
given in amounts so largfc
deprive Europe of incentive
hand,
not be
to
as
tp contribute to
own
the maximum to
these principles
is a very dif¬
ficult
and highly technical job.
All that I can say on that score
translate
To
into terms of dollars
international technical
staff of the Bank, on the basis of
an independent
analysis made by
them, have reached the conclusion
that the administration proposals
do not constitute an extravagant
estimate, indeed they think they
provide a rather tight fit.
is that the
International Bank's Role
The
for
As
the
Bank's
role
in the
provision of new financing for
Europe, I can only say that we
intend to continue to employ our
available capital and our credit
for
the
were
purposes
for
which we
organized, and that we stand
ready
consult
and .willing
with
laws
to
assist and
whatever
agencies
economics
of
For if the
inflexible
are
vated.
limited.
mum
the
improve
legislation,
wage
distribution
of
alter
income,
interest, rent and profits,
prices, or accomplish any
wages,
reduce
reforms be¬
economic
of
number
cause
have, mini¬
cannot
We
a^eps/uih countpr jto
our
Economic
impossible and
the laws of economics.
reform
becomes
development of
and the
thereby aggrar
diversion
of»ERP
The
from
ects
Europe's
projr
of
developmental
the
to
problem, he continued, while
in
rise
:'
U;
S.
prices
export
will increase rthe cost of the pror
gram,
that
the
present inflationary
trend is the fact that the money
running: ahead
is
supply
of
the
money.
He
'
current
of living will
standard
explained
Hardy
basis for the
improvement
further aggravate the dollar short¬
any
Dr.
shortage
funds
age
Joint
nigr-
are
Europe will be retarded
all sides circumscribed and de¬
on
our
Program
economic
dollar
find
we
the
for
action
immutable,
for
demand
holds that all taxes are deflation1
those business taxes
high as to encour¬
except
ary
which
so
are
spending
wasteful
age
dis-
and
| courage resistance to demands for
higher wages and prices of sup¬
-
Professor Harris apparently felt plies and raw materials. Dr. Hardy
capitalistic, free en-, that the cost of the Program to believed that an excess profits tax
terprise system must be accepted the U. S. was not -excessive in of 90% is probably inflationary,
whereas the same tax, with a rate
or rejected in its entirety, for re¬
terms of national income and that
form is impossible.
of 25%, would
if ERP contributes to warding off
be deflationary.
present
our
Professor
Pouglas'
characteristic
of
paper
of
many
was
those
a
U.
be
S;
small
depression, its cost will
indeed, Expenditures of
presented at the meeting in more
$17-$22 billion
than
repre*-
as
thought,
sophistication and leadership
of
which
They
respect.
one
sented
the
maturity
of
economics
American
has
attained.
One
a new
sor
to Eur.ope
aid
American
are
world
jRajris
billion.
which Profes¬
war
estimated
,
,
at
$1,500
.
the
will
Program
unr
doubtedly contribute to inflation¬
ary
sessions dealt with
of the
cluded two papers.
and in¬
Professor Sey¬
E. Harris of Harvard read a
mour
amply justified
compared to the possible cost
While
American, Aid to Europe
pressures
these pressures
ficient
to
in
this
country,
would not be suf-
warrant
the scrapping
and, according to Pro¬
Harris, y the
inflationary
of the Plan
fessor
"The Marshall Plan and
Its Cost to the United States" and
Professor Calvin B.
Hoover of
pressures generated by the
could be held in check by:
Duke
demand for ERP goods.
paper on
University
question
For
the
Europe, Do
discussed
Can
"What
Itself?!'/
/./j'/./
Reducing
(!)
or
ERP
controlling the
•/;' (2), Raising the supply of goods
under ERP.
,
the
European
is one which
at the present time, best be
Unfortunately)
43 > An
-
allocation
system
can,
(4) Careful
requirements.
for
goods furnished, Europe.
analyzed
mists.
by
Government
In, addition
econo¬
the
pub¬
much relevant in¬
not
as
yet been
lished reports,
formation
to
has
available
outside
the
con¬
fines of the Federal offices.
The
sion
of
the
Association's
pro¬
The Program Com¬
mittee decides upon the tonics to
be covered at the Annual Meeting
and then casts about among its
gram
policy.
friends and economists in current
repute for persons to prepare pa¬
pers.
A better arrangement would
committee to
make a survey of current research
under way; to ferret out the im¬
portant discoveries; and to base
the program on the work being
be for the
program
done.
Professor Harris opened his pa¬
by pointing out the total cost
of the ERP—between $17 and $22
billion.
He went on to state that
if the off-shore purchase program
per
and
the
cost may be less
inflationary
ERP
He further stated that the pres¬
surpluses
budgetary
the
of
to pay for
the Program under the
present tax structure. Most of the
other
with
pressure
wartime
at
tax
participants
did
not agree
Harris
Professor
stated
that
neither
interfere
the
U.
when
S.
he
should
with any mone¬
two
sharp reduction
have been more
timely than its outright repeal. r': E>r. Hardy stated that a recent:
but
years,
tionary
effect
tion
erroneous.
as
decreased by the pay¬
checks. Hence, he
to state, the banks can
of
went
on
make
tax
loans
new
which replace
withdrawn by the
of taxes
ditures.
-V-
■
While
the
Dr.
such
make
to
as
inflationary; so long as we
bond market pegged
seriously with
ally
we
cannot grapple
the control of inflation.
Hardy emphasized the point
are relying on very slen¬
evidence in making a sacred
Dr.
der
we
of the parity of govern¬
for
He
discussed
the
whether
the, country
but
we
results
possibility of
government
would wreck
try it out,
we
that
followed
never
auotation
99%
a
until
know
shall
we
for long-term bonds
Economic Cooperation.
tax
must keep the
take to
of Euro¬
the
policy effective, and the present
debt management policy is basic¬
ox
Paris Committee
anti-in¬
Hardy
believed
Reserve System policy
flationary,
not
;./■/•/'
tax policy is
our
excess
government expen¬
over
bonds,
of the
investments
or
the full amount of
know
were
re¬
are
ment
is
excess
will be increased while the
deposits
that
the
securities,
of
with the steps which Europe could
help.itself and his remarks
based largely on the Report
government
a
If the money
taxes, he said, comes
back to the banks in the redemp¬
claims, is
collected
ment
dealt
of
surplus depends on its use to re¬
tire securities held by the com-'
mercial banks. This, Dr. Hardy;
white
paper
a
doctrine held that the anti-infla¬
monetary changes.
Hoover's
con¬
of the rate would
that
Professor
he
inflationary pressures of the last
plans in Europe nor insist
upon deflation, exchange rate re¬
vision,
or
any
other European
tary
profits
excess
rates,
tinued, would have increased tlje
money
An increased capital invest¬
ment program in the U. S.
pean
is substantial, the
of
Federal Government make it easy
arrangements for this ses¬
bring out into relief the. der-
fects
scrutiny
(5)
ent
Maintenance of the
serves
Recovery Program
made
recovery.
inter¬
national staff, owing allegiance to
mere
earth.
on
gardly in Frofgssor Harris' opin¬
her
The 16 nations have already un¬
dertaken to establish
pressure
intended
The motives for
production is vital to the entire
program. In his opinion the elec¬
as
of economic defeatism.
exert
sist but not
a
areas
raised, but not
goal stated in the CEEC
Report
and
unfortunately coal
integrating -influence.
As John
Foster Dulles has said, the Recov¬
this respect depends in large mea¬
sure
the progress which can be
European economies and
of
and
that the
said
the
to
is
world
the
and
/ j';
coal output can be
I have said,
no less
than thp rehabilitation of
one of; the two greatest productive
loans which in effect
primarily to meet
making
are
balance of payments
If is,
1951
Hoover
Professor
opportunity which the Mar¬
great.
very
after
acute
is not of mere aca¬
we reject it, we
unconsciously assume an attitude
that
the
projects
it from the
institution?
tion of the Eureopean countries in
made towards
of
financing
the
on
productive
relieve
made
important ele¬
ment in this problem of manage¬
ment, namely, what kind of Eu¬
ropean agency should be estab¬
ceivably do the trick, but rather
lished to implement the Recovery how much new financing is neces¬
Program and what functions such sary to give reasonable assurance
European agency should perform. of success. To furnish assistance
extremely
will
broad-gauge
economic basis,-it
would help to enlist the full co¬
organization—the new money. If
I am right in thinking of the Eu¬
organization whose strength is al¬ ropean Recovery Program in terms
ready largely dependent upon the of a vast reorganization, it fol¬
contribution of the United States
concentrate
specific
main
Program's end.
indeed
or
shall Plan offers for the
because it will enable the Bank to
which
a
the
To
The
for European recovery and
essary
Those
great hope for Europe's future.
V
full-time bi-partisan board ^." Finally, I would like to say a
bf directors, and what its relation few words about the fourth essen¬
have
the
depend
ments and
■
proposed program,'
both because we regard it as nec¬
welcome
opposition to the Marshall Plan
within the European countries, it
would increase the prospects that
decisions would
be made on a
operation
Management Aspect
ing Europe, he believed, will re¬
but the latter would
always retain the deciding voice
as to
the use of American funds.
I
more
tive results:
re¬
or
posed for the United States. But
I do not hesitate to say that we
who
his
deter
can ever
Program /would prove
important than the coopera¬
The problem of feed¬
Marshall
that
tion w.ill be dwarfed by that pro¬
of
ganization, of course, would have
to
operate in close cooperation
inconceivable
so
continue to be distorted by those
for" the common endeavors
all the participants.
His or¬
individual country results of the
de¬
tard the program.
financial participa¬
our
point
,
The
such efforts
to
While unfor¬
Tt\e attitude is
negative and represents so ob¬
structive an approach that it can
carrying out their undertakings certainly
and in making : effective use of
the aid f urnished to them. In addi¬
what
from
is,
tunate,:' it
envisaged at Bretton Woods;
was
lions.
different
somewhat
efforts
stroy the program.
Our role in Europe
for the next few years, "be
may;;
(Continued from page 27)
individuals or naFurther,
the
giving
of
among
Thursday, January 29, 1948
be established to implement, mented by. active
may
either
&• FINANCIAL, .CHRONICLE
calamitous
no
the
bonds
decline
below
of
85
as
in the early '20's. The
increasing production in agricul¬
ture, coal, electricity, oil refining,
was
steel and capital construction and
pegging the bond market at 2x/2%,
Dr.
Hardy
thought,
must
be
concluded
goals, in
thate the
many
production
of these
could
be
it .attained. Professor Hoover felt the
the
risks
case
attached
to
a
policy of
un¬
,
weighted against the risks of con¬
tinued blowing up of the bank
Volume
credit
Number 4668
167
structure
THE COMMERCIAL
the financial records and account¬
in the process of
ing
supporting the market. ,/■
Hardy further explained
the plan recently advanced
by the Federal Reserve System, a
scheme
calling for - isolation of
that
of
ment
debt
the
short-term
the
from
of
most
important
effect
destruction, he declared.
Mr. Berge reviewed recent anti¬
of
the
tional:
not
only
union
among
Salt
securi¬
everything
next
logical step in
Hardy's opinion would be the
ation
coming to be regarded among
men, he stated, as some¬
thing akin to treason to say any¬
thing good about the new law and
commercial loans.
The
of
third
Dr.
to
cre¬
the
as
short-term,
system's
of
rest
the
special
the
market.
money
would
be
It
of its
ization
worth
of
the
total
volume
reserve
market operations.
Dr.
,
/
atti¬
same
no
foot,
Professor
was
but
the
better.
Witte's belief
Wagner Act represented
by "government
labor-management
relations
from
in
in
of
open
-
Hardy recalled that MarEccles, Chairman of the
its
the
view
followed
in
collective
bar¬
view
and
that
bad
there
monopo¬
moving toward
monopoly power
prohibited
by
the
that
is
Sherman
Act.
his
In
opinion,
of
opolies
the
and
courts
not
were
inclined to disturb monopoly pow¬
er unless it had been
acquired and
maintained
through
predatory
practices. Now, however, the Alu¬
minum
and
Tobacco
indi¬
cases
cate that the possession of power
to exclude competitors from the
market constitutes monopoly and
illegal,
he went
The
by
regardless
attained
of
how
or
how
it
is
to show.
on
Yellow
Cab
decided,
case
the, Supreme Court last spring
and
the. International
Salt
case
decided this fall, taken together,
raise important problems for in¬
Reserve
he said
sented
anki on many points sub¬
stitutes legislative fiat for terms
recently
pre¬
arrived at through free collective
novel doctrine to a Con-'
System,
-
a
,
grqssional Committee that
in long-term rates
bonds
bargaining..,.
rise
a
Government
on
/;'■ Whether
would
governmental
inter¬
ference in labor relations will stop
with
the;'Taft-Hartley
Act
is
This tendency to inverse elas¬
ticity—holders selling on declines
and buying on advances—does ap¬
political determinations will
doubtful
pletely
been
chronic
so
price cutting
want
their
move
g
rise
interest
of
to
The
.
rates
to
be
a
buying bonds.
Taft-Hartley Law
had
interesting paper pn a burn¬
ing current question was delivered
af a dinner meeting of the Asso¬
knpwn and highly respected labor
economist, Edwin EJ- Witte of the
University > of
Wisconsin,
pre/
sented "An Appraisal of The TaftHartley Act.'V
i /;/// J.//;/*
ning
to
checkered history. Begin¬
a
with the
Ariti-Trust
:
d ied
fervor
which
enactment of the
tne
led
Sherman
Act
of 1390, it then
The enactment of the
dowh-
and
the
who
'A
Court.
major union contracts have
expired since
the Taft-Hartley
took
Act
effect
and
this, he be-
ifi
1914,
Commission
brought new vigor to
but activity under
trust; busting,
these
Acts has been
sporadic. In
1938
war.
.\
„
at the
Monopoly Growth^and. Control
pers
on
ciated with trusts
sented
significant
pa¬
practical problems asso¬
were
those pre¬
by Wendell Berge, former¬
General of
lived, is probably the main factor
ly Assistant Attorney
ing
the
the last months, following a
which has been developing
since June, 1946.
Professor
trend
ever
White
felt
unions
the
that
the
Act
has
prestige and
cost
checked
their organization drives but that
only
few employers have util¬
a
ized the
new
law to help them to
get rid of unions
In
his
munist
value
some
to win strikes.
the
affidavits
to
nating
or
opinion^
non-Com¬
have
unions
Communist
been
in
of
elimi¬
officials
and
United States and Hon.
Kefauver, Representative in Con¬
>
f;
Mr.
Berge
courts have
declared
line
with
which
is
its
tive
the
Sherman
historic
directly
preservation
that
at last to
come
plication of the
of
Act
the
ap¬
in
purpose
related
private
an
to
the
competi¬
enterprise and capitalism. If
people, Congress, and the law
enforcement
problems
squarely
have
act
Estes
gress.
the financial reoorting provisions
potentialities for improving
these, he continued,
trust legislation
popular demand
in
response
then
and
ment.
ceeded to emasculate this
legisla¬
tion through lack of financial sup¬
port of the agencies which are
and
secur¬
cannot be marked
operation which
over
infallibility of
or
even
im¬
an
private manage¬
That
utility managements
perhaps been more widely
have
awakened
to
their
financial
re¬
sponsibilities
with
to
pro¬
of
the
through association
Public Utility Division
of the SEC
may have been
an
in¬
cidental/and
beneficial
result.
These managements
may have be¬
stirred
themselves
to
improve
their financial status more ex¬
'
have
been approved by
indicating a more se¬
rious attempt at enforcement.
this agency
need to be.
he/said, through
probate punishment.
ap¬
In his opin¬
railroad traffic associations.
upon
He
concluded
that these associa¬
tions restrain
competition, but not
to the extent that is
often
Some traffic association
he
stated, are
charged.
activities,
probably
sistent
with
incon¬
the "Sherman
Law,
strictly interpreted.
The
common
mon
was rather com¬
integrated industries.
in
The International Salt case, he
stated, although it did not involve
an
integrated industry, held that
agreements to foreclose
competi¬
are
Two of the most
No
The first of
affiliated
are
under
of the Federal Trade
decided
Supreme
period
either the
SEC management
is sufficient Congressional appro¬
priations for our anti-trust agen¬
cies.
Congress has voted anti¬
restrained,
tors from any substantial
Mapy of the papers presented
meeting provide some indi¬
tracts until next summer. Under cation pf the type of government;
all other provisions of the/.law,-' action which large business will
Professor Witte emphasized, a to¬
face.
Out of about 45 papers read
tal of but 11 complaints charging at the meeting, thirteen dealt with
unfair labor practices
thus far problems of' monopoly and mo¬
have been issued by the General nopolistic competition. These fall
Counsel and none of these has roughly into two broad categories:
been decided by the Board. On
the theory of monopolistic competion
and
many points, he said, it will be
the
practical/ social
years before the full meaning of
problems arising from the concen¬
the provisions of the new law will tration of economic power.
Board
a
proves
/'
monopolistic practices
market
as
officers
of
face
concentration
the
as
have the courts, and
vigorously to solve them, there
have
passed
legislation, at one
ing which the conspiracy existed.
time or another,
authorizing agree¬
penalty
he stated, should
ments between carriers with cer¬
vary in amount according to the
tain safeguards, he declared.
While
size
of the offending
company.
there are dangers in
association
Further, he said, the Federal
procedure* Prpfessor Daggett con¬
.Trade
Commission
The
should
given
the
to
power
cease
Clay¬
and
desist orders under the
illegal. Taking the two cases to¬
gether Mr. Berge asked the ques¬
ton
Act
tion, "Do
stantial
illegal
market
would
se?"
per
He
sub¬
be
held
added
the implications of these two
that
cases
"are
sufficiently pointed to re¬
quire a reappraisal of the opera¬
tions of many
conglomerate
enter¬
prises which restrict their subsid¬
iaries to
dealings within the fam¬
ily."
Berge also referred to the
opinion of Judge Learned Hand
in the Aluminum
ing
a
concern
case
indicat¬
as
for the
social
and
moral values of the type of capi¬
talism
which the Sherman
Act
seeks to
protect,
well
as
economic values.
as
for the
In that opinion
Judge Hand said:
"Congress did not condone 'good
trusts' and condemn 'bad' ones; it
forbade all. Moreover, in so doing
it
was
not
necessarily actuated by
economic motives alone.
It is pos¬
sible, because of its indirect social
or
moral
of small
effect, to prefer
skill
a
system
producers, each depend¬
ent for his
and
success
upon
character,
to
his
own
one
which the great mass of those
in
en¬
gaged must accept the direction of
a
few. These
we
have
sible
considerations, which
suggested
purposes
of
only
the
as
Act,
pos¬
we
think the decisions prove to have
been in fact its purpose."
Representative Kefauver took
the position that, in general, trust
Federal
cludes that the balance of advan¬
tage lies in the passage of some
law such as the
Reed-Bulwinkle
Bill, and that the Interstate Com¬
merce
It
Mr. Kefauver's view that
was
the increase in the concentration
Of
economic
should
power
be
halted.
The
Sherman
Act, the
Clayton and Federal Trade Com¬
mission
Acts,
he
stated,
have
been undermined by the
Supreme
Court.
While ;the purchase of
companies through the acquisition
of stock control has* been held il¬
legal, the purchase of companies
through the direct acquisition of
their
this
Mr.
<
the
as
Trade Commission Act.
we now
a
well
3s
be
issue,
unreasonable per se, and hence
reaching provisions, those relating
to union security, he stated, will
not affect the majority of con¬
by the
distribution,
as
provement
"a restraint may result as readily
from a conspiracy among those
foreclose competitors from
and
ity
are
argued, the Court declared that
ing the
clarified
procedures
Secondly, conspiracies to restrict
output, allocate markets and other
terest in the question, lapsed, dur¬
been
needed.
and
cabs exclusively from the
former, were not saved from il¬
legality because the manufactur¬
ing company owned the operat¬
ing companies. In this case, he
Clayton Act and the establishment
attention was fpcjissed on
Taft-Hartley Act is only begin-: monopoly with the TNEC but in¬
have
capitalizations, values,
competition,
output, decentraliza¬
amounts
company manu¬
have an indica¬
tion
that /agreements
between
companies that are
affiliated
through stock ownership which
Professor Witte stated that the
regulation of gas and electric util¬
ities by the Securities and Ex¬
change Commission as affecting
tion and continued free enterprise
certain important changes in our
legislation
"the
their
a
taxicabs
ning to take effect. The most far-
;
of free enter¬
of
all," he declared,
and various
companies operating t a.x i c a b s,
binding the latter to purchase
ments between
busting in the U. S. has Berge indicated,
Trust
An
ciation and dealt with the effects
of the Taft-Hartley Law. A well-
advantages
unrestricted
in
decade of experience in financial
—
goods
quickly. He observed that the late
John M. Keynes considered "in¬
verse
elasticity" as an important
factor in wages, but he believed
stimulant
"All
con¬
Mr. Kefauver felt that to obtain
the
oven
private- management.
socialism, destruc¬
system
improvement
an
technical advantages of as¬
or
integrated ion fines of $5,000 do not restrain
sociation procedure are consider¬
ownership
as
millionaire companies from in¬
able, Professor Daggett said, both
from a conspiracy among those,
clared.
1
dulging in conspiracies to restrain
to carriers and to shippers.
who are otherwise independent."
Dur¬
trade
not when hundreds
of
ing World War II they were suf¬
Monopoly and Competition—the The vice of the agreements was thousands of
r dqllars
are
to be ficient
Future'*
to persuade the Office of
that they restraih^; the"freedom made with
the, outlay of a $5,000
Defense Transportation,, the Sec¬
Many of the sessions of the of the operating companies to buy fine.
The
TNEC
recommended
meeting were devoted to an ex¬ taxicabs in a competitive market, that the fine be raised to $50,000. retaries of War and Navy and the
amination
of
the
problems
of and they also narrowed the mar¬ Representative Kefauver recom¬ Chairman of the War Production
Board to approve
monopoly and competition and ket for taxicabs manufactured by mended that the fine be
joint action by
levied, common
carriers through rate bu¬
foreshadow future Federal action competitors of the parent com¬ not once for a series of
offenses, reaus.
Both Houses of
in these fields. '
pany.
This type of restraint, Mr. but during the whole period dur¬
Congress
management not only want it but
will actually make it work, he de¬
as
the part of sellers
on
to
com¬
*
still survive if both labor and
can
to discredit the general practice of
who
Witte's
replace * free
collective
bargaining in this country ere
long;
But collective bargaining
occasionally in speculative
markets, according to Dr. Hardy,
in periods of rapid price change
never
Professor
opinion, for there is danger that
pear
but has
in
state
nor
charged with its enforcement, he
declared.
In the past, the Budget peditiously than they might other¬
wise have done."
Bureau has been unwilling to ap¬
Professor Stuart Daggett of the
prove adequate requests for ap¬
University of California explored
propriations, he went oil, but for
the effects of anti-trust
the
legislation
coming fiscal year,/ larger
that, the Court held agree¬
facturing
be inflationary and
precipitate
a
wholesale
cashing of savings bonds randr
dumping of marketable bonds.
would
state
our
factory
prise.
it
used,
leads to
power
and
Board of Governors of the Federal"; gaining
S.
nomic
trol
mon¬
satis¬
proven
nomically efficient.
Finally, he
said, the concentration of eco¬
tive
the abuses of
tegrated industries, in Mr. Berge's
opinion. In the Yellow Cab case,
riner
peting units. Many advantages that the regulation of
monopolies
inherent in small business, in by financial
supervision, as ex¬
his opinion, and the decentraliz¬ ercised
by public bodies such as
ing techniques of modern indus¬ the Securities and
Exchange Com¬
try render the small unit eco¬
mission, has neither
earlier court decisions had rested
on
Financing of Public Utilities,"
are
primarily
is
be
cases, he felt,
veering away
is
good
such
as
was
to
it
former
both
are
behalf of labor but that this inter¬
leaving labor and management
free tp work out the terms of their
agreements.
The : new Act," he
continued, in going beyond this,
regulates in detail the procedures
that
court's
lies and that it is
ference did not extend beyond the
pre-collective
bargaining
stage,
short-term
by Federal
not
interference
market, to
withdraw its objections to stabil¬
money
other
like it
that the
se¬
adding
to
the
monetary
structure, he
stated,, especially if the treasury
would agree, in return for protec¬
tion
This is the
the
on
wearers
The
of short-term
do
Act, which
flagrantly pro-
seems
re¬
on
workers
reverse,
he
declared,
which the employers took toward
the Wagner Act and the shoe is
now
the
pressures
reserve
curities
from
them
employer.
tude,
in
reserve
ment,
serve
that
like is ascribed to the
require¬
consisting
of
long-term
bonds, which would isolate the
long-term market yields, as well
a
It
union
market from the
corporate
dyed-in-the-wool unionists.
The
cases.
is
such a plan
protection for the
of
In
a
needed, while
paper entitled
"An Ap¬
competition,
monopolies praisal of Government Control of
aroused
the
said
money
sorely
Professor Merwin H. Waterman of
the University of Michigan stated
inflation.
and
by
towards
would not exist and the
perpetu¬
shows
ties
is
small
legislation
ated shortages would disappear
by
the increase in output of the com¬
reasoning in these
competition
business
this end.
duction
of
affirmative
decisions, emphasizing par¬
ticularly the Aluminum, American
Tobacco, Yellow Cab, and Interna¬
Taft-Hartley Act to date ac¬
cording to Professor Witte,.; has
leaders but also the rank and file
long-term
formation
their output when additional pro¬
under
of
no
busting is good.
Certain monop¬
olies, he stated, refuse to expand
29
trust
market, would be only a
partial solution to the problem of
He
(513)
been the bitter resentment it has
money
would afford
CHRONICLE
of life against the forces that
way
threaten
The
FINANCIAL
is still hope to preserve our chosen
local
many
the
govern¬
rest
of
unions.
Dr.
most
procedures
&
assets
is
is
not.
serious
a
He
felt
that
loophole in
our
anti-trust legislation which should
be plugged.
On the other
hand,
Mr. Kefauver believes that the
re¬
straint of concentration of power
through restrictions
size
on
Commission
be
can
given
sufficient authority to protect the
public.
' /'-'•//■■;
He
went
to
on
state
that
limitation of competition
approved
in
a
some
be
regulated industry
may
without sacrifice of the
public in¬
terest and that this is the
opinion
of the Interstate Commerce
Com¬
mission itself, of most State Com¬
missions, and of the greater num¬
ber
of shippers
and
shipping
or¬
ganizations which have expressed
their views.
Railroads would not
stop running, he believed, if the
present functions of railroad traf¬
fic associations were
greatly re¬
duced, but their efficiency might
be impaired.
.
were
Patents, frequently employed as
monopolistic device, were dis¬
A third needed
change, accord¬ cussed by Professor F. L.
Vaughan,
ing to Mr. Kefauver, in our anti¬
University of Oklahoma, who feels
too
arbitrary and inflexible.
trust procedures is to
control
remove
the
industry exercised by
institutions; to change
the system whereby a few
large
over
financial
banks
tion
control
of
the
a
substantial
American
frac¬
industrial
Improvement in this
field, implies the
restoration of
competition in the marketing of
economy.
securities and the plugging of the
loopholes in the interdiction of in¬
terlocking directorates, he stated.
Mr.
pose
Kefauver
a
ommend
tive
TNEC
new
anti-trust
to
on
to
study
legislation and to
pro¬
the
our
promote
instances
patent system fails to
public welfare in many "
because
new
legislation.
we
program
is
tor,
permits
should encourage the J
the
suppression
of
Professor
Vaughan
said that
patents have facilitated monopoly
and
restraint
of
trade
through
patents,
through the pooling of patents of
mergers of concerns with
different
license
not
discourages
the inven¬
patents, and is a means of creat¬
ing industrial monopoly and re¬
straining trade. ■:>/./
rec¬
A nega¬
it
rather than encourages
concerns,
agreements
competitors.
anti-trust
enough;
went
that
He
and
through
with
gave
former
examples
of such control in shoe machinery,
camera
and
film, electrical, radio,
(Continued
on
page
3Q)
30
(Continued f: -om
ket in this country may
be a mere
phase of the operation
of patent
cartels, he declared.
Patents are suppressed for vari¬
ous
reasons,
he stated.
In his
opinion the most important group
of suppressed patents consists of
the hundreds taken out in the
tries has
relatively
to
come
an
many
promote
larger
Professor Vaughan proposes
inventions of the Indus¬
required the
building of large plants, recent
technological developments "are
qualitatively far different and
remedies for abuses
their effect on size is the reverse
patent system: First, fewer
and better patents. Second, greater
remuneration for inventors by re¬
of
our
ducing litigation, providing a bet¬
ter market for their patents, and
the
royalty basis for remunera¬
tion.
Third, compulsory licenses
on the grounds of conjoint use of
improvement and basic inven¬
tions, suppression of patents, and
monopoly and restraint of trade.
the
international
tions of monopoly were
ment
of
read
State
a
recent developments
was
ramifica¬
on
Organization." In his pa¬
Mr. Vernon pointed out that
although the effect of World War
II had been to weaken the ties
per,
'
between members of prewar
internationaliza¬
of industry was easing the
toward the resumption of
restrictive arrangements in
tion
way
new
cartels,
international
the
trade.
International
cartels, he said, can only have a
reasonable
chance
for
'success
when domestic industries are un¬
highly
centralized
control.
Otherwise, he stated, enterprises
outside of the cartel are likely to
der
threaten
the
price
policies
and
market divisions which the cartel
With the introduction
nations,
sponsors.
of state socialism in many
centralized control of domestic in¬
dustries is being achieved
Vernon's opinion.
C; ;
Mr.
there
that
Vernon
was
little
pointed
reason
in Mr.-
out that
to expect
state
enterprises would be
js*ost hesitant to join cartels than
their private
predecessors.: The
.desire to maintain high prices for
their
their
and to. exchange
information
with
partners could well
exports
technological
cartel
make restrictive international ar¬
rangements
appear' attractive in
the eyes of the managers
of state
enterprise, he declared.
The chief
trend could
means
be
by which this
deterred, he felt,
primary source of
facturing
er;
for
industrial pow¬
the replacement of iron and
steel by light metals, alloys, plas¬
tics and plywood as the basis ma¬
terials oi industry; the replace¬
ment
of
costly,- single-purpose,
by
provisions to assure non-discrimi¬
natory treatment in trade by state
enterprises also are contained in
the
proposed Charter, he con¬
tinued.
He pointed out that even
possibility of an international
of this kind / might
prove impossible if the immediate
currency
and commodity strin¬
gencies of the world were not'met.
Too little aid from
the United
the
tendered
too
late,
may
compel the European nations to
adopt systems of international
trade which turn them irresistibly
away from the aim of multi-lateralism, he emphasized.
Is Big Business the Most Efficient?
In
an
especially competent
pre¬
sentation, John M. Blair, newly
appointed Assistant Chief Econo¬
mist of the
Federal Trade
the
tional
monopoly
presented
and ably discussed. Because of the
unverified and hypothetical char¬
and
competition
on
were
total
by Professor Oskar Morgen-
The other half
picture of large corpora¬ competition. It consists of substi¬
taking over small firms is. tuting for the current ideas of
economic /theory,
derived from
shown in the fact that fully 90%
a
new model
to be
of all the firms bought out had, mechanics,
assets of less than $5 million, and found in games of strategy. These
all
the
of
this
he
asked.
"It
mergers.
tions
was
corporations, composed
part of the tradi¬
most
giants of American indus¬
try. plus a few corporations which
Com-
effectiveness.
and
to
rose
(2) Smaller scale business en¬
terprises are growing in number
$1 million of
had less than
70%
Thus, in contrast to some
assets.
earlier
the
movements,
merger
present one is characterized prin¬
cipally by big firms buying small¬
er firms, rather than combinations
of big corporations," he declared.
"How
extensive is the
movement?
merger
are
which,
in
games
-
besides
chance, the strategies of the indi¬
vidual players determine the out¬
come and where considerations of
current
How has it
(3) Since there is no greater
efficiency in large size, a decen¬
tralization of ownership and con¬
trol is indicated!.
Monopoly
(4)
and
competition
will continue to exist side by side.
Outlook for Concentration
In
the
spite of the doubts cast upon
of size to efficiency
which
Mr." Blair's
findings
indi¬
practice as shown by
Harrison F. Houghton's paper on
business
the "Growth of
Houghton,
on
a
Big Business." Mr.:
colleague of Mr. Blair
the Federal Trade Commission,
after
tracing the
history
of
the
growth of business in this coun¬
off, and the sale of
(if not virtu¬
Government plants
concentration, the integration of
industrial operations, and the posi¬
tion of small business?" In answer
ally completed by that time) will
decline sharply.
The position of
he said that "first of
all, from 1940
through 1946 more than 1,800 for¬
merly independent firms in the
manufacturing and mining indus¬
tries, alone, disappeared as a re¬
sult of mergers and acquisitions.
preliminary
data indicate
that the high level of merger ac¬
tivity continued into 1947. The
value
asset
asset
of
the
concerns
value
of
all
manufacturing
corporations in the country. Su¬
perimposed on the plateau of con¬
centration prevailing before the
this indicates a
war,
shift in
favor of
Houghton went
on
to say
that "two factors suggest that the
current merger
movement has en¬
hanced; the position of
big busi¬
In the first place,
several of
ness.
the
of
the
"Whereas
attrition."
200
largest non-financial corporations
held 48%
of the total assets
taxable investments) in
proportion
Mr.
rose
(less
that
said
traditionally 'small business'
1929, their
to 55%
Houghton went
and
"the
on
in 1931,"
to show,
250
largest
manufacturing corporations at the
of the
most
ties
war
held two-thirds
total usable manufacturing
facilities,
tration."
Mr.
concentration increased by virtue
substantial peak of the
greater concen¬
jected the general Keynesian pos¬
tulate of chronic unemployment
and
did
not
contraction
tunities
see
of
immediate
any
investment
the horizon.
on
oppor¬
Professor
big business," he continued, "will
Williams
further felt that con¬
already have been greatly forti¬
sumption was not passive. One of
fied, through war plant purchases
the great defects in Lord Keynes'
and mergers.
Then it will be a
theories was the lack of emphasis
matter of staying power.
After
placed
upon
price
and
wage
the 1929 break, it will be recalled,
ac¬
amounted to about $4.1
or nearly 5% of the total
quired
billion,
relation
cate, the growth of concentration
continues apace in present day
ment will fall
affected the structure of industry,
And
agreement
States,
meeting several
annual
the
acter of the findings, they will not
Nearly three-- be discussed here. One of the
pa¬
number," he
million.
of the
1 f
the probable reactions of the op¬
ponents have a determining in¬
positions of dominance
fluence upon the conduct of the
during the war, were in charge of
Professor
Morgenstein
Mr.
Houghton
continued by ployers.
highly-specialized machines by roughly 65% of the nation's usable
showed that the tendency of firms
showing that "the overwhelming
newer and more flexible mechan¬
manufacturing facilities.
If it is
and individuals
to-combine the
majority of the mergers since 1940
assumed that these giant corpora¬
ical and chemical machines and
mutual advantage is fundamental
have been horizontal (i.e., com¬
tions control about 1,000 subsid¬
processes; and the*replacement of
in economic life. One of Professor
binations of firms producing iden¬
railroads by the motor truck and
iaries, approximately one-half of
tical products for similar markets, Morgenstein's conclusions was that
one percent of all
the automobile.
the manufac¬
the exploitation of the loser in a
or
products which might be sub¬
turing firms in the country com¬
He warned, however, that the
stituted for one another) and the business game for power, was not
manded roughly two-thirds of the
introduction of these new techno¬
always pushed to the limit.
trend seems to be moving more
nation's
productive equipment,"
logical developments "may be held
Professor David McCord Wright
and more in this direction."
"In
he declared.
'
! . '' '
>'
back
by the non-technological,
addition to the distilling indus¬ of
the
University
of Virginia
institutional barriers of monopoly
"Although this may appear to
try," he said, "horizontal mergers pointed out that an economy of
controls and. lack of financial aid
represent an extreme degree of involved
purchases by large dairy pure competition would be one
for small business."
concentration, it is no higher, on firms of small concerns in the in which no profits exist. He also
a
In addition, Mr. Blair referred
percentage basis, than was the same line of business, large meat felt that business cycle disturb¬
to
the decentralizing
potential¬ case for the identical corporations
packers bought small strategically ances could not be cured by pri¬
ities of atomic energy stating that
prior to the war. This is explained located
packing plants, and nu¬ vate business policy and initia¬
if electric energy can be generated
by the fact that although these merous combinations bought to¬ tive.
In insisting on this, Pro¬
as cheaply with atomic energy as
giants owned 65% of the prewar
gether cotton mills, rayon mills, fessor Wright ; declared that the
with present methods, "the other
(1939)
facilities,
and
operated knit
goods mills, drug firms, paint President's Council of Economic
attributes of atomic energy—its
77%
of
the
publicly financed
and wallpaper firms, cement, rub¬ Advisers was making a mistake.
mobility and its infinitesimal usable facilities constructed dur¬
ber. zipper, and even rice con¬
transportation costs—should lead ing the war, they accounted for
Lord Keynes
cerns."
■
to its widespread utilization, par¬
only about 43% of the expension
Keynesian economics occupied
"What is the outlook for con¬
in private
ticularly in underdeveloped areas,
(war plus non-war)
a conspicuous place in the discus¬
centration?
On the basis of his- ;
thus giving a powerful thrust to facilities."; v' y?' 1 ■;/■?■ ■' ■ "• V
sions of the annual meeting and
torical precedent," Mr. Houghton
the whole decentralization move¬
"On
balance," Mr. Houghton
seven papers on various aspects of
declared that "it may be assumed
ment."^;;*-.. '
' : continued, "the tendency has been
his theories- were presented and
that under continued prosperity
Mr. Blair maintained that any
for the disposal of surplus Gov¬
discussed.
Many of these were
the merger movement will be fur-~
decentralization of plants which ernment facilities to enhance the
ther accelerated.,
Likewise, high highly technical and' since Lord
results from these new technolog¬ power of big business. In impor¬
level activity and full employ¬ Keynes' theories have been fully
ical developments should be ac¬
tant specific industries,
notably
discussed in the pages of past is¬
ment enhance- the. attractiveness
companied by a decentralization steel, electrical machinery, and
sues of "The Commercial and Fi¬
of ownership and control.
The agricultural implements, concen¬ of Government facilities.- The in¬ nancial Chronicle" they are not
available evidence, he said, indi¬ tration has definitely been in¬ flation, incidentally^ v has greatly
to
be repeated
in detail here.
cates that large corporate enter- ! creased."
He stated that "in one speeded the disposal,of facilities,
Some consequences which flow
as on a monetary basis their val¬
prises which own and operate important area, aluminum, an en-J
from Lord Keynes, and the papers
several independent plants are, if lightened disposal policy has sub-1 ues have increased, and as delays
in new construction have made it presented at the meeting, may be,
anything, less efficient than stantially curtailed the position of
!
more
feasible
to
buy
existing however, in order.
smaller concerns. "At the very
the formerly sole producer, and
Professor John H.-Williams of
,
■
least," he added, "the widely-held injected new competition into the plants.".
Harvard pointed out that Keynes¬
Mr. Houghton felt that, "in the
assumption
that the ownership industry. ' And -two new factors
ian theory was only valuable in
and control of plural production
(Kaiser and xTucker) have en¬ event of a depression, the outlook
so
far as it provided guides to
units by single corporate enter¬
tered the automobile field."
for small business is even more
He re¬
prises contributes to efficiency
unfavorable.
The merger move¬ public economic policy.
tices in international trade. Added
,
pro¬
held
firms?"
er
international agreement,
such as the proposed International
would seem to rest upon an over¬
Trade Organization now being ne¬
whelming absence of supporting
gotiated at Havana under the facts."
\ \
sponsorship of the United States.
In summary, Mr. Blair con¬
Part of the proposed Charter, Mr.
cluded that:
;
.Vernon stated, would commit na¬
tions to prevent their enterprises,
(1) The period of long-term in¬
crease in
business since has ap¬
state or private, form engaging in
harmful restrictive business prac¬ parently come to an end.
was
this vast
found that the 250 largest manu¬
a more
corpo¬
At
outstanding papers
pers,
equal footing with
gain
$50
fourths
large plants, he cited the replace¬
ment of steam by electricity as the
"Pest-War Trends in International
Rational
ing
plant? ■ How much of it
at the war's and by big
business and how much by small¬
to
largest
rations—those with assets exceed¬
ductive
enabled small plants
discussed.
paper
sorbed by the very
'.i
controlled
"Who
.
the
Raymond Vernon of the Depart¬
Business
and
funds."
century technology."
which have
Among
At another session of the meet¬
ing,
19th
the
of
merged since 1940 have been ab¬
of
Monopoly and Competition
stated, "were absorbed by corpo¬
stein of Princeton, abandoned the
rations with assets of over $5 mil-,
standard analyses of the subject
"The
nation's
manufacturing
lion.
During the period covered,.
in favor of a new approach, the
facilities in 1939 carried a gross
71 out of the 100 largest manu¬
valuation
of about $40 billion,"
"Theory of Games," evidently an
facturing corporations bought up
he continued.
"To this capacity,
outgrowth of the German theory
about 17% of all companies ac¬
of "Machtoekonomie" popular in
there was added by June
1945
quired, while another 49 of the the '20's.
about $26 billion of, new plant and
second 100 purchased about 10%
equipment. Roughly two-thirds of
In this paper the proposal was
of the total."
"In other words,"
this expansion was provided di¬
he said, "120 out of the top 200 made for a radical departure from
rectly from Federal funds,, and
the current treatment of problems
corporations accounted for 27% of
the
remainder
from
private
of
monopoly
and monopolistic
Revolution
trial
new
.
Economic Theory
The
'small
predominately
fields.. Moreover, nearly
of
the
companies
severe," he declared.
77,'
.7
7
•/
■,
ap¬
one-third
current merger
(4) the level of
the
(3)
movement,
Mr. Blair observed that whereas
manufac¬
ture in this country such patents
are certainly suppressed.
:
business
sion will be
economic activity."
the great
From the standpoint of
three possible
tration;
end and tech¬
a
parel—all
by the War Assets Adminis¬
ties
operations, he declared.
scale of
of reserving this
market for their in¬
abroad.
for
nology is now tending to
a
smaller rather than
for the purpose
country as a
ventions
manufactured
possible
plants to operate in
of
volume
the
machinery, and textiles and
postwar facilities; (2) the disposal
of Government, war-built facili¬
small
fields
just as efficiently as plants of
much larger size.
The long-term,
general and pervasive increase in
plant size throughout most indus¬
it
years
of
business
nological developments have made
foreigners solely
United States by
29)
page
mission showed that recent tech¬
coming
for by
acquisitions were ac¬
only three indus¬
tries, namely, food, non-electrical
will be deter¬
mined principally by four basic
factors," he stated. "(1) the dis¬
tribution between large and small
the
uation, the pressure upon small
the total' business in the event of a depres¬
of
of
counted
: affected.
been
one-third
than
number
concentration in
of
level
have
industriesMore
concentration.
"The
Thursday, January 29, 1948
CHRONICLE
try, goes on to sketch the current
movement and today's outlook for
Monopoly Contn >ls and Keynes'
Theories i n Prospect
chemical, petroleum and glass in¬
dustries.
The control of the mar¬
FINANCIAL
&
THE COMMERCIAL
(514)
as
or,
in absolute terms, al¬
much
owned
as
the entire facili¬
by all manufacturing
corporations in the country prior
changes in modern American eco¬
nomic life together with the over¬
Government fiscal
corrective.
emphasis
upon
policy
a
as
Professor Lorie Tarshis of Stan¬
ford
ories
University felt that the the¬
of
Lord
Keynes
applied
generally to economic con¬
in England
in the '30's
than in the United States of today.
more
ditions
He declared that the national in¬
come
depended
upon
the
propen¬
sity to consume, the marginal ef¬
ficiency of capital and the amount
of money
believed
be in
in circulation.
that
an
He also
could
economy
equilibrium when less than
prevailed,
full employment
Professor Lester V. Chandler of
to the war.
Since the pattern of
disposal of Government facilities' Amherst believed that Keynes'
is to maintain this unbalanced sit¬
theories
are
not adequate for pub*
Volume 167
lie
policy.
needed,
Much
he
economics
to
Number 4668
study is
before his
as a guide
more
declared,
be used
can
public policy.
Richard M. Bissell, Professor at
the
Massachusetts
Institute
of
Technology and lately Executive
Secretary of the Harriman Com¬
the European Recovery
on
rapidly out of the depres¬
came
sion.
denly
and
the
next
time
lated.
les¬
our
be
unless
learn
we
that
now
income
of
wise
are
enough
all
classes
of natural
use
development of his theories, indi¬
cates that the type of economics
which prevailed during the thir¬
ties in this country, and which
basic
were
to
the
far from dead.
New
They
Deal
are
are,
indeed
future
depression
ly desired by the enemies of
They will,
how¬
presented at
ever, if the papers
the meeting are any
guide, be
modulated by greater emphasis on
private initiative, price and wage
policy, new information on con¬
sumption and investment oppor¬
tunity.
In
»
the
thirties,
Other Items of Interest
'
the failure
felt that
of government pump-
priming to bring
us rapidly out
depression established the
of the
fallacy of Lord Keynes' doctrines.
Our experience with World War II
indicated, however, that the fault
rather to be found in the too
was
great
reliance
placed upon the
multiplier effect of public spend¬
ing.
The sums spent in pump^
priming in the thirties
ficient.
When
spend
we
was
insuf¬
really started to
War II, we
during World
Joseph Alois SchumHarvard
was
elected
of
peter
President
nomic
of
the
American
Association
for
Eco¬
1948.
plants.
controls,
with provision only for clearly
justifiable increases.
(e) Postpone tax reduction for
two
after which a fiveorderly reduction of per¬
years,
year
sonal and corporate taxes com¬
stantial
author
the
portant
of
in
works
the
share
im¬
numerous
field
of
H. Douglas of Chicago,
1947.
to
security.
tij
(f) Put off all less essential
works, including Federal, State
and municipal projects, giving
our
priority/„to increasing produc¬
tion, housing, schools, hospitals
and other more essential needs.
(g)
Set
up
Capital
a
Issues
Committee, with advisory pow¬
ers,
under
the
Secretary of
-
Treasury, to review all capital
issues, public and private, with
a view to
deferring less essen¬
tial projects. The Governors of
each
state should
appoint com¬
proposed
projects at the local level before
mittees to pass on all
going to the Federal committee.
(h) Congress to set up a Dig¬
ging Committee to scrutinize
all Federal works and expendi¬
tures
to
determine
postponable;
ernment
also
which
where
spending
are
The
for
economics
sor
A.
Francis
conspicuous
purchase
future
(9)
Emeritus
war
and wartime intergovernment
debts.
For
example, Britain and
creditors
her
must
decide
what
is to be done with the
Walker
Paul A.
ing.
will
article,
more
already
"The
many
and
and
retain
for
three years.
(11) A General Staff for Peace
develop an overall, global strat¬
egy for America's peacemaking.
to
prevented
have
private individuals
the
-y
to
such
the last
war.
It
against
This
my
It
people
a
must
—
I
offer
that
as
yardstick
a
by
a
war
on
to
taking
United
face
to
•
-«
' ■1
.
r
to
dition
goal,
be
American
'
fool¬
savings
the
strongly.
save
con¬
I cannot
They must reduce bar¬
to
must
trade
mutual
individual, scattered sticks
they invite being broken one by
one.--/;. V-/.'- *
1
/;///:://-:/:/
many
the next five years.
the resources that lie
.
•
'
quate without this
promise
of
an
be
greatly
freedoms.
Say Where WTe Stand
Given such
and
Men would discover new sources
supply.
den,
Assets
now
determination, the
uniting nations in
sion.
or
forth.
Let
now
idle, hid¬
hoarded, would
pour
Governments, apparently
hopelessly insolvent, would sud¬
a
United States should pledge itself
to come to the defense of these
quickly reduced.
of
readi¬
of Europeans to stand up and
fight for their independence and
assured
market will stimulate output so
greatly—in Europe, America, else¬
that
Europe's
financial
would
common
ness
'feV
This
Any
economic aid which the
United States gives will be inade¬
You will be able to sell
it all.
the peoples of
can
been
offered
plans
what
any
,
us
not
we
case
of aggres¬
shy from stating
intend to do before
would-be
warmaker
h^s
yielded to temptation of! aggres¬
which
which
or
will
be offered. Let the public ask —
Europe whom does it hit? If it hits
every¬
go to work and reestablish them¬
selves unless freed from the fear
of
another
pleted?
nation.
Other
join
nations, I
in
us
am sure, will
mutual defense
this
pact and, I hope, in
will also.
time, Russia
when,
I
That
as
urged
the
an
true in wartime
was
of
many
remember,
ceiling over
—
all prices,
you
over-all
entire economy
":v/ ' V"'
rents, wages — and that taxes be
belief that the raised to
leave the least wartime
United Nations Charter, in
spirit,
profit commensurate with getting
if
not
letter, does commit the
production. Instead efforts were
United States to oppose aggression
made to let wages run free, farm
with every means necessary. We
prices to rise above the level of
should remove all doubt on that
parity, and so on. The wartime
score.
Our world—this country—
price-control legislation actually
has reached the point where there
legalized inflation.
can be no
is
It
my
own
assurance
less
of peace
American
the
people
they stand.
clear where
I -have
been
warned
un¬
The
make
that
the
principle
same
tional
American people may not be pre¬
interest
terest
the
na¬
selfish
in¬
—
the
or
applies to halting infla¬
tion in peacetime.
■■/'•;■ y.v/.>/
pared to make their position clear.
If that is true, may I add this—if
—
Production
First
the
Need
The real and only full corrective
today, so
of inflation is higher production.
the peace-loving,
freedom-loving
For supply to catch up with de¬
peoples of the world know where
do not take
we
to
rally,
stand
shall be forced to do
we
in the
so
our
future
under
ad¬
more
mand takes time.
do not have
waste.
circumstances.
verse
During
war we
that time—to wait
Nor do
Therefore
or
have that time
we
today in this struggle for
Wanted: A Global Strategy
measures
peace.
must be taken
to
bridge the gap between short
enacting this Marshall Plan
we
shall be giving European na¬ supply and excessive demand. This
tions a preference on the produc¬ requires three things:
tive machinery which happens to
(I) Increasing supplies, parties
be presently available only in this
larly where most needed — more
country.
Shall this discriminate production, more work.
,
In
against Latin and South American
(II) Conserving and directing
nations who have always been our
what we have, to give priority to
friends and allies? How are pref
first needs first, putting off the
erences given
Europe to be bal¬ less essential.
\
anced against the needs of China?
Of the Middle East?
Of the Far
East, where rich stores of sorely
needed
How
materials
all
are
these
lie
untapped?
preferences to
be
ranged
alongside
country's needs?
These
take
our
decisions
not
are
of themselves.
care
the people
which
own
which
To inte¬
the President should create
which
will
sit
on
in
these
General
Staff
will
do,
what
—
must
we
we
can
a
for
Peace.
our own
mintfs,
know what America
we
if
matters
can
stand
alone, and
rightfully expect of
which the
the
Staff
for
Peace
might be created out of the Na¬
tional Security Council set up un¬
der the National Security Act of
entails.
'
peacemaking requires—
magnitude of
resources
fraction of what
a
As
a
war
consequence,
—
is
itself
nothing
degree of denial or
regimentation is necessary.
But
the
same
spirit must be the
must all
see
We
same.
ourselves
as
contrib¬
utors to, or detractors from, peace,
in what we do or do not do.
Another Inflationary Whirl
Unless
General
peace
Fortunately, the scale of effort
other nations.
This
to accept the denials
Regimentation Not Needed
body like
the
de¬
—
winning the
entails.
a
continuous
/
•
(III) Organizing self-restraint—
the enlightened self-discipline of
grate these and other problems
into one all-embracing strategy, only
Only by knowing
among themselves;
compact together in
protection against aggres¬
sion.
Only as they become a
bundle of sticks, unbreakable in
unity, can security and peace be
theirs.
Should they ' remain
so
be
in the ground.
Go out into your
colonies and the far reaches of
the world and tap their riches.
Produce!
How
virtual
Enough
importance of that too
they
the
v.'y;-/
■
anti-inflation
many
have
Fear Paralyzes Stability
liberations
'
Not
for peafefe>rrTo * achieve this
stress
for
out
would
it
risk
Without- such
alistic rates of exchange.
We stand ready to assure a mar¬
ket for the productive labor of all
Bring
own
Europeapff?;jnust stabilize
currencies,.and establish re¬
their
.Trade Will Flourish
peoples
their
both sides.
riers
measures,
effect would
";'v
by
decide
every
bility in Europepan essential
the
saying this:
•
of
The major objective of the Mar¬
shall Plan is the /creation of sta¬
-:
in
right,
is
peace—a peace
these
States
any
Europe
hope, not fear, then
I see that prosperity
continuing
indefinitely, with steadily improv¬
ing living standards for ourselves
and all other peoples,
including
In
in
But dollars alone will not
with
Soviet Russia.
the
Dollars
And if, in that time, we should
men
restrict
nor win the peace. More
required of us. More, is re¬
that "ad-:
quired of the European nations.
venture in prosperity."
making
is
abroad.
then pre¬
We foresaw unpareileled
business activity for between five
to seven years.
Doing what I
have proposed would add another
as so many were
enables
r
Socialism
to
not
guarantee,
dicting.
which
Bar
to
hardy
future
'
'
which the public can measure the
war.
.
tous
succeed in
investments
free choice how they want their
society organized. My suggestion
,V aims at preventing the repudia-tion of debts entered into in
good
as¬
faith
years
or
'
does
tries.
M. Hancock, and I
forecast there would be no calami¬
seven
loans
by
industries.
way the right of Europeans to
socialize any or all their indus¬
sociate, John
to
secured
guarantee
.
inflationary cycle almost
immediately, cancel part of the
national
debt, while laying the
groundwork for orderly tax re¬
duction in the future.
five
loans
foreign
made, European governments
No
present
ended,
of
industry.
Marshall Plan and still break the
the
make
assets
whole
..
third
companies
should agree to repayment in dol¬
lars before nationalizing
any such
the
when
and
be
production
depression
pro¬
action
United States and abroad.
sible,
boost
ago,
into
Recovery Authority should
encouraged, where pos¬
also
cover
years
pigmy
Whatever plan is adopted should
provide for transactions between
These measures, put into effect
four
of
call
us
<ff aspiring and
perspiring peoples everywhere.
Financial
5 to 7 More Good Years
been
Let
The
best
our
We have been attempt¬
the giant energies
are
Almost
market
government institutions.
Where
promptly, can
sufficiently to
Enterprise
stable
a
basis for credit in
new
portions.
Chronicle" in the issues of Jan. 1
and 8,1948.
.
a
results
others
important of these
been published in
Commercial
of
ing to repair the devastation of
the costliest war in history almost
entirely through government loans
read at the meet¬
were
be
the world.
Samuelson of the Massa¬
The
have
needs
The British and others to
their empire preferences
special
will prove a further
private investment,
capital and know-how for the im¬
mense job of reconstruction. There
Wesley C. Mitchell
University for his
cussed in this
lated
(10)
apply
stocks
For
for five years
stimulus to
chusetts Institute of Technology.
In addition to those papers dis¬
of interest
Private
Assurance
to
where
war.
would
hold,
now
Will Free
medal
contributions
economist of promise and distinc¬
tion
was
awarded to
Professor
$14 billions
of frozen pound sterling accumu¬
during the
offer
States.
arrangements would be made.
work in business cycles. The John
Bates Clark medal, for a younger
can
Settle realistically all pre¬
United
production.
governments
President
awarded to Profes¬
was
Columbia
gov¬
be cut
•and whether it is being done
most economically.
"Cut costs
for greater efficiency" is a sound
business maxim.
It applies to
governments as well.
(i) More production—so im¬
portant that I repeat it.
the
as
in
terrible threat
a
resources.
be permitted to
purchases on the
these
basis
The
to
should
in
same
He succeeds Professor Paul
systematic, sub¬
lowering of the national
which is
natural
our own
nations
is
bined with the
debt
world
so-called
various German Universities and
levels, with wartime
rent
the
any
To avoid any misunderstanding
of the intent of this plan, other
(Continued from page 16)
new
effective
be
one, more than likely it will be a
good program. If it taps here and
scorching — economi¬
here, touching one segment, while
cally, politically and spiritually?
How can they tackle the rebuild¬ exempting others, it will be a bad
program.
ing of their countries with enthu¬
siasm if they dread their labors
The Wartime Failure
will be swept into a shambles be¬
Inflation can be prevented only
fore the repairs are even com¬
by taking action all across the
of
needs
coming to America, Professor
Schumpeter was connected with
•
Continued
to
—
in
ravenous,
tion of
Be¬
fore
In Peace
(d)
Any program of inflation conT
trol
compact existed
The
so
not
The ERP—A New Adventure
amortization for
this
brought.
V
The
war
be
impose obligations on all the peo¬
League of Nations, it would
ple, as fairly as can be devised.
have
be
in the
from
a
is
.
"surpluses" will not prove of such
magnitude that this country can¬
safely store them against fu¬
ture needs and against the deple¬
Professor
of
many
such
appropriating. Nor am I
disturbed at prospects of accumulat.ng large stocks of these ma¬
cap¬
cles.
future.
framework
agreement would
We
will
economics, especially a distin¬
guished treatise on business cy¬
the
save
country would then get
something useful in return for at
least part of the money Congress
earnest¬
so
in
very
regional pacts of as-1 the American way of life.
provided for in the must stop inflation not to
the
United
Nations, Europe, but to save America.
whose
Had
Materials Are Valuable
of
within
31
terials.
among
lively corpse and we are
likely to hear much more of them
a
are
charter
.
This
of
Such
sistance
the
italism.
resources.
The emphasis upon Lord Keynes
at the meeting, the critique and
sion.
(515)
are
the
too little upon production and the
optimdm
'/
continuity of despair would
A new continuity of
to
people, conservative price policies,
new investment opportunities and
theories
provided
very
useful
increased production will prevent
tools for economic research.
He
placed too
much reliance upon fiscal policy
as
a guide
to economic life and
•
hope would begin.
Program, held that Lord Keynes'
also stated that Keynes
CHRONICLE
broken.
good distribution
a
FINANCIAL
•...
,
The
enter
we
depression much larger sums
may be spent to restore prosperity
a
&
find their resources ex¬
anything they had calcu¬
ceeded
1
1
,
We may have learned
son
''
mittee
THE COMMERCIAL
the
in
rise
living costs
is halted, labor will demand—and
get—another
creases.
round
of
in¬
wage
It won't do labor any good
in the end, since prices will then
important thing is to be increased—a race to the
abyss.
constantly on the Food is the critical
item, for food
job, weighing the necessities of
purchases, unlike other
things,
peace all over the globe, balanc¬
cannot be put off. I suggest that
ing the commitments we assume
farmers be 'asked to agree to a
against our resources, and, equally
major cut in present agricultural
important
fully
informing
the
prices in exchange for a guarantee
American people so we are pre¬
of being able to sell all their
crops
pared spiritually, physically, eco¬
at the price set for the next three
nomically and militarily, to de¬
years.
That done, we can turn to
liver on those commitments, when
labor and say,
"You, too, must
and where it counts.
help hold this line on which peace
The
American
people must and stability hang."
/.-■■,
make good all pledges. Let us not
Labor and agriculture—through
try to fool them.
their organizations—have both as¬
1947.
The
have
some
group
the
sumed
America Must Stay Strong
The struggle we are engaged in
will be many years in resolving
position of importance
community to which they
entitled. They are here to stay.
the
in
are
They must accept the responsibil¬
ity which goes with that position.
gruelling for peace, America must
Neither can again say wages or
keep sound, solid and strong.
farm prices should be excluded
The great present threat to a
from regulation, when regulation
strong America is inflation.
is
itself.
Because
we
face this long,
necessary.
May I emphasize, so it is clear
beyond the slightest' doubt, even
there
Marshall Plan, we
still would need to take vigorous'
were
measures
ous
Through such
'
a
wage-farm price
agreement, supported by the other
no
anti.infiationary measures I ha^e
J
'
J
,
against this most insidi-: suggested,
and subversive of menaces
to'
Jt
.
,
,
the price and cost of
(Continued
on
page
32)
32
FINANCIAL 'CHRONICLE
COMMERCIAL •&
THE
(516)
just
better
(Contiriuted from page 31)
Restraint
prices boom a bit longer to col¬
lapse in another bust, farmers will
be better off if their prices remain
Every farm dollar will be
worth more in the things it cati
steady.
buy, as industrial prices drop. Byworking longer hours where feas¬
ible, each laborer will be able to
earn hiore.
Since he will produce
prices will tend to drop,
still greater real buying
to his wages.
mOre,
giving
power
By inclination I am opposed to
governmental controls, except in
wartime.
However, we have no
this fact,
considering
adequately
without
hurriedly,
too
done
was
demobilization
The
today.
peace
has still to be won.
The
country
already has paid
much of the price in the throes of
that the peace
adjustment,
over-hasty,
that
for
is
It
demobilization.
belief
my
that few controls would be heeded
today
and then for only a short
production had caught
—
until
time
demand — if inflation
vigorously by put¬
with
up
tackled
were
ting off less essential activity both
individuals,
postponing tax reduction, reducing
farm prices, holding wages stable,
taking smaller profits and in¬
creasing production.
■/:,
of
governments
If
and
not show the wisdom
do
we
and restraint to make these
rather
present denials for .greater
future gains, then I can see no
other alternative but to impose a
small
ceiling
to
wartime,
in
as
entire economy
our
over
government by force.
our
agricultural
having
of
Instead
uproot¬
as
ing those who spread subversive
doctrines aimed at overthrowing
Bust
or
traditional liberties
our
America
save
Reduce Taxes by
.
'
the restraints which We
as
free men
all
of
be honest
than
us
merely
and
appro¬
Had the excess profits tax not
lowered—I move I opposed
f
have had
—the government would
surplus
several billions additional
last
Restoring the - excess
profits tax to the level suggested
yvould permit
people
—
./
consequences.
Stability Helps Everyone
fluctua¬
boom-bust
of
Instead
tion,
have within our reach the
we
for assured markets for an
means
ahead
relatively stable incomes of
indefinite number of years
with
investment should be
restored to spur industrial expan¬
new
At'the end of this two year
sion.
production drive, which is
urgent* taxes would commence
to be reduced steadily. This re¬
duction should not be done all at
peace
so
another 10% of
profits tax would come
off. Similarly the 1943 increase in
Each year
once.
the excess
personal
income
taxes
should
come down 10% each year. After
five
the
situation
whole
the
years
debt,
reviewed—the
be
should
the state of
economy—to" determine
whether a more rapid lowering of
taxes will then be wise.
threat
of
war,
our
Postponing tax reduction for
two years is not asking too much,
when
so
much is at stake.
as
free, and
asked to do things which we con¬
American spirit of
employees, the armed forces
apparent.
Stability is everyone's gain. In¬
flation is everyone's loss.
are
Coming Unbalanced
Budgets
Think of the millions living on
if infla¬
tion continues. What will happen
to
all
the
hospitalization
and
pensions and
medical
annuities,
plans, to church and
college endowments, to the bud¬
gets of state, county and munici¬
pal governments which are even
now being thrown out of balance
rising costs. How long
budget of the United
be
States
remain
in
Throughout
ably
statement
this
I
interwoven
the
are
twin
aspects of the problem we face—
the need to help the recovery of
world
other
and
Europe
own
and
the
need
parts of
to keep
the
our
able
national
It
lyze
us
from action, unless accom¬
panied
by
controls
orders.
as
A
a degree
to create
nation
of
internal
grave
which
dis¬
has
de¬
stroyed its credit has no recourse
other than regimentation.
v
:
such
the
The
orderly,
systematic,
sub¬
stantial retirement of the national
fense
as
a
measure
maintaining
as
navy or
debt is
much
air force.
as
much
an
of de¬
of
.
large ,amount of the people in the
United
as
liberty remains
it is today.
as
vr.
States;,:/<///
Many individuals and businesses
occupy
a
mixed position; some
and own property which appreciates in
the value while the value of their
press
long
as
bonds, insurance, and savings
:;
counts
depreciates.
ac¬
The effect of J
?
*
Gentlemen, the time has come the declining purchasing " power
organize—to mobilize
for of the dollar is, /'therefore, ciiiierpeace. It cannot be put off .safely ent for people occupying different
.
to /
.
pdlicfe state?
What makes totalitarianism? What
makes dictatorship?
Not the po¬
lice, but the absence of law be¬
the
—
any
lopger. The time for
and
I submit to your questions,
'
positions, having different sources
of income, and owning property //
in
differing forms;' ;ih our eco¬
nomic system.'
"■'••"./ ' * } r
'
courage
decision is here.
(
In
short, the decline in the pur1V-"'
broad,
is
It
to
the
interests
of
of
dollar
the
to aid Europe's recovery and such
aid
should
be
substantial.
How¬
the Marshall Plan must be
fitted into a larger structure of
'oreign and domestic policy, rug¬
ged enough for the uncertainties
ever,
Whatever
global
peace
strategy we arrive at will not be
worth anything unless we stab¬
ilize our economy to keep Amer¬
ica
strong. Either we organize
production/and self-restraint to
furnish the tools and materials for
Tie
to
peace-waging
that is
necessary,
or
the degree
the peace is
lost.
,
made
Much
front"
during
is
"home
Where
our
peace?
of
the
the war.
front" for
...
Keep
America Free
it is human nature—
political nature—to try to do
Perhaps
or
was
dif¬
volume
ap¬
The
ferent
stitutions
held
in
much .;
a
1940
-
latter
differ
institutions/'' ///■;'
*
Economic
.
Maladjustments
Eventually Hit'
(The indexes were 78.6 for in 1943-1944.
Furthermore, since
1947.) ' such institutions do; not use their
This depreciation ih the value funds as do individuals, The/ef/
fects of rising prices oh them is a
of the dollar means various things
to the people of the United States. matter for separate determination.
The value of insurance policies
It depends upbn whether one is
dealing with the cost of living of held
in/ 1947, that1, were
pur¬
people in general or of a certain chased in 1940 or earlier, is prob¬
ably a very large item. The value
group of people, with the values
of people's property, with the pur¬
of life insurance policies alone,
chasing power of people's savings outstanding in the United States
accounts, insurance policies, and on Dec. 31, 1946/was over $174.5
investments in government securi¬
billioh-f-an Increase of ($57 billion
riod.
in general or of groups of
and
on.
so
;
individual
an
more
people,
//.;/'■
is
obtaining
rapidly than the
pur¬
dollar de¬
clines, he is gaining in the face
of rising prices.
This tends to be
the
of his
power
often,
case
perhaps
in
gen¬
eral, with farmers—their incomes
tend to rise faster than their
costs,
time, their profits may
give them a real increase in pur¬
chasing power; that-is, their dollar
profits increase faster than the
and, for
decline
a
in thq,
purchasing
power
of these
dollars.. If the deprecia¬
tion in the purchasing power of
continues sharply upward,
time may be expected to ar¬
money
the
rive
the
when
purchasing
in
decrease
power
of
the
the
dollar
the
oVer
'
evil
in
the
Because
early
;//•/
/ If
amount
1940
had
and
been
held
established
until
1947.
prelude to a later drop
to alter the position
has
posits
in
1940
almost
were
Therefore, all that
is
that
the
the
accuracy
insurance
policies,
and
savings accounts has declined ap¬
proximately 50%. Individuals held
$65.4 billion of United States gov¬
ernment securities in September,
1947.
On this item they would
-
have
lost
the
equivalent of over
in purchasing power
they bought these
securities in that year.
It is obvi¬
ous that at the most only a small
$32
billion
since
1940 had
proportion might have done this,
since individuals held only $9.7
government
The
securities
in
system
has
ratios
been
know
how holders of
have the data
/
govern¬
on
Commercial
serve
and
|
of
rather
power
of
of
these
is
in
banks'
liabilities.
more
power
concern
to
Re¬
are
promises to
dis¬
and
/'•/;'/'-yf
System
a
any pressure of the mon- /
supply in the direction of
The decline in depreciation of currency in terms
of goods and services.
..
; .- / / /
of money is of
It is to be emphasized that the /
the banks'1 de¬ I
sharply
etary
best currency
I
reasons
involved in
market value of their assets while
can
ever,
I
not
that
be-a
.currency
public's interest is primarily
I and
in the purchasing power of their
may
Because wages and salaries
can¬
generally be adjusted as rap¬
as prices rise, the purchas¬
•
The point is* how¬
be many.
defective
the
.
rising prices and a depreciation of
purchasing power of the currency
in terms of goods and services
since the causes of rising prices
that the
a depreciating
resulting from
rising
prices.
Since the bankers' busi¬
ness interests are primarily in the
system ever devised
by man cannot of itself prevent,
currency
idly
■"
gold-chin' standard janjd
system the issuance of promises to
pay is confined to those that are (/■
to
be
redeemed;. This restricts
as a group is
rarely aroused when a nation be¬
not
these in-
/
issued
as
pay
dishonorable
both
Under
banking fraternity
.
merely
for
The Gold-Coin Standard
the
securities
selves.
comes
not redeemable but are
honored.
positors than to the banks them¬
It is for these
easy
by the Treasury and the Federal
Reserve banks, and in circulation,
maintaining
assets >at
least
in market value of the
purchasing
system has -madfe,
a great issuance
to pay - since these
our
promises
mestic
than
the
in
purchasing
of this market value since
equal
any
the depre- /
other promises;
to pay which are likewise Irre¬
deemable. In other words, our do-
we
the business of the banker is. one
of
fact,
exchangeable
The principal
bankers
value
offer
nor
on,
domestic money and
our
makes,
are
I
Federal
prevent,
restrictions*
In
and
poli¬
approximately
Sept.; 1947.
not
,■
in terms of goods and
services. //, /'///.///////.'
each person and
held
banks
long -as our reserve
respected, this system
deposits
Position of Banks
,
the
of individuals,
on
so •
ciation of
institution involved.
compared ; with
1940;
would be $32.3 billion.
But, as in
case
,
<
our
are
great
of
declining
power
large volume of pur-;
as
present
money
good currency need
a
.
contributing factor to
depreciation, ^whereas a
monetary
system can
be
a
potent cause of such
depreciation.
?
/;
.;
.
/
/
..
;
/
/ Our 'system, ' involving an issu¬
ance
of
an
irredeemable paper-
i
here,
the
parity of our paper money with
gold can be maintained under this
deposits, securities, insurance, and
other
chases began in 1943-1944.
savings, banking systems
throughout the- world have usu/
Insurance companies, other, cor¬
ally gone along with an inflation¬
porations and associations, mutual
ary tide apd have in general done
savings banks, and state and local
governments held $64.7 billion of practically nothing to help a gov¬
ernment save the people from the
United States government securi¬
ties in, September, 1947. If these "depreciation in the value of their
institutions attempted to buy purchasing power: Where central
banks
are" tools
of government
goods and services of the same
general type as those bought by treasuries/ this - complacency.. is
most pronounced. 4
individuals, then the loss in value
1940.
since
none
by the Treasury. •
. - w- «•-J.
But the important principle to
note
here
is that
although the
in
cies, and of savings or other time
deposits are affected since such
Securities and Insurance
ties,
irredeemable'
gold, then, it;
that thdre }
of indirect
and
system
pre¬
/securities, insurance
interest
accounts .'established then,
the purchasing power of the dol¬
lars represented by these securi¬
de-/
reason
paper
does
we can
purchasing
dollar
market
ings
currency
gold standard unit •
Jan. 31, 1934. •/
/W
why: our ifredeem- '•
able paper currency has not. de¬
preciated 'in
terms
of gold is/
because of the operation of our -
cisely half the dollar volume of
Oct., 1947.
ties in
purchased in 1940 and have sav¬
•
understddd
fixed
The
could be true, at the most, of only
half th'at amount since time de¬
Purchasing Power of Government
people hold government se¬
and
insurance
policies
be
weight of
$92 billion of government securi¬
tions.
our
and
money
been
was
seem
generally taken by the farmers as
a group and by many, if not most,
of the officers of farm organiza¬
between
paper
should
This
knowledge would require that
a
eco-:
generated;
conversion of/
deposits into
This would represent a loss of $28 gold through the Reserve banks
billion in purchasing power if that and running baek to the gold held
ment
prices is
thinks of
one
ship
commercial
sharply rising prices tend to bene¬
fit farmers, they and the officers
of farm organizations are gener¬
does not
'.depreciat¬
preciation in terms of the relation-1
banks, mutual savings banks, and
the postal savings system totaled
over
$56 billion in Oct.,' 1947.
drastically; we do not and cannot
/. know
quantitatively
with
any
Of
stages
a
maladjustments
tending the subsequent liquidation'
will overtake the increase in the
supply of dollar profits.
of:
during the period • of rising priees //
ahd the stresses and
strains at-;
/////•
more.
deposits
All///
because of the
currency
nomic
time since 1929 have depreci¬
Time
>
of
consequences
ing
outstanding in
1940. The purchasing power value
of this $57 billion has been cut
ih half; and those life insurance
policies 'purchased earlidr and at
any
:
time; few frdbijlei^half/*es£a|te
amount
ated still
v
;] In general, and Tn the copfse
1940 and 159.8 for Oct. 29,
ties, with the purchasing power Of
the wages and salaries of people
/
_
($11.5 billion);
their heavy buying began
chiefly
proximately 50% during that pe¬
billion
During wartime
the average
person realized that what he or
she did on the job, on the farm,
'n business, was a direct part of
the war effort.
It is tragic that
so few people see the connection
between
the things they do in
their daily lives and. the peace
effort.
declined
had
curities
peace
re¬
spect to different; people and
(Continued from first page)
the purchasing power
ity prices,
If
Strong
Keep America
with
else.
Secretary of State.
and
army,
protection
lay
foreign policy, the Administrator
would be subject to the President
Reducing that
a
;;
strong
as
fairs.
prob¬
a
Congress
"home
debt is
to ruin."
are
in¬
'nils is a
such
the
appointed
as
ally pleased with that state of af¬
The fact that such a rise in
by
economy
basic policies,
giving full operating powers to a
single, competent Administrator,
heading the European Recovery
Authority. On matters affecting
money and repudiation. In event
of
a
recession
or
some
future
necessary
to prevent
national debt could para¬
own
with
suggest
the
down
It imperils our
be
our
Confronted
lem, J
national security. It is an invita¬
tion for regimentation,
printing
war, our
neces¬
Congress to Set the Policy
pres¬
emergency,
)vhere the expendi¬
ture
of
considerable ^resources
the
how
measures.
ihead.
debt.
for inflation.
advance
from
.
these
Overhanging everything is the
might
in
change,
low much more
quickly Europe
:an recover if her production is
stimulated by measures such as
I have
proposed, or how much
more
can
be safely made avail¬
The National Debt
sures
economy
dict
the spiraling ceases?
swollen
go
makes
What
dollars
have tried to stress how inextric¬
unless
balance
protects it
chasing
care
because of
will
To them I re¬
in others?"
If
Get the Best Administrator
for white collar workers, govern¬
ment
freely at
long as the
radio
tax, wartime provisions for amor-
tizihg
The benefits
workers and farmers.
vote
long
as
laws
our
depend
who
upon
tends to uecfmfc.
come
While raising the excess profits
sities of the situation may
pen.
constitution,
adopt
freedom
our
uphold
those
of the debt and interest cost.
adopted or the country — and the
world
will suffer the tragic
that hap¬
save
of
power
sizable lowering
a
But, the longer the delay in
acting wisely, the more severe the
measures
which will have to be
I would not like to see
to
we
elections,
demn
ing
largely ;or; solely,
year.
strong for what
making and keeping the peace
may demand in the years ahead.
Unavoidably, some'conflicts be¬
tween these two objectives will
ievelop. Nor is it possible to pre¬
•./
wrecked.
being
from
as
priating money.
Many may cry what about "free
enterprise" and "aren't we being
prise if you let the system which
been
long
as
ply, "You cannot save free enter¬
Stages
police—the rule of men
law.. T have no fears
of
of
not
<
turned
spiral would
be
downward immediately.
living
the
instead
but -1
nothing,
here that to make and keep
peace will demand far more
say
the
of
than
if I did not
would
In Peace
hind
A little bit may
little bit.
a
be
The ERP—A New Adventure
Thursday, January 29, 1948!
money
—that is, the issuance of.
/v and / dishonored;
dishonorable
promises to pay — has been. and.
a potent factor in the deprecia~>
is
tion
of
our
dollar;
in/terms
of;
goods and services. The elimina¬
tion of this defect can be a power-,
ful factor in
counteracting further
depreciation of our currency.,.,v
/
the result ofthe forces of supply and demand,;
except in the instances of gov/ Since
prices
are
Volume
167
ernment
>
the
Number
price
4668
v
fixing,
and since
of rising prices or de¬
of / our currency are
causes
preciation
many, the
purchasing
A
to
Such,
for
civilian
point.
production of goods
use
to an extremely
Various government
the
On
demand
have
ment's
policies
the
of
to
currency
depreciation
of the important factors
one
our
be redeemed.
can
issuances of promises to
without intent to redeem is
Any
and
pay
ly
Reserve
to
economic
sound
cer¬
promise to
a
The
utilized, and
are
is
of
pay
only
exception
this
even
money
overvalued money in so far
an
its
as
metallic
cerned.
When
content
is
con¬
government and
a
banks issue promises that are not
fulfilled, the standard of integrity
is besmirched by a lack of good
faith.
pros¬
The
promises of
our gov¬
banks today are not
ernment and
ex¬
,
kind.
same
debt; the wide¬
the loans and 'gifts
tended to foreign countries.
in
arises when silver and minor coin
ing, rather than production, sav¬
ing, and hard work, provided the
roads
origin
which is "fulfilled" by the substi¬
tution of another promise of the
spread notion that debt and spend¬
perity;
its
banks, except silver
tificates, carries
and deposits resting large¬
on government
has
immorality. All our paper
money in use outside the Federal
public purse; the
caused and invited
unprecedented spending and the
growth of an unprecedented vol¬
States)
today
such
the
United
trouble with currency depre¬
our
which
the
good, in
Price fixing by the government,
like monopolies, has tended to af¬
paper
fect both supply and demand ad¬
far
so
circulating
is concerned (silver
as
our
value of
versely.
those
Price
excepted),
and
the
these promises is declin¬
ing with relative rapidity in terms
of what they will buy.
fixing, except in
would not have encouraged great¬
production, has tended to ag¬
gravate
the distortions by de¬
pressing production and by en¬
couraging a greater demand.
money
certificates
in which rising prices
cases
Remove
Interest
Rate
er
Since
the
the
are
of
causes
depreciation
rency
cur¬
many,
so
In
principle, those
increase
production
cures.
forces
our
are
that
relative to demand and decreased
demand
relative
supply
of
should
tend
available
the
to
and
services
bring the decline
in purchasing power of money to
an
goods
to
end.
Price fixing is not
helpful, ex¬
rising prices would
not induce greater production, be¬
cause
it
discourages production
and invites greater demand. Ra¬
tioning, ordinarily an adjunct to
price fixing deals with results or
where
cept
symptoms; it does not in
portant
reach
way
Lower
taxes
causes.
on
im¬
any
should encourage greater produc¬
tion.
'
•
tariffs and
Lower
removal
the
of
obstructions, domestic and for¬
eign, to trade should stimulate
production
buy
and enable people
their money.
In
ures
short,
that
duction
and
to
goods and services; with
more
y.
practically all
tend
to
to
and
services
at
meas¬
stimulate
put
the
more;
pro¬
goods
disposal
of
people should be beneficial. ^Mo¬
nopolies—both business and labor
—should
be
bedding
broken
and
all
up.
Feather-
obstructions
to
production, except where matters
of
health,;; safety,
etc.,
volved, should be ended.
On
the
ment
side:
in¬
\v
govern¬
spending should be curbed
sharply.
be
demand
are
The Federal debt should
reduced.
Price
and subsidies
interest of
maintenance
(except those in the
military, naval, and air
protection) should be ended.
The
use
of
nection with
ductive
stricted
tive
credit, except in
self-liquidating
activities,
should
be
credit
adds
> Interest
mitted to
levels.
rates
rise
The
its
borrow
con¬
pro¬
re¬
to' the
Cujbs
should
to
be > per¬
their
natural
government
funds
in
should
the
competi¬
tive
money
markets
at
competi¬
tive
rates.
Most
our
the
our
1929-1933,
regard
some
that
recession
great
a
the
gold
manner
the,
or
of ,a
multitude
credit
other
our
things undermined economic
tems and destroyed
or
of
Because
of
of
in
as
cause
recession.
mismanagement
ol
people
many
standard
a,
business
man's
and
suspension of gold
widely
associated
sys¬
impaired
a
This
number
belief
of
has
institutions
in¬
not
to
be
widely recog¬
nized in this country.
In the face
of this and many other lessons of
the same kind,
including the
ent
depreciation of
contentions
our
pres¬
the
money,
still
are
advanced, as
they have been during our period
of
suspension of gold payments,
that
Government
our
cient power to
chasing
paper
power
money
permit
That
gold
is
great
this
of
our
that
or
paper
is
gold
majority
country
suffi¬
it
a
of
will
to
is
not
"too
go
and
paper
fact
the
that
the
people d
not yet ready to
admit in respect to money.
The truth of the matter is that
a
are
"managed" inconvertible
paper
depreciate to any de¬
It is a promise to pay that
money
with
it,
he
as
he
condemns
it.
Because he cannot make things of
less
value, such
as
paper
money,
as
valuable as gold without re¬
deeming them in gold, he blames
gold for his unhappy experiences
and
he
attempts to fix things
will
deem
compelled to
promises in gold.
re¬
He
we
not safe from
are
preciation of
that
reason
our
the
down
rencies
therefore
are
ferred.
The
cheaper s
"the
comes
to
cheap
the latter cur¬
currencies,
paper
to
be
valuable V "the
pre¬
be¬
money
best)"; and thb
worst."
more
Such
is
man's
intelligence, thinking, and
argument today as to gold versus
governmentally-managed
a
for the
banks
can
and
pump
much
larger volume of promises
into circulation than would
to pay
of
gree
depreciation
chasing
promises to pay, have driven gold
into hiding and have caused these
slip
radical de¬
Government
Federal Reserve
a
a
currency
irre¬
in
term consols
general
oppose a
the
that
is
a
all
to
monetary system involving hon¬
a
of affairs in
attitude
is
the
promises that
should expect to find our best
we
for
cure
depreciation of
our
in terms of goods and
rency
ices.
cur¬
serv¬
s.
Should
good
itself, it
leadership
that many of those
pose
adequately
assert
reasonable to
seems
informed
sup¬
in¬
now
indif¬
and
ferent would give support to those
advocating
the
it appears
ous
one
and
such
proper
leadership,
highly probable that
will continue
to
be
and
can
most
a
Ave
the present peril¬
on
which
course
prove
wise
Without
course.
may
unfortunate
fbr the people of the United
States.
It
sems
reasonably
clear
that
is prob¬
leadership
of
ably
important in this than
more
in any
fairs
other field of domestic af¬
the
at
value
statesmen
present
of the
time.
The
contribution of
such
leadership to the welfare of the
people
this
of
country
promises
to be immeasurable. The need for
this leadership should
Cinn.
be clear.
Municipal Bond
Dealers Elect Officers
CINCINNATI, OHIO — Wesley
Thornburgh
of
the
W.
C.
Thornburgh
Co., • was
elected
.
Standard
Chairman, and C. A. Richards of
Restoration
this
issue.
C.
Pressure for Gold
Since
this
of
pur¬
money
clear
part
state
general
respect to the popular
toward
our
currency
structure, there is not likely to be
nation-wide pressure on Congress
and
the
Administration,
unless
leadership is provided, to correct
the
far-reaching defects in our
monetary system except as such
or
terest
in
ofour
power
argues that since most na¬ should
make
this
tions, because of their abuse of intelligent
people.
gold
and
reckless
issuances
of
to
Yet
orable and honored
can
even
nations
which they
in
And, it is by the establishment of
be possible under a system of di¬
that rect redemption. The present de¬
so
be
not
his
fundamental
been
Because he cannot do
pleases
one
honored.
not
are
irredeemable
depreciation
far."
has
widespread promise invites.
that, while
Despite the fact that our system
practically all other things were Of indirect conversion of our irre¬
losing value, gold, almost alone, deemable
paper money maintains
was appreciating in value.
it on a parity with gold at the
In short, gold has been, and
is, rate established in January, 1934
blamed for man's mismanagement it is
important to understand that
of it.
preference to
maintain the pur¬
in the face of the fact
deemable paper money.
Another reason why people
debt should
invest
to
of
be funded
Federal
into long-
bearing a rate of in¬
sufficiently high to induce
non-bank
them.
institutions
in
them
and
and
ment
hold
borrowing and properly al¬
that
attempt in
increase
fear
their savings.
loss
a
possible, be diverted from the
United
as
States
to
other
countries
should the purchases by those
loans.
This is
every
we
extend
imperative in the
of such depleted natural re-,
sources as oil.
\ /
case
in
from those experi¬
thoughtful citizens who.
pressure comes
enced and
for one reason or another, have
gold standard given careful consideration to the
prices, they issue, and from those specialists in
way
possible to
the field
of money who are
thor¬
incomes; and, they
oughly grounded in the history
drop in prices lest it bring and principles of
monetary stand¬
in incomes.
Many, for a ards and systems.
realize
are
to
a
rising
their
time,
fail
Government buying of goods to
aid Europe should, in so far as
is
a
interested
return to
with
others
low people a better rate of return
on
is
not
are
savers
to
These
higher rates would
put sharp restrictions on govern¬
gains.
.real
hopeful.
Many
Perhaps most
understand
the
extent
to
which their real
A
proposal to return this
try to
a
gold-coin standard should
raise the question,
quickly, of re¬
sobriety
before
the
purchasing power turning to
declining until prices have risen intoxication of a
depreciating cur¬
great heights and it becomes
rency runs its course ending in
necessary to utilize savings and to the blue
"morning after" with its
sell property in order to live. This
economic sickness and headache.
is
to
last
stage has not yet been reached
important way in this coun¬
in any
try) ./although there
People
are
not
for
return
a
standard.
to
gold-coin
a
Without such pressure
stand that
enjoying the intoxication
likely to welcome a with¬
is
likely to be
them, many government of¬
ficials neglect or avoid this basic
depreciation
matter.
set
appear
inconvertible paper
no
so
"managed" that
upon
Since
money
..
an
—
a
'
•..•».
L
in,
no
!
will
not
ultimately
matter how: totalitarian
$a$eir a government in&yl'be1, if the'fbrces
so-called'"managBtl" that can cause - &£|mebia'ti6ri1 • he inconvertible
W. C. Thornburgh
Field, Richards & Co., was elect¬
ed
Secretary-Treasurer
of
the
Municipal Bona Dealers Group of
Cincinnati at the annual meeting.
The following were elected to
serve
,
It
is
are
honorable and honored.
to
not
dent
and
the
credit
of
this
& Trust Co.,
Isphording of Van
Taylor III Co, ^
B.L.
Opens in New York
L.
B.
Taylor III
&
bers of the New York
change,
Co.,
;
mem¬
Stock
Ex¬
been formed with
offices
at
120
Broadway,
New
York City.
The new firm will
have
do a general brokerage and ar¬
bitrage business, specializing in
when-issued
and
reorganization
securities.
.
Partners
B.
L.; Taylor III,
Lester S. Greenwald,
and Sey¬
mour
N. Sears, Jr.
Mr. Taylor
are
and Mr. Greenwald were formerly
with
for
Wellington & Co. Mr. Sears
the
past
has
twenty years
Dodge.
been with Miller &
f
Dexter Marsh Joins
L. F. Rothschild Go.
BOSTON,
MASS. —Dexter
H.
Marsh has become associated with
L.
F.
Rothschild
Street.
Mr.
years.
in
Directors:
Lahr, Doll & Isphording, Inc.
tefh" of J honorable
■
of
Savings Bank
managed
promises
Board
Robert B.
generation
tha.t
circumstances
make it necessary to argue for,
and to fight to establish, a sys.
the
on
Paul C. Hood, of Seasongood &
Mayer; Walter Kleeman of Provi¬
promises of the government and
banks
C. A. Richards
coun¬
to be drawal of the intoxicating stim¬
indications that some of our people ulant.
Similarly, those who are
Thus far, the chief attention
ip, are beginning to feel the pressure
temporarily
experiencing
real
Washington and in popular dis-K -of. a'
depreciating real income. gains from the current rise in
cussions has been centered in at-y
Many people, apparently, are still prices may be
expected, in gen¬
tacks
on
symptoms.
If
it
be
:iht'the state of relatively high eral, to oppose a return to a goldgranted that a return, to a goldmoney incomes, relatively large coin standard.
coin standard would be a potent
cash
savings,
and
fairly
free
The issue resolves iself into the
force in combatting the deprecia¬
spending. They are enjoying the
tion of our
currency, the question feeling that they can buy much — question of whether government
officials who understand the na¬
arises as to what are the obstacles
until they try it.
ture
of this insidious monetary
to the adoption of this corrective.
There
are
outstanding leaders
The
disease will be leaders and at¬
general public,
in large in all
groups—banking, industrial,
tempt to save our people from
part, does not understand the dif¬
labor, professional—who, for one
further pursuit of a course the
ference between a good and an in¬
reason
or
another, will be found
ferior money.
general public does not compre¬
Most people seem in
opposition to a return to a goldto
confuse
the
convenience
of
hend, or whether these officials
coin monetary standard, just as it
will simply ride out the course
per money with the far-reaching
is reasonable
to
expect that in with
and fundamental monetary func¬
our people, trusting to
luck
these same groups there will be
tions performed by gold—its serv¬
and waiting until a possible crash
leaders who believe that, in so far
ices as a reserve against promises
engulfs us.
/ ;
as a monetary system is
involved,
to pay, its clearing functions
(do¬ the
Apparently, the most funda¬
gold-coin standard will serve
mestic and foreign), its superior
mental question is whether there
this country best.
ability to store up values indefi¬
is enough leadership in the Fed¬
nitely.
' v,
eral
Ultimate Depreciation Under
^ ;
government to
deal with
As a consequence, members of
causal factors rather than with
Managed Currency
Congress and the Administration
symptoms, and to give the people
It seems clear that the people
have been relatively free
from
of the United States a monetary
demands from the people in gen¬ of this country do not yet under¬ standard and
system in which the
eral
sharply since non-produc¬
buyers'
r
governments to whom
r
producers
>
Because
far
cluding
governments
and
gold gree.
standards, the belief is widespread is not fulfilled. It is a bad sort oi
that
gold was in some way the promise; and the
people can de¬
cause or at least an
important con¬ cide to treat such promises with
tributing factor -in that disaster. the contempt that a non-fulfilled
to the issuance of prom¬
ises that
ciation
(for
gold standard.
a
thus
ernment
invited heavy,
borrowing
and
spending;^ the
abandonment
of
the
gold-coin
monetary standard, thus depriv¬
ing the people of direct control
over their government's manage¬
ume
a
sufficiently strong. The fact
that Russia has
recently provided
demonstration of this fact seems
33
a
large
government which
money
to
come
(517)
fore, restricts the banks and gov¬
uneconomic and immoral. Much of
of
to
opposed
business
expansion in which were
employed a variety of devices; the
low interest rate policies of the
ment
return
them,
with
gold-coin standard forces the re¬
demption of promises and, there¬
credit
war,,
consistent,
fulfill
is
,
govern¬
money
force
if
are,
to
govern¬
sharply rising prices has
been the great expansion of irre¬
deemable promises to pay, issued
by the government and banks. A
side, the chief
been
the
compelled
without
pay
payments
in
Causes of Increased Spending
V
should
in
promises to
Gold Not Cause of 1929 Depression
since
Monopolies, both business and la¬
bor, have also been factors.
<
\
factors
standard
a
contraction
tives
productive activity.
on
over
issue
relatively free
now - outstanding.
Return
to
a
gold-coin standard probably would
be one of the most potent correc¬
policies during the 1930's and the
period of the war also acted as
depressants
Reserve banks
ment's and banks' promises to pay
Then the period of'the
low
and
being
the government's
and abuse of the public purse.
some
sion of the 1930's kept production,
with some exceptions, at relatively
reduced
high degree of governmental
dictatorship, with the Government
rect control
*
In brief, on the supply side, the
long-drawn-out business depres¬
—
is an integral
governmentally-managed
all who think they de¬
a
a
to
use
CHRONICLE
currency
part of
sire
that the
so
FINANCIAL
economy,
Return to Gold Standard
gold-coin standard
a
paper
people, once more, would have di¬
large demand for them.
war
power
The country should be returned
problems are to be found by as¬
certaining what caused the rela¬
tive scarcity of goods and services
offered for sale and the relatively
low levels.
again the avail¬
goods and services.
able
to the resulting
answers
THE COMMERCIAL &
;
&
Marsh
the
Co., 30
Boston
office of
for over ten
Lazard Freres & Co.,
,
State
formerly has
/;:y
•
34
THE COMMERCIAL
(518)
almost inevitably
>
(Continued from first page)
certainly should convince
even
hands to
clean
not
can
the doubter—if there
come
into any court
with
certain
other country of any such
course.
But why any one on this globe should need
any such convincing is quite beyond us, and the revela¬
tions, of course, throw no light upon the nature of the
course we
ourselves are now following.
accuse
clashed when either
types of lending^-lending such as your institutions, or savings .>
banks, or insurance companies, or
individuals do—which is a matter
transferring savings from those
wish to
7'/ spend them* to those who do wish
to spend them.
.
,
" 4:
any
The Current State of Affairs
What
have
we
now
of
useful
purposes that the publication of these documents should Russia in check in the East far more effectively than she
serve at this time.
If, for example, they fail to remind, im¬ had been threatening us. The war has reduced Britain to
press or convince us all of the hollow mockery of much of the status of a sort of economic vassal state. Postwar France
our
war
propaganda, they will have failed to accomplish is evidently to be of little help. The United States, operating
one of the
things which might be expected of them. Lest alone, could not be miltarily effective against Russians in
we
forget: According to our daily dose of official nonsense areas now most vitally concerned—and Russia knows it.
in those years when we were
But on a world-wide basis the situation is vastly
pouring out our blood and
treasure to defeat Germany, Italy and Japan, we were fight¬
different. We are now left alone, the only really first
class power on earth to face the ambitious Soviet Union./*
ing a defensive war to save democracy, freedom, "our way
of
life," and much
of the
more
same
sort.
The "democra¬
But Russia
cies" lined up to
destroy tyranny included the Soviet Union,
"brutally" attacked by the forces of tyr¬
anny, imperialism and double dealing. It was an "ideologi¬
cal" war, liberty vs. slavery, statism vs. individualism,
aggression vs. respect for the rights of other nations, honest
dealing vs. treachery, etc., etc.
'
which
in
had been
has elements of
kind of
any
years
sions. It is
our
we
of
any
be
questioned whether
nosed the situation
we are
the
to
set
are
of
to
reserves
proportion
some
amount
-
create by the
they must i.
legal requirement that
hold' cash
extent
the
their de¬
of
posits—which
are
themselves
largely the result of loans and in¬
vestments. Banks which are members of the
i
Federal Reserve Sys¬
tem,
which
hold
85%
of all
commercial bank deposits in this
country, must hold their reserves
deposits with the Federal Re- '
Banks, and no income is de¬
rived from these reserves.;- On
as
serve
required
-the, average,
reserves
amount to about one-sixth of com-/
For every"
credit cah ex-'-
mercial bank deposits.
dollar of reserves,
a
t
com-,"
-mercial banking and control over
It is seriously
commercial
diag-c^
confronted.
has. tra-i
bank credit
ditionally been exercised'-by con-;,
trol
of
these
reserves., >; Three
techn'ques have been' used to
exercise this control: (1) varying
v
They Believed It!
There is little doubt that (thanks to the effective "in¬
1,
Limits
of credit banks can
pand sixrfold.
Reserves are the heart of
posses¬
have realistically
we
by which
our
have cast ourselves—a
role presenting many grave difficulties.
to
.::
could not for
man
shores^or-
role in which
a new
weakness, too, and
severe
yet known to
war
approach
even
,
succeeded in doing does not encour¬
great enthusiam. We have destroyed Germany—and
Europe more or less at the mercy of Germany's fellow
thief.
We have crushed Japan, which had been holding
age
left
But however all this may be, there are certain
•
who have them but do not
aid to world peace.
an
sense
mcney
saved.-
both began to
or
which no one has)
This is in contrast to other ;
spend
than
had historically and indeed
lay plans of aggression. The existence of the two, more
or
less evenly matched in strength of arms, was in a
,
be one—that Russia
Russia and Germany
ever.
1948
Thursday; January 29,*
their bed at night now appear more ridiculous
:
As We See It
CHRONICLE
FINANCIAL
&
the rediscount rate, or
the rate of;
interest *at which member com-,
of an AdministrationI above all a
mercial banks may borrow from;
past master in such matters) in a psychological sense that
the Reserve Banks; (2) open mar-:
(Continued from page 10)
is precisely what a good many American soldiers were fight¬
greatly increased importance of recent acceleration of expansion ket operations, or the buying and
ing for. That is to say, the "drive" which kept them going the public debt is one of the major largely resulted from very active selling of government... securities
bank lending to
businesses: and by the Reserve, System; and (3)
originated in precisely such notions as these. Much the same factors in the present inflation.
doctrination"
programs
,
Why
has
th.s
increase
in
the
individuals.'
varying the level of reserve re-;
/h '
great many who stayed home public debt contributed so
Since the war, the economy has quirements; that is, the amounts
and sent members of their families to the front.
At least,
strongly to inflation? If we under¬ been operating very close to ca¬ which member banks deposit with
this is what they thought they were fighting for.
stand this point, we shall under¬ pacity and the general public has Federal Reserve Banks as legally
stand why some of the problems shown a pronounced disposition required reserves.
But what a different picture now emerges from the
of the
Federal Reserve System to enjoy all the things that were
Two
of these techniques for
documents!
What we now see—as many of us were
are
so
in short supply during the war, controlling
difficult to handle, r; i, v
bank reserves — dis¬
is doubtless to be said of
a
••
*••
,
convinced that
known—is
should
we
see
when the facts
were
made p
During
ment
brutal, tyrannical, imperialistic, fanatical v
Germany (or Hitler) scheming with an equally brutal,
tyrannical, imperialistic, cynical Russia to grab and 4
/> divide between them all the territory and all the people
they could. The "treacherous" attack upon Russia in :
1941 now is clearly revealed as but a "falling out among
thieves." Not a trace of "idealism," ideological devo¬
tion, or any other redeeming trait softens the black
impeachment of both parties to these understandings.
It
a
half the money
ernment
graphical position, and the fact that the whole world
buy. * To
these
anyhow, have added to the strategic strength
position. What Russia doubtless now would like to do
to reach
because
interest is of the
same sort as in 1939 when it was
bargain¬
ing away the life of other countries and other peoples as if
they were cattle.
Pertinent Question
Kremlin have in a communistic
regime in the
States, for example, which steadfastly remained
truly American and refused to take orders from or deal with
United
the Politburo?
The Soviets are interested, so far as
they
really are interested at all, in promoting Communism abroad
chiefly because it is the most effective way to develop "fifth
columns"' within various countries with which
they must
deal or which they
may presently wish to dominate." Pre¬
cisely how much of all this engendered by some imaginary
danger to Russia from "Western powers," it would be diffi¬
cult to say, but it is in
spirit and purpose political imperial¬
ism and little else.
Where does all
we
really
were
sion, it is
been
in
now
this leave the
situation now?
defending
were
a
ourselves
defensive
war—was
clear enough that not
against—if
1
If
-
-
we
political aggres-'
great deal has:
suppose
that
the
what
was
constantly put
gandists of the day.
were even at that
It required enormous credulity-
German
thought they could, do
more
nation
either
could,
we
were
at war, and
some
ing the supply of goods and serv¬
ices
and
restraining price in¬
creases.
People, therefore, saved.
Some of the savings were in cur¬
rency, some in bank deposits, and
some in
other liquid assets, par¬
ticularly Government securities. | j"
The country's aggregate, money
supply, as measured by currency
in
circulation
and
privately-held
large as at the
beginning of the defense program,
about $168 billion, compared with
$66 billion in June, 1940. In addi¬
tion, the - general public} - outside
of
banks, insurance, companies,
and
government
agencies, r in-?
creased
its holdings of govern¬
ment securities to $105 billion, or
nearly seven times as much as in
June
of
1940.
as
These
government
of these strong demands for goods
services—demands
and
and
long
excess
risen,
inflation.
had
have
we
in
have
of v supplies—prices
As
the volume of goods and
as
services
available, valued at cur¬
prices, rem a ns less than the
amount of money being spent, in¬
rent
flation
will
persist.
tion, in fact, is the
flation. .,/?.///
-
This
essence
'j.
Two other factors
making the goods which are
being shipped abroad., But goods
services
to
will be
these
match
turned
out by
in¬
the
abroad
in
payment
for
our
ex^
ports financed through loans.
Both expansion i of productive
capacity
and the export surplus
have resulted
in
amount equal to about
their total demand and
additions to the
which they can sell
time deposits
in
order to
serves
obtain additional re-,
-without
j
from
traditional
The
open
market
Operation to reduce excess b^nk
reserves
is for the Federal Re¬
serve System
to sell government
securities, thus drawing down pri¬
vate deposits at
commercial
banks.
turn, this draws down the re¬
serves
of commercial banks by
In
reducing their deoosits with
Reserve Banks.
thp
Federal
however,; we come up
the, problem of • manage¬
of our huge public debt of
Here,
against
ment
$254 billion.;! If-the Reserve Sys¬
tem were to sell enough govern¬
securities to ; reduce bank
ment
reserves
curb' credit
and
expan¬
sion,! it would ' i n v o\y e ■ great
dangers for the4 entire economy,
To make possible this volume of
through the crea*
sales, the prices -of government se-'securities
in the hands
of the tion /of credit and by the, use. of
ipurities ;would have; to':ibe lpetv:
public are practically the equiva¬ fund£ previously held idle4.' An;
mitted' to; decline. With a marketslent of money because, they are additional
source ?iofy inpreased'
able public debt held by investors
readily convertible into cash;- .In rhoney supply ha^ beeh payment
other than ;the Federal Reserve
sum total, this stock of purchasing
in; gold for some of our exports of Banks amounting tp $143- billion/
power available to buy the cur¬ goods.;
ho one can say How great this
rent output of goods and services ;
This brings me to the problem
decline,; in prices wodld." have to
amounts
to almost; $275 -billion
Which confronts the banking au¬
be.
As pricds .-declined ' because4
compared with a stock of about thorities" and iabout "i which..- the
of Federar Reserve "sales; investors
$80 billion in 1940./*/Hy
Federal Reserve Board is deeply
would euffer capital losses and,in*
Concerned, for it shows clearty the turn -would be. encouraged to .sell,
Postwar Monetary Expansion
changes which have taken pi ace in
Most of this expansion in the the
tasks of the Federal Reserve tbeij/ holdings while theiti losses
were still1 small, khd these sales
money supply and liquid.' assets
By stem.;,
v'• -V W.
would' further' dfive prices down-;
in the hands of the public oc¬
Position of the Commercial 4 > ward/;vInbrifif,(FedepalReserve,
curred during the Wbrld War II
>' <.4:44 BanksT
open/ market operation to reduce
period. However, further expan
to a
sion has .taken
plac^ over the fa*Taken as a whole, the-.commer- bank; ;resery^
e2aL banking
system ;is/funda-: disruptive, decline irt governmen't
postwar period/, and
--^fecept
security
s/wHiPh:-might
mo: '
"
1
•
-i*
mar
irked sighsdf acceleration. This niortey—for allowing borrowers to; spread tb;-the' prices r of .pther se.
■
borrowing
the Reserve Banks.
•
machinery
and buildings: only
over
a
period Of. years, and it
will also lake some years for us
to receive goods and services from
government securi¬
billion of-
$70
of
paid
of
technique
entirely to the s;ze
and wide distribution of the pub¬
lic debt largely inherited from.t/e
war.
Commercial banks now hold
is due almost
50%
the second, producers are
effectiveness
available credit control
of in¬
for
comes
limited
present
an
First, the ad¬
dition of productive facilities to
the economy is going at a rapid
pace.
Second, we have a large
export surplus.
On the first, pro¬
ducers are paid now for turning
out machinery and building ware¬
houses, factories, and houses, and,
and
early in the recent war,
relatively small per¬
centage in central reserve citiesNew
York, and Chicago. . The
except for a
ties,
inflationary forces.
on
oper-/
weapon,
condi¬
:
V
adding to
are
market
have f ations—are /not; so effective,; as.
cur-* they once were,.while the third—,
some varying the level of reserve re-,
They quirements—was exhausted under
these present
law . as
a
restraining
People
money
supply
.
or
than about one-tenth of
on their schedule by the
proph^
These things so many saw under
and- houses:
count rates and open
r
accomplished.; Most of the assertions about Ger¬
time sheer balderdash*
biles
socks to automo¬
.
;
a
many's plan to "conquer the world"
to
funds to bid up prices,
who supposes that the contrary is its, is 2V2 times
the
what
to
demand, time, and savings depos¬
true, let him ask himself this question: How much interest
would
money,
goods, such as au¬
tomobiles,
were
not
available,
controls were effective in spread¬
understanding with the Western powers of
a
piece with its bargain with Germany—only its sights have
now been raised and its
bargaining power immensely en¬
larged meanwhile by the destruction of Germany. It may
prate about "freedom," "imperialistic capitalism," "exploita¬
tion of the
working man," and all the rest, but its real
If there is
any one
therefore,
extent,- they used
some
excess
but because
an
A
Pro¬
spend or save than ;the> value of
the goods and services? they could
was
is
as
consumers,
left
with
more
were
turmoil
of its
spent by the Gov¬
goods and serv¬
for the
ducers,
geo¬
a
twice as
in taxes,
ices needed to win the war.
good fortune. Its
in
the Govern¬
than
and
been willing to spend- their
as
it collected
making up the difference by bor*- rent incomes,and dip into,
rowing.; • Producers — workers of thPir accumulated savings.
"armers, and business organiza¬ have :'also
supplemented ;i
tions—were paid for all the pro¬ funds by borrowing from banks
duction of the economy, but the and other lenders, and; by buying
taxes
they paid were less than on installment credit. As a result
inevitably in these circumstances that when one
brigands found itself on the side of the victors, it at
set out to make the most of its
once
war,
more
much;
was
of these
the
spent
from shirts
167
Volume
THE COMMERCIAL &
Numberr 4668
(519)
FINANCIAL CHRONICLE
rates, thus raising the cost ofservicing the government debt.
•Also, in such a market, the price
it on the supply side.
This means estate loans or to establish addi¬
policies—that is, rigid government economy and tional reserves against them.
It is probably not cprrect to say
policyholders' savings.
In this deferment Of all deferable expen¬
ditures.
ft also means as large a that restraint or encouragement of
sense the funds were saved by the
poLcyholders.- But this is jiot. the surplus -pf fax receipts as possible credit expansion through central
full
answer.
If. -the insurance, so that dollars are removed from bank credit and supervisory pol¬
company had- these f uh^s (invested the spending stream and used to icies ever exercised a decisive in¬
in government" - securities andv in retire public
debt held by the fluence on the lending activities
Reserve
System.
This of nonbank lenders. It would be
order to make a loan, it sold these Federal
securities indirectly to the Federal takes dollars out of the money equally incorrect, however, to say
Reserve Banks, it added to the supply by an equivalent amount that such policies in the past exer¬
money supply, or at least to the and is a reversal of the wartime cised no influence. Central bank¬
potential money supply. Such an process by which the money sup¬ ing policy gradually came to exert
addition to the money supply re¬ ply was expanded.
The classical a broad influence over national
•at which
sults
Tfofcjs
curitjL.es.
to
contemplate,
Traditional open
also i have.\ serious conse¬
quences
for the Treasury.
As
prices.'• of bonds decline,
their
^yield^ ot effective interest rate,
rising, and, if government securi¬
would
,
,
ties
to fall seriously, all
Treasury financing would
;have to be done at higher interest
the Treasury and
other
securities
would be altogether uncertain and
borrowers
could
because
investor sells
sell
,
when
a
nonbank
government securi¬
ties,-/their prices tend to fall, and
if prices threaten to fall top far,
the Reserve System buys in order
to preserve a relatively stable and
orderly market for these issues.
This increases private deposits at
this
uncertainty would interfere
the orderly management of
public debt as well as the
orderly financing of private cor¬
porate investment programs.
with
•the
,
does for almost a fifth of all pri¬
-
were
•future
mortgage credit, accounting
mce reseryes on
r - '•;
market policy
.
'
it
Icyholders in the form pf insur-
rf sktob'sertous
;
35
as
debt, is important enough in
vate
the economy to warrant special
facilities operating under special
legislation. Just because it is so
important, however, its general
policies need to be related to and
integrated with
broad national
policy in the credit and fiscal
areas.
Mortgage credit can, and
^
does, add to inflationary pressures
at
time like the present.
a
you
I know
realize that credit is needed
finance
the
construction of
precept of sound finance that debt
should be paid off in boom times
nonbank lender took these condi¬
houses, and
has peculiar virtue in the case of
tions
and
credit conditions and the prudent
carefully
public debt the size of ours, so
much of which is held by the
nancial
into
account
in
shaping his
banking system.
There is still another
the credit picture.
a
side
to
own lending program.
But since the middle thirties, fi¬
developments, particularly
those of wartime, have, tended to
reduce
the influence of central
The
Federal
Reserve
As you know, curbing of infla¬ banking policy.
System commercial banjrs, and the depos¬
In addition, the
•through its open market and dis- its of commercial banks at the tionary pressures cannot be ac¬ link between important sectors of
; count policy in close cooperation Federal Reserve Banks, thus in¬ complished by monetary and fis¬ the credit market has been weak¬
.with
the Treasury
has already creasing bank reserves, and the cal policy alone. Among other ened at several points.
[recognized that interest rates have capacity of the banks to lend. necessary measures are appropri¬
In the case of mortgage credit,
: undergone
an
upward readjust- The effect, in other words, may be ate private decisions.
You, for for example, where this change is
just as inflationary as if com¬
'ipeht, probably in > response to
example, must, ask yourselves most pronounced, programs and
temporary forces.
It has recog- mercial banks haa sold the se¬ whether, as a group, you are ex¬ practices
instituted since
1932
curities.
The insurance compa¬
jnized- this, first, by lowering the
tending mortgage credit on a have resulted in almost complete
support p r i c e Xincreasihg the nies, the savings banks, and the sound - basis—credit which will
separation of this field of lending
;
yteldX oh short-term government savings ,pnd loan associations are stand up in whateyer storms are from general credit policy. Even
; securities, and second, .hy iowerihg :apo$tles of .thrift and foes of in- ahead of «us.
In this connection mortgage lending by • commercial
[the stipport: price- on .longTternr fjatioih and yet by selling governr. I commend < to. your attention, as banks had been
largely sheltered
obligations .fwith assurance, how- merit •Securities to add to; theii;; well as &hj the attention of all
from
the ^ influence of general
ever, that suppprt of the lowered; currently Available funds /fori iiir
hankers, the program formulated credi|; conditions. Loans under+
yestmejnf they are contributing fb several
weeks ago by the Amer¬ written by the Federal Housing
inflationary pressures.
:"ivican Bankers Association, and the Administration and the Veterans
Federal Reserve Recommendations joint statement on "Bank Credit Administration are obviously dif¬
Ih fhe light pf all these cpp.- Rolicy ^Burin g the Inflation," ficult to discourage by ordinary
:si'deratipns,yhe Federal Reserve issued,Nov. 24, 1947, by the Board techniques of bank credit control
r;; ::ihterest |ate^'ahges
^omd ^Svrenommended • to Con¬ of Governors of the Federal Re¬ when they are being encouraged
per than to le&ye the ecphohiy!£
gress the ad Option Of a plan Which serve System', the Comptroller of on social grounds by other agen¬
I marketable" debt |o;#in<f its own. we feel would restore some- of tlie; theGurrency, the Federal Deposit cies.
V,::interest level in a free market
POwers oyer the. money supply Insurance Corporation, and
the
Your
own
organizations, the,
':
• dominated by gdvennhent securiwhich' 4iave been lost because pf Executive Committee of the Na¬
savings and loan associations, are j
the great increase in the public tional Association pf
Supervisors adding to the problems of re¬
]. •'1 • It should be apparent from what debt. Very simply, this plan [ in-;
of State Banks..■ (■
v. V.
'I have said that the most imporstraining inflationary credit de¬
volyes a temporary increase in
.: As yoii can see, I have so far velopments, again largely because
\, utant change in the problem facing
reserves which
all baiiks would
-the central banking authorities is
spoken almost entirely about a of Federal programs developed
be required to hold, except that
the greatly increased influence of
fairly technical side of the infla¬ since the passage of the original
nstead of being legally required
tion prbblein which confronts the Federal Home Loan Bank Act in
the public debt in our monetary
to
add
to ' their cash reserves,
and fiscal affairs.
After the First
monetary and fiscal authorities, 1932. Let me say here that I would
hanks would be permitted to bold
"World War the public debt ($26
that is, about how the supply of not argue for one moment ip
certa'n income-producing assets;
favor of returning the savings and
•billion) could be looked on as ;
namely^ shortTterm government money is beidg Sbreased. An¬
other, and just as important, prob¬ loan business to the conditions
•merely another set of obligations obligations. ■!'V'"
—to be allowed to find their own
that
existed
before
that
date.
;
We would, of course, ask Con¬ lem is how this large and increas¬
price level in a completely free
ing supply of money is being used. Then, there were no effective re¬
gress to raise the limits to which
•market.
This poliey, which was
Here, again, developments have straints on savings and loan lend¬
required cash resefves may be in¬
>in line with traditional attitudes,
creased, but it now appears to the removed a substantial measure of ing except the volume of capital
;
• resulted
in large losses to many board that to increase
required control over bank lending from available 4o associations, and you
-individuals, and businesses, but
suffered
severely as
a
conse¬
cash reserves by this means far the, hands of the banking author; these
quence. There was no effective
consequences were not sno.ugh to be relatively certain of ities^2.:.:;^;;^-_ f
.
i
means for transferring funds from
nearly a& serious as those which bank credit
restriction, that will [. Banking authorities have al¬
; i would result from a similar pol- be
areas
of oversupply to areas of
required, would mean reducing ways exercised some measure of
; icy now.-: The public debt
today jthe earnings pf bank^ below
influence oven the kjnd of loans scarcity, and developments in real
1
lis a factor to bie. reckoned with in
pehses and a reasonable retprn oq> and investments .made by bank? estate were uneven as a result.
tall public and private, decisions.
capitah
This, - however in ..my, as well as over the total volume There was not sufficient protec¬
Uplniop, mqy become an alterna- of.their credit. Su,ch influence has tion for shareholders against either
orunfavorable
tive, ;f'o> fhe special rejserye plap h^bvexereised by way of statuj- mismanagement
>t) -age m n^netary pQlicy and -eeoeconomic conditions—and many
proposed .by-:the bpard. i;>f^^
wy prohibitions or limitations,
nomic conditions
^repver^lihC; \We Recognize that the bPard^j by; way of varied privileges of investors lost heavily through no
1.'; fact; Jthat the1 .Treasury,, unilke proposal is ho cure-all arid .thaf it access^to ^Federal Reserve
J y
credit, fault of their own.'
i other
horrowera^piust constantly Would only deal with a part of and
The savings and loan system
4by way pf bank .supervision.
refinance its debt ' jhakes ?tability the
inflationary problem. But fh^ •Statutory prohibitions,
and^limif Uias been strengthened to perform
rof the iparkct-for the public debt
.proposed measure would ponsti-r tations have generally^ been
:
quite its functions, and that is a good
.particularly; crucial. V;
: ;: e:-X'4£ tute an
important, available re¬ inflexible. Federal, Reserve in¬ thing, We must face the fact,
c
1 ' The tnCreased importance of the straint, which is now lacking, ph.
fluenced On the kind of lending however, that this very strength¬
•-public debt is Also a factor in an- bank credit
expansion in the prpst done5 by member banks has usu- ening of the system has made it
; ;; other situation which has received ent inflationary situation^' Ther^
ally beeu accomplished, therefore, independent of national, credit
; relatively
less attention in public is
likely to be litfle need for ih'
by keeping informed as to the policy, in a way it never was be¬
discussion. This is the shift which
suggested special reserve; dufjn
fore.
Funds are attracted to a
♦has taken place from the hands the next three months because o credit policies followed by member banks and limiting the access savings and loan - association as
'I
of the banking and fiscal authorithe large amount of Treasury surf
td Reserve Bank credit of those much by the insurance of share
ties of a significant part of the
plus funds, taken from the market
member banks found to be fol¬ accounts as by an association's
control over the supply of money.
through taxes,
which will be
•
lowing unsound policies. Bank reputation for being a sound, wellI
have
already mentioned the available to retire bank-held
pub¬ examination
policy is also adapted, managed institution. The right of
^ primary difference between bank lic debt.
This will temporarily
[ credit and credit extended by exert pressure against bank credit in cooperation with other super¬ borrowing from the Home Loan
other lenders—namely, that nonvisory authorities,
to
changing Banks makes it possible for asso¬
expansion.
If inflationary bank
conditions.
ciations to make more real estate
* bank
lenders lend only • savings
credit expansion continues after
"which have been accumulated by
Developments over the past 15 loans in a community than there
this period, however, and if fur¬
savers,
while banks also make
are
savings in the community
ther Treasury surpluses are fore¬ years, particularly in government
available to borrowers funds creavailable for real estate lending.
gone in favor of tax reduction, the programs, have modified the ef¬
The capacity of the Home Loan
; ated by the 6-to-l expansion of
need for restraining pressure will fectiveness of the powers of the
Bank System to borrow in the
deposits to which I have referred vbe
urgent.
It is better to have central banking authorities. This
above.
general money market makes it
Jij-:\X''
power to deal with the situation modification is particularly marked
It; has. been customary and, in when it develops rather than to in the case of real estate loans. possible to channel the funds
the main, correct, to say that loans have it
provided, if at all, too late It would be rather difficult, for available for investment in insti¬
example, for the Federal Reserve tutions sponsored by the Federal
(" made by nonbank -lenders add to be used.
The
'[" nothing to the money supply. ; To¬
urgency for the Federal Board to say that banks with large Government into the particular
day, this is no longer true. Before Reserve Board's proposal, or some mortgage loan portfolios shall be field of real estate. All of these
among others,
have
jwe can say whether a loan by, for other proposal to curb credit e*- denied the right to borrow at the conditions,
;4 example, 5- an insurance company pans'on, will* be especially great if Reserve
Banks—even
if
redis- given savings and loan lending a
; pr a savings bunk or a savings and we relax pur current, fiscal policy counfing had pny significance to¬ degree of independence it never
loan
association,
adds
to
the while inflationary dangers: exist day—when a large part of bank had in the days when the only
money • supply.: pr not we • must Fiscal policy is by far .the most real estate loans are guaranteed resources of an association were
the investments of its sharehold¬
: know where these funds were obeffective way to deal with the by the Federal Government, either
tained.
in wbOle or in part. Similarly, in ers and depositors and loans from
demand. side ipf inflation just as
5 Take ah insurance
theise conditions, a bank examiner commercial banks.
company, for
.Let me emphasize that the pres.example; - In / the first place, pf i>rpduction and. .particularly?mtprp might- tiaVe >some difficulty' 'in
v v coursei ' the / ' insurance
eompahy
convincing! bankers- to redpee the eqfiy condition^, ds much sounder
obtained11 thef■funds, from ♦its pol-i most effective way ttbr deal'1 with volume
real
•
to
you are making more
of your loans for this
more
You are also aware that
purpose.
credit extended for the construc¬
tion
of
houses than
more
can
be
built with the materials^ and labor
available
and
I
drives
sure
am
upward
limiting
prices
are
you
lending in such a way as to
your
minimize these price pressures. As
experienced
know
businessmen,
not to lend
money
you
to Tom
Jones just so that he can pay more
for a house than Harry Smith can
.
•
•
.
.
1
,
-
.
.
•
-
,
,
-
.
k
.
.
"
-
(
,
•
'
-
,
•
because that is the way
are made* and bad loans
to have a way of staying on
the books longer than good loans.
afford,
bad loans
seem
Summary
-
And
t
let
now
ppneiude
summarize and
me
remarks on this oc¬
my
casion.
Important changes have taken
place in the structure of pur econ¬
omy and in the organization pf
bur society. As a result, central
banking and fiscal policies haye
lost a large part of the influence
they once exerted oyer the sup¬
ply pf money.
The credit and
monetary control thus lost hag not
been placed in other hands, but
has been diffused throughout all
financial sectors. At the same time,
national influence over the use to
which the money supply is put—
never as strong as control of the
supply itself—has been weakened,
partly by these same forces, partly
| also by the independence which
particular credit programs have
had because they are specially
sanctioned and encouraged by the
government for social reasons.
The Reserve Board has recom¬
mended
serve
adoption of a special re¬
plan which it believes would
restore
trol
a
over
desirable degree of con¬
the money supply.
I
that
suggest
reconstruction
policy con¬
the
and strengthening of
trols
the
over
use
to
which
the
credit supply is put also requires
careful and conscientious study.
do
I
not
that
suggest
reaching out for
we
keep
more power
and
pontrols but I am aware Of
in honestly and sin¬
more
the fact that
cerely seeking to promote eco¬
nomic stability • at a high level,
.
effective
techniques may
perhaps be devised to meet the
changing
situation.
For many
years the Board has been able to
new
control
the
of
flow
bank
credit
market, and
during the war it was given the
task Of regulating consumer cred¬
it. The Board has recently asked
Congress to renew this power, at
least so far as instalment credit is
securities
the
into
concerned.
'
.
*
■'
r
central bank¬
find the instru¬
necessary
to perform its
It' is possible that
.
ing
policy will
'
,
'
~
■
'
.
-
.
•
,
.
tjpp the earlier condition, Hoipe
ments
conditions
combination of
traditional controls over the sup¬
tasks
under
which
we
the
face in
new
a
ply of money and selective con¬
trols over the use to which credit
If this be so, cooperation
necessary
between the
banking authorities and
other agencies. For example, the
mortgage credit field may be one
in which such cooperation will be
fruitful.
At any rate, this is a
is put.
will
be
central
question that you and we should
be studying at this
time, both
separately and jointly.
,
problems which monetary
policy must face today
different from those of a few
The
and credit
are
years ago.
On our success in find¬
ing ways fo deal with these prob¬
lems will depend in no small
measure our success in reaching
the goal
of sustained prosperity.
36
Formula to Cure
Inflation, Says Whitney
No Magic
is
this problem
that
clear
is be-
ing greatly complicated and its so¬
lution
greatly impeded by Russia,
which appears to be fixed upon a
of obstruction to all efforts
course
for
world
The recent
relations.
breakdown
tiations
and friendly in¬
peace
ternational
the
of
London
Russia
between
democracies
Western
nego¬
make
the
and
democracies
Western
never¬
can,
efforts toward reconstruction and,
in
time, the choice of freedom
prevail. In these efforts,
our American production and ex¬
ample are vitally important in
should
which
assistance
the
give
should
we
nations that strive
those
to
for recovery
and free opportunity.
"In this country, the
great issue
,—and one that had its beginning
well
World
before
whether
II—-is
War
the
into
fall
shall
we
tain
of those who expect to ob¬
better living for less effort
and
less
ways
•
results
The
enterprise.
for all nations that have tried this
should provide
However, the
philosophy
easy
the
for
answer
direction
us.
which
in
we
ceeding during 1947
were
pro¬
not much
clearer than before, and the issue
still
plagues
was
in all
us
sions. It is the issue that
with
in
the
of
the
close
same
after
War II;
dealt
was
made
the
1945,
year
It is the
months
deci¬
our
report
stockholders
for
pany
annual
the
the
to
com¬
few
a
World
of
issue that
underlies
the present problem of
inflation,, of; rising
costs
and
wages, and of the high cost of liv¬
ing which, as always,, bears hard¬
est upon those least able to bear
•
it.
much
of
problem
of
cost
living
and
high
our
is
usual
inflation
discussed
with
and, as is
Americans, the first
us
measures
problem; many of them will only
aggravate it with the further dis¬
tortions and black markets they
bring.
Such direct and po¬
tent inflationary factors as over¬
will
cies,
can
thought is to pass a law about it.
Among the many legislative pro¬
posals are such devices as wage
and
price controls, allocation of
and
its
agen¬
many
legislative enact¬
magic formula
without further
There is
ment.
no
patent medicine to cure infla¬
tion. It is still true that the only
or
real
greater
in
lies
answer
en¬
government
people,
the
by
and
and, above all, more forbearance
on
the part of everyone.
These
are the fundamentals of a healthy
in
legislation,
our
part of
a
Monetary inflation always means
inflation.
A
superabund¬
brings free spend¬
ing and higher prices and, at the
same time, it provides the means
with which rising wages and costs
are met. Great monetary inflation
price
authorities—not
banks
of
the
.
The
country.
in
followed
1920,
au¬
con¬
such
as
was
and
1929
1937
results.
In¬
flation, is bad and should be
con¬
might
bring
but/ deflation
trolled,
and
worse
to
severe
is
even
is harder
started
once
has
gone
100%
up
has
stop."
We
understand the cost
We do not
can
pound of butter.
a
Venture capital
old
corporations
that
place
capital into'research and the
duction of
products.
new
pro¬
Further,
taxes
are
in
on
war¬
a
businesses
the
and
who
the
are
investors
nation, I want to take this
portunity
ol
op¬
commend the work
being
done
by
the
Investors'
League in fostering in the Con¬
gress and throughout the nation
to
interests of all investors.
ine
conclude with
To
enemies
in
wartimes.
In
fact,
without the collective combination
of
just one-half
dozen of these
a
largest corporations, it is extreme¬
ly questionable whether we could
have
World
won
time. >■/
And
when
makes
of
me
I
by
this
history
Russia
Certainly it
materials
war
II
"we"
say
include
allies.
our
War
V.
one
as
was
the
by
produced
our
industrial
great
corporations,
started as ventures in capitalistic
United
States,
that -saved
the
necks
of
the
Probably
defense
Communist
the
most
leaders.
important
industry
that rose from
the venture capital stage prior to
World
War
II
was
the
aviation
Companies like Douglas,
Curtiss-Wright, United Aircraft,
Boeing,
Grumman,
Republic,
industry.
North American and Martin found
in
security
markets
of
i
the
neededcapital*" for
their research, development and
expansion.
country
the
During the years 1933, 1934 and
these companies were able
1935,
to carry on
the
at
hands
of the
Government,
which broke certain of them apart,
forcing
aircraft
from
segregation
manufacturing
the
their
facilities
of
.
their air transport facilities.
It took several years for our
tion
industry
to
reorganize
avia¬
and
v
\
^
this action
customers
us
for
the
speaking, we have always
and still feel, that ideally,
long range capital needs of most
felt,
industrial
commercial
and
com¬
panies should best be taken
of
care
through equity instead of debt
We have been consistent in taking
this position with our customers
banking support they have a right of this character. We have made,
expect from us—and that there or participated in term loans only
be no lack of willingness, where we felt the exceptions to
to
should
on
part, to utilize the redis¬ this
policy
borrowing
facilities where there
our
and
count
to
open
at the Federal Reserve
us
justified and
large margins
safety credit-wise, indicating
assurance of repayment on sched-'i
were
were
of
viewpoint credit-wise and the market to low rates and long
both too low and too
cautioning our lending officers terms
not
to
mistake
natural cyclical long in some instances.
We fol¬
turns in a business, which can be lowed only where the credit risk
range
are
—
think
I
to be very
that
the
all
of
are
us
going
careful in making sure
conditions
and
terms
re¬
lating to credit lines, and all loan
negotiations,
made
us
go
along
incumbent upon
feel it
to
us
for
our
share in
recognition of competitive factors;
These
very
are
full steam ahead
ad¬
conditions.
current
We
have
all
learned from past experience thai
not very good at
are
we
trying tc
customers' businesses and
run
our
we
have
it
made
a
point
in the
that
they should confine the
this
capital in
for
when
the history
has
country
provided
defense
we
of
the
also
for
attacked.
In
and
were
now
a
big broad
way
that
the strongest, richest,
are
healthiest country
in all the world.
that
feel
should have any
we
would
book, which
rule
prevent
giving them our careful con¬
sideration when they meet our
our
standards
are
as
to
purpose,
quality;
maturity, and the borrowers
and
willing to
pay
a
rate
proper
accommodation.
for the
Situation Self-Policing
all
fact
advice they give to money mat¬
capital *iti our defense
ters. By the process of getting our
program, 'we are faced this year
with a choice between the phi¬ borrowers to project their money
needs and figure out how they are
losophy of private capital against
the
philosophy
of
government going to meet them, any errors in
capital in the development of our their own business decisions have
natural resources and our indus¬ a way of coming to the surface.
trial enterprises.
We know that We are being particularly cautious
private
not
recent past to again impress
our
lending officers the
very
on
the need for
without full
justment of his capital expendi¬
ture or inventory commitments to
As I said before,
it
seems
to me
less
that the situation is more or
in that banks nor¬
not going to liquidate
self-policing
mally
are
long-term
them
place
loans
term
governments and re¬
with investments in
except for their own
customers for
legitimate purposes,
short periods of
compensatory rates;
in urging everyone to meet his
neither do I believe that banks
money
needs at the market, as
they arise, and not go ahead with will want to commit themselves to
capital
or
operating
programs so-called standby credits except
counting on capital arrangements for' very short periods of time and
expected to be made at * some then only .Where the-funds are
actually going to be taken down
later date. -C •
at satisfactory usage rates to cover
reasonably
for
at
time :and
Matter of Interest Rates
.
By contrast to the United States
the part I offer
you the picture of socialist
on
Government and unfortun¬
I
of
matter
the
think
not
do
nearby future commitments a cus-!
is being obliged to make.
With ..referenceK to
consumer
tomer
interest rate is too important to
England.
oury-bank,.* have
our customers — at least we
are credit, : we,din
expanded
time we should have been en¬
not finding it so.
Naturally, no made no material change in our
their
central government
to a
one
wants to pay more than the consumer credit policy since the
couraging this new industry so vi¬ greater or less degree.
At. the
tal for defense.
I only mention
expiration of Regulation W and
present time they
are \ bogged: prevailing rate for a borrower of
are giving the American Bankers
this because it is so important to
down
in; a
state
of-^confu¬ comparable credit standing, but Association
program on consumer
realize that government interfer¬
sion.
This picture can $©> npth7. we think our customers presently
7
ence retards industry and accord¬
are
more
interested in knowing credit our full support.
ing
but convince
us
that the
In the final analysis, we bank¬
that the money will be there for
ingly hurts venture capital.
American Way; the private capital them when
they deservedly need ers are the last line of reserve for
Role of Venture Capital in War
way,- has
succeeded in the lpast it than in trying to get commit¬ our customers. In our customers'
The part played by companies whereas
government domination ments as to what the rate is going interest as well as our own, we
our
ately
this
just
at
occurred
•
:,
the
France
socialist
and
countries
These
have
.
that ventured and developed new
scientific
War
II
products
is
during
fresh
too
in
all
World
of
our
minds to make it necessary for us
to review the facts.
But we do
realize
that
program
the
kind
enable
cessful
war
us
of
is
need
we
would
to
defense
one
wage
a
It
suc¬
out
modern
of
warfare
fill the need
an
to encourage private
aid
to
capital
as
defense
our
program.
developed
tories
with
oped
of
over
corporations,
born
capital and devel¬
free enterprise
such
as
new
must
case
as
stop
the
against
our
to
Government
encourage
the
savings of individ¬
industries.
attacks
on
Attorney
be
new
enterprises.
doubt,
new
a
over
venture
of
the
vital
years
aid
to
prove
our
No
to
to
f'Tt.ns
for
In fixing rates,
to recognize the
getting, a margin
are./trying
our
and above the
money
almost
and
tually
tion,
bank,
come
as
world
gard
to
will,
the
existing
or
to
for
the
In
utilize
banking; i channel^
balance of their needs...,-
concluding I would
I think
say
that
th^ew business angle/as
c
j soft
banks in 1948.
pedalled by*most
It has been ourexr
mention
doubtless
even¬
that
many
our
of you
any
we
and
event, from customers whdm
supported consistently
courageously credit-wise.
I
have
imagine this is the case with most
Treasury ruling with re¬ of
bank
loan
reserves
the?; tax free-feature thereof,
has'dr-set
reasonable proportion
a
factor such, will
be have also done, took advantage of
new
to
borrower
perience over the years that a
great many of our important de¬
along. Tn this connec¬ posit relationships have come, in
certainly
might
I
gram
of that amount and encourage
of develop d other
involved for the losses which may,
military the
happ|nessr0 and well-
panies for pipe lipe monopoly >jjust? being-doom nsrfi aiont *ic
.
business
ahead, these
essential
so
peacgj .ppL
today
tomorrow.
companies will
most
of
successful
the
General's 'defense
thej,'petroleum
new
corporation
Therefore
industry
the
ment
will
investment of
such
savings in
reasonable government encourage¬
about
bring
readjustment of values.
borrowers.
some
With
our
pared to extend a company, we
probably should limit our par4
some ticipation in their borrowing pro-?
ourselves
speculation in the inventories
need
The attitude of
it
and
factors for investors that risk their
underour
uals in
man
to
find
now
spite of our vigilance, there is
doubt there are elements of
for warfare is largely
and made in the fac¬
venture
be
business
no
we
system.
must
American
In
we
bound
eventual
worker represent strong protective
,
equipment
equipment
which
important is
an
The inflationary trend
credit risk.
in
venture
and the modern
little use,
.
clear that
seems
in Washington
that
if it is forced upon us.
.
to be.
All of us, of course, are should try to save some lending
we
more
balance conscious than be¬ margin for unforeseen contingen¬
adminis¬ fore. We
realize, too, that in re¬ cies. If we have a figure in paind
tration
of
any
political
party cent years there has been virtually as ' representing
the
maximum
whose prime philosophy will ful¬ no cushion in the interest rate for amount of credit we would be pre¬
has failed.
need
Therefore, in this kind of modern
The brains, initiative, resource¬
preparation for war the number fulness and "know-how" of the
of men is a factor, but men with¬
and expand in spite of
discouragement they received
the
of
are
the
13)
our
to
come
venture
we
page
they
erally
preventing the
products must come.-A
sinews
■
overcome
new
days are. largely over —
clearly fortunately. There will still be
instances
where good customers
spelled out. Also, we are finding
accumulation of savings, and it is here and there that we have an are going to have a legitimate
from the savings of- individuals educational
job to do as this or basis .for asking term loan facil¬
that a large part of capital for new that borrower seems to be
going ities from their bankers and I do
individuals'
time basis which is
them in such
(Continued from
permitted under the
gone
fact, private capital has provided
by venture capital and
later through their production en¬
abled this country to overcome its
'
20)
page
amount
but the cost of govern¬ Banks, if necessary to take care
up 377%.
So, for of deserving borrowers.
Money ule, in alternative ways aside from
the first time in history, we are management is our problem—not
prospective earnings alone. Wheii
faced
with
a
government thai our customers'.
many banks were active seekers
costs us more than food during
We are trying to take a long of these loans, competition drove
war
nanced
when
since 1939,
the
wisdom.
and
course
a
,
food
of
cost
commercial
the
caution
with
drastic
Federal
Government
spent $382/2 billion, which was just
slightly more than all of its 14o
million people spent for food. The
our
viduals
and monetary
thorities must exercise these
Too
not
Speaking of the savings of indi¬
was
fiscal
our
wartime taxes are
encouraging to ventures. Last
year
of the needs of
care
Current high
new
natural; in¬
deed, because' of the great cost of
war, it was inescapable.
Control
of the supply of money is in the
hands of
Effect of Taxes
ventures
of money
war
requirements. Fortunately for the
only from'capital venturing banks, that is not the case with
that our new aggressive industries most of our best customers. I feel
of the future will come. "Nothing it is up to each of us to manage
our money positions in such a way
ventured, nothing gained!"
so
that we can comfortably take
ness.
„
during the
kind
It is
even
a
.
ance
of this
investment.
ernment bureaus.
great com¬
munity.
'■ ■;'.(/
"In
the
management of our
money and credit as a part of the
problem of inflation, these same
fundamentals should be the guide.
as
People
the past several take care of themselves by large' regulations,
months, the Attorney General's capital
financing programs and
Term Loans
office has again taken out its anti¬ maintaining an independence from
trust
hammer and
is harassing the use of bank credit even for
On the matter of term loans, I
business and discouraging private their
seasonal
working
capital have no rigidly fixed ideas. Gen¬
of
practices, and in our
and financial
conduct
(Continued from
times.
would be greatly encouraged if a
appeared to be unquestioned and
daily—in capital gains tax credit was given expected to correct themselves in the
due course, for basic credit weak¬
long range deposit relationship
economic to investors in new companies and
should be implemented
our
Current Bank Credit Policies
some
understand the cost of many gov¬
They should not be left
stand as idle preachment but
Thursdayj:, January 29, 1948
in
However,
peace.
economy.
to
sinews of war.
ment
terprise and greater production,
more saving and less spending by
CHRONICLE
prior to 1939. Such cases were
dropped very rapidly when war
occurred, so that politics could not'
interfere
with
our
productive
by
over-lending
and
as well as cheap money rates-,
surely be stopped or tempered
trols
'
'
•
"The
bank
such
and to
theless, proceed together in their
;
over
Government
the difficulties of
fundamental Cooperation.
Russia
'may continue in its endeavor to
keep the world in turmoil, but the
:
rationing, further control
credit, and so on. But
will not solve the
sumer
spending
plainer
,
commodities in short supply, con¬
served
has
to make clearer its intent,
•
V,-
(Continued from first page)
■
FINANCIAL
&
THE COMMERCIAL
(520)
?raside
the
you
also. - We are still new
and business-minded, but the primary
and job
maximum
now,
for all of us, as I see it/
is to keep
in close touch with our
>
Volume-167
' Number
customers, ascertain at
own
THE COMMERCIAL
4668
legit¬
imate borrowing needs are going
to be, and then make as sure as
that
can
are
.maintained
our
positions
money
on
which
basis
a
will permit us to provide-our share
of
them
If
to
promptly and willingly.
this, in spite of careful
do
of
management
our
posi¬
money
tions, ^.involves our;tlbeing 'occa¬
sional, or even somewhat'regular
borrowers, at the Federal Reserve
Bank, I feel. confident such re¬
wilf be
course to these facilities
regarded as proper'and fully'justified in meeting our responsibil¬
ities to those
we
serve.
"
.
!* I, personally, have confidence in
the
banking fraternity's ability to
meet today's
ercise
the
avoid
of
problems and to.
ex¬
restraints necessary
improper and excessive
credit while
to
use
the same time
at
essen¬
•
and
also
notes.
Estimated freight revenue in December, 1947, was greater than
in December 1946, by 25.1%, but estimated passenger revenue de¬
creased 3.5%.
:
Com. Appointments
Vvr.v
...
STEEL PRODUCTION MAINTAINED
San
Francisco
Stock
change for the current
announced
ments
made
by
Ex¬
were
year
(Jan.. 20)..
-
Mr.
Appoint¬
Atkinson,
"Chairman of the Board ate as fol¬
lows:
'
Ethics and Business ConductsJohn I. Dakin, J. Barth & Co.,
Chairman; Joseph Hauck, SchWabacher & Co.: Sherman
Hoslscher,
Sherman Hoelscher & Co.; Robert
F. Mulvanv, Irving Lundborg &
Floor
W.
Trading—Harold
R.- Hooker,
A.
Holt,
Holt
Collins;
&
Palmer
C. Macauley, Davies & Mejia;. Vic¬
tor T.
Maxwell,; Shaw,, Hooker &
Co., and Elwin E, Purrington,,'F.
B. Keyston Co.
C.
Relations—Ferdinand
Public
-
Smith, Merrill Lynch, Pierce, Fenner
& Beane. Chairman; George
W.
Davis, Davis.. Skaggs & Co.;
Mark
Co.;
C.
Elworthy :&
Elworthy,
Paul
Koshland
A.
&
Pflueger, Max I
Co., and Frank vF.
Walker, Dean Witter & Co.
LEVEL
numbered
(Special
Listing
third
in
battle
firms
preventing a runaway scrap market.
prices would have skyrocketed to such
have
would
been
forced to
raise
costs alone.
capacity^
increased
scrap
V-
;'V
-"V
■
:r;'/
;
not
extent that
utilize
;
*7?.'
Age"
•
.
With
some
new
a
steel
ingot output is
newly rated capacity.
From
a
on
one
Most steel customers
J.'Soher, Walstori,
man & Goodwin, Chairman;
iel J. Collins. Holt & Collins;
Dillman, E. F. Hutton & Co.;
Dan¬
Dean
J.
Robert E.
Curb 5 & 20 Club Elects
Landsberg President
^
:
■
mill
Fiye; ^abd
elected
Mortimer;
governor
ner ;
of
ingots and castings
one
^Twer^-J!;Cl)ib
Landsberg,
,
a
of the Curb, and a part¬
•
&
Co,, Club President for the next
year.!Mr:Landsberg has been
since
Club's
the
for¬
mation last April.
Edward
elected
A.: O'Brien.
was!
re¬
Vice-President, George J.
Bernhardt. Secretary
Koerner
Treasurer
to
and
Rully
serve
for
highest
annual
kwh.
increase
dinner
followed the business meeting and
election of officers.
-
of
Frank E.. Herma was Chairman
the
Entertainment Committee.
in
according to
11.9%
the
Electric
Institute.
This
week
was
the 11th week since
5.000,000,000 kwh.
the
week
ended
Total
Jan.
1948, ,'ivhdh
17,
was
AUTO
16,774 cars, or 2.0% below the corresponding
increase of 61,843 cars, or 8.3% above the same
1946.
.:,
•
..
output of
cars
and
trucks in
the
drop of 4,023,000 bushels in
resistance
to
high
prices.
;
as
prices
fluctuated
unevenly
prices showing
some
doubled with * price-fixing
in
ralnge most
narrow
a
*
easiness at the close.
the period, influenced by
against sales of cotton to;
slackening of demand
f -• '
a
Boston wool market,
inquiries
were
noted for practically
were
<few and
AND
States
WHOLESALE
TRADE
MODERATELY
Clearance and
to
January white sales continued to attract favorable
Low and medium-priced goods sold well with resistance
high prices considerable.
demand for food
substitutes for
was steady and
at a high level with
high-priced meats and butter sought by an in¬
creased number of consumers.
?
Heavy clothing and rubber footwear continued
siderable
attention
with
consumers
to
attract
con¬
generally
responding favorably
early promotions of Spring clothing.
Fancy blouses and print
dresses were popular and medium-priced shoes were
steadily pur¬
chased.
Men's shirts and pajamas sold well with suits in
steady
demand and gabardine the preferred fabric.
;
to
The supply
SHORTAGES
United
considerable
attention,:
LABOR TROUBLES, MODEL
CHANGEOVERS AND INDUSTRIAL GAS
Estimated
a
Domestic flour business continued very small with-
activity in foreign wools,but spot offerings
some
The
decrease of
OUTPUT CURTAILED BY
to
recent
Severe
kwh. highet than in
thai'Previous high level was
FALL 2.4#> BELOW PREVIOUS WEEK
Loadings for the week ended Jap, 17, 1948, totaled 811,286 cars,
according to the Associationjof American Railroads. This was a de¬
crease of 20,161 cars, or 2.4% below the
preceding week. It also rep¬
week in
v
snowstorms and cold weather in many parts of the coun¬
try adversely affected shopping conditions last. week.
Retail dollar
volume in the week was fractionally above the ibvel of the
preceding
period and moderately above that of the similar' week a year ago.
!
an
FREIGHT LOADINGS
a
;
new
ABOVE WEEK AND YEAR AGO
isliquo
,
the
RETAIL
Se£V 13/ 1947 that production exceeded
^
prac-
established
scattered.
output'was*%6',318,000
reached.
to
new proposals to combat inflation and
cotton textile markets.
was
*
Edison
before
not
oats
all types of wool during the
past week.
Wide interest was reported
for %-blood wools, with steady demand for fine and
-bloods^There
the
over
but
and
December marked the eighth successive month in which consumption was smaller than in the corresponding month of a year
previous.
i
PRODUCTION RISES TO NEW HIGH LEVEL
of
trading
corn,
ington,
corresponding week of last year when
4,856,404,000 kwh. were turned out, and was the highest weekly
output ever reached in the history- of the industry.
The Jan. 24
areas,
and
of branded major appliances improved in
some
but generally remained inadequate to fill the heavy demand.
/ ;'•
Automobile supplies and equipment were steadily purchased, but
a shortage of fuel oil and kerosene
prevailed in some areas.
Reports" states. This compared with a revised figure of 109,031 units
in the preceding week.
Output .in the like week a year ago was V ;" While buyers generally avoided long-term commitments, order
volume for most types of merchandise continued to be
93,278 units, with 121,948 turned out in the like period of 1941.
very sub¬
Last week's total comprised 80,150 cars and 25,650 trucks built stantial. A slight rise in wholesale volume
during the week reflected
in the U. S. and 2,590 cars and 1,475 trucks in Canada.
the prevalent optimism among retailers.
Total dollar volume mod¬
The magazine attributed labor troubles at Hudson, model
change- erately exceeded that of the corresponding week a year ago.
overs by General Motors' divisions and Lincoln
Department store sales on a country-wide basis, as taken from
shortages of indus¬
trial gas as. the main reasons for
production being held below de¬ the Federal Reserve Board's index for the week ended Jan. 17, 1948,;
Canada the past week amounted to 109,865 units, "Ward's Automotive
sired levels.
BUSINESS
increased by 5%
:
FAILURES
INCREASE
with
SHARPLY
than in any other week since
week
a
Two times,
year
ago, but
early 1943, Dun & Bradstreet, Inc.
as in the corresponding
many concerns failed
as
failures
still far below the prewar level,
In the comparable week of
1939, almost 400 businesses went out with
loss to creditors.
"
\
*•j;;
were
'
Failures involving liabilities of
$5,000 ;oi?''fh6i)ecbredbhiiiidtedJ
accounting for 95 of the weekte.total of 109 or more than double'the
44
recorded
last week
and compared with
43 in the
same
week of
an
from the like period of last
increase of 8%
This compared
For the four weeks
year.
in the preceding week.
ended Jan. 17, 1948, sales increased by 13% and for the year to date
increased by 9%. ;
...':ij. '/-• v :
Retail trade here in New York the past week maintained
Rising to 109 in the week ending Jan. 22, from 61 in the pre¬
ceding week, commercial and industrial failures were more numer¬
reports.
beefsteak
'
late
in
wheat,
as
demand lessened.
Resulting liquidation and selling were
attributed to uncertainty
regarding legislative developments in Wash¬
,
industry
equaling 1,802,476 net tons of
of
Germany and a better outlook for exports of the staple to other
foreign countries.
Prices moved lower in the latter part of the
as against 1,732,200 tons last week,. 1,637,300 tons
1,281,210 tons for the average week in 1940, the
prewar year.
ELECTRIC
ous
another year.
The.
ago and
year
and
showing
buying,
In
week in 1947, but an
mem-
Briekman.; Landsberg
President
•"
!
week
This, week's operating rate is equivalent to 1,716,000 tons of steel
bers of the ^New York ;Cdrb" Ex7
•:&h%ge;*
1
,
time.
some
weekly output.
resented
|
...At their annual meeting held at
Cavanagh's Restaurant the
of Jan. 1, 1948 with 100% operations
as
000
Hoff¬
How¬
Greene, 'Sutro:? Sc ^Co.
Sinton, J. Barth & Co.;
Lloyd C. Stevens, Dean Witter &
Co., and John P. Symes, Henry F.
Swift & Co..
- r. :>■,,\i*>.
"
ard
'
the revised capacity for the
*
\ ':
1:1^/. A moderate rise occurred early in
steel-making capacity of the industry will be 95.2% of capacity for
week beginning Jan. 26, 1948. This compares with &6.1 % one
on
still
Cotton
the
-
lower
Hog prices weakened
for
The American iron and Steel Institute announced on Monday of
this week the operating rate of steel companies having 94 % of the
The current rate is based
;
receipts at leading markets increased.
Domestic demand for lard continued rather slow and
prices turned
downward after an early show of
strength.
Refined sugar prices
were
reduced from 8.40 to 8 cents
per pound by one large refiner
on
Monday of last week, marking the first downward adjustment
tight steel situation, "The Iron Age" concludes.
.
wheat
of the week with
steel, allocations.
'
wholesale
Visible supplies of wheat showed
bakers
will find their second quarter quotas slashed, and for the next several
months at least, no possible chance of any change in the current
week ago.
cash
,
of
deluging sales offices attempt¬
week of
; •'
..
irregular, staple food items averaged
food price index, compiled by
were
the
deliveries
the latest week,
capacity having
point to 95%
and
; Grains turned
tonnage standpoint this rate still
reflects peacetime peak levels.
Steel consumers this week were
ing to obtain information
down
same
f' •">
>>
.
respond to a continued CCC inquiry'
anti-inflation proposals from Wash-Other influences were reports that the recent cold wave
in Winter wheat areas has
apparently caused little damage to the
crop and more favorable crop advices from abroad.
better grade of coke become available.
week
i
ington.
been added to the 1948 official steel capacity figure, the industry
is bound to operate at a lower percentage until more
scrap, more
This
week
by the failure of the market
v
older capacity along with
pig iron and
,
for
<
.
y
%.
.
composite price is down $1 this week to $40.83
scrap
gross ton.
■
i
/ seasonal high prices on the Chicago Board of Trade.
?Vv
Early strength in wheat reflected removal of hedges against'
of flour to the government and to the domestic
trade, while'
firmness in corn was influenced
by an aggressive consumer demand.
The late decline in wheat resulted from
heavy liquidation prompted-
to follow or get nothing.
,
•
v\/:
Scrap consumers at Pittsburgh and Chicago have been able to
keep the market steady this week with no changes in the price of
heavy melting steel.
In the erratic Philadelphia market, No.
1
heavy melting the present week has dropped an average of $3 a ton.
a
j
sales
had
"The Iron
last
tically all
practice of earmarking scrap for return to the mill has been
increasing.
One large producer which some .months ago merely
asked for cooperation in this respect has now
put it on a business¬
like basis—no scrap, no steel.
Grading, or the buying and selling of scrap according to accepted
specifications, has gone by the boards, the above trade authority
points out.
As supply diminished, scrap buyers have become less
particular about grading. When a few buyers let down the bars, all
•
c,y
"
The daily wholesale
commodity price index, compiled by Dun
& Bradstreet, Inc., turned
sharply downward in the closing days of ,
last week after
reaching a record high of 308.82 on Jan. 16. The index
dropped to 303,86 on January 20, from 307.18 a week earlier and.
compared With 234.65 on the corresponding date a year ago. /• '
"
the basis of
supplies necessary to
•'
COMMODITY PRICE RISE HALTED FOLLOWING
NEW RECORD HIGH
;
their
this
v
.,,v.'■■
!•
-
*The chief function of the index is to show the
general trend of
officials, however, will still'be faced with the
of obtaining
additional
Had
an
on
■*,
.
In wholesaling, failures-
six in the
and
foo^ prices at the wholesale level.
:V;4 'VV;>•
Steel, production
problem
prices
won
•
week ago
a
represents
situation, the trade magazine notes.
have been fortunate in that steel firms have
users
^
than the
& Bradstreet, Inc., dropped to $7.25 on Jan. 20, from the allhigh of $7.28 registered a week previous. The current figure
a rise of 17.1% over the $6.19 recorded a
year ago.
time
steel capacity recorded as of the first of the year there is little chance
of a change in the tight steel
Steel
*
against four
'• Vy\< V:-/;' ;v
Although movements
Dun
programs.
But the number one problem in the steel in¬
dustry which is causing great concern among some steel producers is
the short supply of open market
scrap, according to the current
report of "The Iron Age," national metalworking weekly.
Unless
enough additional scrap is obtained this year to utilize the increased
more
FOOD PRICE INDEX DIPS
FROM PREVIOUS ALL-TIME PEAK : I
f
;
•
.
The amount of electrical energy distributed by the electric light
and power industry for the week ended Jan. 24, 1948 was
5,436,430,-
Committee)-
Hubert
June, 1943.
14
'•••
,
v
occurred primarily in
manufacturing
Thirty-five manufacturers failed, over twice as
in
as
last year.
.
Hooker & Fay, Chairman; Edison
increase
While the relative gain in retail
trade, where failures were up
from 29 to 45 was not as
sharp, this line had more concerns failing
than in any other week since
allocation
Sidney
Financ e—John,
; >
lower
Lu-
P.
Kahn
& : Co.,
Chairman; Warren H. Berl. Edwin
D. Berl & Son; Joseph A. Johnson,
Henry F. Swift & Co.: Harry E.
Jonas, Irving Lundborg & Co.;
Robert H. Willard, McNear & Willard, and Kenneth H. Sayre, Needham & Co.,* Alternate.
week's
the previous week, and considerably
22 reported in the same week of 1947,
many
The number-one nightmare for steel consumers this
year will be
sharing, the steel scarcity through government-sponsored, voluntary
Co., and Harold B. Williams, Lawson, Levy & Williams.
tich,
AT HIGH
The
FRANCISCO, f CALIF.—
the
of
A- V:''1'
The
and retail trade.
»
'■,
_
Eleven of these larger failures
.
V
"
37
involved liabilities of $100,000
Small failures with losses under $5,000 continued very
low/falling off from 17 a week ago to 14 in the week just ended.
• « "
.• !
interim increase of 25% in mail pay rates authorized in
by the Commission. The mail pay increase, which was
retroactive to February 19, is a part of "all other revenues," and the
December entry includes that increase for the whole period from
Feb. 19 to the end of the year, the Association of American Railroads
scrap
S. F. Stock Exchange
Industry
'(Continued from page 5) ;,
v•
(521)?
pr more each.
an
December
steel
V SAN
.••
been the case,
u
CHRONICLE
,1947,-
The State of Trade and
:■
providing business with its.
tial credit, needs, ' v
FINANCIAL
rea¬
sonable intervals what their
we
&
about the
,c
same
According
to
rate of gain as was the case earlier in the month,
the
Federal
Reserve Board's index, department
City for the weekly period to Jan. 17, 1948,
increased 6% above the same period last year. This compared with
an 'increase of!9%
(revised) in the preceding week.
For the four
weeks ended Jan. 17, 1948, sales increased 6% and for the
year to
date rose by 9%.
* -/
r
store sales in New York
38
FINANCIAL
THE COMMERCIAL &
(522)'
>^5i*Wuttursrfay^isatusi^;^29,^l948'<''i>'
CHRONICLE
•■
tabulations from offi¬
data, quoted by the'Bureau
Labor Statistics, whichr show:
(1) Wages have risen-by^ just
-
;a
•'•
•••■■■
k
■-•■■■
--,
•
•ili
assembled
cial
of
y'
(Continued from page 10)
weekly at ari annual subscription
fourth quarter are not yet avail¬ rate of $1.00, in which you will
able.
For the third consecutive find listed all new publications is¬
quarter, California retained its sued by the various branches of
leading position with a total of the Department. There is a nom¬
$456 million; Texas continued sec¬ inal charge for some of these pub¬
ond with $256 million and New lications, such as the monthly In¬
on
Chemicals,
York; third:• with $240 million. dustry * Reports
-'California continued its ,lead in Leather, Pulp and Paper, but many'
private construction by a. wide valuable reports, such as the Con¬
margmf^-reaching $375 million as struction. and Transportatioqu re¬
The final figures
quarter.
for the
compared with $210 and $154 mil¬ ports may be had .without cost by
lion far-Texas and New York re¬ writingv$ft4is.
Our-mohthly, "Survey of Cur¬
spectively. With regard to avail¬
ability of construction materials, rent Business," for Which the sub¬
1 would suggest that you follow scription rate is $3.00 "a yeaj?, is
our construction reports or com¬
the authoritative source of business
municate with our Office, as time information familiar to many of
does not permit me to go into any you.
■
7 7 7'7 77 /'■
■'
detail.
You will be interested to
A recent publication ift- your
-
■
_
know, however, that during the
last quarter there ; was
an im¬
provement in the supply of gyp¬
sum lath hardwood flooring, wire
nails, fabricated structural sheet,
cast iron radiation
and soil
pipe.
in tight¬
Sheet and strip steel are
supply of all steel items and
voluntary
allocations will un¬
doubtedly continue through 1948,
est
despite the increase in production
facilities
for
turning out flat-
is
and
His
Bank,"
the price of
is 10c.
This, and any of
which
publications of the DepartJnent may be obtained
the other
through our Regional Office in the
Empire State Building. Here we
publish a semi-monthly "Bulletin
of Commerce" containing items of
particularly to business¬
interest
in New York and New
men
sey
shall be1 pleased to
any of you, on written
*
.7
cement and gypsum
a
in
'decline
in * the
output
last
Lumber industry repre¬
-quarter.
sentatives claim that
extra 300
an
day for two months
price of lumber 10 to
freight
cars a
would
cut
flood of
because the great
15%,
lumber into retailers' hands would
competitive
put an end to extreme
bidding. A number of west coast
mills had to shut down during
part of 1947 because of insufficient
cars and cargo ships to move
the finished lumber.
,//
box
Jer¬
and we
Lumber, brick, send it to
board showed request J
f rolled products.
Small Businessman
"The
field
The Bureau of the Census, also,
0
publishes a number of valuable
reports,
among
which we can
recommend, especially to a group
such as this, those on Retail Trade
in
the
Middle
Atlantic States,
New York, New Jersey
Pennsylvania.,. You may have
your name placed on the mailing
namely
and
list
these
receive
to
reports
monthly by writing to the Bureau
of the Census in Washington.
I
You will recall that at our last
hope that you will call on us
for any
detail, the part which the
Department of Commerce is play¬
ing in assisting businessmen? to
meet the problems which confront
them.
There is no need to repeat
assistance you may
the list.
However, I want to call
attention
your
Check
Service
to
the
List"
"Business
published
(Continued from page 23}
a
half
Americans
have
not that
at
all.
*
There is no one
in this country today, at least no
7; The American system of free one whose views carry any weight,
enterprise, on its record, indis¬ who is in favor of the complete
It
'Vi
is
extant
the
only
which
economic
system
investor,
provides
producer and consumer with free¬
dom of choice and opportunity.
It is a system under which all
the
productive facilities of the na¬
are
owned directly by the
people themselves.
The people
;.
,
1
■
-
.
-
•
»-
-■
•
,
-
•
>•
short time
a
into
entered
the maximum utilization of exist¬
demand.
to
catch
up.
the1 fault
ing'plants, and to plan long run
field'.apswing
with its
With the present unset¬
production
tled
yy
before nth
this
the
does
that if
certain
am
We
main-
irt» /
rest
P
monetary deterioration-
plant expansion in such a way as found that
inflationary pressures. is inevitable
*1;
alone
not
present Congress.frrJnstead
to minimize
conditions in the worl
mechanism
wheh»there
or :
-
force
is
elimination of all regulation.-Business
management would oppose
the preserif stage
development, 'the
it because, with
of
industrial
elimination
of
government
all
regulation would create a state
of anarchy throughout the busi¬
ness World.
■
Business
reasonable
no-
.
For.my part, I am
confident that;
.?
treasury officials; that confidence
in the - state of the Treasury .was
Redeemable Currency^ Off$et dqV 1
'•
;
proper
will, fare better in the future
if
hks
than-.;:
to this
moment-^a. momeht
that; finds thfs jcountjy
the.
outside world trembling oveV the.
7
^
outlook for the dollar.
'
^
point-where
fheJ frCevOwn-;
7
77y/|
.7 inflation/.-*77 * disappearing; Congf.ess WOuldibe ership- of gold,: descent toward a. .;
by
government
■
.
those seeking
firmness,-; jand
must idee this situation^ Tt
!,beF7 would be able to effectively; j ustainly seems'to indicate that the tifyf their refusal to; accede, to
citizen's right to own gold is the handout demands. V / •• v
X;7'7777.;
only possible effective offset- to
Any- analysis
on
the
of,/
our /money
political 'Realities
forced/to
confront
worthless
handouts
/With
accelerated and our
/
ers
currency
wilt find- that a
petUal war : ius a
will soon be 777
political rul-> -7 7,
state of per7f;
political necessity
;
just as it vyas' for Hit-;
r
; / Once again Congress could um¬ •ler.;7h/V '..7l77y:
inflationary pressures;/,,7./' ,7
- ?
pire the contest between taxpay¬ 7.If .you-are willing to surrender
v^Perhaps th i ?
conclusion r; is ers and tax-eaters without being our childreh to inflation, war, and
for them,
,
reached somewhat by the process
of irresistible pressure
the victim
slavery, then you can -forget restoratioh of this freedom, f But if-
But certainly the
from,
one
inflation of the past 15 years, plus
the
present monetary chaosv in
gress
:.
could devise plans for addi^ ybti-
of
elimination.
paper
currency
lands
generally,
plus the steadily increasing/power
govern¬
weeks repeatedly featured
ments
'
We are now at the
unless We teturn ;td
tional
revenue
onstrate
;:
Unless the
side.
or
otherwise dem¬
proposed
would not
Con¬
would
of
7
Of; / , t
liberty, justice dnd:; 7 ;■
dangerously ^strain the opportunity that we mustpreserve;
would / continue.
;
this/geriirira^
expenditures a heritage of
public credit, the demand for gold
spread
/
7;7,
Inevitably
economic
force
:
Congress
the
stringency
to
resist
for Our/children,
to do
this
your
basic
then I-urge you
.
V
right of the individual American
citizen to own gold.
77;
.
Li"'
^
TOTAL NUMBER OF PERSONS RECEIVING REGULAR /v
7, 7 77- PAYMENTS FROM FEDERAL GOVERNMENT /
; ' 7
7
•7
As of
?7;7:June 30>19?2 June 39,7939 June 30, 1947 7-i
Federal
Payroll (Civilian)J_7 583,196 7 924,090
2,168,935 . •
Civilians (Retired)
- 25,567 7' 58,385 ;.
-,.96,146 ;.
•
/
;
part toward -restoring:
human
liberty— the;V 7^
;
.
Dependents of Veterans-.^--—- 320,034^^7:
I-ai' ;/ 133,042
187 886 7 7 989,664 ;.l,•,,
31,345
7;
7 484,768 7 y<
;
Army (Active^ii^
28,562":;V
state¬ were not serious in amount, the
2,196,151 4,849,582?:1 14,416^93
for
gold
coin * would
officials demand
and others that prices have risen quickly subside or be satisfied.
ness
in
there should be reasonable regu¬ more rapidly than |wages.
As a [ "But if the' handout proposals y 7 ; '"Does not include Emergency Establrshment, of which there were
lation for the protection of the result the-impression is widely fclearly indicated that their pas¬ 4,006,848 receiving payments from Federal Government, ilor 5,248,7
7*•••>••
v , ; •
public, or whether there should be held that the position of wage sage would cause our money to 798 farmers who received conservation payments.
complete freedom for business to earners has steadily deteriorated deteriorate; then the demand dvet
yjy .iI^lddes living veterans^ receiving' compensatioti, pension,; dis-'
do as it likes with no regulation since the war's end. The National the country ^16^^ gbld 'coin would abiiity allowances, and includes 2,048,374 ;veterahs under' the edu6awhatever.
v
7.
Actually, the issue is Industrial Conference Board has quickly be1 rbfleetba °irri the halls tion and vocational programs;
issue of
regulation of busi¬
this country is whether
'
,
,
it appear that the
;
;
supporting/
.
management
and
,
government
;
-
,
make
;/
,
ticularly with the United
the basic principles previous- sound money except the individ-having to provide for
djCstated and prevent further reg- ual courage of individual office
Europe and a large part of;
7; ,:r7- "'7'"'
"; ;-77;7:/
jbtdations / from halting our pro¬ holders.; - /
shortages exist along certain
7 You can mobilize all fhe techni¬
However, given a free rein,-J'^m gress, we will accomplish what cal
arguments you please against/,7 „ *
Kiplinger has written in, his arti¬
convinced that with the American
cle "Life in I960" which portrays restoring the right of the indivld-y.^ v 7!
ingenuity arid spirit, • production
uai to own gold. I will not quar-.
will catch up in sort order. Pro¬ the inventions and conveniences
rel about the difficulties. But in
/
duction
is
slowly but steadily which :.:thd/American:" peppfe IWill the
light 7of the certain chaos;
77catching up with demand and as
enjoy because .of our -accelerated ahead it seems that anyone oppos-; 7 7
this occurs, prices come in line,
ing this restoration is knowingly^
witness, the small radio field cer¬
or unwittingly contributing to ae7 ;>;■ ./■;>
tain food lines, particularly the without, the necessity for price and struction of this Republic.
7; • ; • 7
dry fruit field, and many others.' wa ge; controls 7777'7 7"'7/'/ 7'":7;7!
7'Trebling Over Dollar Outlook 7
accepts of bloc-votes, indicates thek futil¬
ity of anything less thania comn
ment regulation, not only because plete remedy.
'/
alone—not their government not
it realizes that such regulation is
That
remedy is a gold / coin
their politicians—determine what
standard enabling those who sup^
necessary
to protect the public
wages
shall be paid for what
against
unscrupulous
practices, ply the public treasury to fix the
services and without governmental
but as Well because the existence limits on the outgo from the pub¬
coercion they decide how much
of a healthy business system in a lic treasury.
7
capital shall be invested, in what
To put a limit on public spend¬
country of this magnitude is de¬
competing enterprises, at what
pendent upon such regulation. In ing, the taxpayers at large must
prospective profit.
short, the issue-is not whether possess an ability to influence
?
Price-fixing and controls inev¬
there shall be any, or no, govern¬ Congress superior to / that how
itably lead to black markets which
ment regulation of business. The possessed by the beneficidries of
discourage
production,
increase issue
is whether the regulation treasury raids.
7
7y
scarcity and make price stability
shall be reasonable and proper,
Whenever Congress is besieged
an illusion.
and of a character which encour¬ on one side
by "gimme" forces,
V7
Police State Methods
ages and improves the system of there should be
standing On the
individual enterprise, or \vhether other side of
President Truman himself has
Congress & fofce of
the
regulation shall be sa far- equal or superior pbwerr.' If the
said that rationing and price con¬
trols
are
police state methods, reaching and of such a character Congress shows signS rof ' capitu¬
such methods won't work in the that it undermines individual en¬ lating to the "gimme" cfowd, the
United States in peacetime as we terprise and thus leads the nation thrifty producers who ; pay the
into a state of complete govern¬ costs of
saw under OPA, they can't be en¬
government could then
ment
regimentation and 'totali¬ quietly go into the banks and de¬
forced, black markets spring up
tarianism. mand gold coin for their paper
overnight.
Efforts frequently are made to
The nations press has in recent money. - If the "gimme" outlays
tion
•
.
based
planned it that way.
putably is the most progressive
and completely democratic form
of capitalism yet devised by man.
.
percentage
the Wa^s endh;7>:
as
Wages, Prices, Inflation Controls
and
same
additional information or
require.
Our
offices are on the 60th floor of
In
the Empire State Building and are
open daily except, Saturday and
Sunday.
In closing, I want to
express my pleasure in being With
(Continued from page-7) 7;
you again, and to wish you all a onr money in the absdncef • of
7a o'f Congress. Word wdiild come in
full and prosperous. New Year.
dirppt iavmvpr fnnirni At*
direct taxpayer control on public to the-law-makers directly from
the/ folks back/ home and from
expenditures.
y if J '
* •
meeting, I discussed in consider¬
able
ih fighting inflation:
,/w;power.;
;;
; »h7f'r
7? (l) 'lResist to the uttermosf any '■At'These remarks /have pictured costs since
increases in prices,' arid '.. sell at only: the' inability• Of; .Congress to;-7:7 7
;7'^-7
. 7
(2) Both average hourly, earn-iy prices Which are the lowest con¬ resM spending pressures during
ings and living costs are .about a sistent: with sound bUsiriessf ;prdc- ^ pbrioidTpf ;prosp^rit^7'How rriri^': 7; - /
?'
third higher than when the "hold t ires' 77 '• '■ <vr T'VA
;jV,.,+,yMyp
&•c.-.fyv,{■
the
line" order was issued; In
'7(2) Cooperate to the fullest pbs;r>
iripriefy^^^ aykilablri
period;/ 7;,
April, 1943.
sible extent with thbs^ei mahufap-;
(3) Since 1930 the cost of living turers who, demonstrate a 'desire, of economic advofsity is a ques-:
e/tb youy imaginatipn,! ; [ - 7 /
liK
4*%1' WA'AiMV.- J 71 'Awtrr\'J£If'V*I
4s 66% higher than ift7l039v .How7
A* currency redeemable inr gold;
7;'
ever,
earnings have;-f increased
om demand seems ia be. the right,
7 ;
♦100%, as a result the average:
increase /trie efficiency7ahdi pro-* oh Which all (Our
worker- receives about. 20% more
freedomslUlff-t7;^ '
ductivity of their, necessary; func-; mately rest. >Tt enableS the people f '7 ;
today than in 1930 ih; terms of
tions,
_■
* .,*•v
'■ 1y../ *: -* -:,
;
to Silently,
but; effectively ■ pro- /"
J
real purchasing powers. '7
7 7"
tbbt the fruits of their labor.' lln-.' 7 "
When
(4). Operate on;.inventories
prices and wages rise,
which is cause and Which? effect?- loW: as ' will prove adequate- to der* the preSeht fiatZm^
sefyd the needs Of their customers aged/ currency system; producers.
Do rising prices bring about wage
increases, or do rising wages force and - restfajrr -any ahd'< alL tenden- ■ of wealth carihdf successfully ptd- 7
prices up? This dispute?-ha& been cies wRhin7 their ' stOFes-'tb' buy feet themselves frbrii trie powef of'
going on for centuries • and. Stiff beyohdnormal^equirernentct^7 the - central - : gove rnmertt and its '
legions' bf pressure groups;
The'
has not been resolved. It recurs
(5) Practice firtusual restraint; iri
result is individual rioardihg of:
in much the same line of argu¬ the use Of credit as a selling
tangibles in one Way Or another/
*/
ments during inflation periods in
iceiriive^/^
Some day' this Steady: movement
all Countries. ; 7 ;
^7
(6). Support v i g0r o u si y'ilie into/
; tangibles /vvill- become
$ .7-.
Competition Keeps Down Prices
United States Treasury in llsfortrir
-stsithpdde unless corrective actiow
It has been the history of bus¬
coming campaign to sell savings comes
i s'T'i" ■
iness that when there ha& been- a bondk to the
public and to pri¬ 7 For
years I wept hrid Waxed in7
shortage in a particular^jModqpt vate, business.- •
>
dignant at the failure / . / to put
or group of products Wit|f"^i§^^
^7(7) Concentrate every effort jp the/brakes on lnflatipri./ Firially';f . >
ing high profits, it has p:
current, critical situation upon was forced to the conclusion that •
the
THE COMMERCIAL
Volume; 167 ^ Numbed
&
FINANCIAL
CHRONICLE
(523), 3?
risks, lead to the conclusion that
borne out by the
the maximum tax rate that does
drew Mellon some 20 years ago to
advocate the "reduction of income
not
;y;.; (Continued from page 16) f
; :
that
n
tax rate
the maximum
that is
will not stifle the incentive
make, a risk investment. This
is the iuaximum t^x rate fixed by
to
law
tSat will produce the most
in
money
over the
taxes
that is, the maximum
,
years;
rate above
always in the busi¬ 000,000,000—the equivalent of say
ness to make money, and it would
$8,000,000,000.
It is announced
be natural to suppose that the that the total prizes will amount
cf chance
are
higher the odds in
favor of the
operator, the more money would
be made, the only obstacle to put¬
ting the odds higher in favor of,
the Operator; that is, against the
bettor, is: the knowledge1 gained
by many years of experience in
ry; V which, too many are deterred from
;
making' taxable income by risk
which gach and every one of these games
Investment, . and : below
of chance played by a very large
there is too much loss of tax mon¬
section of the public that, if the
ey, due to a low rate, even though
odds are put higher, less people
more taxable income is' produced.
will • play, a nd even though the
Recognizing the difficulties of
Odds, and therefore the; "take,"
7
calculations of this limiting tax
ate higher, the net results Will be
v.
rate, we must resort to independ¬
lower.
'. ;
ent observations, haying perhaps
;
Now, according to my calcula¬
nothing to do with taxes, but
which because of their nature may tion in roulette the odds are about
9.2 to 10 against the bettor. In the
point the way to the answer .to
question, i-;;rri-t'f.ViV^fA':x'* pari-mutuel race tracks, operated,
in the United States, the odds vary
.vV'
First, let me give you a differ-.omewhat, but generally they are
The New York "Times" of Sun- less than 8.5 to 10 against the bet¬
Kv* .-day, December 28, Carried an ar- tor. Iri the game of Ganfield, the
^'i^ticle in regard to; the .effect of odds against the player are about
8.3 to 10. In the dice game Hazard,
V:
taxes in stifling: incentive.;
k- '
: The article quoted a representa- there are a variety of bets that
five of the United States Treasury may be taken, the odds in. each
%:r;- Department, who!said thai higher being different and, in most cases,
{i--■■■• taxes do increase the incentive to very difficult to figure, but tney
seem to run about 9 to 10 against
V-> '•
earn more,1 explaining that this is
'
,
.
,
.
-
•
,
;
1
■
,
higher the
taxes, the less net income the tax¬
payer 'has;
and, therefore, the
more effort he will exert to sethe fact that the
Cure more
;
;
•
may be true in certain
perhaps the ihost widelyknown cdse being that Of the man
.who farms on shares, but there
must be a limit beyond which the
-i
This
cases ;
;
•
r1;
•
!
.:
income.
amount of income is not worth
i' the extra effort—arid; that is. cerj
-tainly true in the case of
;
the tax-
having independent means,
"so that his earned income does not
represent his total living.
'
It seems to me there is a sharp
distinction between earned income
if the same number ^ of
people play, but he and his pre¬
decessors, after years of experi¬
ence With a great many people,
have learned that if the odds are
v
and so-called
•
in that earned
•
it no risk,
:
money
"unearned income,"
income carries with
higher, less people Will play, and
in
the : end, the operator loses
money.
Of course, the mathema¬
tician who plays can figure what
the odds are against him, but the
either of income or of
principal; whereas so-called unearned income (that derived from
•investments) may not only disap- player who is not a mathematician
(and most of them; are in -that
pear, but carry with it the princategory) cannot figure the odds,
•
•
<
but
An Illustration from
Gambling
of recognizing the fact if the
odds are heavily
against them.
I Technique
indications which
having noth¬
ing to do with taxes, yet pointing
the way to a conclusion as to what
is the maximum rate of income
tax that Will not stifle the incen¬
tive to risk investment. Some of
these are so old that their origin
is lost in ancient history, and all
have been practised so long that
'
Now, as to the
there
is
definite
a
from cer¬
tain gambling games, or games of
chance that have been played un¬
another for many
the game of roulette—parimutuei horse racing—the solitaire
years:
:
\
v-'l
h.
»
as
stated," is
£1,000,000,000 so it is easy to
calculate that the odds are 1 to 2
5 to 10 against the ticket pur¬
s
.
reputable parties, are' known: to
be rtin tairly.
erally
which convinced
It is; I believe, gen¬ prietor
understood that /the' dice
iness.
lare mot
yon
by. getting people * to bet,
certainly should not charge a
fee
to
high
as
keep
in to bet.
/
pf the propfietor
to imake crooked
the odds in favpr
so.
that the pro¬
money
shbrf-ehanged;. and the horses are;
not d|pped;t This inay seOih' like an
undue faith orr confidence in hu¬
man honesty, but the facts- arethat
are
me
w?ts rather new at the bus¬
If- you are going, to make
to
them from coming
v/.*'
In* the above I made reference
the
proposed
British interna¬
tional
lottery,;. There has been
•something in the papers about it
Within the last few weeks. The
how, so - why take M change:; on
crooked wofk, and -perhaps land
in jail, on be thrown
of busi^-
proposal is to sell to the public
internationally (not ohly inlEhg^
land) lottery tickets .at £ Leach
nesst,:.'*. and to sell Up to >twp billionHfckAs the operators of these games ets, thus expecting td .take in^;i2,■
tax rates to
It worked.
maximum of 25%.
a
'
Inllatiott
chaser.
By ROGER W. BABSON
Now, this is seriously proposed
but
has
it
not
been
done
yet.
I
"pose as a prophet, but
willing to lay a wager
that the tickets won't sell, if the
not
do
be
would
faets
is
no
made known and if there
are
^ballyhoo" campaign
the
on
basis of British patriotism.
You will note in the above ref¬
7
to
erences
gambling
that
games
the odds
against the ticket pur¬
chaser in the Irish Sweepstakes
are
heavier than in the other
Asserting there is
no such thing as inflation, Mr. B&bson holds it
only a question of supply and demand. Says price investigations
are
mostly eyewash or whitewash, and cites depressed prices of
citrus fruits contrasted to high
prices of meat as examples of undersupply and oversupply.
is
Certainly
the^—'
■.
'■
■ ■ •—•
help the citrus growers with
gations \yhich higher prices to overcome these
are
being held higher costs.
inve
games' and horse racing, and yet
the Irish Sweepstakes
ally 7successful.
large
very
which
amount
understand
I
are
They
gener¬
raise
of
to
s
ti-
to study
a
money,
goes
.
Most of the talk about 'inflation" is bunk. When
people have
nothing else to lay their troubles to they lay it to inflation. Mer¬
chants blame high prices on inflation; politicians blame all losses on
inflation; while even farmers are blaming the weather on inflation.
prices
mostly
are
The
is that there
answer
is
no
such
thing as "inflation."
It is
only a question of supply and de¬
whitewash.
mand.
Citrus growers
do not
Inflation
is
benefit uniess there is more denot the fault m
and for their products.
In Florof
farmers,
da we see the cattle people
very"
ma n u f a c prosperous while the fruit grow¬
turers, retail¬ ers are very sad. The reason is
the
eyewash or
support of the hospitals in Ireland.
It is my
the sweepstakes
ers
or
any
other
one
group.
fact, there is
no such thing
Roger Babson
as
Our troubles
In
are
just
a
"inflation."
question of
Supply and Demand. When there
is more demand for goods than
that there is
meat With
an excess
demand for'
small
supply, while
there is a big supply of citrus and
a small demand. Neither the price
of beef nor the price of citrus is
a
due to "inflation."
We
all
which
should
are
in surplus supply rather
the things
buy
than, through habit, continue to
buy the high-priced things.
The
next time you go shopping ask
the clerk to give you a list of the
is demand, prices go down, and
things that haven't gone up and
they call it deflation.
then change your food customs to
This means that the only cure
using those things. This also ap¬
for high prices, or inflation soplies to shoes, clothing and house¬
special circumstances, as men¬
called, is to either curtail buying hold
tioned. You might conclude that
furnishings.
Now that the
or
increase
production.
This turn of the year is past and there
a maximum tax rate of 10 or 15 %,
means that the cure is. up to all
are "salCs"
which would correspond to these
going on, this is the
of us.
When we spend less, we time
to do your buying.'
Wise
odds, is the highest that can be are
helping
to,1 reduce
prices; buyersjyill stock up with goods
imposed without stifling *the in¬
while if we inCredse our buying,
centive to risk; investment, but
during the; month of January
We
increase
prices.
The or
while these mark-down sales are
there is another factor involved,
other cure for- high prices is to
in progress.
which is very simple to see or
produce more.
This
is
up
to
realize, but the evaluation of the labor. The
there is
supply, prices go up and
but when
there are more goods than there
they call it inflation;
.
effect
is
very
real trouble with labor
difficult.
Nature of Business Venture
it
is
risk
a
is
more
is such
to
obvious that if
one
takes
in
hope of gain, the risk
acceptable if its nature
that if the venture starts
"sour" one can do some!
thing to bolster it up. It is ob¬
vious
that
in
these
gambling
games, after the wager is made,
there is nothing to be done to im¬
go
is not their wages so much as it is
their restricted working hours and
"
faulty production.
.7
What Should We Expect?
We
should
expect
to
continue
to pay high prices for real estate
until building increases and the
way that building will in¬
crease is to allow rents to go up.
only
of cards, known as Ganfield;
things that have gone up in
played extensively at Saratoga,-1 that it Was not doing much busi¬ higher than in a gambling ven¬
ture. Making allowance for this price.
These prices will again
bOlieve—the diOe1 game of Hazard
ness, and I can assure you it did
It is true that the "mills of
factor would seem to indicate that fall.
—the hatiOnal lotteries; such as not, get any business from me. I
for maximum tax purposes the God" grind slowly, but they grind
the Irish - Sweepstakes •• and the would have
preferred walking the odds should be
something like ultimately in the people's inter¬
prOpoS^ lBritisK international lot¬ Street / and playing a ; table that 7.5 to
Labor
unions succeed in
10, which corresponds to a ests.
tery, of Which I will say some¬ had Ohly. tW6 green numbers. ^In¬
maximum tax rate of 25%.
raising money wages, but not real
"
thing later.
"
\
r
cidentally,
the little gambling
wages. .Unless wageworkers in¬
77' ■ •'V
Ail! o^; these gaipes, if run by room charged an admission fee ;;To spm. up:
crease
game
■■v?
conclusion,
to make
25%.
about
Price-fixing also retards produc¬
tion.
So long as production is
prove
the chance of winning. low then we are troubled by high
After, the race starts, there is no prices.
Take the ceiling off on
way
to make your horse run rents and, of
course, rents would
faster.
go up for a while, but that would
perience that the odds at roulette
In a business venture there are mean building would increase and
cannot be raised without killing
many things that can be done to finally rents would go down. Only
the game for the; operator. 7 1,7- p
bolster up the project if it seems then would we all have enough
If any of you have ever. in¬
tu,be, going wrong. If sales prove homes at a reasonable price.
dulged in rpulette,.have you everi
poor,/advertising can be used. If
We complain about the price of
seen : a
wheel which had more
costs are higher than expected, meat and various other things, but
than two green numbers?
Of engineers may be employed to re¬ sooner or later the
price of these
course, in the conventional wheel
duce them.
If the product does products will be so high and the
it is the 0 arid 00 that govern the
not appeal to the public, improve¬ profits so attractive it will cause
Odds against the bettor. I saw ; a ments of
quality may be made, many more people to go into the
roulette Wheel in a little place in
etc,; hence limiting odds in a busi¬ business of raising cattle and other
France that had three green num¬
ness venture should be
materially farm produce, and manufacturing
bers, but it was perfectly obvious
other
insurance-rates;; r,
der one name or
experienced
daily or frequently and
keep records of their winnings,
who find by experience that they
are losing money and this knowl¬
edge is communicated to other
players—and so the knowledge
gets around; but over the years
it has been recognized from ex¬
experience
The indications come
the
playing
experience has determined the
expectation of life of an indi¬
vidual for the purpose of calcu¬
'
is
players, who make a practice of
Which has been obtained, just as
lating life
it
Perhaps
I have mentioned as
investment is
or
they seem to have an uncanny
way
incentive,
stifle the
risk
My
to
thinking that the fact that
are run for the
benefit of charity makes the tick¬
ets sell against a rate of odds that
would • be
impracticable if the
charitable purpose did not exist.
That is why I say in my prophesy
the bettor, 7 In the Irish Sweep¬ with
respect to the proposed Brit¬
stakes lottery, according to news¬
ish international lottery that the
paper reports which I have seen, tickets
will
not
sell
unless a
the odds are about 7 to 8 to 10
"ballyhoo" ; campaign based
on
against the ticket purchaser. In patriotism is carried on.
the proposed British international
You will observe that, in the
lottery, the odds are 5 to 10 against
examples
given
of
games
of
the ticket purchaser,
chance, the odds against the riskNow, the operator of a gam¬ taker run from 8.3 to 10 in
racing,
bling
room ; where
roulette lis up to 9 2 to 10 in
roulette, omit¬
played, knows that if he puts the ting the Irish Sweepstakes and
odds higher than customary in his the British international
lottery,
own favor that he will make more
both of which seem to involve
payer
a
decision of An¬
Dillon Read Underwrites
Southwestern
Offering
To Com. Stockholders
Dillon, Read & Co. Inc. and as¬
are underwriting the of¬
fering by Southwestern Public
sociates
Service
Co.
value,
of
103,113 shares of
stock, $1 par
to holders of subscription
additional
warrants.
common
The
common
of
record
Jan.
one
new
share
stockhold¬
21
are
given
right to subscribe for the new
stock at $21 per share in the ratio
ers
the
of
for
each
11
shares held.
p.m.
Rights expire at 4:00
(EST) on Feb. 2.
Proceeds
from
the
sale
of
the
stock, estimated at approximately
$2,000,000, will be used for prop¬
erty additions and improvements
and to repay bank loans totaling
$1,250,000 which were obtained for
such purposes.
;
Giving effect to the offering to
stockholders and to the concurrent
sale privately of 10,000 shares of
5% cumulative preferred' stock,
$100 par value, the company will
have outstanding: $32,965,000 prin¬
amount of first mortgage
bonds, $2,170,000 of serial notes,
! 95,000
shares of preferred stock,
$100 par value and 1,237,354 shares
production as their wages of common stock, $1 par value.
The system of free private en¬
increase, they are no better off in
The company, operating in the
terprise, based on the sanctity of
the-end. ' -. ;4 >
•;'
:'.v.
Texas and Oklahoma Panhandle
capital, cannot continue to pros¬
sections' and to some extent in the
per if tax rates are so high as to
What Has Happened to Citrus?
South Plains region of Texas, is
stiQe the incentive to make risk
What has happened to the mar¬
engaged in the generation;, trans¬
; investments in business.
;
:
ket for grapefruit and oranges is
mission, distribution and sale of
The business system is so com¬ a proof of all I have said above. electric
energy.
plicated and;, requires the- com¬ It costs much more to raise citrus
Operating revenues for the 12
bined operation of so many minds fruit
today than- ever before. months ended Oct. 31 last amount¬
that it. is impossible to calculate Wages are much higher, fertilizer
ed to $12,390,576 and net income
Vdiat is itha maximum tax rate is more expensive, and even the for" the
period was $3,142,274.
that does not stifle the incentive railroad freights are greater. Yet, Dividends On the common stock
the prices for citrus fruits today totaled
for risk investment,
$1.32 V2 for the fiscal year
are less than they were when the;
7
ended Aug. 31, 1947, and thus far
Certaintobservatiqns; of average
in the current fiscal year a total
actionori/nWria^irWomer^ioveri
lower. If all our troubles are due of 80 cents per share has been
cipal
v
•
ing
risks, j,, {otnqr^fihah
-
business
tfr d "inflation,'K:♦
inflation
should declared.
.
-
40
THE COMMERCIAL
(524)
Self-Made
and brokers to do business.
limitations
the
as
only have liquid markets been interfered with but
inquisitorial system, numerous forms and reports—
unnecessary—are required to be filed.
All this excess of regulation has made the cost of busi¬
Commission
pre¬
may
an
all
to estab¬
dealers and brokers must be accorded confidential treatment,
and that it is contrary to
contents of such
test of its
findings that these were in the public interest.
public interest
permit a financial publication in the course of a circula¬
campaign to examine carte blanche the financial reports
filed by brokers and dealers?
to
tion
has
Commission
The
disregard by the Commission of the deal¬
right to privacy adds insult to injury.
The response of brokers and dealers to this campaign
confidential treatment of financial reports is encouraging.
for
Does the Commission consider it in the
confessed
its
helplessness
feel convinced
continue
to
the
fight to compel
and for any purpose.
Is such
•
accessibility the general practice in
is
industry? .
exists in
^..
SECURITIES f-ACTS
THE
DO
NOT
SPECIFICALLY
FILING OF ANNUAL FINANCIAL
REPORTS BY BROKERS AND DEALERS.
That
its
;
'
rule-making
under
contend that if the Commis¬
power,
and
we
reasoning, it
provide for confidential treatment of the reports.
sion
make the rule, then, by a parity of
can
can
T.
Rae, Philip-J. Potter
Devens, to Assistant
Vice-Presidents; Norman W. Hall,
Stewart G. Orr and Chester T.
Charles
mouth
elected Assistant Trust
was
Officer and Ernest H.
of Needham
of
has
s|i
smaller dealers
the
to
and brokers in
securities
who
would suffer
Is the
us
competitively thereby as time went on.
SEC in this instance as helpless as it would have
believe?
the
Federal
power
us
to accord these statements
Form X-17A-5 not
confidential treatment.
only calls for the filing of reports of
by registered broker-dealers pursuant to
RuleX-17A-5 but it consists of two parts, designated I and II.
Part. I is
captioned "Financial Questionnaire" and calls for a
sheet and certain other data.
Part II, headed
Conn., joined
Reserve
System
on
29, bringing to 336 the num¬
ber of member banks in the First
"Supplementary Information" provides for the submission
schedules relating to certain other numbered
X-17A-5
are
the report
(b) and (c) of Part II of Form
bound
separately from the balance of
they shall be deemed confidential, *«..*
If the Commission
rule that
some
to the require¬
(a),
can
portion of Part II of the form shall be confi¬
dential, then why in the name of common sense is it power¬
less concerning Part I which constitutes the financial ques¬
tionnaire?
of
How
can
it sensibly argue that it can make fish
portion and must make fowl of the other
fowl in more than one connotation.
one
mean
—
and
we
of our President he indicated that
there was a request for an increase in the budget due to the
need for added personnel in the SEQ set-up* f
.
r - <
As we have from time to time viewed editorially some
of the Commission's activities which have placed unneces-
Stewart,
V.
President,
and
Donner
if!
.
C.
who was named
Eugene Walter
was promoted to First Vice-Presi¬
dent; A. Walter Lukens to Vice-
of
Angelo
Mercer
C.
Vice-Presidents
clair
Spinelli
J.
MacPherson
of
The
Savings Bank
as
Mont-
a
of Montclair,
N.
J.,
oy
T. Philip Reitinger, President.
Mr.
announced
was
Spinelli
also
was
the Board of
Jan. 14
on
elected
Managers.
pherson has been
mem¬
In addition to be¬
Vice-President,
will
retain
his
Spinelli
Mr.
position
President; Anthony S. Ruggiero to
Vice-President, and John F. Ward
to Vice-President and Cashier.
V
Secre¬
tary of the bark and be in chavg3
as
of
operations and personnel. Mr.
MacPherson, who will continue as
Carl W.
join forces with the central bank¬
years,
ing organization of the nation and
1018.
thereby gain direct access to its
strength, facilities and resources
as they may be required in serv¬
ing the needs of the Community
tor
Bank
The
Trust
and
bank
Co.'s
customers.
automatically
with
the
bank
30
for
bookkeeper in
At present he is an instruc¬
starting
in
as a
banking at the
of Banking's
Newark chapter. Mr. MacPherson
savings
Amei ican
Institute
elected to the bank's board in
was
In, 1943,
1942.
when
broadened its activities to include
member of the Federal Reserve
participation in community proj¬
ects, he joined the staff as Direc¬
Bank of Boston and is now
eligi¬
ble to receive the privileges made
available to other banks in the
Federal
First
Reserve
includes
all
of
District,
New
Provident
elected
was
sociation
of
relations
*
>ft
President
Graham,
Kelley
of
the First National Bank of Jersey
City, N. J.,
Jan. 20.
on
ing changes and appointments to
the official staff of the bank, fol¬
lowing
on
a
meeting of directors held
Edwin W.
Jan. 21:
Spoerl,, an
officer of the bank since
Cashiership
the
continues
as
1927,
but
Vice-President;
a
Edward N. Dean,
re¬
formerly
a
Tyust
ident
both
of
Newell
1929, is appointed Assistant
Cashier.
August H. Lages is ap¬
pointed Assistant Trust' vOffider.
Three
to
new
the
members
were
of Directors
Board
First National at
added
of. The
meeting of the
They are Web¬
Todd, Leonard J. Buck and
Charles W. Engelhard, Jr.
Mr.
Board
Jan.
on
a
13.
ster D.
Institute
Stevens
and
Executive
is
of
of
Technology
Children's Village. Mr. Buck
President
of Leonard
Inc., importers of
minerals
and
finished
is
Director
and
products.
Executive
J.
materials
exporters of
Mr. Engelhard
raw
Vice-President
Baker & Co., Inc. and
identified as executive
or
with various
the
hard
Buck,
other of
of
is actively
director
Engel¬
At
13
the
of
Bank
Co.
of
Caldwell,
N.
J., has
increased its capital from $200,000
to
$250,000 by
$50,000.
came
<
a
stock dividend of
The enlarged capital be»
effective<-Dee.(16.
iV
Public
the
of
sjs' ; '
,
-
Na¬
the
Division
Trust
American
meeting
Jan.
on
National
Horace
P.
Stores
Co.,
were
»!i
ifi
,
,
Trust
phia, died
the
Pennsylvania
Banking and Trusts of Philadel¬
phia
were
approved
Jan.
on
19
by the board of directors.
John
O'Donnell was promoted from
J*
Treasurer
Assistant
Vice-President,
Assistant
to
on
Williams from Assistant Trust
Of¬
John A.
Onsa
and
Henry S. Faus were
named Assistant Treasurers,* and
ficer
Trust
to
Officer;
Henry McK. Baggs was appointed
Assistant Trust Investment Offi¬
;
John ' M
Cookenback, from Assistant Sec¬
retary to Trust Operations Offi¬
cer; John W. Thorn, from Assist¬
cer.
ant
Changes
Officer
Trust
Secretary,
were:
•
and
Assistant
to
Clayton; McElroy
Jr., from Assistant Trust
ment
Officer
to
Invest¬
Trust
Assistant
Officer.
the
At
stockholders
on
Jan.
vania
five
19
a
annual
James
Vice-President
Pennsylvania
elected
of
Railroad,
M
the
was
Director of the Pennsyl¬
Company.'
directors,
Jan. 11,
the
of
Philadel¬
of
Co.
He
62
was
Mr. MacCoy, accord¬
ing to the Philadelphia "Evening
Bulletin," had served as President
the
of
bank
last
from
Sept.
Feb.
Chairman
Before
1, 1938,
he was
when
1,
chosen
taking
the
of
Board.
his banking
had been an attorney.
he
The
post,
.•v
Board
Merchants
lentown,
The
whose
of
of
Bank
National
announced
Pa.,
of The
Directors
Al-
Jan.
on
the election of S. H. Carl Bear
13
as
Cashier and Herbert B.
Wagner
Vice-President,
a
#
#
On Jan. 13 Hooper S. Miles was
elected
Chairman of the Board of
Directors
tional
the
of
Bank,
succeeding
Baltimore
of
Na¬
Baltimore,
Howard
Md.»
who
Bruce
elected Vice-Chairman of the
was
Board
of
Directors.
Financial
strong,
J.
S.
Editor
Arm¬
of
the
"Sun"
following
terms
ex¬
pired, were re-elected: Revelle W.
Brown, Alexander J. Cassatt/ Ar¬
part:
Bruce's interest
"Mr.
fairs of the
ish
as
many
bank
in the af¬
not
dimin¬
change, but
give him more time for the
other community and busi¬
activities
ness
will
result of the
a
it will
with
the
identified,
which
he
is
announcement
stated.
Ellwcod
G.
and
Chairman of
of age.
years
in
titles
personnel of
Company
for
executive
the
<!
Directors
of
Board
Provident
Promotions and changes in
in
the
American
reporting the
changes in that paper Jan. 14 said
'
■
*
W. Logan MacCoy,
the
of
and
the
Association.
Baltimore
elected directors.
>«s
of
vv.v;,/fc
,
Liversidge, Chairman of the Beard
of the Philadelphia Electric Co.,
and William Park, President of
the
the
>>
..A1'"'-,':-■■
Central-Penn
Philadelphia,
Symes,
Trust
$
annual
the
of
meeting
industries.
#
this stated
past Pres¬
Pennsylvania
a
Association
American Bankers Association.
is appointed Cashier! C.
Hogan,
with
the • bank
Officer,
America,
•
The Philadelphia
'
tional Association bf Mutual Say^
ings Bank, ard a member of the
School Savings Committee of the
the follow¬
announces
of
an¬
member of
a
Committee
Co.
director at the
a
"Inquirer," in noting
that Mr. Fenninger is
the Financial Public Relatior.s As¬
Eng¬
Conn.
*
Mr. MacPherson is
Vice-Pres¬
a
Trust
nual stockholder's meeting of the
bank
Community Relations.
County,
Fairfield
except
tor of
!i<
;
Philadelphia for almost 24 years,
bank ( until
the
becomes
fit
V
Fenninger,
ident bf
sociated
now
'
-V
to
Mr. Mc¬
board
a
Ives,
Chairman.
said that their institution will
Vice-President
The Citizens National Bank and
In the recent message
John
Bankers
joint announcement, Rosario Gia-
is
provide and does provide by its
in¬
was
21, with two
to
Vice-President
Executive
broadening the bank's sphere in
promotion of values of thrift and
savings. Mr. Spinelli has been as¬
a
questions. ;
<
/•/.'''• '■ //;;:;y•y
We quote from Rule X-17A-5, Sub-division B-3:
of items
Directors
19
additional members named to the
imo, President, and Francis Rossi,
and
Treasurer,
In
Equity Corp., director of Metro¬
politan Life Insurance Co., East¬
ern
Offices, Inc., Park & 46th
Street
Corp.,
and
Twenty-five
Broadway Corp., and a trustee of
schedules furnished pursuant
of
from
Bankers
District.
Reserve
Todd
ments
Board
creased
Director of Community Relations
will assume the responsibility of
Federal
of detailed
"If the
Election
and
since
financial condition
balance
the
Board
ing
Dec.
linquishes
look at the record in support
of our thesis that
if the Commission can make a rule providing for the filing
of financial statements by brokers and dealers, it has the
Let
<:
New Haven,
which
helpless under circumstances where the infor¬
mation filed is being exploited for commercial purposes is a
sad commentary and indicates to us a failure on the part of
this administrative body to recognize its duty to the public
$6,-
at
Executive; Vice - President, was
elected President to succeed Nor¬
22)
page
ber since 1942.
declared itself
and
Osgood, Jr.
elected Assistant
was
The Community Bank and Trust
land
the Commission has chosen not to do so and
That
Edwin
and
a
duty has been created by the Commission
unchanged
split, whereby the 67,000 shares
of $100 par stock are changed to
335,000 shares of $20 par each. At
the same time the membership of
1
(Continued from
Co.
Seeing this picture, we can readily understand that the
wide publication of financial statements of brokers and dealers, as the instant financial magazine says it proposes doing,
can be put to unjust and unscrupulous uses by competitive
PROVIDE FOR
remains
700,000 the stockholders on Jan.
20 approved a five-for-one stock
'
and Bankers
less is
securities business.
THE
phia
Philadelphia * National Bank of
Philadelphia, C. Russell Arnold,
if*
or
goods, we
do not flag him with the question, "How much are you
worth?
Show me your financial statement." There seems
to be no reason for adopting any different attitude in the
firms and others.
capital
Fidelity-Philadel¬
phia Trust Company of Philadel¬
as we
Treasurer.
really of little or no consequence.
When we go to a merchant to purchase his
.
authorized
the
•
S>
We know that intelligent fi¬
*
t't
do, that policies that favor only the
It is learned from the Philadel¬
wealthy in the long run will work to the detriment of capi¬ phia "Inquirer" of Jan. 14 that at
the annual meeting of the South
talism generally and our entire system of free enterprise.
recognizes,
nance
Morrison, to Trust Officers. Also*
Robert B. Osgood of South Wey¬
•
accessibility make any sense?
clearly. stupid to contend that honesty
direct proportion to financial responsibility.
Whether a broker or dealer has more capital
It
*»;! '•
'
stock',of-the
man
'
Skinner.
Corp.
brokers in securities.
and
ers
that within its rule-making power
a way to relieve small brokers and dealers from the
utterly unfair treatment which they will be receiving if their
financial statements are the subject of ready access by any¬
Does such
the left
winged SEC to take its foot off the neck of the smaller deal¬
alto¬
there is
one
!;!
S.
F.
Norman
board, viz.: Howard C. Petersen,
intend
We
gether too readily to suit us.
We
'
•
*
The wholesale
,
Generally speaking, the Commission, by recitals in the
various orders it has entered from time to time, has made the
...;
ers' and brokers'
the public interest to disclose the
reports?
higher.
ness
provide that the financial reports of
rule which will
'
While
,
Not
by
scribe."
a
Morton,
'
*■
•'
.
Does the SEC contend that it is without power
lish
V.
Russell and James M.
that the
(Continued from page 3)
reasonable
thur
burdens upon the securities industry, our thought is
budget in this respect ought to be cut.
It has become increasingly more difficult for dealers
sary
SEC Abuse of Small Dealers Is
Thursday, January 29,l1948
CHRONICLE
FINANCIAL
&
"Mr.
Miles
has been
connected
with the Baltimore National Bank
since January,
1937, when he re¬
President of the County
Company of Maryland to
become Executive Vice-President
signed
as
Trust
of the
national bank.
later Mr. Miles
man
a
was
Four years
elected Chair¬
of the Executive
Committee,
post he will continue to hold, in
addition
ship.
"Mr.
fourth
Chairman¬
his Board
to
!,ViV'i:!
.•
Miles
term
is
now
serving his
Treasurer
as
of
the
State of Maryland and as a mem¬
ber of
Works.
the
He
these posts
islature
also
in
State Board
was
of
Public
first, elected
to
by the Maryland Leg¬
January,
Chairman
of
1935.
the
He is
Board
of
Trustees of the State Teachers Re¬
tirement System and of the State
Employees
"Mr.
Retirement
System.
Miles also is President of
Volume* 167
the
Baltimore
Association
Commerce.' "
"Until
chief
had
today, Mr.
tive date of retirement. The stock¬
bank
the
was
Bal¬
;;
holders
organ¬
'77\, .7,.;.'
\; v
Washington
1942, as chief of the con¬
servation branch, Army Service
held
Forces.
page
■.
,
.
"Mr. Bruce went to
;
he
was
appointed chief of the
production service branch, head¬
quarters, Army Service Forces.
9
Later
material
and
the
directors
Deposit Co.
Baltimore,
of
banking
department,
James
on
the
from the
Jan. 14
Fidelity
Fred
the election
H. Doenges,
St. Louis,
Vice-President
Cashier,
the
item,
the
Detroit,
the
A
thereat
? Jan.
tional
Cal.,
appeared
Thomas W. Pettus. President of
with
to
the
be
is
the United
States.
director -of
a
Board
National
the
of
local
activities;
Mr.
associated
eivie
has-been
Union
prominent
Trust
Doenges has been
of
Cashier, head office, Sec¬
sistant
retary-Treasurer.
Sixteen
new
members were admitted to the
Exec¬
made
was
the
promotions
John
Black,
Burch
the F&D's field organization since
1926
and • for the past
18 years
club's
in
annual
discussed for
to be
banquet,
February.
Ewart
Yonts>,
James
and
F.
v
Mack
,
*
of
the
13.
Mr.
of age.
in
of
V
■
:
"
••
?
l'1
-
is
•
1
elected
Bank
42
on
years
Formerly Vice-President
charge
est
t
Seattle,
Carlson
of
operations,
stated that he is
to
men
it
is
of the young¬
President
of
a
one
be
metropolitan
large
7.
was
National
Commerce,
Jan
'■
,
States.
in
bank
Andrew
the
Price,
entire
the
of
the
the
cial
loans
active
institution
guided through
which
83
J. W. Max¬
of
years
has
12-fold growth
a
in the last 20 years.
well,
he
age,
dean
of
Washington bankers, becomes
Honorary Chairman.
Appointed
the
office
new
of Vice-Chair-
of the board
man
associated
Boyd,
19i4,
since
in
agher,
were
Homer L.
with Mr. Price
Arthur W. Far-
and
charge of
public
rela¬
the
At
Union
annual
Bank
meeting
Trust
&
Co.,
of the
of Los
Angeles, Cal., on Jan. 8, directors
of
the
bank
were
returned to
H.
from
C.
executive
directors
by
recommendation
after
the
bank
on
the
Price
Mr.
of
the
in
the
of
structure
voted
were
outside
branches
of
These* changes
Seattle.
stockholders'
annual
Jan. 13, at which all
directors were re-elected.
meeting
on
•
Board
remains
He
Directors.
in
of
C.
organization.
McGranahan, Vice-President, was
assigned supervision of commer¬
who made the announcement, was
Chairman
First
placed
in
Phillips,
was
charge of loan administration for
*
,
'
Carlson
tje'
*
Lawrence M.
of
the
has
Bank
been
®
■
.
Arnold, Chairman
of
board
National
the
of
Seattle-First
Wash.,
Seattle,
reappointed
director
a
of the Seattle branch of the Fed¬
eral
Reserve
cisco for
Jan.
1,
Fran¬
San
of
Bank
two-year term, starting
a
said the
Seattle "Times"'
which credited the announcement
from
an
officer of the Seattle-
First National
since 1925, and
since
Chairman
Arnold
Mr.
Francisco.
San
has been
Association of Stock Exchange
its
1940.
Firms
To Hold Annual Mid-Winter
Meeting
annual mid-winter business
meeting of the Board of Gov¬
of the Association of Stock Exchange Firms will be held at
The
ernors
Atlanta, Ga.,
Feb. 12, 13 and 14, it was announced by Homer A.
on
&
Atlanta
the
is
Co.,
Regional
Association who
the
of
Governor
Hoyt & Co., New
urer. V ;7'7
7.
is in charge of arrangements.
Sidney
In addition to the executive ses¬
sions
the
of
each
held
Association
and
the
day,
invited
has
which will be
board
the
office by the stockholders and, at
organization meeting which
L.
York), Treas¬
y
■
V 7
Vice-
Exec.
Parry,
President.
>
Vice-Presi¬
Henry W. Putnam,
dent and Assistant Treasurer.
partners
William W. Peake,
Stock
James R.
were:
of
*
'
,
branch managers of all New York
Vice-President of the bank.
Gayler from Assistant Vice-Presi¬
dent
to
Vice-President;
Jack
the
>;«
,
t
Vilas, managing partner of Cyrus J. Lawrence & Sons, New York,
President of the Association. Wil-<J>' —
—~
Walter W. Stokes, Jr. (Stokes,
head liam E. Huger, partner oi Courts
Vice-President,
held
Other
Hofi
1915; Mr.
member of
a
Co.
Oakland of¬
office, was elected Second VicePresident, and Hugh Bergald, As¬
club and plans were
utive
since
Co.
Cashier
Vice-President,
in
with
Trust
&
City
J. O'Brien,
and Manager,
Wornall, Vice-President, to its
membership.
George
C.
Kopp,
Committee of the Baltimore Stock
is
Bank
of
ney
of
Stock
Exchange
Firms; member of the Governing
and
Directors
of
■
L.
Vice-President,
elected First Vice-Pres¬
Robert
W.
Armstrong,
was
ident.
City, Mo., elected Harry
Moreland,
President
of
Great
Lakes Pipe Line Co. and Kear¬
Association
Exchange,
fice,
Kansas
Sharp
Governors
of
Board
'
President
William
year.
Assistant
The
7
■
Street office, San Francisco,
elected President for the en¬
Assistant
of
Board
He
^
&
Dohme, Philadelphia; member of
the
the
National Bank in St. Louis.
joined the firm in 1933 and was
made a partner two years later.
He
to
E. C. Saunmons is
'
Carl
dents.
Assistant
Root,
Both
formerly were Senior Vice-Presi¬
of
more
Edwin
A.
Gumbinger,
Manager of Montgom¬
contract department,
elected
13
private hanlciiig
oldest
in
or
Jan.
£eher$V
■"
"•
.
Maxwell
Offi¬
Francisco,
San
years
suing
family to be! .ix>hhe^^l Directors of Mercantile-Commerce
Alex. .Brown
house
was
Bearing
20
Division,
American Brake Shoe Co., was on
Mr. Griswold is the sixth
tion of his
National
of
Bank,
Assistant
ery
the
20-Year
Anglo California Na¬
with
service,
15, page 227.
A native Baltimorean, Mr"; Ben-1
jamin has been connected With the
Anglo-Bank
the
bers of
changes announced
in our issue of
and
the
D.
41
tion and national accounts.
C. L.
Trust
President of the bank.
to
Jan.
annual meeting on
Club, composed of 189 staff mem¬
previous
regarding the bank's annual
meeting
the
bank.
of
13
*
*
vr.*
At the
Charles A. Kanter is Pres¬
of
item
in
sistant Vice-President,
elected William A. May berry, now
Executive Vice-President to the
ident
California
of
University
1931, has been appointed an As¬
Mich., re-felected all directors and
Board.
department since he re¬
Master's degree from
his
K.
Officer.
31, 1947, after 52 yedrs of service.
Alger J. Jacobs, who has been
identified with Anglo Bank's in¬
retires
named
was
and
cer
Trust
elected
$
of
Minahan
United
vestment
Bank
Vice-Presi¬
Assistant
to
(525)
Wells, Assistant Cashiers.
elected, except Fred V. Vollmer,
Vice-President, who retired Dec.
a
who,
Presidency, will continue
National
Assistant
Armstrong,
All other officers were re¬
dent.
meeting on Jan.
the stockholders of Manufac¬
turers
as an
of
is
W.
Robert
At their annual
13,
of
company,
4.
President
ceived
the
on
and
Leavell
*
Benjamin,.
vacancies
R.
in
at
Maryland,
Other action taken at the
additional
the
director.
as a
Sons; and Charles
meeting included
indicated
as
Union Trust
Co. of Baltimore, were elected to
Board.
Jan.
of
ensuing
from
Assistant Viceto Vice-President; and
Redford,
Chicago; he had been
in charge of the
of
Hoff, President,
existing
15,
on
President
branch
Roland
Alex. Brown &
fill
elected
•
issue of Jan.
our
227, Carl A. Birdsall
was
Trust Co. of
s-s
of
'''
:
the
President, to the office of Cashier,
succeeding Evan M. Johnson, who
has resigned;
Joseph F. Hogan,
Irving Manning and Milton D.
Vice-President
same
••!:
7
*
*
of
Treasurer of the company; Benja¬
min
H.
Griswold" III,
partrer,
W.
12,
Director
as
regular meeting
a
the
meeting,
re-elected the
director.
in
■•!•
At
annual
■'
All directors
for
proved the following promotions:
J.
P. Nathan, Assistant Vice-
Continental Illinois National Bank
operations."
of
*
As noted in
In November of that year
served
Jan.
on
.
CHRONICLE
Following the sharehold¬
meeting, the directors ap¬
year.
Board of Directors.
in July
he
the
at
FINANCIAL
re-elected
ers'
from the
of
&
length of service.
announced
Board
its Board Chair¬
been
ized in 1933.
The
completed nearly 42 years of ser¬
vice to the bank on Jan. 9, effec¬
post
the
the
were
his retirement
siince
man
Manager.
retirement of William W.
Waddelj, Assistant Cashier, who
National Bank
Bruce
of
,
7'.7;':77'7^:?7
executive
timore
THE COMMERCIAL
Number 4668
Exchange member firms in
the Southeast to attend a meeting
Secretary.
Board of Governors
Harold L. Bache, Bache & Co.,
Friday afternoon, Feb. 13, to hear
New York; J. C. Bradford, J. C.
discussions of the major problems
Bradford & Co., Nashville; James
of the industry to foe presented by
F. Burns, Jr., Harris, Upham &
Mr.
P.*' Boylari,
Robert,
Vilas;
Co., New York; Wymond Cabell,
Board of Governors;
C. Gray, First Vice- Branch, Cabell & Co., Richmond;
Manager of its St. Louis
followed, the
directors elected
Lyon Carter, Estabrook
Co.,
office under Vice-President Em- er, Jr., Guy S. Had sell, Emory F. the
following officers for the en¬ President, New York Stock Ex¬ Boston; William W. Cumberland,
mett M. Myers. The latter was re¬ James, Jr., Jack S. Kitchen, Chas.
year:
President, Ben R. change; Darwin Fenner, New Or¬ Ladenburg, Thalmann & Co., New
W. Koester and Allen
Morrow suing
leans partner Merrill Lynch,
tired on Dec. 15, 1947 under the
from Special Representatives to Meyer; Executive Vice-President,
York; Ralph W. Davis, Paul H.
retirement plan adopted by the
Pierce, Fenner & Beane; Walter
Davis & Co., Chicago; Richard P.
Assistant Cashiers.
It is also an¬ Herman F. Hahn; Vice-Presidents; W
Stokes,
Jr., partner
Stokes,
company in 1944.
J. C. Lipman, A. L. Lathrop, E. H.
nounced that City National
in¬
Dunn, Auchincloss, Parker & Red'■
*
Hoyt & Co., and Association Gov¬
7".Jr' ■77:-' '
P.
E.
Neuschaefer,
creased its capital by a 100% stock LeBreton,
path, Washington, D. C.; F. Dewey
ernor; and
James F. Burns, Jr.,
Three -new directors were added
Louis Siegel, J. W. Lewis; ViceEverett,
Hornblower
&
Weeks,
dividend, this increase taken out
partner Harris, Upham
& Co.,
to the Board of the Union Bank
President
and
Cashier,
W.
C.
New
of its surplus account. This makes
York; Albert D. Farwell,
former President
Association
of
of Commerce of Cleveland, Ohio,
the
invested
Farwell, Chapman & Co., Chicago;
capital
structures Neary; Comptroller, W. Watson; Stock
Exchange Firms and pres¬
at the annual meeting of share¬
J. Lewis Gabel, Bogardus,*Frost &
$2,000,000 capital, $3,000,000 sur¬ Assistant Vice-Presidents: W. J.
ently
Governor
and
Chairman
holders on Jan. 14, President John
Banning, Los Angeles; Russell E.
plus
and
$1,300,000
undivided Hunter, J. W. Luhring, R. R. Public Relations Committee.
K.
Thompson announced.
They
Newmark, H. N. Herzikoff; Assis¬
Gardner, Jr., Reinholdt & Gard¬
profits.
The
subjects to be discussed
are
Clarence W. Hannon, Presi¬
#
*
♦
tant Cashiers; Rod McLean, C. H.
will
include stock exchange ad¬ ner, St. Louis; Harold P. Gooddent of The Murray Ohio Manu¬
In presenting on Jan. 13 to the Landis, A. L. Somerindyke, R. F.
body, Goodbody & Co., New York;
ministration, Association of Stock
facturing Co.; Herbert P. Ladds, stockholders of the Third
M. Donald Grant, Fahnestock &
Na¬ Campbell, A. J. MacLennan; Se¬
Exchange Firms activities in be¬
President of The National Screw
tional Bank of Nashville, Tenn., nior Trust Officer, Don R. Cam¬
Co., New York.
half
of
member
firms,
branch
<& Manufacturing Co., and Leigh
his annual report, F. M. Farris, eron; Trust Officer, F. H. Kerns;
Benjamin H. Griswold, III, Alex.
office administration and
public
tWillard, President of Interlake
President, referring to the bank's Assistant Trust Officer, M. Morris. relations. A considerable portion Brown & Sons, Baltimore; James
Iron
Corp.
All other directors
personnel, said: "At the Decem¬ Newly elected to the bank's offi¬ of the meeting will be devoted to E. Hogle, J. A. Hogle & Co., Salt
were re-elected,,, j ,'
V. u
ber, 1947, meeting of our direc¬ cial family was W. B. Hill, Audi¬ questions by those attending and Lake City; Wilbur G. Hoye, Chas.
■$;;£$:; *' 'irvA
I?7yr7 <:
W. Scranton & Co., New Haven;
tors, Walter J. Diehl, who has tor.
answers by the speakers.
*
*
,7
;
The Board of Directors off The served the bank for several years
In
connection
with previous William E. Huger, Courts & Co.,
Northern
Trust i Co. of Chicago as
John D. Kerr, President of the
Vice-President
and
Cashier,
meetings of the board in other Atlanta; James' M. Hutton, Jr.,"
announced on
J^rjH 13 the promo¬ was designated Senior Vice-Pres-? American Fruit Growers, Inc., cities the Association has con¬ W. E. Hutton & Co., Cincinnati;
tion of two of fjpers,.: elect ion of
ident in charge of bank opera¬ was added to the board of di¬ ducted smaller discussion
panels Maynard C. Ivison, Abbott, Proe-five new officers, .and- retirement
tion.
S.
M.
Fleming, formerly rectors of California Bank, Los successfully. This meeting is the tor & Paine, New York; Thomas F.:
of one officer. Officers promoted
Vice-President,
was
designated Angeles, at the annual meeting of first time an entire region has Lennon,
Delafield & Delafield,
served
Assistant
Cashiers
Assistant
to
Chairman,
their
Vice-Presidents; Chester L. Brew¬
as
Edward
and
'
v
,
'
:
.
t
were
John V. Hass and Robert E.
Executive
Hunt, both in the banking depart¬
ment, from Assistant Cashiers to
Second Vice-Presidents.
joined
the
senior
audit
after
was
clerk
v
;
as
Hunt
entered
1934; and in
1943
sistant; Cashier.
the
was
bank
three
in
the
Assistant
Hinch-
Cashier
banking department.
Mr.
in
Diehl
The
bank
Daniel
Kenneth H. Morrill and
George J. Votja were elected As¬
elected
was
i
elected
relations.
All
addition to their
in
in that
Dec.
was
31
to
noted
in
our
Jan. 9, page 135.
O'Day,
:'
*
.
share
Feb.
of
the
the
for
issue
was
of
the
new
*
•
tution.
,\
•
The
Presidents
the
Francisco,
O&fc. Maris.
Mr. O'Day, who joined
in 1946, is associated
D.
McGrew, the
bank's New York representative.
Messrs. Morrill and Votja entered
the bank in 1942 and 1943, respec¬
tively. In the credit department,
Harry S. Temple, associated with
~the bank since 1944, was named
with
bank
Edward
Assistant
Cashier
and
ported
during 1947 was
Jan. 13 by Allard
re¬
A.
Calkins, President, at the annual
meeting of the shareholders.
At
United
the
a
meeting, shareholders ratified
pension plan, providing benefits
for
members
their
Assistant .with
of
retirement
their
the
in
staff
upon
accordance
compensation
and
to
United
Ernest
Gohr-
his
guests
Southern
Georgia
of
the
National
luncheon
at
in
for
position
of
other
were
an¬
was
Assistant
will
major
cities
and
Governors
Association
of
Firms
as
rence
Co.,
Witter
San
of
the
of
the
Exchange
VicerPresi-
York; C. Newbold Taylor, W. H.
Newbold's Son & Co.,
Philadelphia;
Frank C. Trubee, Jr.,
Trubee, Col¬
lins
&
Co.,
Widenmann,
Hans
Buffalo;
M.
Carl
Rhoades & Co., New
President.
Witter &
(Dean
Francisco),
First Vice-
A.
Loeb,
York.
With Heller, Bruce
(Special
SAN
to
The
Financial
FRANCISCO,
& Co.
Chronicle)
CALIF.r-
President.
'
dent r.nd T. S. Prideautf \nd J. H.
Smith, Bennett, Smith
Co., Detroit; Winthrop H. Smith,
(Cyrus J. Law¬
& Sons, N. Y.),
John
Laurence P.
Merrill, Lynch, Pierce, Fenner &
Beane, New York;. Gardner D.
depart Stout, Dominick & Dominick, New
Officers
Homer A. Vilas
M.
Scribner,
Singer,
Scribner,
Pittsburgh;
after
follows:
are
Stock
&
be de¬
respective homes which
18
Officers
as
Walter Johannsen
will
sessions
Governors
country.
In
Vice-President
their
include
Joseph
Deane
&
14,
business
was
the
as
of
Bank
States
of
nounced.
and
the
Mr. Orem also
retain
addition,
a
number
major promotions
elected
Citizens
New York; Leonard D. Newborg,
Hallgarten & Co., New York; F. W.
Pershing, Pershing & Co., New
the Gover¬ York.
noon,
the
be
to
States National Corp.
Executive
Thursday
will
Saturday, Feb.
Roy
L.
Orem,
Graham
Dukehart,
L. E. Williams
and
named
on
On
nors
newly elected Vice-
include
partment.
A
sessions.
which
band,
de¬
the
voted
meeting of that insti¬
Continued growth of the Anglo
California National Bank, of San
sistant Managers in the bond
the
Vice-
of Portland, Ore.,
announced Jan. 13, following
annual
dinner
at
7-y -77
y
National Bank,
of
been
honor of Mr. Vilas.
election of five
Presidents
pay¬
included.
Biltmore Hotel will conclude
ill
*
.
; ;
The
declared,
50
19.
.
succeed
of
stockholders
to
1<
Jan.
dividend
was
*
7"; 7V1'
*
■
a
record
office,
condition
Frank L.
re-elected and the reg¬
quarterly
able
are
Cashier
were
cents
senior lend¬
ing officers.
Sam H, Hunt, for¬
merly Assistant Vice-President,
liff, who joined the bank in 1940,
was
cers
ular
bank
men,
Jan. 14,
on
King, bank President, announced.
At the directors' meeting all offi¬
was
designated duties,
named As¬
James D.
shareholders
in
development.
Johnston,
respondent
transferred to the bank¬
promoted to Assistant Cashier.
Mr.
Vice-President
business
formerly Vicedesignated F^rst
Vice-President in charge of cor¬
ing department where in 1938 he
was
of
President,
a
shortly
and
W.
D.
Mr. Haas
1935
in
bank
charge
George R. Kantzler (E. F. Hutton
&
Co.,
New
v/ipp-President.
York),
Second
James A. Ledterman is now con¬
nected
with Heller, Bruce
Mills Tower.
& Co.,
42
COMMERCIAL
THE
(526)
only give my individual opinion
for what it may be worth./ •
.
the September re¬
felt
funding been of
At the end of 1940,
tanding less the amount of gold
held by the Federal
Reserve Agents as collateral se¬
circulation
curity,
to
channel into the Treasury about
90% of the net earnings of the
tainly it would not have advanced
ma consequently the decline re¬
cently witnessed might have been
System.
Inasmuch as the bulk
outstanding Treasury bills is
owned
by the Federal Reserve
System, this would seem to pre¬
clude any appreciable cost to the
Treasury as a result of the higher
yield on bills.
less severe.
of
Following
tember, the
$165,000,000,000, as against
as of Dec. 31, 1940.
taled
certificates
$75,996,000,000
the money in
$8,732,000,000, and
was
at the end of 1945 it had
increase
risen to
Thus we find an
$28,515,000,000.
circulation and bank
in
deposits of nearly $109V2 billion
from Dec. 31, 1940 to Dec. 31, 1945,
to which must be added $48,183,000,000,
being
the
redemption
value of savings bonds, or- an in¬
crease in liquid assets from these
three
items
in
the
of
hands
the
All of
our vast production facilities hav¬
ing been devoted to the war ef¬
fort, the pent-up demand for ci¬
vilian goods was enormous, and
with a combination of greatly ex¬
panded liquid assets in the hands
of the public and a serious short¬
age in commodities, it was obvious
that the stage Was set for a sharp
upturn in prices. Rising commod¬
ity ..prices are traditionally and
have been inevitably accompanied
%%
an expansion of bank loans
firmer interest rates and the
by
and
several years have been no
exception.
Thus we see that in'
past
1946, commercial, indus¬
agricultural loans re¬
ported by the member banks in
leading cities totaled $9,259,000,000, and as of Dec. 31, 1947, this
amount had risen to $14,658,000,-
August,
trial
and
I believe that as bankers we
000.
agreed that measures to halt
inflationary trend were essen¬
tial, and the Federal Reserve Sys¬
are
the
tem
to
came
realization that re¬
a
which would form the base
serves
for further expansion
would have
readily available
the case during
be made less
to
than
the
been
had
war
rate
broken
ing
Sept. 15. This was followed
on
12-month 1% ana
;he yearly rate has currently been
raised to lVs%-
level in order to finance the war
lowest
cost,
possible
?
the
Federal Reserve
System was ob¬
take large amounts of
ligated to
short-term governments on a very
low
yield basis, and the sales of
governments created reserves
upon which loans or investments
could be
expanded fiver or six
times that amount. Not only were
such
loans
sharply expanded, but banks
took
advantage
the
of
and Federal Reserve
Treasury
System's pol¬
short-terms and buy
maturities at a more at¬
tractive yield, thereby adding to
icy
to
sell
longer
debt
monetizatlon.
check7
it
continuing expansion
necessary that the short-
was
rate
*>^banks
additional
school
that
of
to
There has been
thought for
in
the
the Treasury of carrying
the
was
lesser
■of two evils; namely, higher debt
costs or continued inflation.
First Step Toward Firmer Rates
In April
toward
of 1946, the first step
firmer short-term
rates
made when the Federal Re¬
was
System discontinued the socalled "preferential" rate of V2 of
1%
on
borrowings secured by
serve
governments with
one
year or
maturity of
a
less. ////-
had been
pegged at % of 1%, and
permitting the bills to seek a more
or
less
that
.94
a
market level.
the
bill
of 1%
%
of
cade
true
time
from
1%,
rate
has
Since
gone
to approximately
which
would
considerable
indi-
increase
to
the Treasury for interest
as
•
'
the
is
not
Board
of
Governors
of
the Federal Reserve System some
months
v*
charges.
the case
this
Actually,
ago
invoked
the
au-
thority granted under the Federal
Act to levy an interest
charge on Federal Reserve notes
Reserve
issued by the reserve banks.
interest
ably the key issue, were held at
101 until Dec. 24, on which date
the System
Obviously^
or
bills,
n
a
other
any
or
serve,
charge
is
The
applicable
issues,
key
interest
mit
all
rates
level?
own
Reserve's attitude with respect to
to
seek
do
Please
understand
of income, in as¬
because of need
their
not, mis¬
most em¬
banking
sound
be
not
to
thought to reducing the risk
ard in the bond account?
give
haz¬
known
me; I am
During the next few months,
phatically making no such dire
prediction, and neither do I an¬ if the Treasury figures as reported
ticipate any such unhappy state in the press and various services
tax-exempts as such issues bore 6f affairs, but the possibility , oi are correct, we-may anticioate a
substantial
premium
and there such a condition is .one which possible reduction of some $6 or $7
billion in the national debt, and
neither you nor I, nor anyone else
was little or no threat to the level
of par.
Obviously, the Federal can definitely rule out. The un¬ the method pursued in this pro¬
results
bank's
the
lessens
and
a more
fully taxable, both bank-eligible
and ineligible, would be protected
at certain fixed prices. No sup¬
port
was
awarded the partially
contraction of member bank
reserves
certain
the.
in- ;
suming to some extent the market
lowed the trend, as they probably hazard accompanying the pure ase
Now, how¬
would, is it not possible that in of long-term bonds.
ever,
with rising income from
the best interests of the economy
loans and the additional risk in¬
as a whole, it might prove des rable to withdraw support and ner- volved in their making, might it
made it known to the deal¬
that
ers
by the
government issues owned
Reserve System,
Federal
commodity prices continued un¬
checked and commercial loans fol¬
through the Federal Re¬
mittee,
Reserve's
payment of such
the
certificates
entered'upon
of
aggressive
supporting operation
but at a sharply lower level. On
chat date the Open Market Com¬
Daying off a certain portion of
Treasury bills as they mature.
ability to make additional loans
or
purchase
additional invest¬
factor; in such a situat.on gram will undoubtedly have a
psychological reaction of pronounced effect on the govern¬
the
holders
of
savings
bonds ment bond market. To the extent
which
are
outstanding
in ' the to which retired debt is owned
amount -of some $51 billion, and by the Federal Reserve System,
which are demand obligations of reserves are decreased by 80% of
is—that at
issues was—and
such
the
is
price level they would be¬
attractive yield-wise to in¬
and they proposed to
let them find that level, whatever
some
come
stitutions,
ments.
might be. It is apparent, of the Treasury. A considerable pro¬ such amount, obviously resulting
that with the taxable is¬ portion of these bonds are series in a squeeze on the banking sys¬
sues
being held at a small pre¬ "E" which are held largely by tem. But, to the extent that re¬
mium, the partially tax-exempt those who are economically inex¬ tired debt is owned by commer¬
issues could scarcely decline to a
perienced and whose emotions aie cial banks or individuals, the net
level lower than theUaxables,
unpredictable. A debacle-in the result is,, a moderate easing - of
the type /of
Any effect resulting from the government bond market might credit. /Therefore,
it
course,
latest
The
step
the
program was
taken a week ago by
Federal Reserve
discount
the
.
defla¬
the
in
tionary
action
most of the
raising
in
banks
1%
from
rate
to
iy4%.
recent change
Policies
in the discount rate have repercussions from the hold¬
ers of such
bonds with conceiv¬
has, as I see it, been purely psy¬
chological, as the Chairman of the
Federal Reserve Board announced
/
the effect
What has been
ably 1; disastrous results
to . the
economy. In my own mind, I have
ownership of the securities to be
paid off will affect the govern¬
ment bond market, and should the
inflationary
current
trend
c,dr*-
that a change always questioned the des rability tinue, it would appear likely that
.debt': / Retirement / program:
would be made and it, therefore., of such heavy demand obligations the
Let us.use Treasury~2s of* Dec. 15, should be
fully discounted. Fur¬ of the Treasury, and so expressed would ,be of a deflationary', chary
1954-52
as
an
indicator of the
acter.;- Counteracting this, we have/
thermore, it seems to me that myself as far back as 1942
The
bank-eligible group and "Victory" with such a huge amount of short- answer then was that the bonds continuing gold imports which in¬
2%s of Dec. 15, 1972-67 in the term
governments held: in the could not have been successfully flate the credit base, but, if found
ineligible list.
In the spring of banking system, the discount rale floated on any other basis, wh.ch desirable/ this may be offset at
1946, the "Victory" 2%s, which has lost some of its, significance is probably correct. I. felt, per¬ some, later date by gold sterilizahad
been
offered
the previous as the
prevailing rates on bills sonally, that we might have had a tin or a raise, in reserve require¬
ketwise
various
these
of
mar-
weeks
some
ago
steps?
<
reached
December,
price
a
of
106%, and the eligible 2s simul¬
taneously
sold
at
March
that
year
of
first 'debt
bank
deposits
in
decline
a
and
declined
had
2s
and the 2%s to 101
reserves.
1946,
102 9/32,
to
19/32,
natu¬
ral reaction to the debt retirement
a
program.
Then
in
we
the
an
saw
announced.
I,
disappointed
upward turn
when
market
of the September
the
terms
refunding were
personally,
the
at
was
terms 1 of
the refunding as I had
antici¬
pated a more realistic approach
by the Treasury and looked for a
114 % note rather than another
certificate.
Apparently, the mar¬
ket generally had expected a more
liberal offering, as it proceeded to
move
coincidental
upward
with
the announcement of the terms of
the
refunding.
This
was
per¬
a
fectly natural move, for, as you
will remember, the maturities re¬
funded in September of 1947 bore
of 114% and llk%, and
undoubtedly most banks had them
coupons
their
books
at
a
114%
influence
basis,
possibly better, and in the face
the rising cost of operations,
they were none too enthusiastic
about taking a 1% certificate in
return for their maturing hold¬
ings. The result was that many
of the holders accomplished their
or
are
a
far greater
the market level of
on
longer
and
bonds.
pro¬
Before the end of the year of
the
the
saw
Victory Drive, wh'.ch
resulted
ultimately
of
we
certificates
and
in intermediate
Then
105.
retirement- from
ceeds of the
on
July of 1947, the next step
taken; namely, unfreezing of
the bill rate which, as you know,
In
was
I
System found it desirable to sup¬
port the market. As you know
the "Victory" 2V2s, which is prob¬
action, by agreement with
;he Treasury, in permitting their
holdings of certificates to mature
ather than rolling them over, as
well as the Treasury's action in
a
time
some
increase
national debt
the
it
of acquir¬
or
longer-
loans
moderate
a
./cost
that
so
the purpose
term securities.
.
credit base
Federal
the
been
Reserve
Federal
the
November
■ecent
advantageous for
so
to dispose of short govern-
ments for
ing
raised
be
would not be
•
to
order
In
the
term
.
.
Still anotner iac-
in contracting the
or
las
the upturn in Sep¬
market reversed its
rena and the decline continued to
the end that about the middle of
Effects of Federal Reserve
to maintain interest rates at a low
the
were
October by a
n
years.
all aware, in a spirit
cooperation with the Treasury
at
Is
12% -month
and
offered to holders of notes matur¬
As you are
of
nave
was
purpose
September of 1947, the
on
certificates
was
in
Then
public of $157,683,000,000.
the
and
has
which formerly were
will in the foreseeable future sell
below par, we have the assur¬ somewhat in the category of in¬
vestment trusts have now, with
ances of those in responsible po¬
sitions that they will not. Person¬ the sharp upturn in loans, aga n
ally, I have little or no doubt as returned to the status of commer¬
to the ability of the Federal Re¬ cial banks. This considerable in¬
crease
in the loan portfolio has
serve System to support the mar¬
ket at par or at any price level at naturally increased the proportion
which they might elect to hold it. of risk assets, and it seems to me
under
such conditions it
However, it is conceivable to me that
that we might reach a state where would be prudent to effect some
reduction in the degree of risk
it would become debatable as to
In
the
wisdom
of
supporting
the in the investment portfol.o.
bond market. Let us gay that over other words, when loans were at
a low ebb, there was justification,
a period of time the upward spiral
courageous
a more
lessening the degree
given to
of' market
stitutions
tne market would probably
declined
moderately—cer¬
ype,
.
■
against the amount of notes out-
that had
be
29, 1948
hazard. .Banking
undergone quite a change; in
Regarding
the
query
as; ic
whether
government
securities past several years, and many
What's Ahead in Government Bond Market?
(Continued from page 2)
Thursday, January
CHRONICLE
FINANCIAL
&
■
for
refunding
longer
by
reaching
maturities, buying
million
in
fact,
1947,
of
Treasury
million. From Nov. 26
1947 to Jan. 7, 1948, the Federal
Reserve figures show an increase
in holdings of bonds of over five
ties
were
sold
to
net
the
make
change a reduction in , portfolio
of $556 million.
This obviously
reduces bank reserves and, there¬
fore, is deflationary. The net re¬
sult, therefore, of the Federal Re¬
serve System's support of the mar¬
ket in that period, has been an
extension of maturities owned but
a
funds; I
proximately $1,800,000,000. I have
levy
Currently, the Federal Re¬
authority to raise
ments.
Board has
serve
such reserve.
26%.
id/Chicago—from 20%/to
If bank loans continue to ex¬
a
pand and if gold continues
such a
believe
of income.
the public
that some
plan such as I
to flow
in, I look for the Board to exercise
its existing authority, but if they
do SO' it probably would be ef¬
fective 2% at a time in order to
avoid
too
on
much of a shock to
and
the
much pressure
the banks at one time.
market,
too
another
Still
matter of serious
re- '
funding program, as in additionto the weekly maturities of bills
and the almost /monthly maturi¬
ties of certificates/ there are ma¬
importance is the Treasury's
I doubt
would accept
proposal in peacetime, but turing/or
5%
of
whether
requirements • in the
Cities—New
two Central Reserve
York
becoipin^ optional in!
$64,-/
the next five calendar years
have been ef¬ 203,000,000, most of which issues,
years in maturity of $2,062,000,000, fected successfully in wartime
bear coupons sufficiently high to'
but sufficient short-term securi¬
The possibility of a further in¬ make it almost a foregone con¬
as
May to September,
sales aggregated ap¬
following the end
Such
a
method
avoided demand ob¬
have
Reserve
$875
of
out
from
such
years
hostilities.
of
would
in
decline in holdings for the week
a
endeavoring to prevent just such
a
rise
by -selling- substantial
out
•
30, the
tax of 10% of income,
in installments over a
purchased $970 ligations and possibly helped to
bonds, but sold $255 counteract any bus.ness recession
million, for a net increase of $715 by providing purchasing power in
million in their portfolio.
Obvi¬ the postwar years. Under such a
ously, such an increase provided plan we would not have been con¬
the reserve necessary for further fronted with present-day fears of
expansion of bank credit in the reaction of savings bond holders
amount of $3% billion. However, in an unpegged government bond
for the week ended Jan. 7, this market. I was interested imreadtrend was reversed, and the pur¬ ing in the press recently that no
chases of bonds totaled $214 mil¬ less
distinguished an authority
lion, as against sales of $1,089,- than Professor Sumner Slichter
000,000 in shorter maturities, or had advocated a forced savings
Federal
long maturities as were necessary
to replace the income which they
were
losing.
The natural result
was
a
rising market despite the
fact that the Treasury had been
amounts
war
term period of
!
reduction in total.
;
of
own
-
t
In the week ended Dec.
special
returnable
* /
r
suggested
crease
could
in the certificate rate seems
to me to be
the
success
dependent largely on
of the deflationary
such
they are not, an additional raise
a-definite possibility, al¬
charges
becomes
though a further raise would com¬
plicate the situation as it would
further
weakness in ,the intermediate and
to the sub- longer-term issues, and
necessi¬
AH of this brings us
of
this discussion;
What
Is
the
Outlook
namely,
for
If I
were
to ask you
cause
tate the Federal Reserve
System s
the
taking further substantial amounts
of long bonds to protect the 2%%
gentlemen 1 rate.. I do not look for any'
.fu*~
Government Bond Market?"
:,4//
specific questions ; you ither increase in the certificate
to have answered,, I be¬
rate in the next several months
lieve 99% would reply as follows:
but it remains a future possibility
what
wanted
(1) Will long-term governments
go
below par?
,
::
:
(2) Will the certificate rate go
higher than 1%%?
-
(3) Shall I sell my long-term
governments and buy shorter ma¬
turities?
To
all of
these
inquiries I can
that the
Should Long-Terms Be
Sold?
Regarding the question of sell¬
issues
becoming-
optional will be refunded, as well,
as those definitely maturing/With
steps now be.ng taken. If they
are effective, then, in my opinion
certificates will go no higher, .-li
unquestionably
What Is Outlook?
clusion
a
program
confronting the.'
Treasury, and with a realization;
of the fact that current interest'
about $5,400,000,000
close to the maximum;
that could well be borne based on
may
our
of
be
present
national
-
income,/ it
would seem desirable to keep the
maximum
interest
rate ,at
2%%^
provided this can be accpmplished
undue inflation as the
without
price thereof,
v/
;/// •////>'
This matter of refunding is one
careful consideration, I
all agreed upon the
of
transferring / as
great a proportion as possible of
the nation debt from the banking
meriting
believe
we are
desirability
system to private ownership,,
the means of so doing and
but
still
governments and maintaining the current pattern
maturities, my an~ of urates... constitute a difficult
problem. Certainly,. the mapag,er
swer is that if a bank's portfolio
ment of a debt as huge as ours
is top-heavy in the longer issues,
then certainly consideration should is a. challenge to the ability, of
ing
long-term
buying shorter
.
Volume
the most able
have
THE COMMERCIAL
Number 4668
167
Problems ai id
The
conclusion;, therefore, it is
my, belief that the key to govern¬
ment
bond
prices and
interest
is
primarily to be found in
the trend of'commodity prices and
commercial
bank
leans.
appreciable deel
any
that
•mean
the
•
maturity
pay
not
is
look at some
Some
that
the government
profit
their operations. That is
Actually, the law was
on
true,
not
intended to
route
a
mail
service
prudent
which
on
management cannot develop suffi¬
cient passenger and cargo traffic,
Aeronautics
Civil
the
is
Board
industry,
loads,
have
we
greater value in
present uncertain state, andounpredictable as the future is, it is
apparent that the "one-way street"
traffic!
based
be
should
years,
sound conservative banking
tice
And
its
Over
Expansion
air
the
of
transport industry is that
over-expansion
the
petition,
And
was
created to
example, with five
of
routes
based
Report by PEP—The MacMillan
Company, 60 Fifth Avenue, New
York 11, N. Y.—cloth—$5.00.
under
public
necessity.
is
conveni¬
But in their
scramble for route mileage before
1he airline pattern of the nation
became
asked
frozen,
for
far
airlines
many
routes
more
business
sound
judgment
than
would
dictate, and have sometimes been
Economic Policy for a Free So-
ciety—Henry Simons—University
of
Chicago Press; 5750 Ellis Ave¬
Chicago 37, Illinois—cloth—
$3.75.
granted
development
rant.
Occasionally
route
would
policy
;
.
nue,
war¬
...
it
that the
seems
philosophy of the Civil Aeronau¬
tics Board is to create undue
Mono - Juris—A
Diagnosis of the
Pro¬
for the Guidance of our Po¬
Ills of Modern Society and a
litical
Actions
Economic.
and
through Reason—Joseph L. Tepper
-—
313
William-Frederick
West
35th
Press,
Street, New York
y.—cloth—$2.50;;;::;
i; n;
of Roofing,
Wallboard, Insulation,
and Allied
Building Materials—E.
Fifth Ave.,
New
York
19, N. Y.—Paper—
$1.50 (750 to public libraries and
nonprofit institutions).
W.-Axe & Co., Inc., 730
revised
contents
Plans—
Monetary
edition
which
of
half
nearly
the
published
are
three
com¬
can use
airlines
one or two
four,
or
public in
provided with
some
or
even
five.
is thus
service than
areas
more
Aeronautics Board.
Their task is
mission decades
But if
to learn.
New York 22, N. Y.—cloth—
be
granted
in
long-range principles
to
Savagery
Civilization—Nor-
William-
that
—
with
principles
will work;
best
v
accordance
interests
And six«ad-
schedule.
but not
airlines
by
communities
certifi¬
are
yet-being served.
is diminishing!
airlines
in
south
heavier
carry
loads
Press,
35th
West
313
in the
.
/
Still
Union
•"
ment
Challenge
Control*
The
to
—
Chamberlain—Harper
ers,
49-East
York 16, N;
33rd
.
Manage-
Neil
&
Broth¬
Street,
-
Transportation Tax
another
problem
in
air
involves the5 ex¬
istence of the 15% transportation
transportation
excise tax.
The tax
was
raised to
highly-specialized
skilled,
ally
airline
sengers
pas¬
safely,
carried
are
these
effi¬
And
experts.
trip is 200
mistic equipment orders placed bymost of the airlines during and
after the war, the
last year to take
industry began
delivery
of
number
moderate
is
Transoceanic air travel is not only
logical
the
of
a
tourists and
for
way
businessmen to sell the American
ideals abroad but it is the way we
Americans can learn to know and
appreciate the problems and
toms of other
cus¬
peoples.
Preserve your
air
basic faith in the
industry.
You are
transport
bankers and you will
lines
examine air¬
the usual banking
on
sound
for
plans,
basis,
good' judgment
efficient operation.
and
There is
guarantee that any individual
no
in the industry will suc¬
be sure that
But you may
air transportation is here to stay.
It will continue to grow.
it
more
essential to the economy
postwar
will
of
become
country and of
our
offer
passengers
greater travel bargains.
For the
rriost part 'these*- aircraft are re¬
will
Year by
year
that
planes
friendship then air travel
between
the two.
bridge
a
ceed.
overly-opti¬
the
to
tional
company
5,000 miles.
or
contrast
Furthermore, if mutual under¬
standing is the basis of interna¬
meteorologists.
trained
of
Every day 40,000 passengers pre¬
fer to travel with the profession¬
place
DC-4s
the
ered to us as
costly,
matter
where
are
the
what- seasons;,
routes
or
no
in
industry
the
and
sea¬
has tried to even up travel
habits.
world.
our
supplant
never
and
of
more
It
other forms
transportation, but it will,
in
time, overshadow them.
I
have
Convairs
the
checked
first
quarter travel of the same
of the
1936
DC-3s.
was
in
in
53.4;
it
1947
trend
seasonal
shows
trough
The
that the
is
are
Chairman
of the
12-
deep
expensive to
We hope thus tb lower
portionately
more
load
break-even
our
better
some
factor
opportunity to
our
and
make
and
Fairman &
he
Carter H.
was
Co.
Prior
connected
with
Corbrey & Co.
money.
is
Safety
paramount
the
getting better
or
that
To Be General Partner
Jansen
Noyes, Jr., limited part¬
effective Feb. 1, becomes a
general; partner
in
Hemphill,
Noyes & Co., 15 Broad Street, NevX
York City, members of the New
York Stock Exchange.
ner,
con¬
sideration at all times in the oper¬
ation
the
of
airlines.
We
times have cost
We withdrew
us a
lot of money.
DC-6 fleet from
our
voluntarily last No¬
after a fire in flight which
operations
crew
a
precautionary
injury
us
have
Co.,
11
Wall
added
Maxwell
Ohlman
to
research staff.
Silberberg to Admit
ship in the firm as of Feb. 5.
and tempo¬
Wm. R. Staats Co. Adds
(Special
to
The
Financial
Chronicle)
ANGELES, CAL.—George
H. Mecke is now with William R.
LOS
and for the as¬
it will give the public that
safe airplane,
a
&
Silberberg & Co., 61 Broadway,
York City, members of the
New York Stock Exchange, will
admit Abraham Rosen to partner¬
rarily is proving costly. We feel
that the price is cheap for the as¬
surance it gives us that the DC-6
is
Burnet
New
to curtail our
materially
E.
their investment
or
are
being modified now to eliminate
schedules
W.
Street, New York City, members
Exchange,
of the New York Stock
landing
to passengers
members.
The DC-6s
craft has forced
With W. E. Burnet & Co.
have
frequently had to make decisions
in the interests of safety which at
becoming a the possibility of fire, and will be
Smith, back in service shortly. The tem¬
board, once porary loss of the use of these air¬
said, "The trouble with the airline
industry is that there are too many
amateur weather prophets." These
figures indicate either that the
are
&
He
formerly with Gross, Rogers
Co.
thereto
The Convairs will
the capacity
f
of the DC-3s without being pro¬
shallower depression. C. R.
our
&
double
almost
hold
we
68.4.
was
become
Seidel
loads than; the planes
cargo
47.3%.
was
has
Morton
was
our
aircraft
new
present equipment,
and they carry greater passenger
and
with
replacements for
than
faster
Grimsditch
V.
man
associated
Co., 458 South Spring Street.
Both
find the vember
In 1937 caused
1946 it was 60.8, without
third quarter,
figure
our
order will' be deliv¬
on
quarter - of each«year against the Operate.
third
flying
they replace.
!
individual
months, to find- the Winter traffic
trend,
now
This spring the first of 75
sharp
fluctuations
Staats
Co.,
640
South
Spring
prepared to protect their Street, members of the Los An¬
regardless of cost. The geles Stock Exchange.
ready diminishing the effect of DC-6 will return to service shortly
poor
weather on airline opera¬ and it will be the best transport
With Chester L. Noble Co.
;
tions, and as we learn more about plane in use.
(Special to The Financial Chronicle)
The growth of Airfreight and of
overcoming weather problems the
LOS ANGELES, CALIF.—John
trend
toward
improved
winter international air travel is among
R.
Marsh has become affiliated
traffic figures should continue to the wonders of the postwar world.
Still under five years old, Air¬ with Chester L. Noble & Co., 510
accelerate.
this level during the war specif¬
ically to keep unnecessary travel •'vvMention, of
That need mo bring up' the
^ to" a minimum.
New
Y.—cloth—$4.50.'
W.
15%
information and the ad¬
ter vacation travel. But
they are relying more on the pro¬
petition, capable of earning money fessional meteorologists of the air¬
without having constantly to re¬ lines.
Substantial
technological
quest more mail pay.
and procedural advances are al¬
The
r
boat.
planes are in the air,
each manned by well trained and
seasoned crews and groomed by
expert mechanics.
By two-way
routes.
summer,
general com¬
Street, New York 1, N. Y.—paper
—$2.00.
had the time to cross the ocean by
American
be^
cause tot is the direction of win¬
winter than in the
•-
Frederick
moment there are
Flag airplanes
States
as
The airlines have
always been plagued by this drop¬ placements for less modern planes,
ping off of travel during the win¬ rather than huge additions to ex¬
Norjnan V. Grimsditch
ter, following summer and fall isting fleets.
American, for instance, took de¬ Joins Morton Seidel Co.
peak periods.
This is not true of
(Special to The Financial Chronicle)
all! airlines.
Routes in the south livery
on
most of its 50
new
Loo ANGELES, CALIF.—Nor¬
and
routes
running north and DC-6s, which will ultimately re¬
first, toward - the
of the public and,
secondly, toward the maintenance amateurs
of virile
tourist country
'o millions of persons who never
Angeles sunset and in the Cairo
dawn; across the American desert
and
across
the
North
Atlantic,
weather
foreign
And the speed of aviation
the world
opens
taking off, landing, or flying, in
all parts of the world. In the Los
In
There is good evidence that the
winter valley^in .seasonal traffic
year
is to be served, then routes must
bert F. Dougherty—The
cated
each
New York State
served
are
on
ditional
and the Interstate Commerce Com¬
Williams—Alfred
$3,50..
flying
and
501 Madison Ave¬
nue,
night spent
Atlantic.
one
our own
cities
period what it took the railroads
H.
time—John
the
for
only
Within
14
it
easy
A. Knopf, Inc.,
form
United
vice
lands than by encouraging
travel.
At this very
300
the
from
painless way of establish¬
dollar
balances
in foreign
ing
private auto-,
own
suffering
is
shortage, there is probably
no more
Europe, ciently and quickly, whether their
in
vacation
way across the
one, and they have
tried to establish in a very short
an
public convenience and necessity
book
!tWo-week
and all the carriers suf¬
first
in
here
fact, air transportation makes
it possible to spend 14 days of a
year;
This is done to eliminate'
rivalry for too1
any distortion in weather varia¬
little business.
I was gratified to
tions for a particular month. I am
note the report of the President's
quoting figures for my own com¬
Air Policy Commission, which rec¬
pany, American Airlines, because1
ommended a slowdown and more
they are most readily available,
mature consideration on the grant¬
but I believe they are indicative
ing of new routes.
of the industry trend.
Using the
I have great sympathy for the
first quarter revenue passenger
gentlemen serving on the Civil miles expressed as a percentage
not
Post-War
in 37
compare
The
it
or
hours.
fer from too much
1948 Outlook for Manufacturers
>
or
adequately by
gets
London,
to
with the result- that a With some success.
a city that can be served
: Rather" than
petition,
route
your
world
dollar
Safety
mobile.
sonal
sound
than
more
oversight
Or
In
<
award
riding in
same
get to Budnos Aires
airlines
The
airline
coin, we have an
greater opportunity to pro¬
and promote the peace by
^travel
•
and I will not dwell upon it.
the
According
Council,
year.
safer riding in a scheduled
plane than you are when
you are
usi:; You can now leave New York
at 3:30 p.m. and be in Los Angeles
a
193#* Act
the
the
upon
and
ence
Trade—A
railroads.
three
and
on
the
placing all; parts of our country
within only a few hours of each radio, pilots are keeping in touch
other, and by placing- all parts of with dispatchers on the ground,
of
whom
has
the
latest
the world within a day or so of each
sqme communities- have more air¬
lines than' railroads.
Boston1 is a
Bookshelf
gram
tect
good law, but it is not always ad¬
wisely.
For instance,
good
»
even
ministered
Man's
World
and
com¬
Basically, the law is
prevent.
that
the. Civil- Aero¬ 'with
which
nautics Act of 1938
Business
routes
of
application1 of excessive.
National
larger
before midnight Pacific time.
of Routes
Another serious. problem feeing
,
and
§'
on
dependence* upon. ay so - called
"pegged" market. -i:-' Vn'V;/:
Britain
guarantee profits re¬
for that 'purpose;';.;.:
use
prac?
fallacious
pot. ion, any
:
to
gardless of management, and cer¬
tainly neither the Congress nor
the American public.will stancl for
so
few
The "heed" clause is not
basket
a
government
management now, possibly
than any .time in the past
more
mail
rate to minimize the lack of other
bond market
which prevailed for so long, no
longer exists, and certainly port¬
folio
compensatory
to
of a similar
the reverse
case
compared with 34,397,-
as
previous
reservoir of far
a
1947,
826 the
in the transport
of them
bigger
most
transoceanic air
familiar to
of
story
is undoubtedly
in
At
Green¬
Today, with
and faster and able to carry
a
emphasize it as one of air trans¬
port's opportunities to help in the
cause oi: international amity. While
about 1,000 planes
of
conditions in their
The
to provide the
Iceland.
and
sched¬
travel
Guinea,
New
Alaska,
checks.
you
supply lines to vulnerable fronts
in
using Airfreight regularly for
speedy shipment of cancelled
the
The rev¬
enue plane miles flown
per fatal
accident totaled about 65,971,228
States were
planes in the United
taken by the army
emergency.
the
i
eral Reserve branches in 36 cities
are
But I would be remiss if I did not
recent war,
half of the less than 400 transport
established
in
are
greater public serv¬
ice because of Airfreight, for Feda
pared with nine in 1946.
beginning of the
land
that if the gov¬
mean
requires
ernment
over
guar¬
percentage of
the
empowered to pay more than the
With economic,
stock
men
accidents fatal to passengers, com¬
all gloomy.
Let's
of the opportunities.
part of our national security.
mean
w,-se.
-
to
carrier.
individual
eaen
antees the airlines a
adidtional anti-inflationary
; steps
which may be\ taken are
felt, I am definitely inclined to
caution
Board
the air transportation con¬
But
dition
the
people incorrectly construe this to
of any
counsel
permits
mail in accordance with the need
oi
look, as I have endeavored to il¬
lustrate, and until the full effect
•
of
of you
Some
performing
ward, when there were only five
Gloomy
Not
Today the airlines are an integral
no
uncertainties in the out-
t so- many
Aeronautics-
Civil
cert iicate
current
lVs% would go
hand.
on
inventories
smaller
tain
big step for¬
uled airlines made
Condition
varying rates for the carriage of
higher,
'and from a technical standpoint,
f it would appear that governments
:up to a five-year maturity have
.possibly adjusted themselves >to
such a rate,
There are, however,
rate of
which
1938
of
Act
probably
would
loans
and
wholesalers and retailers to main¬
ten years ago.
was
in the past year the
Even
travel.
Many airlines have sought
refuge under the so-called "need"
clause
of the Civil Aeronautics
present level of supported prices,
■and such leveling off in commcd -ties
many
single greatest con¬
our
in 1948 than it
restriction on
this
by
produced
load
smaller
and
costs
overhead
factors.
from tr;e
ne
to
but
sharply higher ope rat i n g and
inclined to question
am
is
which
loss,
'"programs',
^Granted
period
•months, I
tax
rapid increases
Its speed is widening
markets and enabling both
year.
^
leveling off of both within a
of,
say,
the next' :>ew
a,
excise
The
exists.
this
should be removed promptly in cern. Every department of an air¬
based on performance
themaiterest of promoting travel line interests itself in this prob¬
during the first nine months, is;
lem and it probably receives more
on all forms of transportation and
estimated at over $20,000 000. This
thereby raising general business concerted attention than any other
is- due not only to the costs of
activity, which
ultimately will in the business, with the result
over-expansion and the inevitable
pay
far more in taxes than is that it is many times safer to fly
retrenchment
Conclusion!
In
rates
of Aviation
Opportunities
longer
(Continued from page 4)
'/*" y
43
ably continue its
financiers, and will
profound effect upon our
future financial well-being.
a
/
(527)
CHRONICLE
FINANCIAL
&
surance
we
are
welfare
•
weather
matter
of
always
safety,
freight more than doubled in vol¬
during 1947 and will prob¬
ume
South
the
Spring Street, members o^"
Los Angeles Stock
Exchange.
44
THE
(528)
COMMERCIAL
Business and Finance
GEIST
President, Allis-Chalmers Manufacturing
Co.
'Despite the apparent favorable possibilities offered
by the new year, there are the many inevitable qualifi¬
cations which must be applied in considering the out¬
at
Even
fast pace
a
today, there
are
many
could
slow their
The
1943.
the
to
of
problem
shortages
tian
blinds; awnings; storm doors and windows; garage
doors; gutters and downspouts-; and spandrels.
The
The
large
Corp. Result
delivery of this basic chemical
with plants along the inland
economical
more
quantity
users
waterways system and the intra-coastal canal
for
in
most
industries, labor shortages for
some—will play an important part in
determining the course of the line
on the production graph for 1948.
A
great deal has been accomplished in
the face of these handicaps up to
now.
ords
Other factors which
sidered
include
possible
and
be
outcome
the
President, Aluminum Company of America
The
con¬
the
of
1948—whether
will
level off
abnormal
the
.
steel.
cial
These
are
market
it necessary
found
Over the
aluminum
has
plays-
permanent aluminum markets, even after presentday shortages of other materials have been relieved.
grown
ARTHUR
the
U.
S.
Bureau
during
the
President,
year
will
of
crease
costs
be
of
Mines
for
approximately
the
There is
first
aluminum
will
Thus it
than
more
appears
maintain
an
its
prediction, applicable at least for the
capital goods industries, can be made concerning product
demand.
Despite the production records set in 1947, the alumi¬
num supply
situation' tightened toward' the end di the
A
continuing strong demand seems almost a
certainty during 1948 with backlogs likely to rise during
the early months.i
v
rr
-."*• yf.
As
can
its
final consideration,
HARRY
:
Demand
we.
B.
would
for
HIGGINS
Nk J., to
the
Improved
-
seven
facilities
at
the
our
1
at
highs.
H. B. Higgins
way across
The
the Cararra structural
culite
tempered
this year.
An
.
all-glass
doors
the
in
During the
Pittsburgh Plate's Columbia Chemical Division, to¬
gether with Southern Alkali Corp., owned jointly-with
American Cyanimid Co., produced soda ash, caustic soda
and liquid chlorine in excess of its plant's rated capac¬
ities during the current year.
Expansion of the Columbia
Chemical Division's Natrium, W. Va., plant is under way,
and Southern Alkali Corp. recently started partial pro¬
duction at
at Lake
new-caustic soda and chlorine plant
located
Charles, La.
Situated
W.
a
on
the Ohio
for the. manufacture
Va., the company's Natrium-plant, operated
by the*
in
V
its
on
own
and
available
as
result
a
of
The
v.y/
merits has arisen
fact
all
during 1947
leading
consumer
of
general,
1946, with building construction
of the metal. Alcoa shipments to
various industries during
,
the
year
are
All other uses,
14%.
"
been
applied to approximately 500,000 farm
throughout the nation since World War II.
1947
also
introduced
buildings
Alcoa in
lightweight, heavy-duty
Roofing and Siding,
which is designed for use on factories," warehouses, stor¬
age depots, hangars and similar structures..
" :. \V.'
called
a
Alcoa
as
new;
J
indicate that 2,000,000 aluminum windows were manu¬
factured in 1947, as compared with 500,000 the previous
••
•
-V:''
A
' '
aluminum
.
■ '
]-
i
-•
'
"y'A
applications in building"con¬
noteworthy increases-dur¬
ing the past year include: heating and ventilating ducts
and fittings; nails; screens; molding;, thresholds;: Vene¬
have
or
better than 1947 for the following reasons)
have
banks
Local
deposits.
small
only
Government
)
War
• yy ■ -
shown
Our industries have, in most cases,'reconverted
(2)
from
war
workkwith most retooling and adjustments be*
'1
yi .
*• " •••
V:?;'*yyr
Our industries manufacture essential goods'!Suelii
J hind them,
'
(3)
!.
as shoes, clothing, office machines and
accounting'machines, film and cameras for hospital and industrial use,
y(4) This is
:
a
railroad terminal half-way between NeW
York
City and Buffalo, served by the Erie;
ware
&
prewar
Additional
good
(1)
Loan
Industrial
popularity of aluminum windows in
building construction, both residential and non-residen¬
tial, has continued and shown rapid growth. Estimates
year-
be
i
-.
The
Binghamton, 4-.,>.-•
-
Alcoa Roofing Sheet has found widespread acceptance,
especially in rural markets. This material, in fact, has
material
'
Midiand Trust Co.
intrigue and monetary problems. y..A.,;
(3) Inflation controls and managed currencies will
play important roles. My opinion is based pn local fac^
tors, and if they are average with the nation, 1946 should
estimated to be
follows:
Building Products, 19%; Transportation (all
forms), 15%; Cooking Utensils, 9%; Machinery (electric
and general), 6%; Household Appliances, 7%; Power
Transmission, 6%; Shipments to Fabricators for Further
Processing into products not identified to Alcoa, 24%;
as
i
outlook for backing, during 1948 is full
of questions marks:
"
(1) Because this is a Presidential election year.
(2) The world is torn by civil wars, economic chaos,
the trends established in
the
,
The general
products by in¬
parallel, in
Vy^V:'^:-y
F; MILLIGAN
HERBERT
Assistant Vice-President, Marine
'vy-'-
continued to
:>
Banks
spent in thorough
•
materials
raw
should, this very year, urge their clients to
study the exportable raw materials and finished goods
of other lands; many thinking people are working in
that direction, so that much benefit may well be real¬
ized in 1948.
Every dollar thus spent will be returned
manyfold in the creation of new buying power for those
products which we have for sale in return;*;': Ay.'\
metal; the many new
during and since the
of aluminum;
distribution of Alcoa aluminum
dustries
of
users
struction schemes ever conceived.
v
demand for aluminum
years
'/•■■
is
banker
a
abroad, should be encouraged
by their bankers to broaden their - Arthur S. Kleeman
purchases from other countries, for
if bankers do get behind such a movement, not only will
they build their own income, but they will be helping
in a world rehabilitation which is sounder, more normal
and far less costly to uS'than all the other world recon*
fabrication
many
research.
whether
from
records compiled by aluminum in
military and civilian applications during wartime; and
the versatile new alloys of aluminum which are now
struction which
River, 35 miles below Wheeling,
'
of the world.
country and
matter
the excellent service
the Paint
Pittsburgh Plate acquired the Forbes
Varnish Co. of Cleveland; Ohio, and subsequently estab¬
lished the Forbes Finishes Division. Virtually completed
at this time is an expansion program doubling the capac¬
ity of a seven-year-old plant at Houston, Tex.
•
greatly increased familiarity of manufacturers and
war
produce
year
•'
own
of sell¬
ing more of our own goods in other
-parts of the world. Importers, and
Despite the almost universal
war.
Other permanent bases of the
are:
store-front
Division, begun
in 1945 and continued through 1947, has increased sub¬
stantially our ability to produce a greater volume of
quality paint products than in any past year.
Availability of increased quantities of raw materials
during a year of record demand for paint products, plus
the addition of production facilities at the new
plant at
Springdale, Pa., aided materially in making 1947 a record
production year for the division.
>
program
•
artisans with the handling of the
and useful techniques developed
;
expansion
light metal
since the end of the
now
can
»
a
con¬
better customers, as a means
leadership in the face of soaring costs, which saw:
the company's wage rates increased approximately 75%
over the rates in effect at the
beginning of World War II.
glass and Her-
firm
'.
as
ment to make American businessmen
coa's
firm's
under
the nation will absorb all
program
what
of prices for most other materials, the basic
price of aluminum has decreased a full 30% since 1939.
This price reduction has been accomplished under Al¬
Glass Division should continue
all-time
Sheet.
into production shortly, and will
•
earn¬
hopeful or doubting as to the pros- :
pects for his ordinary 1948 business,
he can improve upon his anticipa¬
tions by getting behind the move¬
upsurge
plate and winodw glass plants,
modernization
as
above
at last to be
No
the
come
demand for the
f
particularly at the Henryetta, Okla.,
window glass plant, where capacity
has been doubled, is responsible for
more satisfactory inventories of
glass
products at the end of 1947.
o
With
demand
strong
from
the
automotive and building industries,
prime users of glass, employment in
|
and
over
me
our
Apart from the abnormal demand created temporarily
by the steel and iron shortages, a great and growing
.
|
be
relieve the situation.
Los Angeles, Calif.,' promises to rem*m
strong during the current year. The
65-year-old firm, with headquarters
in Pittsburgh, Pa., also is a producer
of brushes, cement and plastics..,
MM
these mill products,
port, Iowa, will
plate and window glass, paint, and
chemical products manufactured
by Pittsburgh Plate
Glass Co. in 27 plants geographically spread from New¬
ark,
for
otherwise
,
tribution to the economic welfare of \
case, has been chiefly caused
by shortages of other materials such as steel and gal¬
vanized iron. Alcoa's large new mill for rolling sheet
and plate aluminum, now under construction at Daven¬
President, Pittsburgh Plate Glass Co.
Demand
particularly in certain mill products such
year,
might say the new year
greeted with a reserved optimism.
Let us hope
potentialities materialize.
a
be
Co.
Trust
hope for bankers in 1948 if they will
of the public that we must try
estly to expand our imports
patriotic and profit-producing
in¬
certain that
leadership as
first-ranking non-ferrous metal of industry from the
standpoint of volume produced.
certain
more
new
a wave of understanding which seems
surging through the channels of Amer¬
ican business. I refer to the broader understanding in gov¬
ernment, in business and in the minds
to
the
A
a
help in furthering
1,140,000,000
peacetime-year record—for
than 39%.
more
KLEEMAN
Colonial
.
compared with 819,260,000 pounds in 1946—
as
the greatest previous
S.
Roy A. Hunt
•
preliminary figures
industry
pounds,
been
in
nine months of 1947, it is estimated that actual
produc¬
tion of primary aluminum
by the whole U. S.
as
supply is con¬
Actual reduction in the basic price of aluminum,
the
2,000 to approximately
published by
power.
prices of practically all competing materials
rising, has spurred aluminum's adoption for
thousands of new uses, and should continue to do so in
the future. All indications point toward a healthy growth
have
same span
A f.-j-
On the basis of
or
in the past few months than during the war. These
can't help but boost the total cost of a product.
for
uses
4,000.
"premium" costs in
black market prices.
to employ more expediters
during 1947
not gray
which aluminum
from around
lower grades
We have
in
esential part.
an
electric
than almost any other material as far as
their
earn
of
is expected that 1948 will be another good year for
This light metal is still in an easier position
cerned.
of years, the list of known commer¬
amounts
than $1,000,000
more
1,000,000 people
products
of
substitution
where
while
to
It
aluminum.
livelihoods either through the manu¬
facture of aluminum, or by
making
spent for warehouse stocks,
available, higher grade mateiisls
normally would be used increased
transportation costs due to the necessity of' speed and
importance of time in bringing in materials without
department shutdowns plus new sources of supply.
In the case of our firm, we- were compelled to spend
the
transmission
close
or
•
are
■
electrical
(ACSR), have gone into service, and today
nearly 2,000,000 miles of this cable span the nation for
the
,of
such
reinforced
ago, on the occasion of
years
•
the
anniversary of the founding
industry, it was pointed out
that aluminum, directly or indirectly,
gave employment to about 200,000
persons in the United States. Today,
to
fall—will provide an indication of
what to expect in the price picture.
Management is
just as aware as labor that prices are high and is constantly seeking to increase production to the point where
general price reductions might; be possible.
Let us examine what happens, for instance, when we
are faced with a continuing material shortage.
In order
to satisfy customers and avoid layoffs, we find a gradu¬
ally-increasing cost item called "premium" costs. These
climb,
In
the 50th
Walter Geist
vehicles
commercial
."'y -vV('-:"s
..."
conductor field, wide' acceptance of
aluminum building,wire has been an outstanding devel¬
opment in 1947.
Quantities of aluminum cable,-steel
systems.'
en¬
than
in
any
comparable
period of its history. .'.'vy
during
continue
highly-competitive light-metal industry
greater growth and diversi¬
a
Ten
production
it
the
fication
recovery.
of
aluminum industry,
now
entering its
topped all previous peacetime production rec¬
inl947.
The past year also completed a decade in
joyed
wage demands
application of the plan for
trend
nation's
which
third-round
the
European
The
must
HUNT
A.
for
one of the largest producers of automobiles is cur¬
rently using aluminum running boards, headlamp hous¬
ings and other light-metal parts in addition to the more
familiar standard applications.
Many all-aluminum streamlined trains, elevated and
subway cars, tank cars, hopper cars, and passenger cars
have been placed in service, and numerous others are
under
construction
for
various
railroads and
transit
60th year,
ROY
aluminum
and
Texas
Louisiana.
and
of
use
truck, bus and trailer units has shown a marked up-*
swing, and there is a strong trend toward aluminum
in tne passenger automobile field.
Forged or cast alum¬
inum wheels and rims for trucks and buses look particu¬
larly promising because of the advantage they offer in
reducing upsprung weight and lowering dead load. Ex¬
tensive investigations are being carried on by practically
all passenger car manufacturers
concerning further use
of aluminum to replace numerous iron or steel
parts,
as
bia Chemical Division and Southern Alkali
to
material
—
Speaks After the Turn of the Year
will be
speed.
solution
shortages
Thursday, January 29, 1948
A fleet of new tank bargees—the first ever
specifically
designed and built for the shipment of liquid chlorine
by water—recently was placed in service by the Colum¬
though the wheels of production are turning
potential developments which
CHRONICLE
Division, went into production dur¬
largest chlorine plant built as a single
unit east of the Mississippi River, the Natrium
plant
currently is expanding its chlorine production facilities.
In thQj electrolytic process
employed at the West Vir¬
ginia plant, caustic soda is a co-product of chlorine.
ing
look.
FINANCIAL
Columbia Chemical
(Continued from page 9)
WALTER
&
(5)
are
RR.
Western RR.-,
and
L'A
Hudson
All
and
.
local banks
the
.
Delaware,
..
-
RR.^ Dela?
Lackawanna.
">■*'
careful that industrial loans,
of increasing production.
are
used for the purpose
(6) Our labor in this area is one thing we are always
proud
to
the State
most
talk
or
homes.
about.
Absentee
average
is lower than
National average—our workers are thrifty-^
of, them
are
either
home
owners
or
are
buying
Man^
We draw workers from a wide rural area.
:-agement has been fair-in dealing-with the. workers, and
Volume
167-^ Number 4668
think
we
good
THE
labor-management
tinue.
relations, .will
t*!l
are
establishments—all of,which will create
more jobs.
Some
public works by local governments is in progress which
will
not
conflict
other
with
business
is
and
manenfvnatur^.'.•
of
a
per-
/"'•■
;vV.'
&
FINANCIAL
CHRONICLE
ating resources of all major distributing systems of the
region, recently agreed that installed capacity cannot
catch up with estimated needs until 1954, and then
only
if approved Federal power projects receive appropria¬
tions sufficient to carry on construction work as rapidly
as physically possible.
Population gains and the ingress
of new power-consuming industries during the war and
postwar periods have served to deplete reserve gener-
con-
'V
■;
(7) New industrial expansion is in progress and plans
being made by others for additional commercial
•
COMMERCIAL
A
(529)
television, industrial television, department store tele¬
vision, and educational television.
,
As television
being enthusiastically welcomed into
the family circle in 1947, radio sound
broadcasting cele¬
brated its 27th year.
More than 36,000,000 American
homes are equipped with at least one radio
receiver, and
of them have three
many
biles
,
was
four:
or
Five million automo¬
carry radios and millions of portable sets are in
Conservative estimates place the total of receiving
j In conclusion, if business in the nation looks as good
atfng capacity to
use.
at this time
the
sets in
the
fact
broadcasting? stations authorized or
since V-J Day bring the total to well
the
field
think
we
it does
as
will be
1948
to
us
in
Broome
our-:■ citizens;'*1
'•';*'?.>
G; NEAL
A,
'•
Vr
I.
it
as
r'.i".
»
''
■
v'
'»
■■
may. seem,
Electric Power Co. has been
princi-
:
.
The; decisions
of
residential
hydroelectric generation
cus-
D,
C., and
Iadjoining counties of Maryland re-'
\
suited ln; aiv combined purchase of
approximately $23,000,000 in electri¬
■
cal
appliances
in
1947
including
■70,000 radios and combinations; 6,000
electric ranges; 25,000 refrigerators;
7,000 television sets; 20,000 washing
machines \and many smaller appli¬
A. G. NeaJ
ances.
y
V '■'
v.-";
" u,:', Better;, lighting, more
air condi¬
tioning and cooking equipment are among the items
producing major increases in the commercial customers'
use
of electricity, with the result that we have ended
'
,
increase in kilowatt-hour consumpA
approximately the same growth as that for the
country as a whole. The maximum demand for elec¬
tricity by our customers reached a new peak of 427,000
kilowatts, 6% higher than 1946.
.'. Operating revenues increased 9% in 1947 compared
tion
capacity of their
one
service
our
during
there
were
and
almost
BRIG.
under
as
of Dec. 31.
We understand that
single-dwelling and apartment units
mext three years.
7
,
.
,
v
are
some
/
,
(i
,
..
The company's recently budgeted construction program
-for 1948 is estimated to cost an aggregate of $19,000,000.
Actual
expenditures during .1948 are estimated to be
$11.849 000.
We are planning to spend approximately
$23,000,000 on the system of the Braddock Light & Power
Co., a totally owned subsidiary, in connection with the
addition
71950.
of 160,000
This past
kilowatts of generating capacity by
the Potomac company completed
year
50,000-kilowatt unit, bringing total generating capacity
to a total of 505,000 kilowatts. 7,,
f; 777,A; ' ■■ 777.
a
GENERAL
force
in
sales and
but
revenue
said that
"is
expected
a
substantial growth
in the coming' year,
this
growth .wijll, .b^ accompanied by higher fuel,
and labor, costs along with high-priced capital
additions, makittg It increasingly difficult to maintain a
satisfactory return oft'V&jpital? invested with present rates.
material
T i■
.
JAMES
-
General Electric
Co.
Growth of the blectrib''utility industry in the Pacific
Northwest, which has been rapid both during and since'
I the end of the last; war, at the present time shows no
^evidence of any material slackening. Accordingly, the
vihdustry;is: anticipating
a
continued
,
Iiicrease in load requirements during
S1948' and isr:planning on new 'con'struction programs equalling
ceeding in
jf;
While
scope
or
those of 1947.
the. situation
varies
y
~
A 7,
1
;
North-
West, yery; material progress in The
expansion. of electrical distribution
7 systems
the
was made during 1947 with
result that many industry exec-
.Utives
-
«
expect
to
"pass
..
-
'
the
re-
James
-
H.
Poihemus
.
the ogre of power shortage now confronting the
region due to the rapid depletion of reserve generating
capacity, v.'--. *
•• -;>T
,
Members of the Northwest power
.
pool, which includes
Federal plants on the Columbia River as well as gener¬
I
<.
'
•
*
,
•
industry but
broadcasting has been
!
•
will then
FM
soon
may
be
re¬
move
'
:
'
it
of
an
radio,
industry.
an
increasing
number
of
cable
and
of programs;
ture.
a
a
radio
new
increased adver- V
tion,
David
Gen.
Sarnoff
The
on
a
new
industry takes form
nation-wide scale.
'.'r'T?'
::
.
:
l:
a
,
-
advances.,
In
for
the
'
'V'
1
combination of television, radio relay and
photography, represents another revolutionary advance ;
in communications.
Developed in RCA Laboratories,
ultrafax can handle documents, -letters, printed pages ;
and messages at the rate of a million words a minute,
and can transmit photographs, maps and other illustra¬
tions at the rate of 30 pages a second.
>
Speed, speed and more speed, is the challenge to
electronics. Through radio and the continued develop¬
ment of electron tubes to perform a myriad of tasks in
communications and industry, scientists and engineers ■
are
successfully meeting each challenge that leads to 1
Ultrafax,
tising support and vigorous competi¬
as
Teleran.
Employing radar and television techcomplete Teleran system will be demonstrated in operational flight tests conducted by the U. S.
Army Air Forces in Washington, D. C., in the near fu¬
will
as
as
niques, the
relay
facilities linking stations into inter¬
city networks; the general improve¬
ment
*
(
and progress
known
vas'ly enlarged audience; the estab¬
lishment
.:
speeds through mechanization.
"\
radar is making important peacetime ad¬
likewise has been made in perfect¬
ing the RCA air navigation and traffic control system
television
of
>j
Shipboard
vances
of the great¬
year one
art and
an
believe
stations^thr^pghoqt the country;
;
radio, pioneering never ends; it continually calls
initiative, faith and exploration in unknown fields. ''
scientists and research men of the industry who
throughout 1947 blazed new trails, true to the traditions
■...
Progressive radio men—scientists,
'ndustrialists and broadcasters alike—now think in terms
T
of
radio,
to
are
be
congratulated
'
ments.
upon
their achieve¬
;
ct sound-and-sight; they plan in
sound-and-sight. Tele¬
vision charts their future; it will be the dominant factor
in the Radio of Tomorrow.
Especially to be commended are workers on the pro¬
duction line through whose craftsmanship the finest ra-
j" The Republican and Democratic National Conventions
able to the
campaign in 1948 will be outstand¬
ing events on the air—in both sound and sight. The larg¬
est number of broadcasting stations ever assembled to
the efforts of manufacturers, en¬
gineers and broadcasters, it is possible for the radio
voice of America to travel afar and bespeak freedom,
dio and television apparatus
end the presidential
cover
in
will be
on
around
the world.
Television
was
one
of
-v.
the main
reasons
GENERAL BREHON
i
■;
why Phila-
-There
along
the
Potomac
the
to
the
New England, will be within viewing
range.
as
a
new
means
of
Factors
and
vote-getting, will
,
go
tics
more
.
reasons
many
to view the year ahead with
at the same time, possible .sudden eco¬
may tend to upset the present favorable
that
may
have
great
a
industry in 1948 include the
continued high cost of government
effect
;
on
continued
with
into action on a broad front. Before the
polls close on
the 1948 presidential election, television will reach sub¬
stantial areas in at least 21 states.;
having more than
two-thirds of .the national total of electoral votes.
.^Television is likely to do
|
outlook for the company.
Atlantic
Adirondack?
are
optimism, but,
nomic changes
network operation, was chosen as the site of these
politi¬
cal
conclaves.
Millions of people
from
SOMERVELL
President, Koppers Company, Inc.
delphia, with three video stations capable of being linked
by coaxial cable and radio relasTs with other cities for
Seaboard
;
...
through
friendship and peace.
Philadelphia where ace news commentators
duty to describe the proceedings for listeners
;
in the world is made avail¬
American people.
Further,
national conventions will be linked with the micro¬
phones
high
taxation; of
business; the possibility that the "aid
to
Europ^!'
program,may
Government
bring about
will
which
controls
■
scarcities
cause
to revolutionize poli¬
of
basic
some
com¬
modities; and effect of present infla¬
tionary trends on markets and the
inadequacy of depreciation reserves
with mounting construction costs.
than
sound broadcasting did.
Political candidates
have, to adopt new techniques to benefit from visual
radio; their dress,, their smiles and gestures, all will be
important. How they look, as well as what they
say,
may
measured
status of
season occurs.
enlargement, however, will not
radio
ahead more rapidly.
1947, more than 16,000,000 radio
receivers and 185,000,000 electron tubes were manufactured by the radio industry as a whole, while the allied
phonograph industry turned out millions of disks.
;
Factors creating the promising out¬
look for television in 1948 include:
vision
r; move
'
the
to
FM
It is estimated that in
im¬
each
area
will have 400,000
sets;
receiver, the New York
'
:
au¬
>•
,
Broaden
Research Program
,
in
consumer
date, within a year tele¬
prices will approach the
$500,000,000-a-year industry, and it will grow
in size with the years. For the first two
years of com¬
mercial television—1947 and 1948—it is estimated
that
the American public will spend
a
approximately four times
as much, for television receivers as it did
for broadcast
receivers during the first two years of sound broadcast¬
ing—rl921 and 1922.
,
<
:
•
During 1948, Koppers will continue
to devote a large amount of. research
effort to the development and im<
foresee
:
opoortunities for television to extend into
many fields aside from the home—for example, theater
•;
.
Lt. Gen. Somervell
.
1947,' Koppers' ■ Chemical
showed outstanding growth, starting
;,
;;Tr
7 /.
c
;
•
production of a number of important chemicals ;for indus¬
try and adding three? plants ,to the operations of that
•>i New
.•
-•
.
■
•
A
.
•
•
„
■ >;•
•
•.
r>:
facilities for producing polystyrene, an important
plastic, and other chemicals and chemical compositions
are under construction at Kobuta, P.a., and will be put
operation in the first half of the year.
also will devote a considerable amount of
research during 1948 toward development of, processes
into
Koppers
for
making synthetic' liquid fuels and other chemicals
We have done some important work in this "'Ir
from coal.
line during past years.
A considerable increase in this
•
I
j®
In
Division v.
provement of chemical products.
division. ■.'
>
-
the
by the time the 1948 peak
Catching up with
program for distribution system
be television's
history
dience will be about 2,400,000.
Based upon the progress to
7 business
load
and
in
It is hoped, that these restrictions
moved.
SARNOFF
that
new
the
science,
figuring six viewers to
the
construction
of
1948
estimated that the New York
over
"hump" in meeting new
requirements for this end
public
progress
,
,
/
the
fic at increased
determine, to an appreciableextent< their popu¬
larity. The eyes of the public will be upon them.
Eighteen television stations now are on the air with
regular programs. In 1948 there will be
approximately
50 television stations or more in
operation.
Between 150,000 and 175,000 television
receivers are in
use. By the end of
1948, a total of approximately 750,000
is foreseen, and it
may reach 1,000,000. By that time, it is
-'
What among different utility organi-
■nRations, seeing the Pacific
s
may
ex¬
some-r
in
in
est
Television,
PQLHEMU5
President, Portland
to
radio to handle traf-
DAVID
make this
■
A In conclusion,,; it may
increasing generating
So strong will
53,000
-
tions.
pact as a major economic and social
con¬
planned for the
.
perceptibly by restrictions which forbid musical
broadcast by standard stations and net¬
works to be transmitted simultaneously over FM sta¬
of America
;i;vv;
by the American competitive system of pri¬
vate
initiative and free enterprise,
the fast-growing
television industry in the United States leads the world
in every phase of its development.
v
struction
in
slowed
Favored
6,000 housing units
13,000
stations
programs now
President aild; Chairman of the Board, Radio Corporation
per
area,
1947
e
,
value
number of
:.•/_/
••
,
.
completed
New
service
over
These statistics, revealing new records in
production,
problems linked with expan¬
illustrate the tremendous industrial and commercial acsion:,,; These include new financing, the. rising costs of; V
tivities which thrive upon sound alone, providing em¬
material and labor, shortages of fuel for steam-electric
ployment to hundreds of thousands of persons and in¬
plants, and possible adjustments in rate structures to
formation as well as entertainment to all America. Now,
preserve adequate returns on investment.
While these'",, with
sight added to sound, the potentialities of radio
problems aire immediately troublesome, most power men
service to the public are greatly multiplied.^Vv" *:?. ■
view the continued increases in business volume as 7 a A
International radio-telegraphy continued its. advance
fundamentally healthful situation assuring long-range
in 1947 with many wartime developments harnessed to
stability of the industry.
' ,v.
commercial service in world-wide
.-.Looking ahead into 1948, we find that government
employment has stabilized at around 220,000 for the area,
compared with 150.000 in 1940. No appreciable change
is expected other than perhaps a small increase due to
Agencies, such as the Securities and Exchange Com¬
mission, returning to the area.
It follows that govern¬
ment payrolls should be sustained throughout the year
Which, we expect, will have a corresponding effect upon
'private employment.
fj;ln
in
(frequency modulation) continues to demonstrate
the
_•
industry-wide
hydroelectric projects
own
placed
j
war.
FM
its
than 65,000,000.
other concommitant
15%*
dollar
the
more
1900, or more
operation before
than twice
capacity, utility managements in 1948 will be confronted77
with
Employment and wages were up
ton added to fuel expense was
15% above the previous year and others items reflected
.a similar change.
VV-'/"'"v
14%, the
on
■<>
development on the Colum¬
bia, not only because of their inability to compete with
tax-subsidized projects, but also, because the use.
of power has grown so tremendously that the construc¬
tion ..of low-capacity plants on smaller
streams sus- \
ceptible of development by private enterprise would not ;
significantly alter the power shortage problem.
:
^
:;
With 1946, whereas operating expenses, taxes and depre¬
ciation increased
pre-empted
the Columbia
main
-.Aside from the basic problem of
the year with a 9%
has
the United States at
the
35,000 .commercial customers.
..
Government
since the advent of Federal
pally dependent upon the individual
decisions of 210.000 residential and
;
of
creased the
•
.
-
Federal
the
tributary streams, with the result that
the region is almost completely dependent upon the
national Congress for a permanent solution to the power
shortage problem.
*
*
Privately .managed .systems have not materially in¬
the, .Federal Government had
little affect, upon,. the changes in the electric power
industry • in the Washington, D. C., area in 1947.
Of
course, the payroll of the government employees is a
:
major.source of income in the area,
but, omitting this, the use of elec¬
tricity
supplied
by
the
Potomac
Strange
that
River and
President, Potomac Electric Power Co.
-V
a degree greater than the average for
country at large.
Complicating this problem for
business-managed distributing systems of the region is
County, N. Y.,
good year for banking and for
a
45
activity is slated for 1948.
I PAn + iniiOfl
4G
THE COMMERCIAL
(530)
Speaks After the Turn of ihe Year
Business and Finance
(Continued from page 45)
in the
increase
'
.
'
use
of Inconel because of
mineral
the ability of
nickel-chromium alloy to withstand the high
temperatures and corrosive gases. The same. alloy has
also assumed further importance for heat-treating equip-
International Nickel
of Canada, Limited
President,
Company
World
deliveries
of
STANLEY
C.
ROBERT
and
The
Canadian
nickel in all forms for
will be in excess of those of 1946, although
considerably under the peak wartime high reached in
the year 1943.
' :
Canadian • nickel
deliveries this
the year 1947
\
in. all markets will
approximate
about 50%
at
s
)
1937.
over
Qperations of International Nickel
'Copper
Cliff, its mining and
j*
center,
were
tinuing labor shortage.
Nickel prices in the United States
and the United Kingdom remained
•w
^
unchanged
Nov.
21,
during
the year.
On
The International Nickel
announced a re¬
Company,
Inc.,
duction
of iy40
Robert C. Stanley
per
price for refined nickel in the United States. The reduc¬
tion becomes effective Jan. 1, 1948, simultaneously with
a like reduction in the United States import duty on re¬
provided for in the recently signed recipro¬
agreement between the United States and
Canada. The prices of nickel outside the United States
are not affected by the duty and remain unchanged.
fined nickel
Steels
Stainless
;
y
largest consumer of nickel during 1947 continued
to be the steel industry. Production of nickel-chromium
stainless steels in the United States accounted for a ma¬
The
of this consumption. The applications of
nickel-containing stainless steels in the various indus¬
jor
portion
diversified. The
chemical, petroleum and transportation industries re¬
main important users of stainless steels.
Popular and
well-known uses are in such home appliances as sinks,
refrigerators and deep freezers, as well as cooking uten¬
sils.
Likewise, stainless steels serve in industrial and
restaurant equipment for the processing and handling of
tries
continue
to
be
numerous
foods and beverages.
The
so-called
and
triple
Alloy
have
molybdenum steels of the prewar standard types
also reestablished salient positions in industry.
growing .utilization of high
The majority of these steels
contribute materially to the
over-all consumption of nickel by the .steel industry.
They are used principally for engineering applications
to permit appreciable reductions in deadweight.
Indus¬
tries which have found their use of advantage include
transportation, materials handling, earth moving and
heavy equipment. It is expected that as more consumers
become familiar with the savings accruing from con¬
great
interest is the
strength low alloy steels.
contain nickel and now
their use as a replacement
the carbon structural steels will increase.
structions with these steels,
for
Increases in the use of heat
ever,
nickel for plating. How¬
the
consumption in all fields has been limited by
scarcity of other base metals for fabrication. : ;\, :\s
being used experimentally for gas turbine;;
.The automotive industry with increased plated area"
wheels, forged turbine blades and general sheet metal f
and specifications for heavier deposits is still the largest
applications for jet engines. Jy:. v'*,v:,■>.f ^
consumer, although demands from all other fields have
There was an increase in the application', of rolled'^
increased. £7;®,^/
nickel, Monel, Inconel and nickel-chromium stainless i'
I 'CbnsiderabJe. interest-.has been aroused in steel pipe
steels as a cladding for ordinary steel.- -Included ^ were
bped /With electro-deposited nickel, which was a result
applications in such diversified industries as brewing f ob a; wartime development. ; More attention has been
and the production of pulp and paper.
given to the salvage of worn and mismachined parts by
is
which
saving on
.
the year
Despite the fact that new constructibh^^^iAm^teaa ^
nickel-plating on aluminum to simplify
and improve prevailing practices.* This will expand and
shipyards was considerably curtailed
the conversion of wartime vessels 'to .pea"o^|l^yii^;pcair
diversify uses, which at present are largely in domestic
tinued foprovide^an/putlet for; this
appliances and blunnbing fixtures.
!■ *
Plastic and other non-metallic units with a nickel
produced by International Nickel.f'SJ
Chemical and food industries -in Great J^itain,,' France
deposit posses increased rigidity and strength, yet retain'
and Belgium have placed substantial orders tor<.pure
lightness of construction.
In addition, the nickel pro¬
vides resistance to abrasion and moisture absorption.
nickel, Monel, Inconel and nickel silver., Applications
include caustic soda equipment and large' salt priers.
.Nickel anode consumption is still maintaining a steady
Further developments have taken place with' hickelhigh level in the United Kingdom,- being some 100%
clad
particularly
steel,
industry..
methods for
in
connection
with
thefsoap
- greater than prewar.
.
Outlook
expanding field of electronics has brought -many
uses of nickel and nickel
alloys, such as in tele¬
The
new
The
vision.
hot
of
the
tanks.
For the sheathing of heating ele¬
in electric cooking ranges, Inconel continues its
in
has
been
a
continuing
commanding position.
The
use
of Monel for
:
"Ni-Rod,"
of
There
has
been
nickel-chromium
President,
the many
a,continuance
indicates
The year
*x J '"
Alloy£ ' *
important growth in the use of
electrical resistance materials.
The
an
not be
growth.
\
i
I.
■
■
THOMPSON
K.
Bank of Commerce, Cleveland
Union
1947 has bpen a generally good one for most
greatly different than that in
1947, except for the possibility that
utilization of electrical energy in the home
domestic appliances, water heaters . and ranges, has
largely responsible for this
industry
business, but it has been a disorderly year economically
and we are going into 1948 with many of the upsetting
factors continuing. I think that the picture in 1948 will
increasing
been
in
business
for
serves
showing made by the nickel
JOHN
a
Electrical Resistance
-
favorable
:'„r
welding rod for making ma¬
welds in cast iron, was expanded remarkably
use
'
for
nickel
which
1947.
There
ments
outlook
encouraging
industries
water storage
steels, containing nickel,
continued to be extensively
single class of engineering alloy steels.
Two notable"
applications of comparatively recent origin for these
alloy steels have been for structural aircraft tubing, and
for hot coiled and leaf springs by the railroad, automoile
and tractor fields.
Nickel-chromium" and nickel-
Of
of the increased consumption.of
throughout industry.
Steels
employed this year, particularly in the automotive, con¬
struction, railroad, tractor and machine tool industries.
Their tonnages, as in 1946, were again the largest of any
*
creep-strength properties at red-heat temperathe United States International Nickel, has
developed another high temperature' alloy, Inconel X, <;■
alloy
chromium and molybdenum,
■"
1946 volume of pickel for
plating purposes in the United,States included purchase^
for re-equipping the facilities of the plating 'industry,
1947 sales will be still higher and are ,a :truer indication
•
In
chinable
'
<
Nickel
Although the record high
:
•
their high
tures.
Nickel-Plating V-'>■■■■'
/'•
blading material for
on
trade
cal
"Nimonic 80," con-
alloys, particularly
the standard turbine
to be
One of the standard uses for Monel for more than a
building up to size with nickel-plating, thus
quarter of a century has been on board' ship for appli-:. replacement parts; ;/\
<\!:
cations ranging ifrom pump parts to hd&e^yequipment.',V.
.There has been continued research during
in its
pound
magnetic detector utilizing
,
:
substantially
higher than in 1946,<despite a con¬
smelting
has employed the airborne magnet¬
revolutionizing prospecting methodsi
The heart of this device is a
jet-propulsion engines. These alloys, developed by Mond Nickel's Development and Research De-r
partment, are employed for this application because of
;
;pf-\ the
industry's greatest
peacetime year'of 1937, and ship¬
ments
in
the
United States and
Canada
will show an increase of
those
is
a
-
British
all
.
year
Nimonic
The
<
deposits
which
high permeability nickel alloy core that is periodically
The changes in the intensity of the earth's
ment. A potentially large market for high nickel heat .;? saturated.
magnetic field alters the output from this device and ?is
resistant alloy steels for jet engines and rocket develop¬
continuously recorded, making possible the detection of
ments is indicated by the continuing search for materials'
magnetic anomalies in the earth's surface.
,
to withstand higher temperatures.
^v,
tinued
.
ometer
*
this high
Chairman
Thursday, January 29, 1948
FINANCIAL: CHRONICLE
&
we
may
of
-
have
further development
the
a
dangerous inflationary ten¬
dencies that have been in existence
"
Cupro-Nickel Alloys
for
high postwar"clemand for nickel by: wrought cop¬
per base alloy manufacturers has continued..
It is esti¬
mated that 1947 purchases will compare favorably with
last year.
The nickel-silver alloys are expanding their
markets as base metals in the silver-plated tableware
the
made
-The
past -few
rapid
years
progress
in
and which
1947, with
resultant dislocations,
i
The
be
a
world
serious
which
Ihe
situation
one
continues
to
and all of the things
United
States
has
done:
field; for springs in electrical and communications equip- . : and is planning to continue to do to
ment such as the dial telephone system;1 and in slide;
be helpful, in Europe particularly,
fasteners.
The 70-30 cupro-nickel alloy has proved its ; with
serious, effects
on
our- own
position as a superior alloy for heat, exchanges and is v economy, may not result in our idea
now being more widely employed in marine and coastal > f pf ;"Peacfe op Earthv
;
■ *
installations, power stations, and the petroleum industry.
The. increased demand for food¬
Cupro-nickel for condenser tubes and other nickel alloys
stuffs and other products for our
for various purposes continue to be employed in the '
own people, together with the prod,
large shipbuilding program now
Kingdom.
^
-Coinage
and corrosion resistant cast
in hand in the United
K. Thompson
;
,
shipped to other countries, will probably con-;
create shortages and increased prices, which will,
ucts to be
tinue to
,•
f.-jj-
?
J.
undoubtedly result in further 'wage demands and fur-,
ther increases in prices.
.'/.«/(ybfp;
general trend 'has- been
It would not be surprising >to see .our .national income;
nickel alloys for coinage
purposes.
Many of the countries which -employed • higher in 1940 than in 1947, but all of us should direct;
^
Postwar activities both in the United Kingdom and on
emergency alloys during the war have already returned \ Our efforts towards seeing to it that' ^the inflationary *
v
to the minting of nickel-containing coins, while others.
the Continent of Europe point to a continuance or an
price-increase-^iage-ancrease spiral: will'and , in 1948,?
extension of the use of nickel alloy steels. A point of,
contemplate an early resumption -of the use. of. nickel
■ Some reducUon ot;ta^es. ih4948:XVbuldbe'h^lpfyl in the
r
interest in this connection is the extensive use of nickel
and nickel alloys for their coinage.
.V\
general -situation.
/;
jyv
*
India and the United Kingdom are replacing silver
r 'There were substantial
changes5'duririg theyyear 1947
/'* steels in the British Railton Mobil Special racing car,
which ^exceeded a speed of 400 miles an hour at Bonne¬
with pure nickel and cupro-nickel, •respectively, as the'.;., in the supply and demand and cost bf money.
Triple
ville Salt Flats, Utah, in September.
VA" corporate bonds which were selling (On a yield basisstandard coinage of those countries.^ ;Spain
recently
Nickel steels are being employed in lightweight trac¬
of .approximately 2.60% at the beginning Ofrthe year,
adopted pure nickel for the;5 and 1lk peseta coins. :New
tors which are particularly important to United King¬
Zealand is replacing silver coinage with that of cupro- Vr were on approximately a 3% yield basis at the end of
dom agriculture. The new Rolls Royce piston type en¬
nickel.
Ecuador has returned to the use of .pure nickel,,
the year with the resultant drop,Jp market yalqe^; of the
gine, tme of the most powerful aircraft engines of its
for the one-sucre coin, and monetary reforms now under
issues brought out at the lower coupon rates. (Currentlyt
kind, makes extensive use of nickel steels and ether
consideration by a number of Latin American countries
the discount on 91-day United States Treasqry Bills M
nickel-containing materials. On the Continent, where
contemplate the introduction of pure .nickel for their
h :95% yield basis compared with % % nvhi'ch had" been,
wartime >controls resulted in the employment of "ersatz"
standard coins as well as for various minor denomi. established during the war*
The interest rate bn United
alloy steels, nickel alloy steels are once .more taking a
nations.
;•
v*';;.
- States Treasury one-year Certificates of Indebtedness
Nickel Alloy Cast.. Irons*yf£ •$
prominent part in the new steel specifications.
' ■ has increased.during the year from %% -to
Lightweight nickel alloy steel mine cages in coal mines
mand -for money by various eorpprate enterprises, and
Progress in the field of nickel: alloyed cast irons has
have proved very successful in Belgium and further
for municipal projects increased the yield qn .-corporate
been
well
maintained during
1J)47. ^ Such specialty
cages.are being constructed.in Belgium and France.
nickel-containing alloys as Ni-Resistrand ;Ni-)Hard .have ; and municipal bond issues. This and dcanand for -bank
*
The past year saw a further broadening of the use of;
advanced at a sharper rate /than .that ol the-overrall ;, loans resulted in substantial selling of .government bonds;
Monel, Inconel, and other nickel alloys, as well as rolled'"
development.
Sales of nickel this year for the produc¬
! While sizeable declines in prices, of bonds have taken
nickel, for special duty purposes involving resistance
tion tof Ni-Resist are expected to .be 45% greater than ,
place, there is an offsetting factor of increased income,
to heat, corrosion, wear and other difficult-conditions
the best prior peacetime year and Ni-Hard production,
on
new money available !for
investment. This general
for which their versatile prQperties are important.
As
exclusive .of rolls, will use almost 90% more nickel than
hardeningof_ interest rates,';; together • with^^jabstantial
in the past, the chemical and associated industries took
has been consumed in any preceding yCar^/ demand for- loans from industry, should- result in in¬
the major share of the tonnage, but increased use was
In addition to very satisfactory progress in the devel¬
creased gross income for banks, a factor nf considerable
noted in other fields, such as power and electronics.
opment of Ni-Hard in the, mining fields of the United
importance for 1948 in view of the substantialincreaseS
Important: applications were found in the production
States and Canada, this abrasion resisting alloy.,is ,being
;
in operating and other costs. V
.?
\
:
of modern drugs, such as streptomycin and penicillin,'-in
applied in South America, Mexico, South Africa and
the manufacture of synthetic detergents, and in the han¬
";From the standpoint of our economy as a whole, the
India, for grinding, milling and other mining applications.
dling of fluorine, a highly corrosive agent which is being
interest rate .increases Constitute a favorable- factor.'
In Great Britain, as in the United States, most of the
used on a constantly increasing scale for many new in¬
While the dislocations caused by the increases may be
rolls in rolling mills now contain nickel.
dustrial processes.
disconcerting, the move is fundamentally sound.
International Nickel in its constant search for new
The rapid advances in jet engines accounted for an
steels for industrial
applications have continued to ex-
pand these markets for nickel.
-
Throughout
the
world
the
toward further use of nickel and
....
-
,
.
-
.
,
;
•
.
,
"
THE
Number 4668
Volume" 167
COMMERCIAL
Controls Affecting Investment
&
Politic s
Our Reporter on
JL
clearly indicated the diffi-' particular company as far as can
culties of rationing, and remem¬ be foreseen. The Dow-Jones In¬
,..:cbe deflationary if there were anybering the old NRA days, one dustrial Averages are at around
; large volume of Federal Reserve
questions the value of the effort, 180 level, which is certainly not
borrowing by member banks,
but nevertheless, under that Bill, a low level, and interest rates on
:V"•:• •l;
It is also proposed that the gov« proposals will be made for vari¬ high-grade long-term corporate
V'.Nr
^ ernment bond market be allowed ous voluntary controls regarding bonds are at around a 3 % level,
;
to seek its own .levels.-After conessential material... Probably the which is certainly not high.
If
','A' siderable change since last June;
biggest change will be in the financing is required let it be done
when it was decided to allow the
method ;of allocating export li¬ now even though the cost may be
:
Treasury bill rate to rise,- then censes on the so-called list of 600 higher than a year or two ago.
: •subsequently, to allow the certifiItems
which' are- considered in
(Continued from page 11)
,
:
\
days
h
The
level
has
;
present
the
to
short supply.
1% %,, the money market
in a state of flux. The
of
Ask
been
jointly stated
'either end of the
..
v-
'will
: ' 2 Vz
.j
?'
1V8%
be
on
government list
certificates, and
Treasury ' 2Vz% bonds que
1972-1C-C7, An increasing number
•
•■.yi.y-of thinking people
.
essential
lor:
I Who
users?
determine-;wbat
an
is
the
essential
A-.A[ that the Treasury interest rates be
; In
a
sense
the
be
own; level.
this would'-fepresent
•
should
we
point
ward
and not
Which
deciding .factor
controls.:- One
here to¬
be concerned
' an ; indirect deflationary! control,
day is whether or not these pro¬
for obviou slyg if f there were no
posals may lead to others more
AA''money market controls we would
;ar reaching and involving rigid
;; ; • ■ v have certain positive action in a
controls 6f the pblice state; {type.
AA'* deflationary direction.,,.
' 1 \ "
1Ac "-A A'>1A:V-A,/ A- /-AA-A'
;
-' ; Industrial Profits
-'u; What Abe lit Government Interest
?v ■;*«
•
1 A; A'S Rates?
:
•/
.Probably
greater -importance/ at
•
•V*
*
:
this .time
than
.
:■
what
is
c/A: government
;
loans,
ties
1
prices,
then,
we.
have
a
the
-'
■
the
were
'
the
inflationary
to be
controls
reversed.
It
interest
*•
to
seek
banking
its
'
-
•
•
.
AAA (2) Mortgage loans for
sentlal
•
building
which
postponed until labor and
-1
can
they are in existence and
most proposals are for abandon¬
ment in whole or part. The price
be
supplies
available;.- should be discouraged.
;
k 1
allowed to find
their free market
.
believe,
can
adjust to either
deflation.
or
.
Agroup
■
by
;
^"v4
fr. •'* -i' ^
r".
y Steps
.y>¥ .r:v;
-
.
:
;j
o'i'
.
,
,
Toward t Deflation;
Too many voters are benefited
rent controls, k The conclusion
_
,
,The various proposed monetary
Jan.
28
of
&
Haven
New
r
Interstate
to
sion
the group,
by
Commerce
authorization,
at
the
of
Proceeds
ma¬
We
are
at
a
!
;
r
-{voluntary control bill, as I
it, {signed by; the President
on
30v was just another weak
evasive political move to do someJ ; v j •. thing, but not in any way whatso;;
i :I ever,
to give positive results.v A
V-b i' meeting of the steel industries was
{
to be held on Jan. 8 to be attended
'v : i •
by 17 executives, who were going
v
Dec.
t
,
''
'
-!
..;
Gene'rarsy Department. J Remem¬
bering how the OPA- in its last
critical, point and
cial house in top flight order, and
a
well balanced capital structure
meet
the
requirements
of
a
.
,
now
issue
will
the
become
Company,
Exchange.
He
Was previously with Julieri Collins
(Special
to
The
Financial
Chronicle)
[/CHICAGO, ILL.—Bowen Blair
is
now
Blair &
affiliated
Co.,
with
William
135 South La Salle
Street, members of the New York
and Chicago Stock
,
r
market '
the bargain
securities.
,
.
.
liquidation
Some
of
longs
is
being
...
in
uncertainties and partly to offset the in¬
Also these smaller commercial hanks,
against future
crease
risk
assets.
...
feel that the exam¬
and do much
more
talking about the quality of assets as well as the ratio
of capital and surplus to risk assets, in future examinations. . . /
The loan picture, especially mortgage borrowings, is likely to
which
are
largely savings banks, seem to
ining authorities
going to take a longer look
are
be in for considerable discussion.
.
v
,
•
,
shifting into shorts in order
prepared for anything that might happen.
.
.
Accordingly, these institutions
to be
are
.
MORE
PRESSURE
Continued
money
that
.
^
//v
will
pressure
be
exerted, by the
authorities in the
markets, at least until the end of March, and it is believed
these
developments
trend of bank loans.
.
.
,
should
important effects
have
upon
the
Although it is not expected that it will be
hammer-and-tongs affair, because of the political factor, it should
sufficiently forceful to have a limiting influence upon the money
•; While the initiative for creating reserve balances still
any
be
markets.
lies with
that
.
.
the member
could
still
be
banks, the authorities have some powers left
to offset a movement to build up reserves
used
that
might be used for inflationary purposes. . . .
Treasury deposits with Federal increased $449,006,000 last
week, reflecting in some measure the transfer of income tax
payments from the commercial banks to the Central Banks. . . ,
This account is being watched closely by money market fol¬
lowers for clues as to future action of the authorities in their
policy toward the money markets..
'
ury
.
.
The building up of Treas-
balances at Federal would have a tightening effect upon the
it reduces reserve balances of the member
credit base because
:
-
banks.
»>;,
vC'V■':l/-;;''I';
/"■'
'l?
BUYING
Although the partially-exempt bonds are considered vulnerable
With William Blair & Co.
■•'..
on
.
,
hedge
'■
8i CO;
.
out-of-town banks, with the proceeds going principally into
' -:
7'
This shortening of maturities is taking place, partly as a
South La Salle Street, members of
the Chicago Stock
.
certificates.
«.
231
markets, should be favorable to the
done by
all-steel
Illinois
.
.
tip-off that long Treasuries are
the
non-Treasury
S. Looassociated
mls,' Jr./ has
with
money
Selling by insurance companies of government bonds has been
most important source of pressure on the • government market
(until the announcement of the increase in reserve requirements in
New York City and Chicago brought in bank liquidation)
since
these institutions continue to shift into higher yielding loans and
be
Chronicle)
the
Some believe that continued weakness in the equity
the
subject
CHICAGO, ILL.—John
funning out., The financial
policies of corporations must give
weight to probable ineffectiveness
of many of the proposed controls
which have been mentioned, and
the longer trends indicate more
rigid control. If the Federal Re¬
serve were to get the controls it
"Wants, 'financingWill' •< be more
costly and difficult. ; This forces
the
development of? a financial
to
alternative to letting prices of long gov¬
borrowing so expensive that
an
...
counter.
With Illinois Company v
td{{{d?scuss-:bowl to'chanhel steel policy which should involve im¬
to essential uses, under the mu- mediate action to ^et one's finan¬
./ ''.?■} .I;* nificent blessing of the Attorney
as
SMALL BANKS
is
time is
better
make-up of the financial community seems to be
than ever; with jitters running rampant through
mental
might be
Commis¬
prices to
passenger
coaches;
25
streamlined parlor-chair
At^a Critical Point
v
controls
pressure .on
-
yield from $ 1.50% to 2.95%, ac¬
cording to maturity.
yy (Special to The Financial
'
cities,
that this particular control
mean
.
powers
new
government bond market.;.
2%%
Hartford
equipment trust certificates,
obvious. :; ^^ ;i
credit controls are in the direction of .deflation, but are nulli-
.
ordinarily mean less demand for bank loans and other bor¬
A topping out of the inflationary forces, with not so
much
by
and
,
,
rowings.
What national ■ ; state or local beer has become associated with
the increase of Federal-, Reserve
^; ^qihreifnenits^^ ifbiy momber • banksa governments m ay; -do with rent Graham, Parsons & Co., 135 South
He was formerlv
the changing of; requirements on controls is illustrated to an ex¬ La Salle Street.
Veteran Loaix financing; and FHA treme in' • France where World with Kidder, Peabody & Co. and
C. F. Childs & Co.
War I controls are still in effect.
financing
<
.
to stem the inflationary monetary
It will be interesting to see whether the Congress will
confused
would
Halsey,
^nc. jyon the award
$6,480,000 New York,
headed
Stuart & Co.,
'
5
-V'?;/'
the government bond market and the equity market. . . . The
declining trend that has been in evidence in both of these markets
seems to
be a bit contradictory, to say the least. , . . A receding
stock market would seem to indicate a down-trend in business which
.
^
.
both
Halsey Stuart Group f
Offers New Haven Eqps.
;
:•
.
•The
more
4
•
entirely.
ask for
new
..
y
up
PARADOX
}A- (4) Drive to sell Treasury sav- industry for^a few cents a /bushel, streamlined grill cars.
A'r
fags; bond s and to pVomotb other while at retail levels the price
.;AA ' forms of savings, should be inten- was $3.00 per bushel. To what de¬
v.;AA sified > ; '
gree ithd 'supports: are; changed so John H. Kasbeer Joins Staff
i%i, I - ,• Then there are such other pro- will inventory, problems develop
Of Graham, Parsons & Co.
posals ihvolviiig1 an .increase in fh -many industries, and in turn
(Special to The Financial Chronicle)
^
the gold reserves, the convertibll- the overall financial policies will
/
CHICAGO, ILL.—John H. Kas¬
•1' '
ity of paper; currency into gold, consider these possibilities^;!:
^
.
governments to get the! necessary reserves to pcarry on
sell
grant
V
v
':••-? ?■?
requirements to 26% in Central Reserve
reserve
lending, then the monetary authorities should be in a
forces.
y A to borrowers who can Create prod1: T
ucts and services heeded here and
t
:
.
is the present limit, would
position to
Just consider the; 1947
(3) Banks should give priority levels,
cars; 20
bumper potato crop, part of which all - steel
streamlined baggage government agencies bought and parlor - lounge cars;
5
parlorA"A Aabroad now.:AA„'A
1. //A-A; then either gave away or sold to, lounge
cars;
and
10
all-steel
-
effects from the recent
see
and
banks
used to provide for not more than
Support program is pn; the books; 75% of the cost, estimated at $8,until the end of 1948, and because: 640,000,
of
the following new
of the* farm bloc .it is inconceiv¬ standard-guage
railroad
equip¬
able that farm prices would be ment:
30
all-steel
streamlined
are
.
-
commodity,; allo¬
omy,
non-es-
some
it would have to slow down.
re-offered
•
cation j and rent controls influence
a tremendous sector of our econ¬
.
•
AAA
While present
.
(1) -That commodity and inventory loans to withhold essential
goods in the hope of anticipation
of price rise, should not be made.
;
/AA
.
,
.
.
their
bonds and common
whose companies which you
>
.
be¬
must
no pne can say
inflation
own
of banks into individual hands;
feeling
are
action, with the smaller institutions not
The increase in the rediscount rate
to 1J/4 % was taken in order to help tighten the credit base.
. If
loans should continue to expand after these measures, because the
there¬
their
banks
.
has been used
levels, and resist spiraling wage turing $432,000 annually Feb. 1,
increases, reduce taxes and gov¬ 1949 to 1963, inclusive. The cer¬
ernment
Costs,
and
attempt to tificates, issued under the Phila¬
force, more government bonds out delphia plan, were immediately
industry
itself
American
Bankers
: A*vAssociation, recently has proposed
that four objectives, be set up as
; v -i a
guide
toward
anti - inflation
,1;plans:
* ;
*
The
through
rates
cities
...
large
Raising of
positive decision, and
exactly what
a
Central Reserve
the
ernments seek levels that would make
best
Everyone wants the deflation^ tb
somebody else but them¬
If the government really
meant what it
said, it. should
abandon food price controls, allow
;-.;AA pegging will be counteracted.
••
one
"Special
requirements in New York City and Chicago.
action was not unexpected, it was not looked
this
stocks
rigidly
selves.
of
implications
to
Since
as
reserve
high-grade
proposed
•come on
au-
structure.1
The government
* thorities Say that by retiring .debt,'
! much of which is held by banks,
1
if
that
year..A;fr>.:v:|
.
•
No
stocks
common
such
directly
yet aside from the psychological influence.
.
.
This
could, however, result in the pulling of some funds out of the
large money centers by the out-of-town institutions for protective purposes.
' " V■!.. ■'■
will
is
these controls wilbb^ rigidM^^;
forced, especially in an election
•
1
for
to
.
.
involved
fore; would appear not likely that
control of
A the money market which is decid;:edly inflationary in that the Fed"A?'A eral Reserve continues to increase
funds available to the banking
:
.
uncertain.
comes
interpreted, industry would slow
down, deflation would set in,, and
on
.uryhondsasofferedatthepegged
•
•
outlook
authori¬
come
credit controls
If the government insists
maintaining the long rate at
present levels and will hujy TreaS*
tance.
■
.
The
to
tend
doubt be lifted
no
The monetary authorities are using up
.
requirements in
reserve.
credit limiting
do and how much
controls
will
requirements
.
were
also let out by these institutions. . . . Another
uncertainty has been tossed into the money markets in
of
raising of
Although
.
which
since
ceivable
.
limit
profits, and therefore, in turn, the
view
of
for at this time.
adequate:
going to happen, the individual
working capital in relation to sales investment policy should on the
and potential apparent capital re- average,
consist of - a
middlequitem^ntsl lit l is entirely .con¬ ground course, balanced between
corporate
,
,
.
,
reinvest¬
.
h
:AAA
the
wait
of
.
shorts
Some
dislike controls, we won't lose
them.: From an investment point
screaming about industrial
are
we
.
they have at their disposal to curb further expansion
credit, and with the exhaustion of these restraints/ there
element
we
all familiar
enough " cash' for
ment in facilities and
-
.
are
cure
matter what
profits, and yet industry does not
i and
,v
course,
hav§
municipal re open market financlng,; are tied Jo /government
...r. interest; rates, controls, or lack pf
;1>controls, will be of utmost ijnpor..;
Vou of
with the way government
happen to
rates, and
apt. to
interest
bank:
all
since
•
;
{/Avj / AA
to
come
New
powers
inflation
If
more controls
the depression.
bursts; ;tben
'
.
■
controls.
more
requirements of member banks in
reserve
this
Upping
continues, more controls certainly
will -.be adopted.
If the bubble
With
'
======
brought in liquidation of Treasury securities with the intermediates
and longs again being disposed of in sizable amounts by the member
banks in these cities in order to meet the higher requirements. . .
controlled,
the other I believe of necessity in
order to compete, will ^tend to¬
-
•; ;•
•
v
'
'
REACTION
completely
one;
*
t
.
world into two orbits, namely, the
Russian and the United States, and
with
«.
'
«
is likel.y to be greater pressure for new ones,
Reserves" unless the action taken is effective.
or
,
users
after
oflbank
deflation, and in turn de¬
cide
the
amounts of 7 so-called
"hedge" assets which should be
held. With the channeling of the
to;
raising of
.
tion or
;s;> and how much he needs. T
chink competitive pressures will
advocating
are
not this so-called Anti-
Bill
Governments
>
' *
"
1
-
By JOHN T. CHIPPENDALE, JR.
.
bash
individual
an
on
\
increase,
the legal limit of 26%.
investment
to
;
City and Chicago to 22%
loans
lack of controls, will
contribute to the degree of infla¬
.
% approximately, on the long-
term
•
reference
x>Iic"es,
controls,
questio-
the
really will do anydiing for you or for your com¬
pany. Would it help those in your
ndustry to get together an I try
to work out specific allocations
A. foreseeable future the anchors at
.
or
Inflation
for the
that
yourselves
•
whether
Federal Reserve and the Treasury
have
??With
1
"■
47
on Feb. 27 is another move by the
monetary authorities to restrict the credit base and to combat the
forces of inflation.
Unless there is a change in the course of
York
-
rise
/'
1
=====
,
cafe1 rate :,to
*}
r
*
-
-
(531)
CHRONICLE
FINANCIAL
Exchanges.
by many investors because of the premiums involved and their
unprotected position, compared with the supported taxable issues,
the tax-free yield is so much, more attractive than that available
in comparable maturities of the taxabies, that there have been selec¬
purchases of the exempts by the larger commercial banks. . .
Buying has not been vigorous, hut it is of the type which
been taken out of the
market for some time to come,
Despite the limited amount
of partially-exempts outstanding, practically all purchases have
been made at prices well below quoted markets.
tive
indicates that the securities bought have
...
,
48
THE COMMERCIAL
(532)
Thursday;' January 29, 1948
CHRONICLE
FINANCIAL
&
action, in this situation, unless we
Vital!
Government Bonds Support
bonds.
The fixing of $22,320,000,000 at the beginning of
premiums for special features of 1948 (Jan. 7).
Since we began
particular issues, such as parti- giving support to the long-term
ally tax-exempt issues, was left government security market in
1947,
an
operation
for determination by the market? November
which coincided with the most
At the same time, the market was
Treasury
(Continued from first page)
tendency which arose partly from
an excess of funds seeking invest¬
a
partly from the playing
ment and
"pattern of rates" by banks
In July 1947 we be¬
of the
others.
and
given clearly to understand that : recent period of heightened inthe abrupt change in prices didY terest in inflation, and which has
not represent a step in a retreat drawn critical comment from some
with the
Treasury, to take steps to narrow
the spread between the yields on
short and long-term government
cooperation
in
gan,
securities
so
from?a
centive and the tendency of banks
for
stretch
to
tendency which
contributed to
I
previously the Re-
whereas
that
growth in the vol¬
of bank credit. In this we
undesired
an
reluctant
ume
buyer, it would now buy Treaswere successful.
ury bonds aggressively, at the new
Later in the year there was a
price levels, - in such amounts as
more important change in the demight be necessary to clear the
•
'
serve
mand-supply situation in the investment market. On this devel¬
;
-
uses
pressure
on
ket
Bond
possible
the
' bonds
have
totaled
2,022,000,000.
During the same
period, however, net sales and
redemption
of
short-term securities 1 (principally
Treasury
bills and certificates)
have
change in the character of
government bond market (and
of other security markets) during
October which was accentuated in
November and continued in De¬
cember. Whereas during the ear¬
lier months of the year the pres¬
sure of buying tended to advance
a
the
because
savings institutions of the coun¬
try,
business
by
and
mortgage
this
borrowers, gave support' to
trend. At the same time both
the
of the commercial banks
meet this demand, and
the desirability of their doing so,
were
brought into question by
the emphasis on the inflationary
power
to
:•
help
problem in the President's mes¬
sage to the advanced session of
Subsequent discussion
Congress.
possible anti-inflationary meas¬
ures in the field of credit
policy
of
and
debt
management
gave
market reason to believe
Treasury
large
pect
1948
able
me
that the
surplus in pros¬
during the first months of
would be used in consider¬
part
to
retire government
by the Federal
obligations held
Reserve
banks,
mercial
banks
and that com¬
would be under
to sell gov¬
(or
to sell
other securities or reduce loans)
in order to maintain their reserve
continuing pressure
securities
ernment
The Federal Reserve
banks began, in the week ended
Nov. 19, to give such support to
the government security market
as
was required to maintain or¬
derly markets in medium and
longer term Treasury bonds at
about the price levels then pre¬
vailing. Reserve Bank purchases
were
supplemented by purchases
for Treasury investment accounts.
'positions.
"With the prospect of continued
need for Reserve Bank purchases
,
government securities—a need
had
to
be compromised
with restraint on further expan¬
sion of bank credit—and in the
of
which
Jight of the fact that maintenance
of premium prices (rather sub¬
stantial premiums for some issues)
appeared to be encouraging profittaking sales by some investors, a
reconsideration of the prices at
which Treasury bonds would be
purchased by the Federal Reserve
banks was required. On Dec. 24,
after the completion of the Treas¬
ury's
(then) current refunding
operations,
the
support levels
were
lowered—in
most
cases
to
well as
as
shall
the expansion of bank credit,
while continuing To maintain or¬
upon
conditions in the govern¬
derly
ment securities market.
modest
program which we have been fol¬
lowing for the past year, and it
is
That
most, important figure
standpoint of inflation-
the
from the
is how much money
ary pressures
(currency
ii
other than
and demand deposits
•
a.
•
j
government and inter-
deposits and cash in bank
vaults) belonging to the public
has increased.
During 1947 this
sum
rose
from $110 billion to
bank
roughly $113 billion (estimated).
Although the large money supply
resulting from
war
financing
the necessities
of
already re¬
ideally there
should have been no increase at
all, it seems to me that the small
increase indicated by these fig¬
ures,
as well as the slight rise
dundant,
in
was
that
so
velocity of use of money
which
to have taken place, was
the major factor in the infla¬
appears
not
tionary developments of the yearf.
Further
inflationary
pressures
-
were
largely
more
of
think,
the' result, I
in
distortions
relative
prices, and jerky adjustments to
them, throughout the economy.
With
respect
to interest rates,
three-months Treasury bills which
were
3/sth
at
nearly
1%,
Certificates
issued
at
of
1%
now
earn
one-year
Treasury
of Indebtedness are
1 V6%
instead
of
%%,
long-term restricted (not eligible
for
bank
investment)
Treasury
yield 2.48 instead of 2.33
(and a low of 2.12%?;in 1946),
present rates on other- govern¬
ment securities have risen at least
bonds
a
little
enchanted,
existing pressures and fore¬
disturbance later. But
worse
has yet found a sure way
bringing about just a little de¬
pression. I think our present pro¬
gram of modest restraints involv¬
ing
some
should
we
combination of debt man¬
credit policy is the
a
nounced
figure 22% effective Feb. 27,
1948.)
In the long view, it may
well be that authority further to
increase reserve requirements of
the
commercial
banks
of
the
government securities would
"natural'* level, and that
a
everything would then be
better.
as
our
contacts and ex¬
perience indicate the present mar¬
kets to be, I cannot agree with
mean
that
our
them, would
!ever
action would have
to be drastic enough to
lower the
income of a large segment
consuming public. To ac¬
complish this by over-all mon¬
etary or credit action would mean
money
of
the
bonds undertaken for what-
(laudable or other¬
would be likely to find an
almost "bottomless market" on the
purpose
wise)
'irst day support was
there
if
especially
ganization,
should continue to be a persistent
With
gold.
banking
central
modern
a
of
inflow
substantial
and
system "operating in a highly
de¬
deposit banking system,
with
a
decreasing -reliance
veloped
and
gold, much of the need for
requirements
and
upon
low
reserve
economizing
consequent
the
in
balance
a
of
advantage in higher
of
requirements,
reserve
the
reducing
means
a
as
dangerous
ex¬
much pansibility and, at times, destruc¬
With markets as delicately
balanced
progressive
a
provision of money by commercial
banks has disappeared.
In these
in circumstances there may well be
security
feach
be
step in our montary-banking or¬
and
only moderate declines
prices would occur, thaL
that
would
country
still be argued, I sup¬
program
an¬
that
that abandoning our sup¬
port of the government securitv
market
could
be
encompassed
modest
the
know
you
increase of 2% in re¬
an
city banks, which will make
serve
pose,
our
■
city
reserve
serve requirements of central re¬
trying to
objective, which is to
prevent bank credit from adding
further. to inflationary pressures
and, if possible, to reduce some¬
what the supply of money.
within
at
of Governors has just
Board
our
It might
20%
citVv. banks.As
best course to follow in
achieve
critics have im¬
use
be
against demand deposits of "coun¬
agement and
Iment
as
plied
would
as
fi^ifeserve^requirements of 14%,
this opinion or judgment. Without
pears to be art almost insatiable /our-«upport, under, present condidomestic Stffd foreign demand for
I tions, almost apy sale of governour products.
To use our existing
powers,
assets,
if authority were given to
case
withdrawn.
rapid descent in prices going
far beyond any question of. the
\
money
a
low reserve ratios
commercial banks. There may
supply based
of
of
contractability
tive
on
be too great an
element of lever¬
present system to be
left at the disposal of 14,000 banks.
If
and
when
such a change is
age
in
our
made, however, it should be as
part of a revamping of our whole
reserve
pattern, which
is based too much on geography
outmoded
existing banking
to give serious,
consideration to a system of re¬
serves related to the character of
and too
little
It
facts.
is
on
time
government's credit
(which is
high) or relative interest rates deposits rather than their location.
would be most likely. Uncertainty
a serious
in
and employment. Otherwise the
But as a method of meeting the
flnH pmnlnvmpnt
Ofhorixnco fVio would almost
surely persist for a
policy, by hypothesis, fails or else considerable time after such a de¬ present situation and getting us
our
off
the
horns
of
the
dilemma
present
modest
program
velopment, the government's nec¬
stands approved. It seems to me,
where we are now perched, not
essary refunding operations would
too comfortably, I doubt that fur¬
therefore, that .our critics are be made
very difficult, and pri¬
ther authority to increase reserve
chiding us for not having used vate
security markets would be
powers, which we would be fool¬
seriously affected.
In such cir¬ requirements of the banks of the
ish to use—which are not really
cumstances, there could easily be country, either primary or special
available to us in the present state
is the answer.. Any effective risea flight of "cash" out of both mar¬
of domestic and international af¬
in primary reserve requirementskets, and price changes so erratic
fairs, and in the face of a Federal
would have. to result in the sale
as to make new financing almost
debt exceeding $250 billion and
of government securities by vir¬
impossible for some time, with
interwoven into our whole econ¬
banks. Any effective
what ramifications I do not like tually all
omy.
J
'
'
to contemplate.
In the face of a imposition of the special reserve
Federal debt of over $250 billion, requirement would result in the
Price-Support and Deflation
sale of government securities, pre¬
'/■
in all sorts of forms held by all
This latter point suggests a sub¬
softs of holders, and with a high sumably bonds, by a substantial
sidiary question which I know b
consumption
high
employment number, of banks. Other sales by
in the minds of some bankers.
frightened nonbank holders might
economy, in which there are al¬
Why should we support the gov¬
be expected to follow, in addition
ernment security market, and to ready severe stresses and strains, to the sales
by nonbank holders
we can't treat the government se¬
.
.
,
produclion
decline
.
that extent circumscribe our
and our actions to control
the volume of credit? To me it is
powers
not
primarily
a
question of*cheap
low interest rates so far
as
the government debt is con¬
cerned, although it is sobering to
calculate how big an increase in
the
cost
of
servicing the debt
money or
would
be
involved
if
short-term
interest rates rose, say, to 2 or
3%
(a not impossible level if ah ag¬
gressive credit contraction policy
pursued). It is primarily a
question of what good can be ac¬
complished in the 'present situa¬
tion by a vigorous, aggressive pol¬
curity market as we might a $50
million issue of the XYZ corpora¬
tion. I am not a believer in more
and
more
government
controls,
certainly, jbut 'this is one
which I would not
let
go,
control
want to try to
voluntarily, under present
circumstances.
which
would
ket
obvious, if it
such
absorb
not
It
was
that the mar¬
un¬
loading and the Federal Reserve
would
Bank
have
take
to
ever*
vigorous support measures.
It is quite possible, in these cir¬
cumstances,
that more credit
more
would
possible further means of
dealing
with the
situation by
credit
measures
has been sug¬
could
have
be
be
to
locked
requirements.
further
be
a
of
were
be
now
not five weeks ago,
"Special Reserve" Plan
T
One
already in prospect.
are
should
Federal
put
by
up
The
out; than
the new
result
random
would
distribution
Reserve?credit
at
a
gested by the Board of Governors
time when new measures
were
of the Federal Reserve System—
rates on State
the so-called special reserve plan. being taken to tighten reserves. )
and! municipal securities and on
And when it was all over, would
I have summarized my own rea¬
corporate securities have risen
icy of over-all credit contraction
the System have returned to its
sons for opposing this plan in tes¬
substantially, and bank lending
and what are the risks. Our critics
position; a position in
rates are up somewhat.
timony before the Senate Banking prewar
say that if a drastic fall in mar¬
which it was relatively free to
and Currency Committee on De¬
ket values of government securi¬
Federal Reserve Credit
aggressive open market
cember 8, and wish only to call pursue
proportionately,
Federal Reserve
which determines
have added to or sub¬
The amount of
credit
in
use,
whether we
tracted
bank reserves, de¬
$24,375,000,000 at the
from
prices slightly above par
dium and long-term,
beginning
Per¬
moderate success.
has had a
haps
so-called
the
clined from
for me¬
fully taxable
i
all
are
one
no
also start a depression, and this
despite the existence of what ap-
place restraint
to
continue
credit—unless
of
gcsts that if we chop into this sit—
uation with a meat axe we could
continue to sell
can
level—
own
employment
stall
;mg reserve pressures. It seems to
me that we should have the greatest chance of success if . we are
able to continue this program, and
that it is much more important,
government securities
to buy them, and we
contract
to
some
.
we
their
to seek
forcing them down by System
the
in¬
crease,, primary
reserve require¬
ments beyond the presently au¬
thorized
levels,
and
no
other
chaiige was made in our existing
reserve arrangements. (The Board
oJt? Governors of the Federal Re¬
serve System is now authorized to
earning
of course, with the idea of a mod¬
est downturn which would relieve
$21,900,000,000
and redeem
ex¬
reduction in the aggregate
(or other scarce
to follow a policy of
We
total
policy,
we
batiks, and 26% at central reserve
$2,382,000,000. Consequently, therefore, that there continue to
portfolio of government be a substantial amount of Treassecurities has been reduced from ury funds available to retire Fed-
'
can
and, therefore,
consumers' disposable income.
to $21,540,000,000. eral Reserve held debt than that
I would like to emphasize those
take all-out monetary action
figures. Our support of the govaggressively raising discount
prices, and almost $1.8 billion of ernrnent bond market, thus fkr, rates and selling government segovernment bonds were sold to. has not reduced our supply of curities.
,
,
the market from Treasury invest¬
ammunition—we have more than I
I would agree that by exerting
ment
accounts,
in addition to when we started. And, if all goes aggressive pressure on bank reabout $900 millions of a special
well, and if a substantial surplus serves we could set in motion
offering of long-term bonds whichk of Treasury receipts over Treasury forces which would reverse trie
was
made available primarily to
expenditures is assured by fiscal trend* of prices. Experience suginvesting institutions, there now •
appeared an excess of selling orders which moved prices down¬
ward.
The likelihood of a con¬
tinued heavy demand upon the
govern¬
this
essence
and
been
our
In
try";; banks,
situation will allow toward impos-
Treasury
short-term
of
policy were so vigorous as to
reduce
substantially
production
of a coordinated credit and debt
management policy designed for
recent published figures show that this purpose.
In my opinion, we
since Dec. 24 System purchases of are doing as much as a delicate
position of the commercial
banks, and uncertainty about the
future course of interest rates, led
wage
how
prices for
likely an¬
increases
the
doing.
been
have
of
But
on.
a
sales
the banking system.
been
has
This
rising
or
round
prices
and
on
securities.
allowing government security
In other words, we have
pressure
up
ment
materials)
taking funds out of the mar¬
exerting a restraining
been
'
made
demand for food
or
or
might be said to be a method of
so
pect
tional
increasing reserve requirements of
banks
without
reducing
their
near
high
other
and
required, and this addi¬
special reserve could be
be
can
the root of much
tinued
.
Jan. 21.
our
food makes much more
that is what |
The most
time
that
Since
reserve
to
,
Buyers
of funds by non-
investors,
Reserve Large
Federal
•
possible
the
in
increase
"An
1
.
^
we
alternative
System had been a
market."
opment I can do no better than to
quote from the last issue of our
"Monthly Review of Business and
Credit Conditions."
■-"..'■v;---.1'"
bank
of
banks, in addition to the reserve
now
required or which
balances
consumers'
present troubles and con¬
situation is
(not, every banker by
we have actually
reduction of $464,-t
000,000 in our total holdings of
government securities (we sold or
redeemed more short-term securities than we bought long-term)
and the total amount of all Federal Reserve credit outstanding
has changed from $22,689,000,000
on Nov. 12 to $22,227,000,000 on
supporting the | bankers
of
gradual recession in support prices
over an extended period. By word
and action it was also made clear
yields
by the longer maturities,
carried
a
higher
the
policy
indiscrim¬
an
in
reduction
disposable income as to threaten
the kind of disaster we are trying
to avoid.
To illustrate, the food
Treasury bond market, but had any means),
been decided upon in lieu of a | shown a net
to reduce the in¬
as
such
about
bring
inate
of
1947
(Jan.
8)
ties
is the price we must pay
bring
to
attention again to the broad operations, and to raise or lower
the
discount
rate
by whatever
for System- policy
seemed
warranted
by
contained in that criticism.
The amount
worse "bust" later, we
?f.
T sav we can't bring special reserve
plan would au¬ monetary conditions? I think not.
about " deflation\ now,.: and
prevent a
to about deflation by
general credit
your
implications
thorize
a
required reserve for all
The
wartime creation of
a
public
,
Volume
debt
to
equal
"
than
more
half
-
makes
have
that
of
ly needed and which do not
na¬
impossible.
We
ise
quick
a
in
crease
and
production
in¬
have
CHRONICLE
require¬
reserve
that
market for government securities
which cannot be shirked.
Prob¬
ably
no
easy way will ever be
found to relieve the System of this
applies to insurance
nies
and
cannot
them
savings
1945.
the
meet
of
out
current
to
and
to
us
Banks
the Congress in
bill
a
cf
rency
banks.
country.
our
be
may
the
nent bank
ings bank which, in order to make
be demanded in
anything like the
British
non-essential
amount of 25%.
If there
our
that
does not
reserves
price
and
of
the
be
ignored.
yield
fluctuations
remainder of the
And if
mean
debt
can
accept that
responsibility, then, under present
inflationary
not
gain
ability
we
conditions,
much
shall
we
in
terms
of
restrain
to
credit
expan¬
our
sion
by increasing
reserve
re¬
quirements.
Most of the banks
would
still
curities
could
have
of
government
kind
some
sell, and which
to buy, if they
have
expand
their loans.
be
either
that
tain
which
to
pressure
secondary
main¬
in
reserves,
case
increase in primary reserve
an
quirements,
the
or
in
law
a
imposition of the
serve
of
case
special
of
re¬
re¬
requirement, would restrain
banks
from
selling
short-term
government
bonds
when the
loans, sells Govern¬
at
the
Federal
such
time,
present,
gold
a
cannot
Reserve Banks
is adequate.
reserve
conceive
that
tremendous
40%
swamp
the
gold
rush
just
in
would
were
it
any
to janf on
had
tionary
But I do
pressures as a commercial
expands its loans
wisely.
'
■
.
good
Question of F. R. Bank Reserves
And
having
now,
spent
advice
when
Senator
Our
people
afraid
not
are
the
time
of
now.
of the
close
of
the
the
of
present
the
crease
the
on
advance
there is
session
reserve
ter how devious the
of the Federal Reserve Banks.
As
the law stands at present, and has
stood since
it was amended
in
in
gold
to
I
are
intermediate and long-term
performing
approach,
requirements,
always
have
might add to this general argu¬
a
more
specific one.
The
in
order
to
provide
funds
"deserving" borrowers..
Such
(gold
certificates)
and, to
terest
whatever extent
rate
borrowers
rations
in¬
because it
lending,
some
would thereby be cut
rise in interest rates to
off.
But
the
extent
a
effect-
threaten
an
borrowers
on
the
have
to
necessary
appreciable
would
the
entire
struc¬
ture of interest rates and
govern¬
ment
security prices and could
not be countenanced.
After all the
turmoil and the risks of
new
imposing
requirements, and
reserve
barring accidental and capricious
effects, we should be about back
where
started—still dependent
the moderate use of our
we
upon
present powers, and of the
of
debt
management,
the results
to
desire.
we
'
v
powers
achieve
rather concentrate at¬
tention
on doing a
good job with
present powers, than on try¬
ing to get a ticket from Congress
to
ride
a
be
a
what
on
to
seems
merry-go-round.
me
And
I
should hope that the
campaign for
sanity and soundness in lending
which is being launched
by
American
would
Bankers
the
*. Association
bring strongly to
port the whole
our
banking
sup¬
commu¬
nity.
There I must introduce a
slightly sour note, however, if I
am to be
wholly frank. That cam¬
paign will be no more successful
than
other similar
voluntary
campaigns for
restraint, if the final
determinant of
banker's policy
a
is to be what the bank
surance
will do.
or
the in¬
company down the street
This is a time for some
leadership in banking, not for fol¬
lowing the practices of those of
your
competitors
conscious
for
of
who
their
least
are
responsibility
the
general credit structure
and of the risks to their
individual
institutions which are inherent in
the present
inflationary situation.
Yet
many
a
good
resolution
has
been broken when the
alternative
seemed
be
to
the
loss
of
a
cus¬
Bank loans which enable
ficient
producers
to
inef¬
anti-inflationary
At
trying
to
expand
a
they
are
credit,
proposal
ing of the gold
able
check
on
I
opments.
and
of
"strengthen¬
base"
is
a
desir¬
inflationary devel¬
not
am
of economics and
public pol¬
area
icy I can discern, rather dimly,
three arguments which might, be
made for this proposal, none of
which, however, has anything to
do with the immediate inflation¬
ary problem.
; \
First, there is the argument that
reserve
requirements of the
the
Federal Reserve Banks
ered
during the
emergency
be returned
now
to
war
meet
serve
war
is
over.
Second,
some¬
some way.
increasing the re¬
requirements of the Federal
Reserve Banks would
current
is
an
to their former level
there is the argument that
how,
low¬
were
situation, and should
that the
sterilize^ the
Third, there
gold inflow.
the sort of catch-all argument
an increase in the reserve re¬
that
second
the
j
straints
on
the
central
bankers,
warning of
give
earlier public
critical conditions in
ject before
tal purposes,
by
notes
the
Congress for review.
first
pointing
argument, aside
futility of a
requirement for
out the
reserve
and
a
banking
deposits, in a country
highly developed deposit
system
and deposits are
changeable,
I
in
which
notes
completely inter¬
hot urgent-
do
can
than to quote from
a
no
better
speech made
Senator Taft
at
the
time
the
their
on
have
may
in
the
powers.
that it
sure
-
not
was
of those who
some
suggested
increase
an
of
requirements
reserve
Federal
Reserve
banks
the
government
security market
and right now that means sup¬
porting the government bond mar¬
ket. So long as potential Federal
Reserve credit is so large that no
one ever stops to think of measur¬
ing it, panic swings in prices can be
avoided and basic changes in the
the
that increasing
requirements of the
the Federal Reserve banks now
have too much excess
reserve, and
it follows
by definition that
level
structure
and
be worked out in
icy,
there
in
the
will
those
excess
reserve
reduce
the
reserves.
of
require¬
of
amount
rates
of
an
can
environment
This is not
whole
is
ammunition
our
look
excess
jeopardize the
you
undertaking.
is imported into this
(and is not placed under
sold
Treasury
are
direct
more
and
dealing with the
the
reserve
requirements of
the Federal Reserve banks.
has
proposal
I
dead
If the
been
asleep I
awakened
it; if
haven't
I have
wish
no
hope
it
is
to revive it
Conclusion
If
all
these remarks can be
marshalled in support of one the¬
of
credit controls
nor
the
If
Con¬
are
not the
whole
main
the
even
answer
to
the
creeping, jumping price rise which
has
characterized
the kind of in¬
flation
we are having.
We cannot
forward, without serious in¬
terruption, toward our major ob¬
move
jectives
increased
of
continued
and
at home and
high
production
employment
without interference
with
our
aims
abroad,
induce
political
economic
and
if we are going to
substantial decline in the
a
purchasing
tion
the
power of a large sec¬
the consuming public, by
drastic use of indiscriminate'
of
overall
credit
restrain
controls.
We
can
further in¬
creases in the supply of credit, if
we
have the cooperation of the
commercial banks, and we may
be able to reduce, somewhat, the
amount
now
outstanding, by a
or
prevent
wise combination of debt manage¬
ment and credit policy.
This m
turn, will depend upon a fiscal
policy which assures a substantial
surplus of Treasury cash revenues
so
long as present inflationary
pressures persist. Beyond that we
shall have to devise more specific
remedies,
whether
realm
of
food
prices,
credit,
or of wages, or of consume*
or
-wherever
it
the
in
be
supply
food
and
of mortgage lending, or
the particular
bottle¬
necks and the specific
pressures
Nor
are.
inflationary
do
dismiss
I
increased production of goods and
services
become
high
our
to do.
with
ployment, there does
to
be much room
duction
with
be
full
em¬
not appear
to expand
quickly.
that
say
To
running
economy
and
gear
it has lately
as
the fashion
with
sure,
in
easily
so
who
But
to
better
and
new
pro¬
is
plant and equipment coming into
use,
with
and with
hour
on
could
alert management*
more
greater output per manthe
not
part
perform
acle of production.
is what
and
our own
what
the
of
labor,
another
we
mir¬
Certainly that
situation demands
world
needs.
at
Observations
foreign owner),
the
to
$35
United
States
fine
ounce,
per
(Continued from page 5)
dollar proceeds are paid
to the seller frortiV+he Treas¬
ury's account in the Federal
so condemned, may now actually be
unprecedentedly logical and sound
genuine investment point of vjew.
apparent refusal to rise, which is
the
over
and
a
gold
country
earmark for some
and
of
reducing
by
reserves,
reserves, and it is at that level
that the problem currently arises.
it
supply
scanty,
sterilization, however, since noth¬
ing is done about member bank
When
uncertainty without fear. Make
our
Federal
pursuing
situation than this proposal to in¬
crease
any
increase
ment
the
is
effective ways of
who
or
ently committed to the policy of
maintaining orderly conditions in
Sterilization
that
System
Wrong policy, or is not to be
trusted with the weapons of pol¬
applauded the suggestion when it
appeared in Congress. We in the
Federal Reserve System are pres¬
meet is
on
not
am
in the minds of
constituting
from
Re¬
a
behavior
which
is
'
Bank.
serve
The
spending of the
cial banks, and enables the banks
Specifically, it may possibly be reflecting intelligence in refusing
capitalize 1947-48 earnings for the long-term future. Perhaps it
is looking back at prewar profits and assuming that future earnings
will average somewhere between the prewar and the postwar boom
to expand
levels.
proceeds
well
as
puts
new
reserves,
deposits, into the
to
as
commer¬
their loans and invest¬
ments by several times the amount
of
the
by
the
level
to
created
reserves
gold
inflow,
at which
be sterilized
for
This
the
gold imports need
under present in¬
surplus in its cash revenues,
could
long as it uses a consider¬
part of these surpluses to
retire
"■■■*:
:y*;'Vy
•"•y^
yyy.-;
'■.-•y
yyv
between the
$13% per share
profits of $13% &
share on the recent year-end closing price of 180 show an earnings
yield of 7%%iffrom which an actual dividend return of around 5%
as "our
so
able
■v,■.
market"
difference
flationary conditions, and fortu¬
nately we have the means of do¬
ing so. So long as the Treasury
a
-■
might be realizing that earnings on the stocks
comprising the Dow-Jones industrial average during the 4 years
1936-39 averaged about $9 per share.
The 1947, earnings on these
issues are estimated at about $18 per share, so a splitting of the
them
is
•'v-■ v-S-vvV;.
"The
•
future
be
earnings'
two
periods would give
Such average
us
average.
expected.
Such calculation of future long-term
yield based on reasonably-
expected earnings, related to the present market price, seems at
least to be a realistic and logical way of evaluating market levels—-
government securities held
by the Federal Reserve banks, it
in
's effectively
complicated comparisons of present with past price-earnings ratios
which were themselves anticipatory.
offsetting the effect
of gold imports on the
sition
the
of
That is what
to
we
"sterilize"
while
the
so
po¬
gold
imports
of
gold
large this
lieu
Of
banks.
is
have
our
we
and,
justified
not
year
Vise
were
may
as
should continue to keep
fiscal house in
Order,
so
that
debt management will enable
the
course
been
frequent practice
my
as
grossly
of
getting off on
the tangent of
assumption of the median between the prewar and
basis for investment evaluation may turn out t©
incorrect. But it seems to me that it is fully as
presuming to assume as permanent the 1947 profits which
And if, apart from other factors which
double those of prewar.
properly be conducive to a lower market level (some of
which I
exaggerated), investors are looking at
such long-term earnings prospects rather than those of the moment, I
suspect that quite possibly there may actually be nothing whatever
believe
last,
of
1947 profits as the
have been doing
inflow
pkely to be
reserve
commercial
'
are
brakes
plication in present circumstances,
Reserve Banks would sterilize the
current gold inflow. This is
really
just another way of saying that
and
re¬
monetary and credit
they should not be
refuse demands, by
This theory has a particular ap¬
argument
reserve
has
desirable
put
cal
'y^yl/yy:' '
Little time need be spent
Banks,
would
designed! to,
po¬
and
automatic and inflexible mechani¬
emergency ac¬
been the emer¬
No Need of Gold
quirements of the Federal Reserve
with
in
gency it was
still with us.
if
going to enter
into the area of
religious belief
and religious disputation.
In the
goods
anticipation
of further
price increases are not
"good" loans today.
And bank
loans or any other loans for capi¬
withhold
tion, but if it had
a
restrictions
on
compelled to
The action taken in 1945
,
impose
expansion,
and I
solely
an
to
restraints
hap¬
adjustment
system.
not
ac¬
reason
was
not
might,
who believe that any
similar
a
it
course, have arisen out eof the
fundamentalist thinking oi those
distributors
which
why
time
sition
cannot
we
commercial
the
Reserve banks should be in
public debt and in the as¬
sets and liabilities of the
banking
might interfere with the further
expansion of credit by the Reserve
Banks but right now
make
as
to face the situation
with
asset.
have
confidence in its ability to obtain
money when needed.
While the
in the
effect.
future
remote
some
so
pily
some
effect,
out
long
war,
serve requirements of the Federal
Reserve Banks would have no im¬
mediate
different
to
re¬
banks
we should
try to get
further authority to go down that
road now.
An increase in the re¬
On
market
reserve
conventional
or
they
however,
be permitted to
margin of excess
on any sound
It is essential that the public
for restoring the reserve
require¬
ment to what it was before the
I don't think
from
the
the
commercial
although I have pointed
high
prices and
from
"granny"
of the country could have
immediate anti-inflationary
divert materials from
more efficient
producers, and bank
loans which enable
producers or
pay
in
of
stitutional
pretty loose tie.
a
our banking
system, and bring the whole sub¬
tomer.:
i
increase
quirements
Such
our
lor
An
was
a
they were a 35-40% reserve re¬
quirement would not stop them. ■
/
F. R. Can Do Good Job With
Present Powers
I should
knot must have been
not
am
commodation
and
securities
I
banking system, and to extend
—•
short-term
but
Reserve banks must
prepared
contacts
reduction in reserve requirements
of the Federal Reserve Banks was
equal
banks
they find it, to maintain broad
as
ment
Reserve
49
sis, it is that general quantitative
require¬
Reserve
To be of real service in
time of need
be
of their note circulation
made late in., the war as a neces¬
deposits.
The. proposal re¬ sary adjustment to fundamental
sales
would
take
place ' if
the
cently made was that this require¬ changes which had taken place
bank's loss of yield and premium
ment should be increased
that and still were taking place in our
on
the security sold was suffix
the previously existing
require¬ banking system. The reserve re¬
ciently less than the interest to
ments of a 35% reserve
against quirement was lowered in order
be earned on the new loan.
The
deposits and a 40% ^reserve to provide the monetary authori¬
yield sacrifice involved in making
against notes should be restored.
ties with sufficient excess reserves
new loans
might be increased by
to
meet
\ In
any
some way this was tied to an
emergency
which
forcing banks to sell long-term
anti-inflation
I can see no in¬
rather than
measure,
but the might develop.
for
wide
a
reserves.
are
25%
rities
1945, the Federal Reserve Banks
required to maintain a reserve
usually
the
Granting that Reserve
should
real disservice.
a
we
banks should be subject to reserve
real run-away inflation;
a
tried
we
reserve
unnecessary,
Congress.
those who risk creating such
fears about our currency, no mat¬
to in¬
requirements
tight brakes
for Federal
believes
gress
System, be¬
which may require review
by
and
Congress,
Reserve
arguing that they are not required
by public opinion, and as a broad
guide to policy and to necessary
changes in our banking system
question of dollar; they are gravely concerned
about rising prices, but they are
reserves
of
member
banks,
I
not rushing to get out of currency
should like to refer, briefly, to a
proposal which popped up toward into things, as people do when
deal
the
high fixed
requirement of the
Theoretically
are
Act
money panic.
ments
Taft
it, and it is good advice
gave
good
a
great danger involved
see
in constantly agitating as to what
the reserve should be."
That was
un¬
Bank
found that when
would swamp
securities.
But they
would not be stopped from
selling
secu¬
Federal
a
for
system, and in
country we established
cause we
25%.
I do not see
necessity for a 4Q% reserve.
reason
currency
own
the
bank which
adjustment.
the
of
was
reserve
the
it
as
England
gold
would
much
as
I
principal buyers, is con¬
tributing just as much to infla¬
are
se¬
wished to
may well
It
insurance company or a sav¬
ment
they
would
we
as
dangerous
a
suspension
An
as
pressures.
Historically, the chief
I think 25%
responsibility. Certainly transpos¬
ing part of the debt into perma¬
as
gold imports from
inflationary
sound, but it
gold reserve requirement is
not a sufficient one for the cur¬
or
to
Finally, there is the general ar¬
gument about tightening up the
brakes on our monetary machine.
It has a
reassuring
was
"I cannot understand why
(533)
prevent
adding
25%
maturities,
commercial
by
He said when the
year,
upon
income
current
deposits,
well
which
demands
Reserve
before the Senate in April of- that
compa¬
banks,
adopted
was
place in the present situation. And
for main¬
stability in the
for Federal
ment
no
general
taining
FINANCIAL
present reduced
prom-
substantial
responsibility
a
&
•"
all of the indebtedness of the
tion
THE COMMERCIAL
Number 4668
167
are
now
popularly
"the matter with the market."
**•
50
(534)
THE COMMERCIAL
Thursday, January 29, 1948
CHRONICLE
&1 FINANCIAL
Indications of Curcent Business Activity
The following statistical tabulations cover production and other figures for the latest week or month available (dates
shown in first column are either for the week or month ended on that date, or, in cases of quotations, are as of that dateJi :
Latest
Indicated steel operations
Equivalent
Week
Latest
Feb
2
95.2
96.1
96.4
Feb.
'percent of capacity)
93.6
2
1,716,000
1,732,200
1,686,900
AMERICAN
1,637,300
of
to—
Bteel Ingots and castings produced
(net tons)
PETROLEUM
Crude oil
INSTITUTE:
Gas
oil and
(bbls.)
(bbls.)
„Jan. 17
distillate fuel
fuel
qil (bbls.)
oil'
pipe
16,236,000
2.489,000
16,289,000
2,290,000'
7,496,000
7,471,000
2,291,000
6,520,000
17
8,880,000
8,776,000
8,643)000
Steel
8,176,000
98,751,000
12,975,000
44,482,000
96,698,000
87,056,000
16,866,000
96,354,000
jan
_
I
at
17
IIII11 Jan]
at
AMERICAN
14)434,000
2,326,000
17
17
17
jan. 17
14,536,000
OF
AMERICAN
51,502,000
AMERICAN
51,935,000
49,846,000
i
Jan. 17
cars!
811,286
Jan. 17
690,251
722,498
675,434
828,060-
705,350
!>-
each)
Refined
•.
(net
including
tons)—Month of
lirXORD:
•••'.•
ENGINEERING
production
_i
crude
oil
gasoline
(bbls., of
Total U. S. construction
Public
_*
State
and
Federal
municipal
____
;
;
'
_
$118,949,000
67,823,000
51,126,000
40,171,000
32,201,000
51,083,000
Jan
22
Jan
II
$63,608,000
36,231,000
$83,284,000
Jan. 22
"
22
I—IIIIIIIIIl.IIZIIIII Jan'.
-
output
OUTPUT
stocks
"
lignite (tons)
Pennsylvania anthracite (tons)
Beehive coke (tons)-,
22
32,615,000
10,955,000
18,468,000
.
27,377,000
18,837,000
8,540,000
23,791,000
of
Number
T
STORE
SYSTEM—II) 1,5-39
SALES
jan. 17
,
jan
.1,269$000
17
13,030,000
='13,800,000
13,180,000
1,210,000
140,300
1,100,000
1,218,000
13,270,000
fT,166,000
*139,300
142,800
V
•
of
freight
zinc
'
AVERAGE—100-
233
Stock
STREET,
INDUSTRIAL)—DUN
to
5)436,430
5,370,112
;
INC.__
Jan. 22
109
PRICES:
'
(per lb.)_!
Jan. 20
—
"A
(E.
to M.
J.
3.18925c
$40108
Jan. 20
,
'
T
METAL PRICES
3.18935c
Jan. 20
__
Pig iron (per gross ton)_
Scrap- steel (per gross ton)
\
$41.83
■'K'■.
Europe
•,
period
21.200c
21.200c
21.200c:
Jan.21
21.425c
21.550c
94-.OOOC
94.000c
94.000c
Jan.21
__Jan. 21
15.000c
14.800c
10.500c
,
20,025c
10.500c
„
58,057
829,725
1,219
176~346
370(172
353,012
——
■
*
:Y_;
10,044
■AAA A
2
^——
Nov.:
6,194,857
5,650,266
544,591
1,151,101
•6,411,924
5,797.269
•614,655
5,326)400'
1,0.77,303
1,934,073
y !
-
tonsil
tpns);^Yfc^^_v----r:
(net,
379,814
v.
200
tons)—
coke
550,160*
448,288
765,123
411,911
——
(net tons)
4-,954',300::
372,100"
•
-
.
Jan. 27
100.69
Jan. 27
110.70
:?
loto
100.69s
10.50QC
104.47
111.07
109.97
117.40
Jan.27
115.82
116.22
114.85
114.27
113(50
100.97
110.15
108.88
54.70
^4^.'-^,I'
=■
Jan. 27
103.64
103.97
103.30
110.88
Jan. 27
105.34
105.34
104.48 '
Jan. 27
112.56
112.75
112.00
Jan. 27
.
114.85'
115.24
113.89
111111111111111
,
118.60
120.63
f 47**.*- A/-.
t.-.
PUBLICATIONS
FAIRCHILD'
-
"
-
49.3
.'AH *40:9
*40.2
39.8
:'
yiy ■■''yf+k
$1,257
•*1.337
$1,260
-1.341
1.185
i
-.NonrdMrabl'd-■
:<J
;
,!«• Y
.Z,;1 All manufacturing
r
D'urable: goods..-124jc-i-J-C._——— I"
113,31-
•47.17'
.40.8
1
'
Hourly-Earnings—
"* '
'
*
Durable- goods
'
-
'
L._
■& *•54.66" KA.A'_-r_—_
47.10
Non-durable; goods
'
:*$T30.98'
'
_il„—_
.ft Hours—
I:
'<•' •••.?.• AH
manufacturing'
'
-
.
s
$51.02-
—(— /
Durable. goods;
Nbn-durable' goods
V
'
.j)
.44L manufacturing
;.
117.40
.__
;V A'r-' ''
A"'*;'-'••"A.:iV'A.'A.\.'l t'f
•>'(
£
HOURS—
Y v
ESTIMATE — ,U.
S.
OF LABOR—JVfonth of November: •
—
"
'
A-:. A A.;-A,
AVERAGE
Earnings— v-'W.-y
120.22
miiimiiiiiiiiiii:
■'"xr'y^y
<
$287,000y000> $287,000)000 y$228;0t)0>000»
—
—
EARNINGS -AND
DEPT.
121.88
114.27
minimi;
31
"
i2.6ooi
Jan. 27
Industrials Group
tons)
tons)__l'.
(net
WEEKLY
;
i3'.000c
_Jan. 27
___i
(net
tons)
(net
coke stocks at end of month
FACTORY
70.000c
14;800c
10.500c
.
I *•:'*
:
15.000c
141800c
_Jan. 21
IIIIII
15.000c
Jan. 21
—_—j
Railroad Groups
Public Utilities Group
43)250
' 19.225c
21.425c,
Jan. 21
.
-■
;Baa
59,705
-COMMERCIAL PAPER OUT STANDING — FED¬
ERAL RESERVE BANK OF NEW YORK—
"I
—HH'
I I"
i
90,204.
175,800:
/
'
j.
79,789
69,166
(net
anthracite
America
Central
(net
^ As Of Dec.
I
72,151
(tons)——
(net tons)
(net
Beehive
Oven
BOND PRICES DAILY AVERAGES':
Aaa
Asia
Oyen. coke
$40.50
70,176-
69,682
70,996
68,011
'
■
'
.
U; S. Govt. Bonds___
Average corporate
(tons
production1, .(net?
,Y;
;
;
•
(BUREAU OF MINESf—Mbnth of
COKE
;
vv
QUOTATIONS):
Electrolytic copper—
5
Domestic refinery at.
L__,
Export refinery at__
Straits tin (New York) at
Lead (New York) at_
__■__.
Lead' (St. Louis) at
Zinc (East .St. Louis) at
America
To Africa
s
$40.08
V
South
To
*"h
■
..234-:'
1,982,143'
2,499,883
of November:
and
*>'"
3.18925c
«'yi;'x;:234A
(BUREAU OF MINES)—
North
52
.1
-
,
>.'1
Finished steel
.1
.
61
-
IRON AGE COMPOSITE
I':
■.
grades
lbs.)—1
of
end
at
To
4,829,570
BRAD-
."V
(tons)____—____—
period
To
4,856,404
V
all
2,000
.of:
of
orders
Month
223
output,
To
jan. 24
AND
162,952,000^
0,376,000-
-'
——....
(tons
COAL EXPORTS
576
251
lbs )
end
at
Unfilled
-
(in 000 kwh.)
(COMMERCIAL
export
s
-
smelter
Ui Shipments
■
'
FAILURES
3,902,000
reporting———
234
transported
(tons)_—2,135,692
U. S. exports of Pennsylvania
Electric output
2,-665)000
:
carriers
motor
of .2,000
„
RESERVE
BDISON ELECTRIC INSTITUTE:
150,000*
7,001,000.,
3,731,000;
178,521,000
> 920,000
10,125)000'
AMERICAN ZINC INSTITUTE, INC.—Month of
124,400
17
nm
___
INDEX- -FEDERAL
188,196)000
148,323,000;
8,658,000
ASSOCIATION—
November:
of
Volume
;
22,522,000
■J
DEPARTMENT
7,761,000
4,757,000
(bbls.)__
TRUCKING
Month
50,083,000
Slab
and
50,000
and
158,598,000
168,626,000
157,530,000
11,046)000
50;000
'
11,635,000'
___.
AMERICAN
$73,874,000
(U. S. BUREAU OF MINES):
Bituminous- coal
164,913,000
(bbls. I—
December:
COAL
gal¬
(bbls:)—•
.
Inci'easc—all
Jan. 22
"I
~
construction
42
176,598)000
output
*i." ',f.i;
*,
Private-construction
(bbls.)
NEWS
alloy
Nov
INSTITUTE—Month
Indicated consumption—domestic
v
5,404,4931
produced
December
output (bbls.)
oil imports (bbls. )_*_■
products imports
(bbls.)
Crude
•
.1
CIVI»vr^^INEERING CONSTRUCTION,
l(
5,760,501,
5,681,597
> 109,263
—
INSTITUTE:
for. castings
of
products,
PETROLEUM
Domestic
832,130
831,447
steel
steel
domestic
lons
Benzol
(number of cars)
Revenue freight rec'd from connections
(number of
•7,233,035'
5,216,990
.
October:
oi
Total
53,293,000
52,113,000
and
of
and stainless
RAILROADS:
Revenue freight loaded
2,325,863:
2,045.W77(
176,073;
189,777
therms)
(M
STEEL
AND
tons)—Month
'Natural
ASSOCIATION
sales
(M therms).
saies
ingots
(net
15,723,000
46,785,000
51,601,000
2,152,536
1,897,564
165,782
7,369,596
therms)————
(M
gas
IRON
Shipments
5,271,000'
lines—•
_
(bbls.)
4,711,000
Jan. 17
A
—
and
5,246,000=
16,006,000
Ago
4,623,950
5,289,000
5,344,000
5,284,489
17
~~jan
,ion'
jan!
"
terminals, in transit and in
(bbls,) at_
Residual
5.313,137
5,326,137
17
jan
~~ ~
Ihbis.)""*
Residual fuel oil output
(bbls.)
Stocks at refineries, at bulk
Gas oil
jan
_
__
distillate fuel oil output
Finished and unfinished
gasoline
Kerosine (bbls.) at
sales
gas
Mixed gas
output—dally average (bbls. of 42 gallons each)
to stills—daily average
(bbls.)___
Year
Month
(M therms)—
sales
gas
Natural
Manufacturing
Crude runs
Gasoline output
Kerosine output
ASSOCIATION—For
November:
Total
*
AMERICAN
GAS
Month
2,388,005
2,088:959
Ago
Ago
Previous
Month
Year
Month
Previous
Week
AMERICAN IRON AND STEEL INSTITUTE:
__
"i-rf-
*1,174
A
;
• v,
PRICE
RETAIL
INDEX JAN. 2, ty:if^il0() (COPYRIGHTED)
U.
S.
Govt.
K
Bonds
Jan. 27
Average corporate
I
I
Aaa
2.45
Jan
IIIIH
I
,:A-A;
3.13
.
27
"
Jan. 27
:
2.45 A..
2.45
-.'■v.'-y
3.11
2.86
2.84
Jan. 27
_________
2.94
2.94
I
•A-
3.16
3.23
3.51
3.55 A
Jan.27
3.43
3.43
3.48
3.02
3.06.
2.89
2.96
~~
Jan.27
Jan. 27
;
3.03 V />S:-A
2.91
,
yy
"AAA
Home
•Piece
COMMODITY INDEX
Jan. 27
444.4
y:
449.5
460.5
y;.'
'
ITY
FERTILIZER
INDEX
BY
ASSOCIATION—WHOLESALE
~
378.7
Jan. 24
244.6
238.4
Blankets
300.5
272.7
Jan. 24
274.4,
330.2
316.2
279.9
337,8
323.4
279.9
--
_
I
Metals
mm
materials
304.9
261.7
266.8:
272.6
,machinery
combined
216.0
209.0
"II
—Ill——I—I—
II_~T
181.5
180.7
180.2:
_
;
,
,
220.2
219.7
161.5
161.3
160:4
161.0'
139.5
13019
116.8
106.8
233.2
236.3
155.3
155.3
156.4
.
—.
138.5
137.5
k
142.5
*142.5
141.8
———
neckwear_y__—
and
caps.
including
126.8
——
„—
Jan. 24
134.5
224.3
134.5
226,5
134.5
124.3
223,2
Shoes
189.0
130.0
■AAA
A
;
at
Jan. IT
1
1
—a
111
—Jan. 17
193,150
104
-Jan. 17°
431,880
Jan.. 23,
—
150.6-
177,964
99
459,989
V
178,556
183,641
100
•■.
416,851
China
'■•10.3
:
577,269
151.1
149.9
<
141.7
•>
148.6
149:4
>
S. DEPT.
.
125.0
All* commodities
.Jan, 17
Hides and leather products
Textile products
165.5
164.5
162.5"V:
196:9
'V'
! 166.0
182.1
178.2'r *!-
201,4
200.3
204.4°.
145.7
145,8
146.9,
130.0
;
lighting materials
metal products
materialsChemicals and allied products
-v.
191.1
189.7
.Jan. 17
140.8
139.0
132.9
.Jan. IT
136.9-
136.7
135v3"
.Jan. 17
—
Housefurnishinis good#
I
commodities-.
I
I
,•
123.0
122.1
120.5':.
151:6
;
.135-7
189.1,
.
:
"
.,171.7
t
1
153,2
130.0
154.8
126.2:
Jam IT
.Jan. 17.
and
Building
"
firms
carrying ;margin
accounts—
S.: Goytv issues——
Member borrowings on U:
on
other colltiteral _f_
/
127-1
1
122.4
A
'
Semi-manufactured articles
......
Manufactured products:
All commodities
other than farm products—
—
All commodities other than farm
products and foods-
•Revised figure.
.Jan. 17
.Jan.17
.
.
186.0
157.1
157.6
182.9
158.4
157.3
183-4
156,9 :
109.5
J
Jan, 17-
157.5
157.3
154.9 s
Jan. 17
147.4
146:9s
i45i4-
<
137.8
,
;
_
;
.
.
A:'*
1 199;222
Y.=-'.v A.>•
214,097
av,
81.0% A
$157,807-
$98,752
$57,276
243,585
,
v
68,594,912:
140,792,541;
."■I* A 75.8%
76)8%
74.TG9Y
401,984.
704,399>
•;
-
.
$295,256
71,029
——_i._:———
'.
eompanies___-___i.———_
Banks_^i_^w^.-:ii-:-*r.-^^_f:-■
individuals:
-
$266,108?
$339,991: '
42,979"
85,354
•-
276;103-
.'49;334-:
185,221
55,111
'164,973 ...
129,866.'
2301588)'
62,682
238,334
and Trust
V Miscellaneous lending institutions—
136.4
:':
Banks
Mutual -Savings'".
153.3
154.4 -
136,206,807
.
FINANCING', ANANON- A;A
{
U. S.^HOME y
LOAN BANK BOARD
--Month 7:>
<' of .November. (000 omitted-)';:
:,y.vr-'.^YiyA
Savings' and* Loan Associations——
FARM' AREAS OF
Insurance companies
Jan. 17
'
REAL ESTATE
1
.
$647)552'
'
75,989 i
409,007' :A'
60,997
67,026,355
137,5091338
A-.'
Special groups—
Raw materials
•$592,890
$577,877
A
A 68,312,500
Market. value-Of listedAbonds__v^---A_ ——
Stock- price- index; 12-31-24=106_i_rlA_1
136.7
.v, \
.
'
net debit balances——
*015,246
■'( Member borrowings
98.3
124.0'A
131A3
1
613)121
on
164.5
-
-
127.5*
•
'A
400;792:
Cash
120;6;*
129.0'
137,3
Total of customers' free; credit balances..—
Market value of listed ^aresy—A'iA-_'_^-_^.-.-
157.8
?,
128.0
'
:i' -■
: 140.8
197.0
181.2
.Jan; 17
,
I"
~
a.
201.5
.Jan, 17
.Jan. 17
'
.Jan. 17
.Jan. IT
products
.y
137.5
hand and" in banks in U. Sj—_—_
.
148 3
r
STOCK
"Total of ctistomersf
': y
LABOR—1926=100:
132.7
14215'
,
.
____—
^
EXCHANGE—
As of.Dec, 31 (000 omiMed)
'A*: (
i
11*5.3?
119.7
'
appfiances__—____
household
YORK
;rMember
151.2
12T.5-1
129.8
131.4
.-
141,5,
130.2
^
::
NEW
123:8
151.0'
coverings
Electrical
123.0
103.2
:
123.8
173 85"
157,585
A
125.3 '
120:8
129.0
,
12919
185.437
133.7
V
149.5
/—:—J.
ASSOCIATION:
1'62,359
129:8
146.4
t
119.7
.——___A——-
■Furniture
124.7
142.6'
'--Y---
Underwear
-
122.9
wear—A;
.
-.
149;8>:
138.1
130.0
overalls-—
Infants' and children'^
128 0
/.
J* Y'A 133.7
138.9
164.3
133.6
Jan. 24
>
,
A
"A,:;;
125.6
Jan,24
132.9
130.6
Clothing,
153.8
138:5
152.2
133.8
—
132.6
138.4
145.3
132,9
212:9
Jan, 24
.
(tons)
146,1
148.3
Hats
142.3
233,»
Jan. IT
PRICES—U.
Miscellaneous
139:5
174.2
139.5
Credit extended to- customerSj._.__—______
Metal
Ay
Shirts and
"
A
•!
Fuel and
135.i:
A
*;'l\ 161.5 y
Underwear
212.9
Jan. 24
HIIII_IIII"
-111111111111-11111
.11111111111111
(tons)
Foods
135.3
.
'
,
brassieres_^__Y:__—1—
Hosiery
/
151.3
219.4
Jan. 24
OIL, PAINT AND DRUG REPORTER PRICE
INDEX—1926-36 AVERAGE=100_
Farm
139.9^
174.6
A:;;,;:'v';AY
Men's apparel—
V
157.6
Jan.24
(tons)
Percentage of activity
WHOLESALE
138.0*
124.7
136.5
Floor
PAPERBOARD
Unfilled orders
^
comfortables——————
Underwear
227.1
216.0;
-Jan. 24
,
Production
120.G
144.9
154.1
198.0
Jan.24
-
.
Fertilizers
received
.128.4
;
163.7
——
294.6
336,3
Jan„24
;
Building materials
Chemicals and drugs—
Orders
A
and
and
Corsets
226.1
Jan. 24
::mmim:mr
—
NATIONAL
A
;
266.3
Jan.24
„II__~
groups
goods—_____
Women's apparel—
214.0
282.0
-Jan.24
Miscellaneous commodities
All
239.2
Jan. 24
—
Livestock
Farm
128.1
106.8
:
H
IIII__II_II_
Grains
Fertilizer
128.2
132.9'
■;
Aprons and housedresses—^———
r"~~
oils_
Textiles
A
■
Farm products
Cotton
Fuels
'•
COMMOD
t
and
H'x ■ yv
135.5
Dbmestics—
;
GROUP—1935-39=100:
Foods
Fats
A A
Ay 136.5
145.5
—
v'
wash
Cotton
.
NATIONAL
furnishings
goods—
I "^VpolehSv'
2.62
•;
MOODY'S
"A;'-'
128.4
2.99
A;-A;; 2.72
-
AA
134.1'
-,v'
wear^_L^_____
children's
I 139.0
A'Y 138.7
137.5
120,6
2:78
3.12
A*
A
140:5
Infants' '&
131.9
137.8
138.7
—
apparel.
Women's .apparel-:
.
3.53
_Y'__
Men's
,
3.17
~
~"
-11111111111111111.
Industrials Group
:
■
Jan. 27
' l; ;X'
.
Composite index
A 2.20
■y:::A.: 3.17';A;C 'AAA' : 2.78
2.91
2156
'V,
2.98
,A;A';'' 2.64
Jan.27
Baa'imimiiiiiiiiiiiiiiimmimiiiiiirRailroad Group
Public Utilities Group
AS OF JAN/ 2'
v
MOODY'S BOND YIELD DAILY AVERAGES:
163,866»,
A 116,614>;
V153",679v
135:3
126:6
j
$954,509r ".
Total
•Revised figure.
.
v
-
-
$lvlO3,030>A
*
$869)489(
Volume
167
Number
FINANCIAL
&
THE COMMERCIAL
4668
CHRONICLE
kind of international trans¬
every
Inflation: A Product of New Deal Blundering
^Continued
the j
&
from 'page1 6)
principal
President
-
which
measures
.'ICohgressvonactedrdurih^
riod.
European
ourselves of the fact that most of
these laws enacted as "must
legis¬
whole
our
economic
Beginning with relief
and
•-ures
that
meas-
at
miles
50
lift itself
to
off
hour
an
the
it
can't
ground!
Let
me make myself very clear.
unreservedly for a plan to
aid Europe and China—especially
I
Corps:
March 31, 1933.
Federal Emergency Relief Act:
.May 12, 1933.
•
•
am
China, since ■ we have behaved
disgracefully in the light of our
promises to that stricken country.
Agricultural Adjustment Act of
'1933: May 12, 1933.
■
/ ' ■
President signed jointYresolu.'tion
abrogating the gold clause in
tied
in
promises to the electorate—
whether it be
private
countries
$40 cost-of-living
AA^-AA rebate bn income taxes,"the Towna
dom.
; .a;
other hand,
the
On
^
prices, con¬
rising wage levels, and
ever-spreading
monetary
infla¬
tion. In each country the political
stantly
the system
leaders have been obsessed by two
of government controls necessarily
fears: (1) the fear of deflation
proceeds from a wholly different
and (2)
the fear of telling the
concept.
It envisons the nation's
people the truth.
.
economic life as being essentially
There is also the fact that in its
static.
The rationing, or allocaearlier stages inflation is pleasair
cation, of goods among consumers
and even intoxicating in its ef¬
is
based
upon
the
belief that
shortages
last for
a
of
goods
likely
are
to
long period of time. For
incentives
personal
springs of
which
main¬
the
are
in¬
and
economic system, it
our
substitutes the wisdom of govern¬
ment officials charged with the
•
fects.
Under the influence of such
and
could
anticipated,
System Needed
proposed
complications
in soaring
effect
might then have
a
economic
obvious
was
in
was
The
The President
in
expressed
supply, upon free mar¬
prices. It lives only in
the atmosphere of individual free¬
which
war!
51
A Sound Money
the swapping of credits
or
that
the
been
creased
the ebb and flow of profits to
obligations: June 5, 1933.
I>. Home Owners'. Loan Act: June send Plan to pay old-age pensions,
responsibility of planning for the
A;
13, 1933.-As-'A • aa;AA or throwing in a plate, of ham future and
policing all the com¬
.i i AAA' Farm, Credit Actr of -1933June and eggs every Thursday.
A;:r;AAAA plex details that enter into mod¬
1933■' A: A
A
The A other A half
ern industrial life. *
of ;r President
A
-:v
< /NationalIndustrialRecovery Truman's tax
proposal; makes-just % There is another important dis¬
AAi Act: June 16; 1933:Ari
as
little
seiise
and A is just
as
tinction, between these two com¬
A41Commodity Credit Corporation: suicidalA To
reimpose a so-called peting systems.
„
have
regulate
ventiveness
foreign
ments,
prices
on
kets to fix
on
aid
to
,
trade there is must proceed on the
basis of barter, bilateral agree¬
times
before
so-called "blocked" currencies.
This has all been followed by in¬
tne
with
—five
use
The result is that what foreign
reduction^ipf -costs and the im¬
provement of products. It depends
But I don't want any program of
-
and
similar
giant air transport. At
of 300 miles an hour
carry a tremendous load;
a
can
but
-
existing governmental
of
top speed.
speed
it
repudiation of our
gold contract, thus cutting our
-I
currency adrift from any metallic
-base, we took the following steps:
Conservation
nations, American in¬
full
pat-
the
Civilian
—-
the next five years at
We are in a situation
a subservient Congress
to change the basic con¬
cept of
.tern.
has
dustry will have to function for
lation" by
"served
Truman
and carry .out even a small-part
of the promise we have madb to
+u
;
^
that peIt will be helpful to remind
action.
»-by thousands of producers competoutlined ing with each other in the steady
•
(535)
immediate return to
an
sound money
the
free
system based
upon
coinage of gold and the
convertibility
of
the
into gold for domestic
unlimited
currency
but
not
for
export
license. This, in
fact, would itself operate as a far
more effective
ceiling on soaring
prices than any return to wartime
purposes
without
—
proper
controls of goods in
short supply.
else, the Presi¬
have gone on with a
firm promise to restore those in¬
But, above
dent
all
could
internationally known economists
centives to "work and save" which
Lord Keynes in
England, Alvin
Hansen in
this country, Gustav
have been the real
Cassel
There
as
in
there
Sweden,
has
the
and
like
strongly
rooted philosophy that inflation h
a .good thing so
long as it is prop¬
erly "managed." It seemed to sup¬
ply the answer to a lot of prob¬
lems
that
tion.
It is
'
that
grown
otherwise
as
a
defied
solu¬
only in its latter phases
inflation
light
up
is
in
seen
disease far
a
its
more
true
dan¬
America's
duce
men
strated
mainsprings in
economic
supremacy.
only two ways
are
to in¬
to work—often demon¬
throughout history. There
is the hope of profit, which is the
dominant influence in our capita¬
listic enterprise.
There is fear of
death, which is the cardinal prin¬
ciple in the Soviet regime which
we
despise. A thoroughgoing re¬
vision of the tax system is of
course /necessary
to restimulate
Enterprise relies
Pet. 17, 1933.A
gerous than war itself.
AA :
Abbess: profitstax woijlC defeat on 6the'.: consumer's freedom o
We now know that A it is far individual thrift and saving.
A - , • Federal. Civil' Works: Admiriis- o#r
goal of attempting- to stabi.l-':
:*
tration: No\rc;9; 1933;
chqicq in any number of direc¬ easier to repair the damage to
The President then could hav6
* A *;AA-A; ze prices by increased
production, tions.- making whatever
"A; A P .- -• .Federal Farm
personal bombed-out* cities and
Mortgage Corpo-" liven more
destroyed dealt with some of the more tech¬
importantly^ it • would readjustments may be
[ j\ A'ration Act: Jan.
necessary
nical phases of the problem of
1934A A
Atitthei^df^fbf^thc capital market^ to meet changes in prices, styles, transportation facilities than it is
to rebuild the highly complicated public debt, which now stands at
" '^FmergencyrCrop Load Act: Feb.'
vhich; are already virtually non¬
habits, or individual tastes. State economic mechanisms on which the colossal total of $258 billion!
AAA 23,
existent: aaaaA'A -aaaaa aa:aaa:'
,
-
'
'
-
\ A Because
•AvA
\<A Act
of: 1935 -(WFA'and
A / A; (President signed the
f
aiding for the largest single
-
.
pro-
propriation
;
Home
A*
voted
ever
Mortgage
,
by
than
■
Relief A Act:
;May 26, 1935.•"'
.
A
A
Social
Security Act: Aug
14
.1935.
A; ;•.»
/ .A
Undistributed Profits Tax Law
A ^of 1936: June
22, 1936.
•
;
-
U. S. Housing Act: Sept,
1, 1937.
Miller-Tydings Act: 1937.
A
-
:
-
Domestic
'
Servicemen's Readjustment Act
A
v,>;of 1944: June 22, 1944.
AThe net result of these succes¬
sive
acts
was
A-effectrto
the
'
which
v
.
A
*'A*
give cumulative
forces
of
inflation
seriously menace
our future. 'Therefore, it seems, to
A
;;
now
to
vine
that
so
Number One problem-
our
f Atax reduction, is riot the reimposifiction of wartime controls over our]
by
more
if investors
case
anything out of their
save
incomes and had confidence in the
future value of the American dolWe
ar.
must
restore
this
confix
dence in the future 6Y the country
and
reverse * a
trend
which
is
A Broad General Income
make
can
start
a
in
A'.>
that
direction through a broad general
reduction in income taxes which
.will remove some of our present
inequities and end a most unfair
it
discrimination,
hat the Krmtson
standardizing
of products on a
quantity^ rather than- a quality
basis. Abundance and a high level
of public purchasing power are
to
seems
,
bill,
me
pend¬
Repre-
now
solution
\i a. A:1;}
State of the Union
This in turn
have been
duces
of
non-pro¬
the public pay¬
the
re¬
number
ducers carried
rolls who
on
always
are
charge
a
against those engaged in produc¬
tion. > This leads to a constantly
rising cost of government which,
inr itself,
single
is
of
one
the
greatest
parts in infla¬
;Ai: >
component
of
this
f V aA
Budget,
we
v A
■ ■.
.
Mr.
Truman's
Will be assessed a to-
AA A*domestic
economy,
but whether
lay partisanship'aside and,
AAfAiri a spirit A'of: mutual Sacrifice,
"v Av meet this fresh
emergency before
'it ig too late. A ♦
•
v.we can
-
..
Many proposals have
i*.
,,
to the
as,
remedies
A
A
been made
which
should
be
applied' in this anti-inflation
campaign. Among the most real:
istic
(although I disagree most
."heartily with some of his sugges¬
tions) is the plan advanced to
Congress last week by Mr. Baruch.
A
Mr. Baruch, it seems to
me, makes
mistake of tying everything
in one big
package as a kind of
cure-all for our past mistakes.
A the
I
•
think
former
President, Her¬
bert Hoover has made a splendid
.contribution 1 to
the
solution
of
of
many
these
letter to Senator
problems
in
with incomes under $4,000,
to taxpayers with in¬
over
$4,000; By contrast,
28%
comes"
his
Vandenberg. Too
AA^'FaHacfous: Fiscal -■.. Policies .AAA
this
total
tax
undertaken, it should be made
applicable to alb taxpayers and not
merely by conferring special priv¬
ileges
on : the < largest
voting
groups! A
' A- AAA -A
.
I
certain
am
and
energy
will
so
long
more
than
make
reductions
in
is
to
all
of
present
must
be
us
high
does not stand
1922
case
and
A;
But tax reduction,
the
as
desirable
suffering
co^t
a
as
from
of
living,
goal by itself.
considered
as
merely
They prescribe political poultices
still larger program
designed to release the brakes on
when
our
the
reached
Inflation
the
point
causes.
vuu,^,
disease
where
has
drastic-
surgical treatment may be re¬
quired. Unless we grapple real¬
istically
with
there may be
ery Plan.
no
these
disorders,
European Recov¬
We will be
so
the
acute phases of
home that we may
..
kind
,
of
busy with
inflation
need
at
some
American
recovery plan
our own domestic economy!
..
A, for
The
v
,
plain
is that if
truth
of
the
matter
we are to. shoulder: the
a
system and get business and
industry functioning
once more at
full speed ahead.
President Truman has taken his
stand in favor of government con1 rols
as
an
alternative to the full
functioning of
economy:
these two
a
Yet
I
free
the
competitive
fact
is
that
systems are not only
mutually incompatible but are the
very antithesis of each other.
The motivation of
industry de-
ptends upon the assumption of risks
investment
from
trust
funds
and
to
including
suing
Ever
They have
had
ever-mounting
deal
burden
with
of
an
public
debt, largely inherited from that
catastrophic
an
conflict,
and
ever-mounting volume of
ciating with the result that in each
country capital has either gone
into hiding or sought safety in
flight to other countries.
Right
now
there is a flight from the
dollar
>pst
flights
as
ffnm
and the
there
the
have
been
the franc,
lira,
poui^d, though not
as ap¬
parent.
In the illusion that governments
could "manage" currency, there is
no
yardstick left to
the
measure
true value of any country's money,
expressed
rencies.
of
its
in terms of other
We
cur¬
have
deprived gold
function either in
proper
the settlement of international
counts
or
as
the various
driven
each
a
for
This
has
currencies.
country
in
restrictions and controls
ports,
•
ac¬
anchor
sound
his
address would
quite different in tenor
turn
over
exports, A exchange,
to
im¬
and
Treasury's
general
fund.
This
would help "stabilize the purchas¬
ing povj/er of the dollar and avoid
having to pay such taxes twice—
first,
when
the
obligation
is
created; second, when payments to
the
Instead
-
beneficiaries
Such
of
painting a picture of
an
effortless
prosperity
to
be
created
through
government
spending, he would have appealed
for a truly national effort and na¬
permit
a
due.
are
further would
rates to seek a
program
interest
normal level without governmen¬
tal
interference, and would dis¬
the over-rapid expansion
of bank credit beyond its normal
tional
sacrifice
in
meeting the
rate of growth. It would also dif¬
challenge of this appalling danger
ferentiate between, the needs of
to the nation's future.
He would
our
domestic
economy
and the
have pointed out some of the sim¬
strains imposed on that economy
ple, fundamental steps that are
through export. This would in¬
necessary to check the decline in
volve the most rigid control of all
the purchasing power of the dol¬
lar.. He could have appealed to exports without the use of dis¬
the patriotism of the country by cretionary authority in such mat¬
ters by the State Department;
declaring that the Federal Gov¬
ernment
itself would
practice
ample and
set
some
the
would
have
every
dollar
called upon
promised that for
that America was
to advance in the ef¬
fort to rebuild
stable and pros¬
a
courage
Such
ex¬
of that
austerity and self-restraint
government officials have
urging upon the public. He
same
been
world,
has been pur¬
fiscal policies.
to
se
which
our own,
fallacious
problem,,
the
from the easy sophistries to which
the
in
had
face the
.
he gave expression.
practically
Treasury will, -"paper money." Everywhere cur¬
rencies have been steadily depre¬
up any loss in
proved to be the
as
the
War
government
every
with
the
ag^in in 1945.
it
intiative
careful consideration.
since. eWorld
first
that
me pirt of
than
the
still other aspects of
problem that de¬
inflation
serve
that will be released
revenue,
after
that
A The1"®
benefit the economy in the
run
It
rather
relief to
taxpayers
with incomes under $4,000.: Cer¬
tainly, if tax reduction. is to be
syipptoms
..
( our money's worth.
the President's $40 per person tax
bonus would grant over 93% of
many of these political approaches
to the inflation problem deal with
.
we're
the
s
•Af.
Mistakes, of Anti-Inflation
AAa
A -:Campaign
payers
and
Truman
courage to
riousness
of
this
the government.
A'vIfA'we'-' accept
vprobleniAA
throughout all history it
is that there is no easy way to
control inflation. It requires tough
IfA President
approacli
the
If there is any one lesson dem¬
onstrated
lems.
tionary cycles,
.
depend¬
of huge popu¬
are so
get government debt out of the
banks.
A,. AA'
essential to the proper function¬
He could have pledged that so¬
cial
ing of competitive enterprise. Of¬ and courageous treatment.
security and payroll taxes
ficials
charged
with
Stalin deflated his subjects by would in the future be used solely
rationing
scarce goods always dread the re¬
for
the purpose
as much
as 90%
of retiring the
overnight. That
turn of plenty, for
it * threatens was his delicate approach to the Federal debt—not as they
are
their jobs and raises new prob¬
now,
mere
contributions to the
problem.';/ A" •A.' J' •
A- ;■
ing before the House of
sentatives, offers: a constructive
to
He could have announced
a policy
providing for the refunding of at
least $100 billion of that debt into
lations.
A -': AVAA' A,:"
long-term bonds bearing* interest
No Easy Way to Control Inflation rates
sufficiently high to invite
all modern nations
ent for the support
reduce the percentage of the na¬
tional income channeled through
Tax
A--Reduction :v,. A;
We
pn
such choices to
Finally, tax reduction tends to political
highly dangerous.
Silver Purchase Law:
.
the
$2 billions—which certainly
could
Agricultural Adjustment Act of
,1938: Feb. 16, 1938.
A,' .; AVA\;:,:'-
July 6, 1939. A
to
go
loans
would hot be the
V
;
to:
In, the last. ,12
the, largest banks
'have increased
the: country
their
corporate
Con-a.
forced
borrow.
15 ,of
in
#p--
regress,) :. April 8, 1935.;aVAA v
.
months
: tbeirAmabiUty
to
eapitaL ^corporations
fresh
banks..to
mil-
of
being
are
others)?
$4,8^0
resolution
iX-Morur-work i ^relief
•
raise
Emergency Relief:Appropriation
1r
^
the contrary, reduces
a necessary mini¬
mum,A itA seeks to reduce or to
eliminate
competition by the
control,
.-A::t-SilvertPurchaseAct;of"1934;>
a
would likewise
program
suspend over-elaborate programs
of
public
works
and
housing,
beyond those which are absolutely
essential, until Europe's impera¬
tive
have been met.< And,
without saying, that such
pledges for adherence to sound
it
needs
goes
fiscal
policy in the future would
rigorously observed, without
yielding to pressure from self-
Executive
branch of the government would
be
match it with
interest groups,
perous
its
world,
the
a
dollar saved from
That,
for example, under the terms of
the Marshall
Plan, would have
meant
a
promise to save, over
the next four years, at least $17
own
operating
expenses.
billion—nor indeed is that
possible
an
im¬
the
or
left.
the right
on
indeed
from
led
whether
by Henry Wallace or others,
who
would
itance
build
a
America's
use
and
world.
promise.
either
Nor
threats of political revolt,
resources
in
inher¬
trying to
completely visionary new
A
-V'V .;
A
A.
such
dealt realistically with one of the a program would win the enthusi?
root causes of our present diffi¬ astic
support of the American
culties—the excess supply of mon- people,
rebuild their confidence
?y.
New
money
was
created in their own future, and once
through the all-out mobilization more set our feet on the path of
for war production. We produced sound recovery from which we
Next, the President would have
anprecedented quantities of goods
were
shipped abroad and
which
consumed
in
the
maelstrom
of
I
have
gram,
that
;
.
venture
to
..
suggest that
been diverted.
Such
a
pro¬
raised to, a plane far above
partisan politics, would
of
the, loyalty and unity of
American people
as
would
which were the re¬ nothing else. The country cries out
ceipts for wages which could not for this kind of bold and cour¬
be exchanged for an equivalent ageous leadership at Washington
amount
of cqnsumer
goods. In in meeting perhaps the gravest
crisis that America has had-to
currency alone we now have in
war.
left
That
enormous
behind,
excess
production
currency
or
cement
the
bank deposits,
circulation
more
than-$110 billion
face in many
generations.
1948.
Thursday, January 29,
Securities
•
Acme
Dec.
2,
Corp.,
Ann
a
Jan.. 16
par)
share. Underwriter—Dean W. Titus
Co., Ann Arbor.. To build factory, pay obligations
working capital.
All
American
Oct. 30 filed
Industries,
•
writer—Derrick, Waddell & Co., New York.
Price by
amendment. Proceeds—To pay off indebtedness incurred
in the acquisition of the capital stock of A. D. Cook, Inc.,
Lawrenceburg, Ind.
.
Dec.
29
(letter of notification)
common.
Price—$2 a share.
California
Insurance
Union
Calton
■<
;
'
River
Coosa
velop
of $16,000,000
•
three
public; 8,500 shares will be issued to underwriters
additional underwriting consideration and 7,500 shares
the
as
be
issued
in
for cancelling $15,000
machine
tools.
Keppler
&
Price—$2
Inc.,
Co.,
Corp.,
Hagerstown,
•
Underwriters—To be sold through com¬
•
10 filed 160,000
Nov.
equip
one-half
of
each
share
shares ($10 par) common.
share
common
of
share
held.
construction
ceeds—For
new
one-tenth
and
common
share
Price
and
of
common
by amendment.
amendment.
the basis of
definitely postponed!
•
-
'
one
share
,
finance
Price
construction
'
Dogpaw Gold Mines Ltd., Toronto
Oct. 22 filed 1,000,000 shares ($1 par) capital stock
Underwriter—Tellier & Co., Price—400 per share.
Pro¬
Pro¬
repayment of bank loans.
develop mining properties in Flint Lake local¬
ity of Ontario.,
,' M- j
* j i >
1
•
Credit Corp.,
Domestic
29
Chicago
/
filed
ployees,- executives and management personnel., Prices—
$3.49 a share,
Proceeds— Company did not state how
proceeds will be used.
'
.
Hollydale, Calif.
Dec. 1 filed 204.000 shares
e
No under¬
writing.
Price—$100 a share.
Proceeds—To purchase
rolling mill, equipment and for working capital.
Electric
Jan.
No
15
e
un¬
Rights expire Feb. 2.
Clinton
Proceeds—To finance construction.
e
in exchange
210,000
For
shares of
common
&
Water
Investment Co.,
Phila.
of
Inc., Gem, Idaho
100,000 shares of non¬
Bay Lead-Silver Mines,
(letter of notification)
Price —10
stock.
cents.
No
underwriting.
development of mine in Kootenai County, Idaho.
King, Inc., Chicago
notification) 400,000 shares of com¬
stock!
Prices—Ranging from 15 to 30 cents each.
development of mining properties and equipment.
(letter of
C.
fund debentures.
York.
Price to
Proceeds—To repay bank loans
and for general corporate purposes including the financ¬
ing of new stores. Application filed with SEC Jan. 23
for permission to withdraw registration statement.
Oct. 30 filed $5,000,000 15-year sinking
Underwriter—Lehman Brothers, New
•
f
Finance
Jan. 19
Corp., Denver, Colo.
(letter of notification) 2,500 shares of 4%%. cu¬
common.
ton
Corporate and Public Financing
($5 par)
_
itai.
;
21
both
ceive
•
Boston
.
.
...
New York
;
Chicago and other cities
'
•-
e
./•
Products
•
&
t>ty
ceeds—Construction.
Johnson
;>
10
Nov.
filed
-
.
u
,
are
each $100
Feb.
until Feb. 1, 1950, and 20 for each $100
No underwriting.
bank loans.
1,500,000 shares ($1 par) common. Under¬
California Co., Sah
Francisco, and Allen & Co., New York.Price—By
amendment.
Proceeds—To .purchase
machinery
and
tools to increase production of automobiles from current
day to 1,500 per day.
poned.
/ \V/
Kansas-Nebraska
•
Pliillipsburg,
23
lative
7,
.
•
;
to pay
until
Natural
Kan.
Gas
TemporarUy post¬
,
'
Co.,
Inc.,
..
-
(letter of notification) 2,200 shares o£:$5jcumif*
preferred stock.
Price—$104.
Underwriter^*
?vl!
BROKERS
For working funds and
'
Corp.;
filed
6
being sold by 14 stockholders who will re¬
1, 1951.
: ;
writers—Otis & Co., Cleveland; First
mm
Louis, Mo.
Pa.
shares cemmon stock; (par 500).
Higginson Corp.
Proceeds — Stock
150,000
Kaiser-Frazer
Jan.
proceeds.
Louis Brewing Co., St.
Bids—Expected about Feb. 9.
being sold for account J. P. Flaherty, a stockholder.
100,000 shares ($1 par) common. UnderCampbell, McCarty & Co., and Keane & Co.
Price—$5.25 per share.
Proceeds—The
Gast St.
Cov'(2/9).
Bronze Co., New Castle,
Underwriter—Lee
filed
—
Light
first mortgage bonds, series due
be determined by competitive.
bidding.
Probable bidders: Blyth & Co., Inc.; The First
Boston-Corp.; Halsey, Stuart & Co., Inc.; Glore, Forgan
& Co., and A. G. Becker & Co.. (jointly); Harriman
Ripley & Co.; Kidder, Peabody & Co., and White, Weld
& Co. and Shields & Co. (jointly); Salomon Bros. &
Hutzler; Lehman Brothers. Price—By amendment. Pro¬
Co., Detroit, Mich.
(letter of notification) $75,000 of 4% convertible
notes.
Convertible into $1 par stock at the rate of 50
shares for each $100 of notes by Feb. 1, 1949; 30 for
Pittsburgh
—
Underwriting—To
1973.
Jan. 19
CORPORATION-
.
Ind.
Dec. 22 filed $6,000,000
Detroit.
shares
FIRST BOSTON
■
Fraser
writers
Xi<$g*s
Evansville,
14.000 shares of ($1 par)
$7.50.
No underwriting.
For
J
Power
To supplement working cap-
Oct.
The
Price
stock.
common
Underwriter—Robert L. Mit-
Investments, Denver.
f
(i.,
'
Corp.,
(letter of notification)
working capital.
Jan.
e
Orton.
shares
.
Finance
Interstate
Jap. 21
mulative, non-convertible ($100 par) preferred and 5,000
J
,
Inc.
be filed by amendment.
Dec. 29 filed
Gold
Underwriter—H.
.
Department Stores,
rate of 950 per
Fund, Inc., Seattle, Wash.
103,089 shares of common. UnderwritersPacific Northwest Co., Seattle. Price based on market
prices.
Proceeds—For investment.
Equity
Colorado
mon
16
assessable
for 300,000 shares of Obear-Nester Glass Co.,
St. Louis."
20
Gas
(letter
Echo
For
Jan,
23
Jan.
Jan.
•
600
bentures; due Feb. 1, 1978.
(la.)
filed
15
(letter of notification)
Eastern
Industries, Inc.
shares ($1 par) capital stock.
Underwriting—None. Offering—Shares are to be offered
Dec.
New York
notification) $125,000 51/2% de¬
Underwriter—Bioren & Co.,
Philadelphia. Price—Par. To advance subsidiaries funds
for capital improvement and working capital.
v
Offering—Common stockholders of record
given the right to subscribe on the basis of
share for each 10 shares held at $22 per share.
are
new
one
26
Corp.,
This is an offer of recession, the stock
having been sold in violation of SEC rules.;
Co.
($8.50 par) common.
Industrial
Drico
stock (par $1).
,
derwriting.
Jan.
Interstate
Iowa
150,000 shares ($1 par) Class A Common;
Underwriters—None. /Offering—To be offered to em-
Dec.
*
Cincinnati Gas &
common stock.
working capital.,
.
(jointly), the First Boston
Nov. 10 filed 4,000 shares ($100 par) common.
Cleveland, Ohio
12,820 shares of Class A
Price—$10. No underwriting.
Co.,
(letter of notification)
ceeds—To
Proceeds-^-For property additions and expenses.
Century Steel Corp.,
22
.
cumulative pre¬
ferred.
Underwriting to be determined by competitive
bidding.
No bids received at competitive bidding Dee.
15.
Sale may be negotiated.
Groups formed to 'bid if
issue is reoffered include: W. C.vLangley & Co., Shields
Credit
Industrial
Jan.
and for
Rights expire Feb. 25.
Proceeds—To
/ /
program.
Central Power & Light Co.
/'
21 filed 40,000 shares ($100 par)
White Weld & Co.
Ohio
for
Nov.
& Co. and
be merged with the regis¬
merging companies are Toccoa Manufacturing
Stickley BrotHfers,' Inc., both Illinois corpo¬
rations, and the Luce Corp. and Stickley Bros. Institu¬
tional Furniture Co., both Michigan corporations.
In¬
"•
on
exchange for their holding!
in
and
Co.
(Ohio)
for each nine shares held.
—By
receive
($10 par)
stockholders of record Jan. 30
Chicago
Proceeds—The shares are being
part of the stock
share.
a
sellers will
For
/
Corp.
Portsmouth,
small gasoline engines
build
to
Corp.,
trant. The
Power & Light Co.
Dec. 5 filed 170,000 shares ($7 par) common.
Under¬
writing—None.
Offering—Offered for subscription by "
"
r"
factory
Dayton
each pre¬
for
new
Co.,
working capital.
Under¬
On
Dec. 8 only one bid, that of Blyth
& Co., Inc. and
Kidder, Peabody & Co. was submitted and was rejected
by the company.
They bid^ $13.75, less $1.75 under¬
writing commission. Offering—To be offered to 6% pre¬
ferred and common stockholders for subscription on the
ferred
the
(letter of notification) 10,000 shares of Class A
common
stock,
Price—$30 each. No underwriting. To
writing—To be determined by competitive bidding.
basis
Engine
For
of four furniture companies to
Corp., Flat River, Mo.
Jan. 19
Co.
Power
Culver
cents.
exploration.
Price—$9.25
bank loans.
pay
Price—421/2
com-i
100,000 shares of
No underwriting.
sold by four stockholders and represent
(letter of notification) $300,000 of fully paid in¬
vestment certificates.
For development and expansion.
officers and employees, *"< Offering — To company
stockholders, employees and customers. Price—At par.
Proceeds—To retire indebtedness and for working capital.
Maine
To
Finance
Inc., Seattle, Wash;;
Mines,
notification)
Illinois-Rockford
Jan. 23
pany
Central
Crown
(letter of
July 24 filed 120.000 shares ($1 par) common. Under¬
writers—Brailsford & Co., and Straus & Blosser, Chicago.
each
Md.
22
stock.
Va.
Lynchburg,
,
Dec. 29 filed 254,682 shares ($10 par) non cumulative 6%
stock and 70,643 shares ($10 par) nonvoting common
Class B stock.
Shoe Corp.,
9
Inc., Lynchburg.
Chemical
Central
Consolidated
Idaho
mon
Working
20.
scription by stockholders pn basis of one new share for
7 shs. held. Underwriter—Scott, Horner & Mason,
York.
-
©
(letter of notification) 6,168% shares (no par)
common.
Price—$48 per share. To be offered for sub¬
share. Underwriter—R. A.
To provide operating
per
New
funds, etc.
Jan.
account for
open
23
Jan.
'r
Craddock-Terry
& Tool Co. for invest¬
Die
American
to
return
Feb.
,
for hotels.
mine
expire
Rights
'
capital.
-
will
ment
held.-
shares
V,
(J. Herschel), Ashland, Wis.;/
(letter of notification) $61,800 of notes, to pay
Hardy
Jan.
of capital
stock
.
303,587 shares ($1 par) common. Under¬
Price—50 cents a share. Proceeds—For
filed
26
writing—None.
stock
(letter of notification) 101,000 shares of common
(par $1), of which 85,000 shares will be sold to
working capital and pay
\7 // V ;, .l.Y'v.;•.."■V.;- r.:
Guyana Mines, Ltd., Toronto, Canada
Nov.
(par $5). Price—$30 per share. Underwriters—
None. Offering—4,000 shares to be offered to stockhold¬
ers of record Jan. 13 in ratio of two new shares for each
Cameron Aero Engine Corp.
increase
To
equipment and working capital.
Dec. 29
,.V:V 7V///:
Denver
Co.,
loans.
4% 1st mortgage bonds.
Co., Inc., Cayuga, N. Y.
(letter of notification) 5,000 shares
13
Coal
Creek
(letter of notification) 37,600 shares of capital
sale to present shareholders at $1 each.
Nq>
for
underwriting.
'
(par $50). Under¬
Cowles
Jan.
Grassy
Jan.. 19
Newsprint Co.
subsidiary";,
Harleyville, 3. C.
plant and facilities for the company's
a
Carolina Giant Cement Co.,
•
Proceeds—To dei
Price: by amendment.
stock held.
mon
writing none. Offering—Stock will be offered direct to
public through directors and officers. Price, par. Proceeds
—Erect and operate mill for manufacture of newsprint,
from Southern pine. Company also contemplates the sale
"...
•'
common
stock
Dec. 23 filed 238.829 shares of common
Co.,
»
non-cumulative
4%
$1,000,000
public. Common may be bought only by patrons and
members. Price—At face amount. Proceeds—For acqui¬
sition of additional office and 'plant facilities.
Co.,
development.
common
stock purchase warrants.
Underwriters—
Craigmyle, Pinney & Co., New York; Winslow, Douglas
& McEvay, New York, and Jenks, Kirklancl & Co., Phil¬
adelphia.
Offering—To stockholders 011 basis of two
shares of stock and one warrant for each share of com¬
the
Leavenworth, Wash.
Jan. 21 (letter of' notification) 598 shares of non- assess¬
able common stock;
Price—$100. For mining property
Mining
filed
16
Pa,
Philadelphia,
Co.,
453
Kansas City,
Cooperative Assoc.,
Cement
564,906 shares ($1 par) common and 282,-
filed
12
Co., Inc., New York,
&
Portland
Giant
Jan.
($25 par); $4,000,000 of 3V2% certificates of in¬
debtedness
cumulative; and $1,000,000 of 1V2% loan
certificates cumulative. No underwriting.
Offering—To
.
•
(2/2)
Y.
stock
San Francisco
Nov. 28 filed 99,700 shares of common stock (par, $10).
Underwriter—None. Price—$25 >a share. Proceeds—For
working capital. :•
•
./
-
;
N.
Inc.,
Missouri
Oct.
150,000 shares ($2 par)
No underwriting.
For
working capital. ' Offered to common stockholders of
Philip Blum & Co. Inc. of record Dec. 22. Rights expire
Feb. 20.'
; :• ■
•
,\yt';:
Publications,
(2/3)
Corp.
$1). Under¬
Proceeds—Stock
being sold by four stockholders whd, will receive pro¬
ceeds..
Price by amendment.
J''-;/'• ' Vv"''1 '
writer—Burr
(letter of notification)
Consumers
Distilling Co., Chicago
B.)
26
Jan
100,000 shares
(James
Y
•
Conover-Mast
Instrument
Nov. 14 filed 150,000 shares of common (par
2,250 shares of common
stock (par $1).
Price—$22 per share. Underwriting—
None.
Additional working capital.
»
' '
Inc., New York
($1 par) common (name to
be changed to American Steel & Pump Corp.) Under¬
Beam
Underwriter—Emory
ington, D. C,
General
Mount Rainier, Md.
$68,000 of 6% debenture
S. Warren & Co., Wash-
Co.,
(letter of notification)
bonds.
and for
Finance
Registration
SINCE PREVIOUS ISSUE
INDICATES ADDITIONS
Commercial
Arbor, Mich.
40,000 shares ($5
notification)
Price—$5
common.
and
Broach
(letter of
in
Now
DEALERS
THE COMMERCIAL
.Volume 167. Number 4668
Merchants
;
:
,
Jan. 20 filed
—G.
__..—_ -
_
-Equip. Trust
Ctfs.
/
; : Chesapeake
r;;:. Noon
,
Common
- ----- r - - - - -.- - -
February 3, 1948
General Instrument
Corp.-,.--—
Trust
__
Ctfs.
-Common
Co.—_
Pacific i
——I—-
-
-
facilities.
present
-Condit.
&
Sales
;
Pacific
Tel.
March
&
;
V
April 6,
Offering
postponed
due
to
stockholders
common
on
the basis of
Northern Indiana
.
.
Public Service Co.
2
First Trust Co. of
p.m.
fered
To pay indebtedness.
prove
•
3
Dec.
Products Co., Inc., Emporia, Kans.
of
(letter
notification;
3,lo7
a
Ocean
Detroit
100,000 shares
Co.,
;
;
-
Downs
•
Berlin, Md.
•
Jan. 9 (letter of
derwriting.
Price — $10
trotting and pacing race
O'Donohue
Kuner-Empsom Co., Brighton, Colo.
bonds,
refunding
Jan. 19 (letter of notification) $125,000 first &
Writer
.For
Denver.
Christensen, f Inc.,
and
plant improvement.
Ltd., Toronto, Canada
June 27 filed 300,000 shares ($1 par) common treasury
'stock.
Underwriting — To be supplied by amendment
Price—50 cents a share. Proceeds—To develop mining
Legend Gold Mines,
properties.
•
,
21
Jan.
(letter
common
Cleveland,
Co.,
stock
of
notification)
and
4.000
shares
•
1,000
shares
Class
A
(no
par)
common.
McColl-Frontenac
the basis of
on
or
Oil
United
States
funds.
ex¬
Proceeds—To
retire
bank
indebtedness
and
to
Bonds
six-year
Market
Basket,
Pasadena, Calif.
shares (50c par) common. Under¬
writers—None. Offering—Shares are to be issued upon
exercise of cobimon stock purchase warrants issued in
Dec.
30 filed 27,788
July, 1945. Price—Two shares
per
Jan.
Mercantile
19
Acceptance Corp. of Calif.
(letter of notification) 2.092shares
of
first
preferred 5% series stock. Price—$20 each. Underwriter
—Guardia Securities Corp., San Francisco., For gen¬
eral corporate purposes.
- .'J,
.
,
...
.
103,113 shares
&
($1
par)
(2^3)
common.
^
Under¬
Co.
of
one
4
share for each
p.m.
and for
(Fla.)
(EST)
Feb.
11
2.
construction
Electric
shares held.
Rights
Proceeds—To
retire
purposes.
4
Co.
filed
notification) 300 shares of capital stock.
underwriting—For working capital.
No
Union Trusteed
Funds, Inc., New York
Dec. 29 filed 657,500 shares of
capital stock. Underwrit¬
ers—Lord, Abbett & Co., Inc., New York, is
selling agent.
Price based on market
prices., Proceeds—For invest¬
ment.
•
Wilson
Engineers, Inc., Springfield, Mass.
1
23
(letter of notification)
1,100 shares-($50 par)
6% cumulative preferred
stock, and 5,481 shares ($1 par)
commoirstoek. No underwriting. To
expand business.
Jan.
under
,
Proceeds—To finance
of electric, gas and steam facilities
^
Latch
■
Pittsburgh Steel Co.
Wisconsin
;
De^
29
filed
Power
&
Light Co.
$3,000,000 30-year first mortgage
bonds,
Series B, and 30,000 shares
preferred stock.
($100 par) 41/2% cumulative
Underwriters—Only the bonds will be
underwritten under competitive
bidding terms. Probable
Bidders—Halsey, Stuart & Co. Inc.; Glore, Forgan & Co.
and Harriman
Ripley & Co.
(jointly); W. C. Langley &
White, Weld & Co. and Kidder, Peabody & Co.
(jointly); Blyth & Co., Inc.; The First Boston
Corp.;
Co.,
Shields & Co.
Offering—Bonds will be offered publicly
while stock will be offered to
holders of 4%% preferred.
Price by amendment.
Proceeds—To pay bank indebted¬
ness and for construction
costs,
v..
.,,.4* -s
Nov. 20 filed $6,500,000 of first
mortgage bonds, due 1967.
Underwriters—Kuhn, Loeb & Co.; A. G. Becker & Co.,
-
Inc. and
Hemphill, Noyes & Co.
Proceeds
—
To refund
Price by amendment.
outstanding first mortgage bonds.
Temporarily deferred.
•
Plantation,
Inc., Boise, Idaho
(letter of notification) 300,000 shares
16
Class
A
of
non¬
($1
par) common stock. Price—$1
underwriting. To improve clubhouse and in¬
stall sports facilities.
each.
No
Prospective Offerings §
Chesapeake & Ohio Ry. (2/3)
<
Company will receive bids up to noon (EST) Feb. 3 at
;3,400 Terminal Tower, Cleveland, for the sale of $4,900,000 equipment trust
certificates, to be dated Feb. 15,
1948, and due annually Feb. ,15, 1949-1958.
Probable Bid¬
(par $10). Un¬
by competitive bidding.
ders—Halsey Stuart & Co. Inc.; Salomon Bros. & Hutzler; Harriman Ripley & Co., Harris, Hall & Co.
(Inc.).!
Chicago, Mil., St. Paul & Pacific RR. (1/30)
Probable Bidders—The First Boston
Corp., Kidder, Peabody & Co. and Blyth & Co., Inc. (jointly); Harriman
warrant at $6 a share.
Proceeds—For additional working capital.*
•
offered
24
construction
Jan. 20 (letter of
Co.
Price by amendment.
program
assessable
'
be
Phillips Tutch
Jan.
..
.
to
finance
Inc.
Offering—Offered to
stockholders of record Jan. 21 at $21 per share
Price—$50.
Underwriter—
/
Co., Portland, Ore.
Jan. 20 (letter of notification) 300,000 shares
(lc par)
common stock.
Price—25 cents each. No
underwriting.
To pay indebtedness and for
inventory.
A
;>
•
ment
/ V
Electric
Proceeds—To
t
filed
finance purchase of machinery and other plant equip¬
-•
par).
l-for-2
$6,000,000 30-year first mortgage bonds.
Underwriting—To be filed by amendment.
Price by
amendment. Proceeds—To
pay construction costs. Ex¬
pected early in February.
'
;
•
'Turf Equipment
Inc., Minneapolis, Minn.
City, Mo.
of preferential cumulative
($4.50
Beane.
Tampa
($1 par)
underwriting.
estimated to cost $235,000,000.
No underwriters.
Manhattan Coil Corp., Atlanta, Ga. V /
May 20 filed $500,000 5% serial deoentures, due 1949^1957; 12,000 shares ($25 par) 5%% cumulative convertible preferred and 85,000 shares ($1 par) common.
Un¬
derwriter—Kirchofer & Arnold, Inc., Raleigh, N. C. Price
—The debentures at 102.507, while the preferred sharei
will be offered at par and the common shares at $4
stock
a
t
expire
Dec.
Kansas
shares
&
bank loans
&
Weld & Co.
For development of mine properties and equipment.
each.
100,000
Inc.,
on
$7,000,000 30-year first mortgage bonds,
Underwriting—To be determined at competi¬
bidding.
Probable bidders: Halsey, Stuart & Co.
at the rate
will
'.:V:
Drugs,
common
Company will receive bids up to noon (CST) Jan. 30 at
Chicago for the sale of $5,040,000 equipment trust cer¬
Public
Service
Co.
of
New
Nov. 25 filed 139,739 shares of
derwriters—To be determined
Hampshire
common
Ripley & Co. Offering—Common stock first will be of¬
fered for subscription to present shareholders at the rate
on
one
share for each five shares held.
Unsubscribed
shares and the bonds will be offered publicly.
—To
pay
*
filed
common
shares
No
competitive bidding.
Probable Bidders Include—Halsey, Stuart & Co.
Inc.;
Morgan Stanley & Co.; Glore, Forgan & Co., and W. C.
Langley & Co. (jointly); the First Boston Corp.; White,
a
Price—20 cents.
25,000
each.
5
writer—Dillon, Read
Detroit
$4.25
l-for-10 basis and the
Dec. 24 filed
—
Lead, Inc., Spokane, Wash.
Jan. 21 (letter of notification) 500,000 shares of common
-
filed
20
stock.
Silver
non-assessable stock.
—
$25,000,000 first and refunding mortgage
bonds, due 1978, and 150,000 shares ($100 par) preferred
stock.
Underwriter
Morgan Stanley & Co. for the
.
Mammoth
Co.,
,.VV
Co.
Southwestern Public Service Co.
,
capital. V
participating
Jan.
$10 per
Rights
-
notification)
Price
Philadelphia
pire Feb. 18. Proceeds—For building expenditures and
to repay bank loan.
•
;
1';.
•
27
of
stock.
a
program.
Co., Topeka,
Kan., and the $332,500 balance will be used for working
capital and expansion of business: retail drug stores.
Offer will expire March
for each two shares held at
one
in Canadian
Co.
on
Fenner-
Underwriter—
for funds used to purchase McFarland
Drug
Co., Ltd., Montreal. Can.
Dec. 16 filed 900,000 shares (no par) common. Under¬
writing—None.
Offering—Stockholders of record Jan.
21 are given the right to subscribe for the new stock
share
City, Md.
Blosser, Chicago.
Price—$5.25 per share.
Proceeds—$140,000 will be used to reimburse company
•V-'4V/VV
/
(letter
Straus
$1 par stock of Great Lakes Chemical Corp. on the
basis of one share of McClanahan common for each two
V
Service
Chemical
Parkview
35c
for
15, 1948.
19
Jan.
shares ($1 par) capital stock. Un¬
Offering—Shares will be exchanged
shares of Great Lakes
Park
•
'".'4:^'.;-..": V-
Dec. 30 filed 260,000
derwriters—None.
Price—Par.
Gas
Inc., Lehman Brothers and Lazard Freres&Co.
(jointly);1
White, Weld & Co. and Kidder, Peabody & Co.
(jointly);
Blyth & Co., Inc. and Stone & Webster Securities
Corp.
(jointly); Glore, Forgan & Co. and W. C. Langley & Co.
(jointly); Harriman, Ripley & Co.; Merrill Lynch,
Pierce,
Probable
For working
McClanahan Oil Co., Grand Rapids, Mich.
;
Public
common
v
■_
un¬
First Boston
Jan.
($103 par)
preferred stock.
Price—$1 and, $100 respectively.
No
underwriting. To develop and promote manufacturing
and sales.
No
(Joseph J.) IV, New York
notification) $150,000 5.5% sinking fund
1948-1973.
&
series B.
bidders: Halsey, Stuart & Co. Inc.;
Corp.; Harriman Ripley & Co.; Blyth
& Co.; W\ C Langley &
Co., and Glore, Forgan & Co.
(jointly). Price—By amendment. Proceeds—To be used
for construction.
Expected in February.
The
Ohio
of
Nov.
Dec. 22 filed $10,000,000 first mortgage
bonds, series due
1978. Underwriting—To be determined
by competitive
■bidding.
;
,
..
Lic-Rich
Ocean
-
Electric
Southwestern Gas & Electric Co.
-y!/: V;/./VV/
Inc.,
common.
Carolina
Commonwealth & Southern Corp.
Proceeds—To build
near
S
Unsubscribed shares will be offered
publicly.
Price by amendment. Proceeds—Proceeds
together with
other funds will be used to
purchase all of the outstand¬
ing common of South Carolina Power Co. from the
&
Ohio
•
.^/VVV
*
share^
track
\
.-V/.V.-'
basis.
Co., Philadelphia. Personal, and business re¬
quirements.
*
■
mortgage 4V2% sinking fund bonds and 5,278 shares of
6% cumulative preferred stock ($10 par). Underwriters
—Peters,
series
Bioren
($10 par)
a
Ross-Smith/
A
Salle-Ann
tive
Nov. 28 filed 34,900 shares
A
'•
Products Co., Inc.,
Baltimore, Md.
(letter of notification) 400 shares ($3 par) com¬
stock. No underwriting. For materials. '*
ferred
l
(letter of notification)
($3 par)
participating stock. Underwriter—Carr & Co.,
Detroit.
To purchase machinery and provide working
capital.
12
Jan.
class
Rights expire
V
M.
*-o
($4.50 par) common
for sale, and 687,293 shares reserved for
conversion of
preferred. Underwriter—Kidder, Peabody & Co., New
York. Offering—Shares initially will be offered for sub¬
scription by company's common stockholders, the pre¬
of¬
;VV,
Proceeds go to Alban
V.
Dec. 2 filed 80,858 shares
($50 par) cumulative convert¬
ible preferred and 404,293 shares
im¬
Racing Association,
:
additional retail stores.
preferred
Proceeds—To
ex-'
Shops, Inc., St. Louis, Mo.
22 (letter of
notification)' 175 shares of Series B
preferred stock ($100 par). No underwriting. To
open
Bay, Wis.
notification) 5,000 shares (no par) com¬
Price—$10 each. No underwriting. To construct
terminal.
.,
Manufacturing
•
Northern Transportation Co., Green
mon.
Torrey.
/South
shares will be
com¬
For
Jan.
one
Inc.,
(CST), Feb. 2. Unsubscribed
publicly. Price—$18 a share.
its public utility system.
&
S and
mon
(2/3)
one
{$5 par)
underwriting.
Jan. 23
Jan. 19 (letter of
pa*;
snaies
preferred. Price—$95 a share. Undewriter—Kenneth Van
Sickle, Inc., Emporia. For additional working capital.
Kerr
•
New
Bonds
•
•.
-
Corp., New York (2/2)
(letter of notification) 2,000 shares of common
(par 5c).
Price—$4 per share.
Underwriter—
President.
Chicago; The First Boston Corp., and Blyth & Co. Inc.,
York.
Offering—For subscription
by common*
1948
Cruttenden and Co., Chicago, and the
Kansas Soya
•
26
Cohu
stockholders of record Jan. 19 on basis of
share for each eight common shares held.
Lincoln, Neb.
'
Rock
Ross-Smith
Jan.
.stock
Oct. 29 filed 272,694 shares ($26 par) cumulative
pref¬
stock. Underwriters—Central
Republic Co.
j.Bonds
Co
Gas
development of mining property.
Red
•
market
erence
California
Proceeds—For exploration
mon
stock, iPrice—$6.75.
No
pansion and working capital.
common share.s held. Price by amend¬
Proceeds—To pay off indebtedness.
ment.
.
Southern Counties Gas Co.——
Southern
.
share for each six
1948
May 4,
,
L
subscription to
1948
Co.——— .Debentures
Tel.
cumu-;
agreed to purchase all shares not subscribed for by other
stockholders. Offering—The shares will be offered for
Bonds
16,
funds.
•
;Remington Corp., Cortland, N. Y.4 'V
Jan.,22 (letter of notification) 8,100 shares
;;VV''Vv
Inc., Boston, Mass.
Dec. 24 filed 83,333 shares (no par) $1 cumulative con¬
vertible preferred. Underwriter—Atlas
Corp., owner of
100,000 shares of the registrant's common stock, has
Agreement
Light Co
>"
Power
:
$4 dividend
Northeast Airlines,
'•••'
February 9, 1948
Iowa
St.,Louis
Underwriter—Smith,
Common
—
Monsanto Chemical Co.,
conditions.
•'
-
Canadian
Reiter-Foster Oil Corp., New York "
Jan. 16 (letter of
notification) 180,000 shares (50c par) *
•
common
stock.
Price—80 cents.
Underwriter—Frank
.V*
W. Bennett & Co. For
working capital.
1948
February- 6,
•.
Chicago Rock Island &
in
•
Barney & Co., New York.
Price to be filed by amend¬
ment.
Proceeds for general corporate purposes includ¬
ing financing new plant construction and additions to
———Equip. Trust Ctfs.
Service
Public
share
Bottling Co. of Cleveland
Jan. 23 (letter of
notification) 40,656 shares ($1 par)
common.
Price—$1 each. No underwriting. For work¬
ing capital.
-''
•••*
Business—Finance
Nov. 28 filed 250,000 shares (no par)
lative preference stock, series B.
Northern Indiana Public Service Co- --Preferred
Southwestern
•
Mid-Continent Airlines, Inc., Kansas City, -Mo.
Jan. 9 (letter of notification) 30,601 shares ($1 par) com¬
mon
stock.
Price—$6 per share. Underwriting—None.
-
Equip.
Pennsylvania RR.__,
cents
a
and
For working capital and equipment.
/•".
(EST)--——^
Underwriter
'
.
Mirres, Ltd., Toronto, Can.
Jan. 7 filed 460,000 shares of
common stocks Underwriter
—Mark Daniels & Co.,
Toronto, Canada. Price—25
•'
Co.
paying off bank loan.
Red Lake
53
-
-Common.
& Ohio .Ry.jv.i-
&
business.
i..CQnover-Mast Publications, Inc..^
Corp.. ,—-
Walker
ceeds—Toward
February 2, 1948
Ross-Smith
75,000 shares of class A stock.
Raleigh
\>,v
Offering—43,383 shares will be
like amount of outstanding old
class A shares,
Unexchanged shares and the additional
31,617 shares will be sold publicly. Price — $13:75. Pro¬
January 30, 1948
(CST) -1
Worcester,
■:•<.[< A''-: v- v,.. ■'
offered in exchange for a
Chicago, Mil., St. Paul & Pacific
Noon
H.
(537)
Corp.,
Mass.
•
-
FINANCIAL: CHRONICLE
Acceptance
H
NEW ISSUE CALENDAR
&
Proceeds
off loans and for construction purposes.
tificates series CC, to be dated Feb.
1, 1948, and matur¬
ing F. & A. 1 from Aug. 1, 1948 to Feb.
1, 1958 in¬
clusive.
Probable Bidders
Halsey,Stuart & Co. Inc.;
—
Salomon Bros. &
Harris. Hall & Co.
(Continued
on
page
54)
(Inc.)...
v
1
54
TjHE COMMERCIAL
(538)
(Continued from page 53)
•
Chicago Rock Island & Pacific JtR. (2/6)
^
Company will receive bids up to noon (CST) Feb. 6
at its Chicago -office for the lowest interest rate at
which bidder will provide not to exceed $1,240,000 to
finance four Diesel passenger locomotives, under a con¬
sales
agreement.
Edison Co., Chicago
The First Boston -Corp. and Glore
Forgan & Co. are forming accounts on any securities
company may sell to finance proposed $100,000,000 expansiort program. Halsey,, Stuart & Co. Inc. may bid
on any bond issue.
Commonwealth
•
Jan.
New
s
-
22
syndicates
reported
>
•
Pacific
-
Jan.
bid
to
onii
of
company
stock for
common
Scott
in
tbcohneettne
7)
Jan..
held.
"
intends to, offer ^;680,953
subscription/at par ($25)
^Utzler/7
Pacific
-
Telephone & Telegraph CP.
Gulf States
Utilities
(.3/16)
;
Co.
reported company plans an offering of $10.0jD0,-'
000 new money bonds. Probable Bidders-^Stone & Web¬
ster Securities -Corp.; Halsey, Stuart & Co. Inc.; Salomon
International
23
Bank
for
Reconstruction
&
reported the - bank
by
would be to
•
Louisville Gas &
Jan.
bank
&
The
conditions.
/
Corporation
$2,000,000.
at
bonds
new
ferred stock
no
at
more
(5/4):
noon
be
sharehold¬
will become known on Feb. 10,
1948, when the subscription rights
terminate. The subscription price
is $51 per share.
share
of
each
for
record
been
wide
the
basis of
27,
underwritten
investment
a
zuela and the MidcUe East
on
the
indications
are
that the
Particular
Gulfs
interest
to
production possibilities m;
the Middle East based on a whollyowned
subsidiary's 50%
in Kuwait Oil Co.,
Ltd.
Gulf
will
interest; 11,345,250 shares of Capital stock.
Produc- Funded debt of $187,000,000 at
tto from the Kuwait pre^rty to
1947 averaged 20,000 barrels of
Dec.
31
l347
'
consisted
,
of notes
.
crude oil a day and current de- ! held by banks and insurance comvelopment points to a daily pro¬ panies and a wholly owned sub¬
duction of 250,000 barrels daily sidiary.
V..
f
.
the1
but
'
Co.
directors
28
authorized
of rights Which,
subscribe, at $12 per share, to
additional share for each eight shares of common;
stock
stockholders
(par $10)
issuance
to
held
on
Early registra-'
Traditional underwriter, Paine,
March 9, 1948.
;
Webber, Jackson & Curtis.
a
proved
to
decidedly
part
any
which
long spell. °
of 7$360'
is calculated
it
Chances
/that equities of well-
milljpn
the
»
mar-
are
it will be
done' in
several stages, however.
1
large block of Bendix
Corp. common within a
General
of
certainly proved the wisdom
of those in the
ness
.
underwriting busi¬
to
new
the
mortgage
Tuesday.
bonds
The
to
the
the
public
at
sold
general
Light Co. is understood to be
working on plans for $3,000,000*
new
mortgage bonds, plus $5,800,-
000 of
the
ably
on
attended the previous financing
*
:
/
delay
Gulf States Utilities Co.
ing
is
of
said
to
plan
$10,000,000
"bonds.
This
over
mean-
offer-
an
new
money
undertaking
7
:
~
may
until April, depending, T
of course, on market conditioais.
-
Meanwhile, Pacific Gas & Elec¬
in
going
through with its financing plans;
Which included the projected re¬
financing of $7,657,000 in out¬
standing bonds, plus $16,000,000 in
new money, is proving costly to
Rochester Gas Sc Electric Corp.
Initiated early
last year, this
plan ran into trouble with the
here contrasted with that which
of the company last July.
enforced
into • registration
7 J
go
fortnight.
a
while
Rochester Gas
/ The
debentures and prob¬
new
will
within
go
setting
making plans,
financing In.
future.';/Utah Power &.
are
near
^
in¬
and was
at $28 a
approximately
or
time
issuer,
.
r
moderate-sized
the
try and the aviation business of¬
fering good promise for the future,
investors evidently needed little
coaxing on this one. ~
marketing of
New York Telephone €o.'s $60,,006,000 of new 30-year refund¬
ing
the
utilities
for
by
With both the automobile indus¬
The big event of the week, of
was
from
held
prevailing market.
securities.
course,
stock,
399,990 shares
offered
share
along that given quality and rightpricing investors can be attracted
Motors
formation of
volved
tvho haven't contended right
of
'■■■■■;
Utilities Prepare Issues
Two
block
This
week
group
outstanding
have
Co.,
short period.
The splendid reception accorded
several large new offerings this
tric Co.
for
of
an
is expected to move soon/
offering of 686,953 Shares'
its. $25
par
common
stockr to"
shareholders, at par,, in the ratio-'
reflecting, to some
of one.new-share for each ten now.
extent, the change in money mar¬
held. / /"7;-;/,.
ket conditions in the interval, ithe
over-all
picture
was
decidedly
more to the liking of the institu¬
With Cariivi. :
and
tional buyers who absorb the Ipul'k Public; Service Commission
of these high-grade issues;
/1 wound up in a test suit in the Loeb, Rhoades
77
/ ;. (Special to Thb PwAMcut cmbKiax)
courts which upheld the conten¬
r
Bankers paid the Company a
tions >of the utility in the case.
MIAMI BEACH, FLA.-^Mertoii
price of 100.85 for the issue and i
Getti's
is
with* Carl
M,
<Bui now ihe oompany has ^deLoeb, 7
redffered
at
101.43 Xtir /YteWF11
Rhoades / &, Co.# 1011'/ Lincoln /
3.05%; Get.ting immediately ; cided to* foregoing the refinanc-7 Road. ♦.'ir
7:.7-V.
■ ■7 7
ing and its $9,O20,0OO of new
SEC clearance,
bankers were
/ bonds may carry a 314% coupon
able to announcer oversubs£rtp-> ^
IWid, its <hew- preferred /a dlvi- -I
tion in hardly an hour's time. &:}
With
dend' rate of as much as 5%,
While two of the Big, Five life
(Special to The Ftkancial/Chr^tsxbJ '• •. • i*
against maximums of 3% and ;
companies were reported but <©f
ST. PETERSBtMG,
*originally proposed.
7 /1 1
This
time
.
•
j
;
-
.
-
HenMfWaddett7«
"
v
'
After completion of this financ¬
ing
a
Aviation
three
attaches
Electric
-
of
pose
new
corpora--
In addition, the company
sell $2,500,000 of common stock to
But, al¬
companies also can be ready,/two large groups,
both,
marketed when terms and condi¬
headed by New York banks, are
tions surrounding a situation are in
process of formation to seek the"right," bankers were able to dis¬ bonds.
'■ 7
great tinn's capital expenditures in 1948 the market, general demand
world concentrations of crude -oiL will be larger than those of 1947. exceptionally brisk.
'
Gulf," the
preparing to enter the?
$12,000,000of bonds and4
with
known
has
nation¬
banking
is
company
March
Big Block of Stock
1948,
by
in
tion with SEC expected.
recalled,
Proving
held
shares
four
Jan.
on
one
headed by The First Boston Corp.
The dollar volume of the entire
Rights to subscribe for the shares
operation, the largest piece of will
expire on Feb. 10, 1949/
equity financing in recent years,
Proceeds from the sale of the
is around $115,721,550.
Also no¬ stock will be added to the
corpo¬
table is the scope of the under¬
ration's general funds.
Among the
writing machinery which was set uses to which the funds
may be
up for its handling.
A group of applied by the corporation and its
over
500 firms, representing all
subsidiaries or companies in which
sections of the country, partici¬
the corporation has investments
pated in the distribution of the are the acquisition and develop¬
1,213,443 shares.
ment of properties for additional
The big public demand for the
oil and gas production and the
shares sold and the prospects for
expansion of refining, transporta¬
an
unusually large response by tion and
marketing facilities. Dur¬
stockholders to the corporation's
ing the 11 months ended'Nov. -30,
offering of the remaining shares 1947, these expenditures amounted
were attributed
in underwriting; to
$149,363,000, of Which $80,691,circles
to
Gulfs
exceptionally 000 was primarily for crude oil
strong position in petroleum and exploration and production; $5;gas reserves its substantial earn¬ 241,000
for pipe
line systems;
ings, conservative accounting $17,072,000 for marine equipment;
practices, and its outstanding po- $14,522,000 for refining; $26,720,000
sition a£an integrated unit in the for
marketing and $5,117,000 for
petroleum industry.
miscellaneous expenditures.
Ac¬
Gulfs major sources pi jgvide,
cording to the prospectus, present
oil are In the United States, Vene¬
Persian
forj
debenture
ket is able to take at that time. /
Corp. and associated underwriters completed
Jan. 28 the sale of 1,213,443 shares of Gulf Oil Corp. stock at
offer to its remaining
-r.>
$100
Power Co.-
Wilson-Jones
one
sticky for
Boston
on
late
Penn
entitle
reported company plans filing with the SEC late
bonds, with bids to be consid¬
ered on May 4. Proceeds for extensions. Probable Bid¬
ders—Halsey, Stuart & Co. Inc.; Blyth & Co., Inc.; Mer¬
X
which is
•
Jan.
March $15,000,000 in
$59 per share. The offering was heavily oversubscribed. These shares
represented the "Mellon interest" in Gulf Oil Corporation's offering
to stockholders of 2,269,050 shares^
of
additional
stock;, and were from this source by 1951. Develavailable
to
the
underwriters opment costs are expected to be
through the purchase by them of provided out of Middle East earn¬
the Mellon subscription warrants. ings.
The
offering to stockholders,
The result of the Gulf Oil Corp.'s
ers
une
minority common stock-•
holders would
receive
subscription rights.
Probable
Bidders for Bonds and Debentures—Halsey, Stuart & Co.
Inc.; W. C. Langley & Co. and The First Boston Corp.
(jointly); Lehman Brothers.
"
Group's Offering of Gulf Oil
1,213,443 Shares Heavily Oversubscribed
at
West
Jan. 16
in
Penn
reported
also proposes to
orignally planned to offer the
than 3% interest and the pre¬
Southern California Gas Co.
28
$5,000,000 of preferred stock.
maximum dividend rate of 4%%.
a
-West
market
60,000 a^tloiMviiommon
General^ Public Utilities Corp., for
shares to its parent,
First Boston
First
$10^000,000 30-yesir 1st; & vet mtge. bonds (to be "sold i
eompetitvely)' and to offer to commoh; stockholders ]
rights to- subscribe at rate of
b
fe^^^^^omprise''-'
financing
new
-
Co.
Ripley & Co. (jointly).
The
;
'v.
Virginia Electric Power Co* >.
.
Jan.
$9,020,000 bonds which are to car^th^fefeXinterest
of 3 V2 % and $5,000,800 new preferr^
Is to
have a dividend rate of no more than75%.< 'Trt^addition,
Inc.; The First Boston Corp.;
Kidder, Peabody & Co., and Stone & Webster Securi¬
ties Corp. (jointly); White Weld & Co. and Lehman
Brothers (jointly); Blyth & Co., Inc., and Harriman
Stuart
-J
^.-v
•
'•.
\
'
-
Jan. 23 company announced proposal to offes* to public)
reported
the company proposes to sell
$6,000,000 and $10,000,000 new first mortgage
during the spring. Proceeds will be used to pay
loans and plant expansion.
Probable Bidders—
Halsey
27
corporation has afoanrifmed plans to
$7,657,000 bonds outstahdlngpbt^ will proceed:
with $18,020,000 of new financing. Abandonment of the
bond refunding has been decided bh/because of market;
Narragansett Electric Co.
bonds
\
0
refinance
Electric Co.
Jan, 12 company disclosed that it plans the sale of between
tures.*;
.
(Ky.)
Jan. 22 reported possible sale of some $35,000,000 bonds
in-near future.
Probable bidders: Halsey, Stuart & Co.
Inc.; The First Boston Corp.; Lehman Brothers and Blyth
& Co., Inc. (jointly).
,
•
the
$11,753,800 of 15-year convertible ;
Pennsylvania RR. (2/3)
debentures.
Preferred stockholders will - vote on pro-i
Company will receive bids up until Feb. 3 for the pur- ;;
posal March 5. Probable Bidders for Bonds—Stone &,
chase of $10,890,800 equipment trust certificates, series
Webster SecuritiesGorp^ The First Boston Corp.; Glore,!.
S, to be dated July 1, 1947, and due in 15, annual in¬
Forgin & ,Cp^, and W. C. Langley & Co. (jointly);)
stallments.
Probable iCo.
Halsey, Stuart & Co. Inc.; White Weld & Co.; Merrill;
Inc.; Salomon Bros. & Hutzler,
L ; ' v
Lynch, Pierce, .Fenner & Beane, and -Hallgarten Sc. Co. \
•
Rochester (N. Y.) Gas
'
(jointly). ::
P !
may launch another bond
mid-summer. The purpose1 of the offering
provide funds for loans to South American
countries. Applications-for such loans are now under
consideration by the bank, but the identity >of the wouldbe borrowers is to be withheld pending definitive ac¬
tion on the requests.
issue
^i-
.•
•
Development
Jan.
-
-i'
each 25 Shares held to
Bros. & Hutzler.
t
Commission; has authorized
to sell $75,000,000 30-year debentures at com¬
petitive bidding. The money will be Used to retke loans ^
from American Telephone &Telegraph:;G07'7^:eonstruction and other corporate purposed. Probable Bidders
—Morgan Stanley & Co., Halsey, Stuart/fic Ca7 InbV'Ex—7
pected that bids will be opened about March: 16.
;
Jan. 28
;
U,
P.
company
.
•
California
t *
Utah Power &
Light Co.'" •:
J an 28 reported compa ny working on plans for $3.000,-!
d00\ new. mortgage bohcls, plus $5,000,000 new deben-f'
,
The
reported -company /plans ' sale of $10,680,0001
trust certificates about Feb. 20.
Probable ?
Bidders-fHalsey, .Stuart & Gp. Inc.; Salomon Bros. &'
>;
.
•'
■
22
it/'/' / //;■*/?■
J
equipment
by ^stockholders in ratio of one hew for each 10 - shares
$30,000,000 debenture issue to, be; offered ^ near future.
Probable Bidders^Wfaite* Weld & Co. and Paine, Web¬
ber, Jackson & Curtis (jointly); Dillon, Bead & Co.
Inc.; The First Boston Corp.; Halsey;, Stuart & Co. Inc.;
Morgan Stanley & Co.
) ,
;
77; •J/*/"*
i.•'*'» V:////
new; .';
r.ys" v
ElectrieOo*:;-:4--»:
&
Gas
announced
27
shares
being: formed
generating plant
7,500-Kilowatt
a
County, Mo., and a transmission lihe
units with present distributor
Consolidated Natural Qas Co.
Jan.
<
York -Chicago
company
build
to
reported
23
Thursday, January 29, 1948
& St. Louis Rfti77' ;777i:7'.'V':>' rill Lynch, Pierce, Fenner & • Beane; Harris, Hall &'
Co. (Inc.). 7
^77-7,77,'" rP'-.Tp.v 7/.77:;7 v-Khihk
plans sale of $1*400,000 serial equips
ment trust certificates at early
date,^..-C^iiScdtes'^w^I;^ P ' Southern Counties Gas Co* 44/6)- 7\7yVr?://v7:}
be dated March 1, 1948, and will raatureannually for/
Jan. 16 reported company plans filings with the SEC late
10 .years.
in February $7,000,000 in
bonds, with bids to be consicH
ered on April 6. Proceeds for extensions/ Probable
•
Oklahoma Gas & Electric -Co."
/7//:>
Bid-)
The company has applied to the Arkansas P' S Commis¬
ders—Blyth Jc Go., Inc ;- Halsey, Stuart & Co. Inc.j The*
First
Boston Corp, and
sion for authority to issue an additional $2,500,000 3^4 %• '
Harris/ Hall & Co.
(Inc.) 7
(Jointly); W. C. Langley & Co.7 and Glore, Forgan &U
bonds, maturing in 1971. The proceeds would be used
•
>
Jan. 27
ditional
FINANCIAI/^CHRONICLE
&
was
•
shorter maturity; this issue-runs
five years shorter than the
sold
in
one
July and, likewise* the
much
ipore
basis
points
liberal
better
yield, 0.44
than
the
2.61% afforded by the previous
issue.
The older
rest
A.
nected
Buyers evidently liked the
/
Ohio's Bonus Bonds
bonds, it will
MacGibbon
FLA.—-Fpr-'
is
now'cph-'
with
Herrlck, Waddell &)
Although looked upon as about
" • '
six weeks away, Ohio's big Soldier Co., Inc., of New York.
Bonus -Bond issue is naturally a
topic of recurrent discussion in Joins Buckley Bros. Staff 7
market,
circles; particularly since
York
(Special -to The- Pinastctai, CRRlnt^iote)'
State decided to get
LOS ANGELES, CALIF.—Gaius •
along temporarily via short-term
W. Perkins has' become affiliated
financing.' • /
/'''
! 7:
with Buckley
The issue, now expected about
Bros., 530 West)"
New
the middle of March, could run
Sixth Street.
'
'
-
Volume
Number 4668
1-67
THE COMMERCIAL
take -over.
what
Tomorrow's
they're
I have
Says—
reflects
So
baiting Congress is
messing things up.
v
/ •
*
I
watch
a
vote
our
By WALTER WHYTE=
does.
is
say
boy in college who'll
be called upon to fight, and
maybe die in a war because
Walter
Market
that
and
quoting people who
papers
should know. But I also know
Markets
=
At least
the
*
want peace.
Congress di¬
Washington prosperity.
for market direction.
❖
don't
I also want
I most certainly
inflation
want
and
a
our
na¬
Anyone who reads this col¬
umn
regularly is aware that
tional economy. All the hoop¬
la I read about small profits
I seldom advise short sales.
doesn't
It
impress'
a
also
understand how
items
long distance advice imprac¬
I try to make
profits by
trying to foresee trends. If I
can
balance sheet and I
read
isn't that I have
any scruples.
It is the mechanics that make
I
me.
be
can
can
certain
disguised.
I also know that
going,
man
things are
high that the little
so
the
—
backbone
of
our
ideal way to
1929-32
into
who
I'm
profits.
Back in
was going
There's no
cellar.
enlarge
were
that. Those
on
around know what
talking about.
The fact
that my profits came out
we'll
and
of
somebody else's misery didn't
all
be
catapulted
off.
Well, I don't want to be
catapulted. In exchange for
that I'm willing to
give up
Today my personal profits something today. That some¬
must be
secondary to a na¬ thing was succintly expressed
tional interest, or more
spe¬ in the Baruch report.
y
*
sjs
sjs
cifically, my own interest. I
.concern
don't
me.
o
to
mean
^
wave
•
the
by Section 102 of the Inter¬
Revenue
terest
Bonds. Issue Oversub¬
tended
to
scribed.
against the
An
bank
at
flag.
I
don't
But I'd like the business that
fears
gave me my beer and cham¬
think
bogey
are
the
Baruch
man
stuff. I
care
who the next tenant will
j
do
is
care
about what
doing,
if inflation takes
But I
-—I'm
Congress
a
real hold
referring to the
ket—I'll make
mar¬
banking group
headed by Morgan Stanley & Co.
made public offering Jan. 27 of an
issue
of
$60,000,000 New York
Telephone Co. refunding mortgage
force
loans
factors
an
and
have
expansion
would
of
success
of
tional
3.05%.
after
The issue
An
country
things,
at
cost
a
wouldn't touch with
a
I won't make
ciates in competitive
Cutting
taxes is
my
derful. (I'm for that.
big boy
I little
I
now.
divide.
even
I
can
for
won¬
But I'm
keep and eventually build
something
soap
than just
to
sale
the
Fifth Avenue
A regular
(75(*)
Company
to
this
that
share and
per
Cents
dog isn't going to help
than
more
Sure,
v
The
me
—Walter
for
\The
short time.
a
Europe
Commies
is
irticle
starving.
trying to
are
Hme
views
do
not
coincide
expressed
necessarily at
those
with
Common
Stock
Company,
13
of
share
per
Tiie
an%
tfu
of
of Qew
construction
11 months of
194/.
is
at
the
few
next
a
high
level
years.
On
of
cash
program,
the
the
to
Financial
New York Telephone
largest member of the
Securities
lii'J {
T.1
Coradine
ciated
Orders Executed
with
458 South
Schwabacher & Co.
.«•"
•
.,*Members
New
New
,
York
Stock
become
business
February
10,
Spring Street, members
\
regular quarterly dividend of One Dol¬
share
per
with
Paine, Webber &
Co. in Chicago.
Exchange
York Curt) Exchange
Street;
New York 5, N. Y.
increase
business
COr.tlandt 7r4150
Private
January 21, IS48
San
Francisco
Monterey
—
—
Santa
Oakland
Fresno
-—
Barbara
Sacramento
""
•'!'
pany,
1948 to stockholders of
ord
i
Secretary
on
in
in
output
H. M.
An interim dividend
(60(f)
on
No.
(Special
to
The
Financial
Chronicle)
MIAMI, FLA.—Henry C. Olive,
Jr.,
has
Trusteed
become
Funds
connected
of
Biscayne Building,
Florida
with
Co.,
-
=
jj
I
ERSKINE,
to
152
|
:
"of lixtyToft's
Uf
My ST®*-.V*
Common
the capital stock of The Borden
stockholders of record
Stock
1948,
DIVIDEND
the close
at
-V'y
,
of business
February 1 1, 1948.
E, l.
'1
"•
of a quarterly dividend of
sixty-two and one-half cents ($.62^) per
share payable March 10, 1948 to hold- (
Treasurer
ers
payment
of Common Stock of record February
25, 1948 who on that date hold regularly
issued Common Stock ($1.00 par) of this
Company.
EATON MANUFACTURING COMPANY
DIVIDEND
Board
Holders
NO. 93
outstanding common stock of the
Company, payable February 25,1948,
of business
former
CHAS.
One
Manufacturing
Company has declared a dividend of
Seventy-five cents(7 5c) per share on the
at
of
stock
issues
of
the
exchange is made.
of Directors
shareholders of record
F.
BRADLEY,
Secretary
Broadway, New York 4, N. Y.
Vanadium Corporation
the close
of
February 5, 1948.
America
H- C. STUESSY
January 23,
v
Secretary ^Treasurer
1948
420
Lexington Avenue, New York
17
Dividend Notice
Southern
At
the
Directors
Railway
on
Company
"the
DIVIDEND
from
a
New York, January 27,
the
cents
common
of
the
today,
a
per share
stock
of
Board
of
dividend
of
declared
was
the
Corporation,
payable February 13, 1848, to stockholders
of record at 3:00 o'clock p. m., February
5,
1948.
Checks will be mailed.
B.
I
NOTICE
meeting
held'
twenty-five
Dated
O.
January 26,
BRAND,
1948.
Secretary. | :
,
1948.)
de¬
Preferred Stock of Southern Railway Company
mand—& diminished inclination to
kave today been declared, payable as follows
spend
from
a
invest money."
Regard¬
ing intensification of credit con¬
on
the
"
WOODALL j
as
an
ent
Date of
Amount
anti-inflationary
would
of
are
of
encounter
formidable
Industry is urgently in
capital; but condi¬
new
not favorable for the is¬
new
securities, especially
equity securities. Individual sav¬
ing is discouraged by accumu¬
lated
rising
taxes
tions.
shortages of
prices
on
consumer
and
high
goods,
income
individuals and corpora¬
Corporate
saving
is
lim¬
N DISTRIIES
iNC.j
To Stockholders of
or
-
Payment
Record at the Close
of Business on:
-
trols
1
*
Company entitled to issuance of Common
Stock ($1.00 par) in exchange for their
holdings will be paid this dividend when
Cleveland, Ohio
The
\
The Board of Directors has authorized
the
noetzel
January 27, 1948
Lines
Company
share has been declared
per
Company, payable March 1,
to
from
\
Dated: January 24,1.948.
United States
DIVIDEND
inflationary
or
12,
rec-
the close of business
March 1, 1948.
at
."■iimiiimiiiiiiiiiiiiiiiiiiiiiiimiiiiiiimiiiiiiiiiiiiiiiiiiiiiiir
Tele¬
supply,weakening of
March
Vice President and Treasurer.
Bell
money
payable
=
Company,
come
§
1
|
the
=
of Eaton
the
=
share has been declared
on
i
Edwin O. Wack
Dividends oggregating $3.75 per share
sue
Teletype NY 1-928
Wires to Principal Offices
in
cents
1
February 4, 1948. Checks
but
rather
tions
With Trusteed Funds
:
,f
:
A dividend of 37^
\
Common Stock of
Southern Natural Gas Com-
Guaranty Survey," pub¬
monthly by the Guaranty
break
!
GAS
§
Company of New York con¬
in its January issue a dis¬
tains
1948.
Treasurer
Preferred
Cumulative
(SI.12j^)
of bank loans.
lished
1948
February 16,
GINSBERG,
on
Con¬
10,
=
sold
need by industry for
capital has forced expansion'
need
Francisco Stock Exchange
Chicago Board of Trade
record
March
Series, payable March 1,
half cents
will be mailed.
Guaranty Trust Company of New
...
San
14 Wall
of
National
per
a
1948, to holders of record at the close
of
Credit Restrictions
obstacles.
i*
(Associate)
payable
quarterly
declared
was
the
§
on
Stock, 4 !6%
of
pres¬
was
of
=
lar and twelve and
Giles Obstacles lo Bank
Stock
'•
regular
a
share
The Board of Directors has declared the
graph Company.
Trust
Secretary.
Birmingham, Alabama
After completion of this financ¬
"The
as
1948.
Common Stock Dividend No. 36
§
A
without par
Angeles
1948,
per
NATURAL
=
and
2,
SOUTHERN
''77'1
thereto
Los
FRAHER,
pay¬
record
iiiiiiiiiiiiiiiijk
A regular quarterly dividend of 75i per
share on 1,298,200 shares of Common Stock
the
of
February
1948.
move,
Ex¬ the
Guaranty states:—
change.
He was formerly with
;7 "Any attempt to place close re¬
Carter H, Corbrey & Co. and prior
strictions on bank credit at
of
holders
on
has
share
per
CONTAINER
Stock
HARRY
and Utica.
an
asso¬
22,
30c
stockholders
BUTLER BROTHERS
Albany, Binghamton, Buf¬
falo, Schenectady, Syracuse, Troy
Chronicle
Gross, Rogers & Co.,
on
pacific Coast Exchanges
has
to
Corporation
on
Sys¬
tem, furnishes communication
services, principally local and toll
telephone service in the State of
decrease
"
of
Common
tainer
$125,000,000 of series D bonds in
July, 1947.
Gross, Rogers & Co.
The
1948
business
15c
Company,
COMPANY
during
company
spiral is not likely to
to
January
dividend
have
|
requirements of the construc¬
tion
of
close
January 27, 1948
ex¬
Because
inflation, and concludes that
ANGELES, CALIF —Reese
of
of
this
Y.
1948
Edmund A. Harvey, Treasurer
pected that such expenditures wil]
continue
initial
Special
of
N.
22,
March 1, 1948, to stockholders of record at
which
It
4,
Company
Checks will he mailed.
T. R. Coradine Is With
LOS
dividend
a
Stock
16,
close
this
CORPORATION
American
payable in
the
These obligations were in¬
curred in connection with the
pro¬
cussion of the proposals to check
Pacific Coast
February
the
thit
^hrnnirle-, They are presented at
those of the author only.]
YORK
of
EDWARD
the Common Stock and
banks.
Whyte
in
declared
NATIONAL
extra dividend
an
(75(-)
short-term notes aggregating
$50,000,000 held by several New York
; new
'
NEW
Directors
Common
dividend of Seventy-five Cents
Tobacco
repay
; says urgent
Thursday.
STREET,
of
New York 3, N. Y
been declared upon
.
More next
a
day
the
on
Extra Dividend
an
asso¬
Seventy-five
bonds
Board
1/Oth Common Dividend and
the proceeds from
use
of
BROAD
The
^
V
the
York in its monthly publication
add and
know
of the hair of the
more
more
bubbles.
market."
CITY INVESTING COMPANY
25
of
bidding /earl¬
ier in the day at 100.85.
New York Telephone
the
is
DIVIDEND NOTICES
able
money.
-
to
a
much
as
10-foot
I
;
But what I make I'll be able
pole.
,
undertaken,
bond
it
as
support the
addi-
INCORPORATED
awarded to
was
Morgan Stanley & Co. and
a
is
long
to
necessary
government
effort
J&uvHcau (Jir&LccxdZmpuu^
offering it was announced that the
subscription
books
had
been
closed.
first
Federal
January
111
Shortly
Telephone
economy
that
operations
credit will be
tending to tighten
closely limited as
DIVIDEND NOTICES
gives every indi¬ in a
ing the company will have a total
doing. The current have to give it back in one funded debt of $260,000,000. The
outstanding
4,213,000
shares
of
Congress (both parties) is dig¬ form or another. If a realistic common
stock
are
owned
by
ging for votes. It has prom¬ treatment
of
the
nation's American
rest of the
is
open-market
deemed
cation of
ised me, and the
difficulty
Reserve
militate
any
restriction.
3V8% bonds, series E, due 1978, at
101.43
and
accrued
interest
to
lot of money
short time and then will
or
in¬
the
fixed-interest obliga¬
these
credit
Rising
weakned
have
55
investment
thing they're real and very New York and in a small portion
pagne to go along on an even close.
If Congress, and the of Connecticut. -jOn -Nov.
30, 194 Z,
keel.
White House stop playing pol¬ the company was supplying local
service
in
493
exchange areas,
itics I'll make money. If
they having 3,967,167
telephones
in
For that reason the Baruch
don't, and insist on avoiding service of which about 61% were
analysis hits me right where
strong medicine because it'll located in New York City. Other
I live.
I'm not interested in
cost
votes,
I'll still make important cities in New York
State served by the
politics. I don't particularly
company in¬
money. The difference is that
clude
be in the White House.
Code.
rates
for
prosperity—is grad¬ is the largest in the
company's
ually being squeezed out of history, according to the pros¬
the market. Giving him more pectus.
The balance of the pro¬
ceeds will be applied toward new
money, in wages,- and then
construction.
raising the prices again is
The prospectus states that ex¬
just the old merry go round. penditures for new
construction
Eventually the whole thing were approximately $83,000,000
will gather a whirlwind pace for 1946 and $143,000,000 for the
an
everything
the
need to
to be
ited
All
gram
national
Going short used
(539)
nal
tions.
the
succeed, fine. If I don't, I try
again.
rV*
CHRONICLE
market
proposes
tical
FINANCIAL
Morgan Stanley Group
Offers N. Y, Telephone
yield
further unbalance of
&
$1,25
Mar.
15.
1948
13,
1948
1.25
June
15,
1948
May
14,
1948
1.25
Sept.
15,
1948
Aug.
13,
1948
Feb.
-value of Southern Railway Com¬
pany ihas today been declared, out of the
surplus of net profits of the Company for the
fiscal year ended December 31, 1947, pay¬
able on March 15, 1948, to stockholders of
record at the close of business on February
13, 1948.
Checks in payment of these dividends on the
Preferred and Common Stocks will be mailed
to all stockholders of record at their addresses
as
they appear
on
the books of the Company
unless otherwise instructed in writing.
**
J. J. MAHER, Secretory.
regular quarterly dividend of
per
share
on
the 5%
Con¬
vertible Preferred Stock has been
declared
payable March
1,
to stockholders of -record
ary
1948,
Febru¬
14, 1948.
A regular quarterly dividend of
!5£ per share on the
Stock has been declared
Common
payable
February 28, 1948, to stockholders
of record
February 14, 1948.
M. E.
GRIFFIN,
Secretary-Treasurer.
56
THE COMMERCIAL
(540)
Thursday, January 29, 1948
CHRONICLE
FINANCIAL
&
the committee and the legislative
BUSINESS BUZZ
leaders.
Certain elements within the spe¬
cial housing committee, named
Washington.:..
J
JLM. tl/M
A
Behind-the-Scene Interpretations
from the Nation's
.
Capital
the
when
year
last
housing
present
construction boom had not mate4
rialized, have big ideas. Here are
some of the
proposed recommen¬
■
—*
JL C/ U>
dations batting around
within the
special committee:
VI of FHA be
That Title
stirred
has
race
up
play for a winner had
better put their bets elsewhere.
trying
to
is
It
sive
apprehension
considerable
was
Eisenhower
that
the
of
results
first
the
was
who
man
a
write
if
that
believe
housing.
the
carry
result
Another
to
been
has
rise in
of
case
mand
deadlock
Sena¬
conjured
the
tor Taft.
is
arrester
v
dark
Now the big lightning
all
the
of them
not
and
down,
horses,
some
dark, have got theirs up. This
so
the
that
means
of
proponents
Stas-
Senator Bricker, Governor
sen,
Speaker Martin, Gov. War¬
ren
of
California, are likely to
work
travel around and
And
for their candidates.
harder
hear
trading purposes, will
their
offered
names
host
a
put forth
of local "favorite sons"
for
.;
come
the
grain
could
work
to
There is
of
instance
stated
but
better
shape"
the
to
respect
with
In the United States
1948 crops.
winter wheat prospects
much
better
are
officials
than
a
thought
they were going to be. Officials
have been saying conservatively
that they looked for a one bil¬
months
of
couple
ago
lion bushel 1948 wheat crop
are
coming
around
bushels.
billion
In
to talk 1.1
Canada the
moisture has been good
in that
spring
for
•
belt.
by
up
I
'>
ft
dropping sharply—indicating that
despite the availability of jobs for
the asking and little fear of un¬
more
and
more
are
tending
to stick to the jobs
large acquisitions
producers' equipment by in¬
dustry, officials look for the curve
of productivity to show a sharp
rise
upward this year and next—
when the figures are in.
7
#
$
,.
,
of
and
It will
excess
s::
profits
persons
.
■
abolished
annuity
..
tax
levels
the capacity of
the
formerly of large means,
and
the
assistance
com¬
insurance
housing
subsidies,
statutory
minimum
wage, laws, etc., also are slow in
posals,
aid
k
such
to
as
local
of
the
getting under
It may mean
course
7
the weather to come
now
and
harvest
can
Two
nomic
of
the
this
For
near
the end of the ses¬
sure
to
be,
a
big
South Shore Oil & Dev.
Try
Us—There is
a
Reason
H. & B. Amer. Mach.
Pitts. Steel
Pfd. &
1919
Security Dealers Ass'n
Exchange Pl„ N. Y. 5
H.A. 2-8780
Trading Markets:
Oregon Portland Cement
Riverside Cement A & B
row
election
HAnover 2-0050
LERNER & CO.
Investment
10 Pest Office
Securities
' '
Square, Boston 9, Mass.
Telephone Hubbard 1900
Teletype Ba «•
Teletype—NY 1-971
7
BLIZZARD SEASON
Y.
Spokane Portland Cement
is
city
Indiana Gas & Chemical
This Is The
an
H.
Ralston Steel Car
off some of these
vote-getting proposals.
7
There
best-known
minds;; in
ESTABLISHED
Mevibers
that the "press of
year Congress,!over
housing legislation/The row
eco¬
which naturally looks for a lot of !
°
were
political wares to peddle, this ses-i ma^'^e a double-feature attracmake or break the crops. But IF asked to
diagnose privately the
sion of Congress is getting off to tion, V occurring
first within the
prospects continue favorable reasons for the apathy of the pub¬ a slow start.
I special joint Congressional Housthroughout the spring wheat plant¬ lic toward stocks at present priceTake the matter of social secur- ing Committee, and later between
ratios.
These
individuals
ing season in the northern hemi- yield
Of
between;
M. S. WlEN & Co.
way.
middle class to acquire equities.
,
New Issues
health
sion may choke
capacity
Securities
education,
business"
the
Domestic & Foreign
40
House.
buy stocks, and also are bearing
011
Rai,s 7, .,,7:
with
up
only
on
Then the Senate
biggest investors in equities, to
down
77:77-
Other politically appealing pro¬
labor
..
Finally,
:
Teletype N. Y. 1-13»7
in
investors
doesn't
get corporate profits the Gov¬
ernment will."
7 ,7 '
7; X
v;<7: /•
.•■./.
"if
comes
wheel until it gets a bill from
the
will actually
it
little legislation by it¬
of
group
a
but
—
Reorganization
mittee is determined not to turn
state of mind
that
it \would
as
probably be March before
old-age
a
tax has created
engaged
recommendations
year.
potential
Old
Senate Finance
the
year
committee
that
rises
restoration of the
equities
go
housing
' 7.
technicians to survey the whole
(4) Administration request for
among
employees.
features.
a
any,
self.
subject and recommend changes.
their
prices
going to
much
per¬
State and local govern¬
even
Committee
will be able
the "third round" of wage
due this
such as the self
professional
people
Last
are
hence
to consumers in the
higher
socia
of
to presently ex
fury
make very
groups,
ment
supply
if
is
as
adopted without any special
fact that
products
more
into
coverage
employed,
domestics, farm laborers, and
haps
becoming competitive, fewer
have
of
_
represent
of the
and fewer producers
(5)
they have.
In view of the
;
sense
one
they
prospective added labor costs in
signs that labor's habits are
beginning to shake down toward
a more normal peacetime pattern,
The number of quits per month is
people
and
more
coming
are
view
In
form
ft
.Officials close to the labor front
employment,
(3)
to pass on
long time to come.
a
| empt
"inventory profits."
the
speculation,
see
wheat
great
country's
fed
in
are
illusory, in that
gressional "exposures."
These
have probably scared all but the
hardiest
would-be speculators
(in¬
cluding spring wheat). Now they
created
nomic Report)
not
profits"
Eco¬
"high
extension
the
! security
President's
the
in
volves
set-back.
a
Present
(cited
and the resulting round of Con¬
the winter thus far
Europe "they are in a great deal
is
are
Truman attack upon
'7
freezing
officials
fuss
the
with
It
They fear
(2)
Administration
"drastically."
ume
about
that every
not
last.
curbed trading vol¬
has already
port than a year ago.
without last year's
of fall plantings.
In
officials
margins.
trading
the
like
and
33%% margin adopted by
big grain exchanges at the
the
good. The Australian crop is
especially
good.
The
southern
hemisphere will have more to ex¬
passed
one way
to
imagination — but then I found housing committee. The housing;
time he gets bullish!" committee has made much sound
my
was
gets
but their ity expansion, for instance. Thk
are listed' has been proposed by the Admin¬
istration and generally has beer
(1) Many persons do not take
blessed
by
the
Congressional
the
present
large
volume
of
i leadership.
This proposition in¬
business as something which will
That would be by
hiking
thought it
REALLY
he
be identified,
combined explanations
could further curb
The
the
"At first I
out
may
speculation.
are
has
only
leadership
just
have
voluntary
a
job trying
a
its recommendations
legislation,
and
they
figure
brighter prospects. Southern hemi¬
sphere crops now being marketed
In Europe
out
have
of
legislative committees and
This
to curb speculation.
program
ago.
confirm
Agriculture
of
will
Congressional leadership.
for
been called in by the
have
asked
political weather for later
this year.
All factors relating to
world
production of grains are
looking generally better than they
now
to
the
Department
down to size, and this
tussle within the special
a
any
the
to
die
other food commod¬
Taft "voluntary"
the
grain
exchanges
program
some
months
sell
or any
again
six
action
struggle will be to cut
■
conditions
unless
initiated
-
Under
ity.
the nomination right off.
Officials
mittee
77,',7 77 ...'77.
!'s
:v77' 7,"
'*//.
Incidentally,
government
Natural weather also may make
did
.''7,.; *
further limit speculation in either
July some one gets set
unless by
■
change radically, there will be NO
Republican convention next July
to cop
-•
in¬
housing committee. Then the com¬
feared rise in the cost of
living.
-.,7 ■ 7<
•
will be
but it could abate much
—
of the
between Gov. Dewey and
The first
the program
swollen de¬
of meat to
duction
likely to catch the sparks in the
of
housing
rental
in
projects.
not bring up the pro¬
will
depreciation
or
vestments
easing of the grain situa¬
An
tion
arrester
lightning
big
one
provide for more rapid amor¬
tization
cost of living.
the
form of yield insur¬
housing.
a
That the tax laws be modified
to
food
dark
of
herd
General Eisenhower was
horses.
the
whole
a
\
Government
for rental
ance
.
excite
the instal¬
low cost
for
-
_
develop
under
victory
be provided
That the Federal
Republicans to
presently-foresee¬ shortages the world over continue
into spring, they will constitute
able conditions.
the greatest single impetus to a
would
utilities
of
lation
Government
controls.
economists
form of aid for
That Federal aid
Republican Congress for not
enacting
new
some
clearance.
to municipalities for
tinued
at the
FHA in its op¬
houses.
slum
rising living costs that the
General's renunciation is to boost Truman Administration has staked
the potential of Harry Truman. its political fortunes. The Truman
General Eisenhower was the man bet is that living costs will rise
the Democrats most feared. There and that the country will be mad
of
One
fi¬
(as it is
That the Federal Government
the prospect of con¬
upon
ex¬
eration) and toward less expen¬
*
«
slanted by
now
grain prices in the U. S. will abate.
#
toward
slanted
nancing rental projects
the animals out in the political pasture as
much as anything that has happened in months including the Wallace
candidacy. This political capital accepts the withdrawal as on the
level.
It
is now reckoned
that"*)
•
:—7~™
the
General
doesn't
want
the sphere, and for the 1948 winter
crop,
then the strain in
nomination and the boys who are wheat
tial
but
tended,
from the Republican presiden¬
General Eisenhower's withdrawal
Firm Trading Markets
FOREIGN SECURITIES
Foundry
Empire Steel Corp.
Susquehanna Mills
All Issues
Common
SERVICE
Herbert H. Blizzard & Co.
123 South Broad
Clear
St., Philadelphia 9, Pa.
thru—Montgomery, Scott & Co.
York &
Philadelphia
LEWIS & STOEHR
'
r.ASL MARKS 4 C.O . INC.
FOREIGN SECURITIES
Established 1926
SO Broad St.
New York 4
Telephone: DIgby 4-0985-6-7-8
50 Broad Sireei
Hill, Thompsons Co., Inc.
SPECIALISTS
Incorporated
Markets and Situations for Dealers
7
New York 4, N. Y.
AFFILIATE: CARL MARKS & CO. Inc. CHICAGO
120
Broadway, New York 8
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