Full text of Commercial and Financial Chronicle : January 4, 1951, Vol. 173, No. 4974

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~s2>—

UNIVERSITY
OF

MICH.GAN

JAN
'

■.iw#

ESTABLISHED 1839

8 19

vrttMir'':

Volume 173

Number 4974

New

EDITORIAL

As
~

In the

system^ there is

policy which is officially denominated ^self-crit¬
icism."
To the outsider, it would appear that
this is a misnomer; what
actually occurs, appar¬
ently, is that the Kremlin makes use of one of
its organs to call another to account. The
analogy
this

custom

the

Kremlin

and

recent

action of the President's Council of Eco¬

nomic

Advisers

real.

be apparent rather

may

have

of knowing, of

way

Summarizing viewpoints of economists and businessmen

Insurance
national

general opinion is that
offing and more inflation
is coming, as well as lower profits and civilian cutbacks.
Looks for tight manpower situation and restricted elas¬
ticity of output, despite increased military production.

seems

course,

Once

military establishment which

the

plainly implied in the most recent
report of the Council, but it is certain that there

are

serious dislocations

some

than

the

A;;

There

that

advance

are

Mr.

Wilson

has

for

the

there will be

from Washington

reports

already made

progress

common

that the

the

fault, in

military but

to the central

In any case,

for
One

any
runs

the public is indebted to the Council

hope

Meanwhile

for

naming

that, too,

has

some

actiye

markets

page

*An

are

neither

the

time

the

ciation,

This is

midst.
the

from the downturn which be-,,
|n late 1948 became increasingly
diverse. In some quarters the mild

find ourselves today.

1948.

garded as
heightened

the

recession

description, written over 100 years
of the situation in which we
It was written
by Charles Dickens, who put it in
the
mouth
of
that
unforgettable
character, Oliver Twist.

re¬

was

Washington

stressed

the

duration

brief

economy.

The words
some

and

Donald B. Woodward

evidence

century.

page

"Please, sir, I want

are:
.•.

six

words

condition of the

surely describe
world at mid-

The American defense forces want

The American

consumer

and allies in Western

more."

These

the

,•

Somewhat para¬

nor

ago,

demonstration of the
ability of the postwar
to absorb cyclical shock. Administration spokes¬

address

con¬

wants

some

Europe want

some more.

Our friends

more.

some more.

So do

page

our

by Mr. Gainsbrugh before the joint meeting of the

Statistical

Association

Chicago, 111.,

Dec. 28,

and

the

*An

1950.

address

Mr. Woodward at the Annual Meeting of
American Statistical Association, Chicago, 111., Dec. 28, 1950.

Economic Asso¬

American

the
'

The CHRONICLE'S "Annual Review and Outlook

Issue," to be published on Thursday,
18, will contain views of the nation's leading executives on the economic out¬

January

been to

Continued

look for their respective industries during

bates mfg. co.
dewey

century has

expansion gained momentum,
viewpoints' about the lessons to be

Continued

American
on

which

was $16
1949 trough

doxically, they also contended that this brief adjustment

all be thankful.

Continued

discussed

fuse the superior minds of the bril¬
liant "century
which
followed, of

actually above the postwar peak

of the right issues

must

hint that the chief result of the work of that much

This

the

than

dampened-down intensity of the recession

come

discussion of the

Indeed, there has been

place to
argue the general proposition. But I
do wish to suggest that the century
gave us at least one product not yet
surpassed or even equaled. It is a

of inherent strength of the

times

men

corrected.

the- Council

rather close to

economy

the situation, and

result the existing state of

sooner

some

century had little merit.

read

Martin R. Gainsbrugh

Critical Problem

The Critical Fact and the

gan

in substantial part at least

upon

(4) increasing individual savings. Holds
capable of making from $30 to $50
billion in defense expenditures in 1951.

A considerable part of the economic

first

character

affairs will be the

—and

strong suspicion

management of the Administration.

focusing attention
may

and

national economy is

event, lies not wholly with

(1)

the 19th

our-

of late

prob¬

1951.

State and

almy

dwight mfg. co.

hollingworth & whitney
keyes
Class

n. e. gas

fibre

Franklin Custodian Funds,

& Common

A Mutual Fund

Municipal

inc.

600 Branches

•:

& electric co.

lowell

sac0

co.

across

shops

west point mfg. co

Bonds

Canada

Monthly Commercial Letter
upon request

duPont, Homsey & Co.

THE NATIONAL CITY BANK

1,16

Members New York & Boston Stock Exch.
Free

31 milk street, boston 9, mass.
Tel. HAncock 6-8200
Private Wire to New York

Springfield

Tele. BS 424
CAnal6-8100

Fitchburg

Worcester

from

Prospectus
your

be obtained
investment, dealer or
may

OF NEW YORK

Street, New York 5

Canadian Bank
4@°mnwice

Head Office:

Bond

■

FRANKLIN DISTRIBUTORS, Inc.
64 Wall

Dept. Teletype: NY 1-708

Toronto

New York Agency: 20 Exchange
Seattle

Department

CHASE

THE

NATIONAL BANK
OF

THE

CITY OF NEW YORK

Portland, Ore. San Francisco Lob Angeles

We maintain active markets in

Brown

^Massachusetts

(all

Underwriters and

Investors Trust

Distributors of
and

Municipal

Corporate Securities
Prospectus from authorized dealers

OTIS & CO.
(Incorporated)

Devonshire Street

Established

BOSTON
New York

canadian

department

Goodbody

Co.

ESTABLISHED 1891

1899

Angeles

New York

Cincinnati

Chicago
Columbus

Denver
Toledo

BONDS & STOCKS

New

England

Public Service Co.
An interesting

DoMmiox Securities
Grporatioti

MEMBERS NEW YORK STOCK EXCH.

40 Exchange

CLEVELAND
Chicago

Los

Canadian Superior Oil
Company of California

VANCE, SANDERS & CO.
Ill

CANADIAN

Company
Issues)

workout situation

Steep Rock Iron Mines

■

Dallas
Buffalo

•.

and chil¬

women

last 15 years has suggested that much of the writing of

and

ably inspired reports. We have

agreement that the year

seasonally-adjusted).

Time only

recommends:

(2) adding

—from

billion

will tell how much truth there is in these

1950 began propitiously. We emerged
in record time—as business cycles, go

which

the rearmament program.

be met,

are

hours;

should be curbed,

dren to civilian labor force; (3) raising personal income

taxes;

war dominate
ahead, as they have so much
In more leisurely retrospect, I

bringing order out of the confusion and futility
was

increase in work

experience; with
postwar; recession, without too many
cyclical scars. By the second quarter
of 1950, gross national product was
back to $270 billion
(annual rate,

excessive, and

year

past generation.

believe

observers (including, apparently,
the Budget Bureau) who feel
very much as the

are

contending civilian demands

economist,

output are
if defense demands

again the overriding demands of

outlook

many, many

Council does.

Second Vice-President, Mutual Insurance Co. of N. Y.

regarding business outlook for 1951, National Industrial

what, if anything, the President had to do with
"the criticism of the

By DONALD B. WOODWARD*

National Industrial Conference Board

Conference Board economist says

the

Critical Economic Problem

By MARTIN R. GAINSBRUGH*

Chief Economist,

Copy

Curbing Civilian Demand

Business In 1951

established

Price 35 Cents

Survey View of

We See It

Soviet

between

York, N. Y., Thursday, January 4, 1951

15 BROADWAY

105 W.ADAMS ST.

NEW YORK

CHICAGO

Place, New York 5, N. Y.

IRA HAUPT&CO.
Members New York Stock Exchange
and other

WOrth 4-6000

Teletype NY 1-702-3

WHitehall 4-8161

Principal Exchanges

111 Broadway,
Boston

N. Y. 6

Teletype NY 1-2708

Telephone: Enterprise 1820

The Commercial and

Financial Chronicle

Thursday, January 4, 1951

(54)

R. Hoe & Co.
and Class B

Common

Tiffany & Co.
United Piece Dye

participate and give their reasons

;

'v"Vv.

they to

are

New York 5
Teletype NY 1 -583

120 Broadway,

Atlas

120

and able,

management.

Looking

aggressive

stock
could be increased without
be¬
coming burdensome. The dividend
yield is high on present prices,

2-7815

the outlook

and

National Gypsum common
listed

appears

excellent.

American Furniture

Bassett Furniture

Industries

varying rates

Co. of Va.

without interruption

STRADER, TAYLOR & CO., Inc.
Lynchburg, Va.
TWX LY 77

LD 39

thermo

u. s.

control

are

and has

Request

built up
position in its industry
prospered.

company's

capitalization is

simple.
It owes $1,250,000,
serially to 1956, borrowed to
a

profitable business now

148 State

St., Boston 9, Mass.
:

Teletype BS 259

N. 7. Telephone, WOrth

4-5Q00 ^

due
buy

operated

Following that

subsidiary.

shares of $1
par common stock, which is con¬
servative. The latest balance sheet
shows
current assets $7,940,951,
including $2,399,612 in cash or
equivalent, against current liabili¬
ties $1,633,409.
This is a healthv
position.
Book value of stock
debt, it has 600,000

Tel. CA. 7-0425

$4,860,000,

the company has

The
on

strong

simplex paper
Analyses

carried

replacement value is probably
above $11 million.
In other

well

words,

served notice that its inten¬

tion

was

building

many

and

will

it.

Manufacturing

needs and a more
remodelling market,

Bought—Sold—Quoted

keep them busy at practical

m
Norman

de Planque

1938, have been paid in

six

yeais,

and

Portland, Me.

Hartford, Conn.

been

from 200 to 15,000;
or no.
stockholders from 704 to 15,000;
National Gypsum common sto^k,
and sales volume from virtually
nothing in the first year to an listed on the New York Stock Ex¬
estimated $74,000,000 for 1950. Ail change and also accorded unlisted
this has been achieved in the face trading privileges on the Philaof the stiffest arid most firmly en¬ delphia-B a 11 i m o r c S.ock Ex¬
change, may be used, in my opin¬
trenched competition.
ion

investment

vehicle far

Company is
individuals (both in speculative
domestic man¬
ufacturer
of building materials and., conservative accounts) and
for. institutional investments.
using gypsum as the basic raw
material. Its products, used prin¬
CYRUS II. POLLEY
cipally in the building industry,
also have wide industrial, agri¬
Manager, Trading Department,
cultural
and
chemical applica¬ Coffin, Betz & Co., Philadelphia, Pa.
tions.
It is estimated that the
Ultrasonic Corporation
company accounts for 25% to 30%
national sales of gypsum

Nothing has been cf greater interest to me than the aggressive

immediate prospects for National tunities never
steady expan¬
before
avail¬
mounting from Gypsum favor a continued high
rate of operations, since use of able. I submit, in this category,
around $4.8
million in 1940 to
the Ultrasonic Corporation as the
about $28 million in 1948/ There gypsum products in home build¬
ing is generally confined to the speculation I like best.
was a decline in 1949, due to gen¬
Sales

sion

Over-The-Counter
Securities

NEW YORK STOCK
NEW YORK

EXCHANGE

CURB EXCHANGE

EXCHANGE PL., NEW YORK 5,

Phone DIgby

4-4950

N. Y.

Teletype NY 1-953

years,"

construction lag¬
The Ultrasonic Corporation
60-90
days behind founded in 1945 in Cambridge,
Building starts in both
Mass., is believed to be the only
year ended June 30,
1949. This September and October of 1950 company in the United States
topped 100,000 units, and for No¬ whose activities are exclusively
was the low point for Atlas in re¬
are
estimated to have concerned with the development
cent years and there is ample evi¬ vember
The ultimate effect
dence that a corner was turned been 85,000.
of sonic energy as an industrial
that year and business has surged
?u R^"lation X, as set forth by tool. The use of sound in industry
forward since then. For the year the Federal Reserve Board, will is not new, but the performance
become apparent for many
ended June 30, 1950, earnings per not
of actual work done by the use of
share were $2.11 and for the Sep¬ months to come. However, in the
Continued on page 20
tember quarter of 1950, earnings text of its order the Federal Re-

causes, and after inventory
adjustment earnings of $2.01 per
share were reported for the fiscal

eral

Shaskan &Co.
MEM«£RS

showed

for

latter stages of

ging

starts.

some

•".»

York Canal 6-1613

Keyes Fibre Co.
Mexican Light & Power

Co.

Boston Wharf Co.

Boston Woven Hose
& Rubber Co.

Bought—Sold—Quoted

Ralph F. Carr & Co., Inc.
Milk Street, Boston

Tel. HUbbard 2-6442 Teletype

BS 328

Pennsylvania Railroad

Philadelphia Electric Common
Common

Penna. Power & Light

the second largest

of total

Enterprise 2904
Enterprise 6800

American Felt Co.

built,

5,000;

Gypsum

10, Mass.
Tele. BS 142

Open End Phone to New

remarkable

National

of Securities Dealers Ino.

Tel. HUbbard 2-5500

Until recently the

Nat'l Assn.

75 Federal St., Boston

largely from re¬
tained earnings, from $4.38 per
share at the end of 1937 to $21.22
has

Co., Inc.

J. B. Maguire &
Members

great deal to recommend
Dividends, which were ini¬
a

during 1950
amounted to $1.50 per share. The
present regular rate of $1.40 could
easily be sustained under pres¬
ently contemplated excess profits
taxes, in view of per share earn¬
ings of $2.21 for 1946, $2.89 for
1947, $3.60 for
1948, $2.57 for
1949, and an estimated $4.50 for
1950.
Book value of the shares

past

financing con- *

truly

Bates

increasing amounts in each of the

the

fir

home

tiated in

dustry under

figure of

Statistically, the common stock

diffi¬

The

residential
a

capacity during 1951.

building in-f

shows

military

active

the antici¬

from

activity, coupled with government

over stressing

pated

reduce

1,300,000 in 1950 to around
825,000 starts in 1951. The con¬
sensus of opinion among materials
manufacturers is that any such

and

company,

starts

products. Gypsum board accounts
for over half of the company's exploitation since 1946, of wartime
management total sales and gypsum plasters research and discovery and the
concentrated efforts on packing
for an additional 10% or slightly
prom p t ness
cases, but certain conditions hav¬
more.
Lime and limestone prod¬ with
which
MQERTO RICAN GENERAL,
ing arisen which seemed to jus¬ ucts account for slightly less than these advances
diversification, attention was 10%. The remaining 30% is di¬ have been
AQUEDUCT and WATER tify
turned to making other plywood
vided substantially
equally be¬ turned to civil¬
lines.
In a brief space of time
REVENUE OBLIGATIONS
tween
rockwood products, fibre ian advantage.
these new ventures fitted perfect¬
insulation board, and metal lath, I think it has
ly into its other operations and
paint and specialties. Almost 20% been a dyna¬
now Atlas has become an impor¬
of total sales are made in indus¬ mic factor in
tant factor in the production of
trial, agricultural and other non- our postwar
Paul Frederick
plywood doors, panels, sheathing,
building fields.
'
economy
and
pallets, as well as trays, crates
& Company
The promulgation of Regulation that it offers
and baskets for the fruit and veg¬
the scientific¬
70 Pine Street, New York 5
etable trade.
These articles are X on Oct. 12, 1950, cast a dark
iVHitehall 4-1875
NY 1-2643 mostly high-profit items and at spell over the building stocks, ally inclined
this time about 50% of sales are from which they have shown lit¬ speculator a
However, host of oppor¬
of goods other than packing cases. tle rallying tendency.
Cyrus H. Polley
Primary Markets

branch offices

about

has

$23.59.

Firm Markets on

NY 1-1557

HAnover 2-0700

/
: ■
per share at Sept. 30, 1950.
ried on the books at $3,942,000, but record of consistent growth since
The common stock of National
worth, according to the Presi¬ Its foundation just 25 years ago
dent's estimate, about $9 million. last summer. In the intervening Gypsum Company represents-an
Common
practice is to buy as period, the number of plants has oversold equity of a still-young,
dynamically growing enterprise in
much timber as possible and to
grown from 1 to 23; products from
conserve its own supplies.
Plants 1 to 150; employees from 50 to a most essential industry. Hous¬
ing must be provided, limited war
and properties, aside from timberdealers
but

St.f New York 4, N. Y.

New Orleans, La. - Birmingham, Ala.

serve

strong

of the business es¬

tablished, the company acquired
substantial timberlands, now car¬

lands,

York Curb Exchange

Members New

25 Broad

Mobile, Ala.

trols.

To take care

Members New York Stock Exchange

Direct wires to our

culties

since 1936.

overlooking

the government, rate
these cases highly. Atlas did very
well and has paid dividends at

Dan River Mills

Steiner,Rouse&Co.

Philadelphia. (Page 2)

market

great

including

Commonwealth Natural Gas

Life Insurance

and selling around 16 V2,
attractive at current lev¬

el because the

points
about
the

Camp Manufacturing

stock,

the New York Stock Ex¬

packaging division of the
plywood industry was for years
the business of Atlas. It turns out
about 70% of all plywood packing
cases, noted for light weight and
strength. Many tests by shippers,
The

Trading Markets

its debt should soon change

eliminated and common

Planque, W. E. Hutton

man

Curb

capital, expanding orders
to the future,

Exchange
Exchange

BROADWAY, NEW YORK 5
Tel. REctor

activities of

are

company

does not carry an ex¬
NORMAN de PLANQUE
investment in fixed assets,
W. E. Hutton & Co., N. Y. City
has no unwieldy inventories (ra¬
tio
of net sales to inventories National
Gypsum Company
about 5 to 1), has ample working

Members

;

to me the new

National Gypsum Company—Nor¬

& Co., New York City. (Page 2)
just beginning
to bear fruit. Government orders
Ultrasonic Corporation—Cyrus H.
for shipping cases should be large.
Polley, Manager of Trading-De¬
Dividends of $1.50 annually are
partment, Coffin, Betz & Co.,
well within earnings ability, and

this

cessive

McDonnell & Co.
York Stock
York Curb

share of 93tf were shown.

seems

Bought—Sold—Quoted

City. (Page 2)

structure,

Since 1917

Corporation—MerBeal, Analyst, Peter P.

McDermott & Co., New York

Exchange. Atlas presents a growth situation
The company is engaged in a sta¬
not discounted by present market
ble industry and occupies an out¬
prices. It sold as high as 38 V2
standing position in it.
It has in
^1946.
a
comparatively modest capital
York

New

the

Rights & Scrip

New

Plywood Corporation

Louisiana Securities

(

ritt F.

;.i'

My current favorite among in¬ capacity to pay.
dustrial issues is the stock of Atlas
The excess profits tax position
Plywood Corporation, traded on is comfortable and, in my opinion,

Specialists in

New

; :

for favoring a particular security. Atlas Plywood

per

Analyst, Peter P. McDermott & Co.,
Members New York Stock Echange
Members New Yo&k Curb Echange

Alabama &

and

Selections

contained in this forum are not intended to be, nor
be regarded, as an offer to sell the securities discussed.)

MERRITT F. BEAL

Hanseatic
Corporation

New York

BArclay 7-5660

Their

(The articles

Works

Preferred

Common

in the investment

each week,

Participants

Forum

different group of experts
and advisory field from all sections of the country

A continuous forum in which,

Week's

This

I Like Best

The Security

MARKETS IN

TRADING

Foote Mineral

Central Electric & Gas

S1^

Central Public Utility

American Marietta

'"
0

III

HdirV D.WBMBr &lO., IDC.
Members

Phila.-Balto.

Phila. Telephone

Stock Exchange

St., Phila. 9, Pa.

123 South Broad

Bell System Teletype

PH 771

PEnnypacker 5-2857
New York

Direct

BOwling Green 9-481S
to Ames Emerich, Chicago

City Tel.:

wire

BUY
•

•

SAVINGS

B ONDS

N. Q. B.
OVER-THE-COUNTER'
INDUSTRIAL STOCK INDEX
11-Year Performance of
35 Industrial Stocks
BOOKLET

REQUEST

•'

National Quotation Bureau
Incorporated

46 Front Street

NewYerk4,N.Y.

Number 4974

yolume 173

The Commercial and Financial Chronicle

The Urgent Need

(55)

INDEX

for

■

•

v..-

•

■

llCHTEIWfin

B. S.

Articles and News

Page

AMD COMPANY

Curbing Civilian Demand—Critical Economic Problem
—Donald

By WALTER E. SPAHR
Executive

♦

■

—;

tions

New Look With

That

was

historic
ent-

upon.

them

International Crisis Pervades Forecasting Sessions
—A. Wilfred
May__
■
___,

■

A♦

mom¬

lthis

for

nation.

governments
take

—Albert
A
,

Economy

the

Simple

ma n s

What

Can

Stock. Investment

—Harry S. Schneider

Governmental

'•

: '

■

Currency

power

•

our

W\4

Reserve

fit.
the

use

public

purse

inherent in the ballot can be ser¬

iously impaired when the govern¬
ment is disposed, as is ours, to
purchase the support of an effec¬
tive majority of vote-delivering
pressure groups. If as a last resort
the people should attempt to con¬

trol the

use

of their purse by re¬

fusing to purchase government
securities, either these would be
sold to the banks, which would
issue
irredeemable
money
and
deposits against them, or the gov¬
ernment would resort to the di¬
rect issuance of fiat money.
■

redeemable.

;

Truman's

ing that has continued until the
people of the United States now
find themselves without any ef¬
fective check on those that have
are

still leading them far

safety

sound

prin¬

inability of thoughtful and
people to bring
the

concerned

continuation of this course to
end

illustrated

British Industries Fairs Aided Overseas Business

SEC Commissioner McEntire Takes Issue With Dealer

J.F.Reilly&Go.
Incorporated

BO 9-5133

Return to Bond Price Pegging

Ironical Twist-—-

Treasury.
the

Federal

United

the

The

gold,

Philadelphia and Los Angeles
Urges Unfettered Agricultural

Program.

Reveals Impact of Defense Program on Manpower.
it
*
*
' ' ''
'
■
.

•.

Reserve

banks

v■■■;

•

■

Regular Features

...

Treasury would reflect the signals
warning being transmitted from
every
individual demanding re¬

Bank

and

Insurance

demption

non-gold

rise in the volume

nals

and

the

banks

serve

Treasury

would

put

effective

people

are

protest

their

sig¬

and

Stocks

Teco, Inc.

Bates

the

number

convenient

Mutual

paper

and bank deposits into gold

money

purchasing
of their dollars. The Treas¬

ury,: the
would
be

Reporter

people

may

it wisely
fact

______

with

Governments

Public Utility

not

may

that

unwisely;

they

compels

But

can

the

Securities

———

Securities Salesman's Corner

Securities Now in Registration

dom provided
currency.

employ

irredeemable

Even if the

this

people

Industry

—

Tomorrow's Markets (Walter Whyte Says)

Washington and You

page

—

*See article by

Twice

Weekly

and

COMMERCIAL

:
:

WILLIAM

Spencer Trask & Co.

2-9570

Chicago

Teletype—NY 1-5

1879.

RIGGS,

Dominion

Business Manager

«'

Glens Palls

Schenectady

Worcester

Air Products Corp.

Other

Uhion,

$45.00

Hoving

;

Pan-American

President

per

year;

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

S.
of

Stromberg-Carlson

year.

Bought—Sold—Quoted

Other Publications

Every Thursday (general news and ad¬
vertising issue) and every Monday (com¬

■

seeond-class matter Febru¬

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Mr. May on page 5.

WILLIAM B. DANA COMPANY,
25

York. Stock Exchange

STREET

FINANCIAL

25 Broad Street, New York 4 •- 50 Congress Street,

S03 OUIVE

wisely,

power

Continued

Stix & Go.

Security I Like Best

The State of Trade and

that does not

pay

Railroad Securities

The

discretion in the issuance

of promises to

not

MEMBERS

and may
banks, the
Treasury, and Congress to proceed
use

Exchange PL, N.Y. 5

MIDWEST STOCK EXCHANGE

this power, or they may em¬

ploy

by the futility

Teletype NY 1-1825 & NY 1-1826

*
—;——

Security Offerings

MACKIE, Inc.

HA-2-0270."

the government's bills.

The

the

Our

Prospective

the hands of the people who must

pay

use

Reporter's Report

—

Wilfred May—

Our

Singer, Bean

34
—

Observations—A.

Cement Co.

_______1

—

News About Banks and Bankers——

banks,
and
Congress
compelled to respect

Giant Portland

NSTA Notes

in order to protect the
power

Funds

Indications of Business Activity.

by wishing to convert

Drive"

„

Fine Spinning

News—Carlisle Bargeron

From Washington Ahead of the

their right

exercising

•

Mfg. Co.

Berkshire

British Rearmament

Einzig—"The

notice

Securities

;

F. H. McGraw & Co.

—

Bookshelf

Dealer-Broker Investment Recommendations——

preferred stocks

* r

Coming Events in the Investment Field

re¬

Re¬

Congress

and the Administration

that

Canadian

currency.

of the

in the gold

drop

serves

Business Man's

High Grade Public Utility and Industrial

•

Cover

Reg. U. S. Patent Office

Members flew

As We See It (Editorial)

and

interested in offerings of

$35 Million Credit Granted to Israel;

States

reserves

•

banks, and

Teletype NY 1-3370

Direct Wires

land,

are

Broadway, New York 6

Board Increases Bank Reserves

Federal Reserve

Published

Albany

SUGAR
10

_____•

Foresees Sustained Capital Financing in 1951—

The
We

PUNTA ALEGRE

More Production and

exist under the unrestrained free¬

ciples of behavior.
The

Economic Advisers Urge

Ruckeyser Calls for Armed Preparedness

such protest.

government, after obtaining the
freedom given it by an irredeem¬
able currency, launched out on an
adventure in government spend¬

the

Thus freed from effective con¬
It is in this manner that a re¬
by the-people, a government deemable
currency
keeps
the
can embark upon a spending orgy
power over the public purse in
without any known limits. Our

led and

Lonsdale Co.

Consumer Controls

trol

from

Fraine

The Plight of the Investor—E. W. Flender_________

J Even the power of the people
the

Berkshire Fine

banks.

tured at will and used as the gov¬

over

Valuation of Security Holdings of Life Insurance Companies
—Harold

Botany Mills

Sabotaging of Business Executives
1

currency

sees

Alabama Mills

when

dividual,

possession of their gold and has
given them, instead, irredeemable
promises which can be manufac¬
ernment

Area Defense—John Foster Dulles—— 12

Testing Formula Plans—C. Sidney Cottle and W. Tate Whitman 13

demand redemption of their paper
system, the money and deposits in gold. Thus
important power of the people to red flags of warning to the gov¬
demand
redemption
o f
these ernment would spring up across
promises has been destroyed and the country. These signals would
the government has gained a new be transmitted
through commer¬
authority over them. It has taken cial banks to the Federal Reserve

Under

different situation pre¬
a
people's currency

very

vails

Federal

and

TRADING MARKETS

Siefkin

—Forest D.

Then, every Yinthe extent he has
.our people to
paper money and bank deposits,
control
and without need to join or con¬
.their,
government
sult others, can exercise power
Walter E. Spahr
rests not-only
over the government's use of the
in the ballot but
also in their
people's purse. All those disap¬
ability to require redemption of proving of the government's huge
the paper, money promises issued
spending program, with its at¬
by the United States Treasury tendant profligate waste, could
The

STREET, NEW YORK

Common

hip

Redeemable

:v*

.im i
"

V-:;

that

.yours

Telephone: WHitehall 4-6551

Hart

Formula for

The Fallacies of

of economy.
I-V.v

people's purse,;
autocracy rep laces
rep o n s i b 1 e
S

government with the freedom

ganizations and individuals, and
can nullify their efforts in behalf

posses¬

sion

heart for

our

obsoletes

Brings

Strategic Economic Policy for Less-Than-Total War

provided by an irredeemable cur¬
rency can ignore all protesting or¬

When

little

Obsolete Securities Dept.
09 WALL

Of. Widespread Equity Investment
—Homer P. Hargrave___

Selection of Public Utility Stocks by Formula
groups, taxpayers' organizations,
'
and others have all been defeated. Y oY—-Edward B. Barrett-——-

1933.

spot

poor

wants!

today.

thrust

was

soft

those

nobody

Streamlined Capital Structure—Allreri J. McNeal

organiza¬

individuals.

arid

all

The Need

efforts thus far made by a

multitude of protesting

currency

We've

Boston and Maine Railroad Takes

irredeemable

BLESS YOU ALL!

Gainsbrugh_Cover

Statesmanship

—Walter E. Spahr___

attacking present irredeemable currency system, Dr. Spahr
contends it deprives people of power over nation's purse and
opens gates to extravagant government spending. Says system
is incompatible with responsible government. Defends gold as
monetary standard and calls for monetary statesmanship as
exemplified by John Sherman in restoring gold redeemable
currency in 1875.
Holds 1934 legislation, abandoning gold
standard, was "act of dishonesty, and a pull toward socialism."

when

Cover

The Urgent Need, for Monetary

of all

Woodward

A Survey View of Business in 1951—Martin R.

Monetary Policy

The people of the United States
lost control of their public purse

Vice-President, Economists'. National

Committee

and

Quotation

per year.

Record
Monthly,
(Foreign postage extra.)
—

Note—On account of the fluctuations in
the rate of exchange, remittances for for¬
eign subscriptions and advertisements must
be made in -New -York -funds.

—

THEODORE YOUNG & CO.
40

Exchange Place, New York 5, N. Y.

WHitehall 4-2250

Teletype NY 1-3230

The Commercial and Financial Chronicle

(56)

The following is

mitted to bondholders and secured

Boston & Maine RR. Takes on
New Look With Streamlined

Net investment in road and property
Funded

Total

corporate

Total

miles of road

well-

Total

fixed

managed railroad should attract more investor interest, and
should at last be paid on both classes of New

Total

contingent

To'al

operating

Recapitalization, the securities of this

under the Plan of

dividends

Stock, after

long period

Outlook

stockholders.

of forbearance on the part of
bright and financial and

Maine Railroad has been burdened
with

capital

structure so

Street

Wall

plex that most
alysts simply
threw up their

com¬

an¬

mention

even

the road when

writing

about

general.

The

result

has

been

stockholders

benefit of the

due

that

and

course,

just
of

J. McNeal

note

the

condition

first

the

in the way of regular

increase

Road

and

none

figures

.1950

are

capitalization will con-

$39,841,730 and Equipment
Obligations increased by $3,842,-

the

908.

years

not

avail¬

yet

the gross equity of

stockholders

follows:

convertible

par)

($100

has

been

in¬

Working Capital has increased
below:
$2,973,121 to $12,065,321. -

by $104,184,646 as shown

from

DEBT

RETIREMENT

preferred.

($100 par)

com-

debt

Both

listed

these

stocks

will

Common—"When

the

bonds

due

1, 1961,

CAPITALIZATION

*Funded
Lease

22,642,972
36,503,944

value

plan of exchange, providing for a

better

rearranging of the debt structure,

greater speculative

resetting of maturities and a re-

change which will
market and

mean

DECEMBER

Common stock

($100 par)

convertible certificates for 3%

"•Includes

$5,850,000 held by

700

15,
are being notified-that $279,principal
amount
of
these

bonds and certificates will be
deemed on Jan. 15,

Net

Redemption will be

made

head

Banque

office

Net

Est.

ments

1949

5,837,715.

1948

9,201,362

head

office of

The National

City

Bank of New York.

Primary Trading Markets

Boston & Maine R. R.

common

Prior Preferred
New Preferred

Net

Adjusted

(When Issued)

Per Share
;

New

After Charges

New

BeforeFunds

Preferred

$4,516,615

$3,683,385

1,321,100

4.79

4,516,615

4,684,747

17.02

4,516,615
4,516,615
4,792,178-.... 4,51-6,615
11,245,388" "
4,516,615
13,233,077
4,516,615
17,425,964
4,516,615

Sinking funds amount
♦NOTE—We
all

$5.00
of

Preferred

expected

net

sinking

Stock

1.00

275,563 *

6,728,773'

24.44

8,716,462
12,909,349
7,229,349
3,529,610

31.66

13.42

46.89

21.08

INCORPORATED

9.78

26.26

10.69

12.82

3.93

that

$679,102; income 4'/2s $482,870.
earnings for 1950 will approximate $2,500,000
funds. This would be sufficient to cover full

and

leave

89 Devonshire

earnings and $5.00 out of
$1.00 on the New Common.

Direct Private Wires between

earnings.
•»

Preferred.

the

mand

new

stock of Boston & Maine,

mean

the

New

With such

al¬

BONDS

Private Wires

Common

could

the

price of $20 to $25 per
against present quotation
(W I) of (15-161/2).

ISSUED

New

UNDER THE

Outstanding
in Hands of Public

Percent

Members New York Stock Exchange and Other National Exchanges

Issped

Dec. 31,1949

Reduction

$67,890,700

$54,526,900
24,248,000

UNDERWRITERS and DISTRIBUTORS

Income

of INVESTMENT SECURITIES

The

4V2s, 1970

Transportation

ratio

48.267,500
of

Boston & Maine in 1949 amounted

43.46%

against 39.7%

for all Class 1
this ratio

were

give

would

average

added

Boston

by 3.7%
& Maine

England

Company has been ordered
two Magnesium plants.

operate

19.7%
49.7

per

common

lbs

month:

ending Sept. 30, 1950—$2.03.
Dividend

paid

December

1950—$.50

Market Quoted 10-12

earnings of approximately

$3,000,000.
;

In 1940 all gross ton miles were

Railroads, thus if bandied by steam
reduced

Co.,

to turn out 40,000,000
of metal in next 2 years.

Originally

Expected

DEBT

Established 1925

Mortgage 4s, I960—

H. Davis

Lime Co.

Earned

1st

to Paul

Chicago, & Morgan & Co., Los Angeles

earnings the
easily com¬

READJUSTMENT PLAN OF 1940

BANKERS

Boston,

York, Philadelphia, Hartford,

Providence and Portland, Me.

$6.00 per share

over

Common, after

REDUCTION

lowing full* dividends

roads in general, it is easy to vis¬
ualize earnings of $5,000,000 for

New

share on the Common
on
the Preferred—$0.60
Also expect a dividend of

over

1950

In view of the outlook for rail¬

which would

St., Boston 9

LAfayette 3-3300 ,-TWX-BS 203-9

$2.00 per
$5.60 will be Paid

dividend

;

6.05

1st 4s

to:

understand

including

1949

least

the

Stock.
out

charges

after

2,19.7,828V.. ; ; 7.91
:,;T.50V
-1,312*115:'; c; 4.7-3,:

4,516,615
4,516,615

8,046,225

(When Issued)

$4.22 "

;

11,745,6-34

New Common

;

Common

$13.37

4,516,615

6,714,443
5,828,730:

1940_

the

Na¬

la Republique
d'Haiti,
Port-au-Prince, Haiti, and at the

54,708,300

to 1940 Charges

$8,200,000

1941—

Phone LD-159

27,529,600

"{"Convertible into 1%

company.

Interest Require-

Available
for Charges.

1942—

•

the

1943—

Home Office: Atlanta

tional de

earnings applicable to the New Preferred and Common Stock
adjusted to 1949 charges

1944—

•

re¬

1951, at 100%.

EARNINGS

1945—

Private Wires

ex¬

sinking fund dollar bonds,
due Oct. 1,
1970, are being noti¬
fied that the period for
exchange

$182,156,902

1946—/1

BROKERS of BONDS, STOCKS, COMMODITIES

coupons

10,436,102

...

Total

1947

Oct.

and

has been extended to Dec.
31, 1951
from Dec.. '31,
1950.
Holders of

$89,482,900

purchase agreements and -equipment
fPreferred stock 5% cum. convertible ($100 par)

*1950

INVESTMENT

1961

being notified that the ' ex¬
change offer, dated June 5, 1941,

31, 1949

debt

duction of fixed charges was sub-

following.

are

Holders of Republic of Haiti
internal loan (5%) series A bonds
and bond
certificates, due July

the

and

the New York Stock Ex-

Jan.

and appurtenant

(Giving effect to the proposed recapitalization plan)

falling

problem

Issued"

Exchange Extended

due between

debt

Holders of Republic of Colom¬
bia 6% external
sinking fund gold

1940 alone.
meet

Haiti Bonds, Certificates
Called for Redemption

Capital Stock from
$104,437,300 to $82,238,031, thus in¬
amounted to $37,416,964.
creasing the Capital Surplus by
The amount of money that has $22,109,269.
been "plowed back" into the sys¬
This amount added to the $42,tem to increase efficiency is in¬ 299,589 Surplus of Dec. 31,
1949
deed quite remarkable.
would give Total Surplus of $64,The
Plan
of
Recapitalization 408,858 against Surplus of only
will
reduce
the
aggregate
par $3,821,124 as of Dec. 31, 1939.

which $12,660,885 matured in the

being

are

(45V2-473/4).

stock.

stocks

new

over-the-counter

Colombia Bond

1957,
Total Depreciation and Amorti¬
zation
charges for the period

Oct. 31, 1939 and Dec. 31, 1944, of

year

mon.

se¬

BETTERMENTS

Expenditures for additions and betterments

plant and equipment in poor con¬
dition and faced with the maturity

$63,300,000

new

also has been extended to June
30,
1952 from June
30, 1951.

ADDITIONS

PLUS

Mortgage bonds and leased line bonds retired.. $45,037,730

coming .more and more severe,
of

paid
V

ternal

creased

competition from trucks be-

off,

$2,-

actually

(15-16i/2).

to $1,121,859.

able but further reduction in debt

creased

ing effect of the 1938 hurricane,
revenues

the

New

in contingent interest

10-year total increase in shareholders' equity__$104,184,646

None
None

with business and

sist of only two classes of stock as

547,083

investment

$30,512,062
49,454,289

simplified capital years.
which will
In 1939 the management of Bos-

dividend payments.

cumulative

agreement paid off

give the Boston & Maine Railroad ton & Maine Railroad was faced
better credit rating and enable with an almost hopeless task. The
stockholders to again participate road was reeling from the paralyz-

275,296

Boston

Equipment trust certificates and conditional sales

established

new

the

Net

ing:

securities.

The

Current

figures you ; Fixed Charges have decreased
improvement in from $7,404,290 to $3,394,756, with

vast

place the old capital

shares 7% Cum. Prior Preferred.
shares Cum. 1st Preferred.....
shares 6% Preferred Non-Cum
shares Common...

in earnings

fuel

incorrect.

years.

structure consisted of the follow¬

clean

structure

included

are

look at the record.

Through the Plan of RecapitaliNow for a little look into what
zation $79,966,351 of dividend ac- has
happened to the Boston &
cumulations have been eliminated Maine
RR. during the past 10
and

technically

will

Tot. Arrears Dec. 31, 1950

229,414
387,833
31,498
394,728

$16,467,130

Thus from the above

AND
Allen

its

benefit to the long suf¬

Let's take

road and;con¬

minimum

TOTAL

managed rail¬

interest

the

about

"When Issued" basis. Present
quo¬
tations are as follows:
'
New 5% Preferred—"When Is¬

1939

31,

been

than

is believed that the

sued"

Payable amounting

Dec.

have

traded

82,238,980

46,341,081

revenue—...

would

time

ing the past 11 years.

well-

sequently

None

•

be Maine Railroad during the past 10 charges from

the Boston & Maine Railroad dur¬

apathy toward
this

which

fat

what has happened in the case

general

great

to the

railroads

charges

1,000 gross Ton Miles and at

Equipment has increased by $10,- and interest charges is certain.
All
of
this has
been
accom¬
Funded Debt and
You
can't keep plowing back 124,042 while
Equipment
Obligations - in
the plished
through
plowing
back
earnings over a long period of hands of the
public has decreased earnings to the ultimate benefit of
time without having it redound by $35,998,822. Funded Debt de¬ the stockholders.

refused

lot

7,404,290

curities may be issued in
February
or
March of 1951. In the mean¬

fering stockholder.

and

despair

in due course prove to

should
of

hands

putting

which

& Maine has been

Boston

years

charges.

the

1,910

locomotives

for Diesel oil in 1949.

42,299,589
1,711
3,394,7561,121,859

3,821,124

operated

steam

1940 unit of coal consumption

per

100,000

statement, but according to the company this
belongs properly in Funded Debt and is thus, shown in the above figures in that
way—otherwise the statement would show a Working Capital deficit of $13,494,009,

past

the

during

However,

the Boston

years

many

Liabilities

appears

physical condition of the road is excellent.
For

2,973,121

the

present-day coal prices,

94,069,003
28,378,393
1-3,313,072
12,065,321
17,888,252

5,256,424

surplus

Bills

and

Loans

duced

9,249,071

———

Thursday, January 4, 1951

If the gross ton miles produced
by Diesels in i1949 had been pro¬

Dec. 81,1949

130,067,826
12,222,192

working capital..
Cash and equivalent

streamlined capital setup, provided

Author contends that with

cost

public———

Net

York City

years

$247,553,706 $257,677,748

————————

„

-Current liabilities

By ALLEN J. McNEAL

?•

assets

Current

31,1939

equipment obliga¬

and

debt

tions in hands of

| Capital Structure

Dec.

Partner, Price, McNeal & Co., New

indication of

of Dec. 31, 1939, and the progress made
declared operative June 13, 1940. since Dec. 31, 1939:

creditors,

1949 7.8%

were

power,,

but in

handled by steam

and 92.2% by Diesel Power.

Dayton Haigney& Co.,Inc.
75 Federal St., Boston, Mass.
Tele. BS-S96 N.Y.C. Phone WOrth 4-2463

Volume 173

Number 4974

The Commercial and Financial Chronicle

k.'*

Wadelton Partner In

.»

Steel

Auto

Industry

The upward trend of industrial

whole

Trade

•

-'Francis'

Commodity Price Index
Food

■

!, Abbett & Co.

^
*-

Carloadingfs''

'-^'.Retail

State of Trade
and

Production

Electric Output
"

Price

'Wadelton,

Jr.,

Forecasting Sessions

re¬

search director of Lord, Abbett &

Index

Failures

Mr.

May views; Chicago meetings of Allied Science Associa¬
as
evidencing experts* expectations regarding business,
finance, and economic developments being completely de¬
pendent on factors bound up with international political

tions

production for the nation

as a

.developments.

Extent of government interventionism seen as
correlated with the temperature of the "Cold-Hot
War'*; with

slightly arrested the past week due to the Christmas
Aggregate output, however, was appreciably above the 1
level for the comparable week a
year ago? While initial claims for
unemployment insurance continued to show a slight advance in
was

Holiday.

the

week

ended

Dec.

(latest

figures

available),

claims held about steady with a year ago.

Turning

steel

and

metalworking

anticipation of the Executive Order and future policies fraught
with insuperable imponderables.

accumulated

Chicago, Dec. 30—The annual fiscal measures, beyond the com¬
meetings of the Allied Social Sci¬ paratively
orthodox
monetary
ence
Associations,
which
have stabilization policies like rises in
just come to
short-term interest rates, and di-

industries

found

that

they enter the new year prepared to make far-reaching
changes, according to "Steel," the nation's weekly metalworking
magazine. But uncertainties attending development of govern¬
mental policies controlling the
economy for the duration of the ;
emergency prevent a clear-cut appraisal of the outlook, especially
for the

near-term future.

„

firm.

steel

partnership

Mr.

1936,

pretty much after World
Considerable time will elapse, however, before
smoothly-running control machinery can be set up.

Wadelton

the

has

been

has

and

associated

been

with the

Lord, Abbett organization
since Jan. 1, 1948.

patterns.

With

Wadelton, Jr.

the investment advisory field since

eral, they probably will be fashioned

increasing volume of rated tonnage coming out, the

supply

squeeze on the general consuming trade is becoming
pronounced, the trade publication points out. February allo¬
cations to nonrated requirements are off sharply from preceding

line in

the various

dicated

product markets, increasing shortages

rearmament

shifts

into

high

gear

are

in¬

accompanied

in December.

important

stacle

However, the arrival of Hot War
would tend to make the freezing

put
way

busi¬

This

again

the

Econometric

price action until after Dec. 1, the rollback date. Whether
mandatory rollbacks will be ordered in steel is unknown, but the

nomic

can

fact that the stabilization

Park

steelmakers

prices of record June 15 and Dec. 15, 1950, is con¬

sidered significant.

000

and

cars

trucks, setting

new

record,

Reports" stated at the close of last week.

House

attempt

New

81st

Congress)

step

"Ward's

This compares with the

clear

Year's

unfinished urgent business
(its next-to-last
session
in

Day
the White

sent to

the

House

tax

bill

the

designed

corporate levies between $3,300,000,000 and $5,100,000,000

President Truman is expected to lose no time in
affixing his
signature to this measure which combines a two-point increase in
the regular corporate rate and an extra 30% levy on excess profits.
In furtherance of defense measures steps were
recently taken
by the National Production Authority to ban the use of copper
in more than 300 nonessential civilian products.
The order goes
into effect on March 1, next, and it is reported that like bans are
taking form to conserve aluminum, zinc and other scarce mate¬

rials.
the

Federal

Reserve

Board

last

week

acted

cope

in available bank credit."

For

the

sixth consecutive

month

business

failures

were

less

than those of a year ago. November casualties totaled
3% drop from the previous month; they were 18% below

numerous

the

of the

phases

many

par¬

Conference

Indus¬

Inc.,

Board,

247

Primer

—

Con¬

ceived and developed by Sigurd S.

President

Larmon,

Young

Rubicam, Inc., 285 Madison Ave¬
New York 17, N. Y., and his
associate,
Thomas
W.
Lapham.
Single copies 25c; quantity prices
nue,

request—Orders should be di¬

Mr. Larmon.

rected to

Study of British Interest Rates
for Connecticut General Life In¬
Company

surance

Hallowell
Life

—

C.
General

Burton

Connecticut

—

Insurance

teria.

Association, etc. (at
of
meetings which

plethora

sprawled
many

over

three hotels and

halls around this town).
injection of
uncertainty

revealed at the top economist

level

Reserve

John

Dr.

economic

adviser
of

Bank

Professor

Williams,

the

New

Federal

York

Economics

and

Har¬

vard, who is the incoming Presi¬
dent

American

the

Economic

Association. In an interview, Dr.
Williams, who will shortly be en¬
gaged on a special mission in

Paris, held that the unfolding of
the world's political crisis may
advisable

make

altogether

the

novel

imposition of

monetary

■'?.■?

Rearmament

Association,
the
Society, the Ameri¬

Finance

This

Americans

for

ing
motivations
equivalently
governed by elements of patriot¬
ism instead
of cold value cri¬

Economic

can

the savings tech¬
Savings Bonds becoming
public's buy¬

'iv

Uncertainties
Like others at the

tainty

meetings, Dr.
the

that

feels

Williams

length and

the

uncer¬

degree

mobil¬
transition

industrial and military

ization

the

coming

period make gauging of the em¬

ployment situation extremely un¬
certain—the amount of possible

unemployment depending largely
on
military needs and the impo¬
of

sition

manpower

controls,

element.?:-

be,
that

utlimately

the

Whatever

policies

may

Continued

and

turn

page

of the Observer—Richard

Tales

Jr.,

Edwards,
of

Centennial

the

written for the
Jordan Marsh

pany,

TROSTER, CURRIE & SUMMERS

Com¬

Marsh

Boston, Mass.—Cloth.

Announce, effective this date, change

835

recorded

year

ago,

but exceeded those

any

other

November since 1941,

according to Dun & Bradstreet, Inc.
November liabilities of business failures rose to $18,864,000,
the largest amount in four months. This was a rise of 13% above
Continued

page

W. B.

Healy Joins

David A. Noyes
(Special to The Financial

lit:

Troster, Singer & Co.

Chronicle)'

—

He was formerly in
department of Corn-

Exchanges.
the research

name

& Co.

William B.
Healy has become associated with
David A. Noyes & Co., 208 South
La Salle Street, members of the
New
York
and
Midwest Stock
CHICAGO,

partnership

stock & Co.

Members:

CLEVELAND

Security Dealers Association

Private wires

DENVER

—

DETROIT

—

PITTSBURGH

JANUARY

Trinity Place, New York 6, N. Y.

<•

PHILADELPHIA

—

ST. LOUIS

—

1951

Nelson O'Rourke Adds

(Special to The Financial

Chronicle)

BEACH, Fla.—Gil¬
bert A. Suits has joined the staff
of T. Nelson O'Rourke, Inc., 356
DAYTONA

are

pleased to

announce

that

Announcing.

South Beach Street.

the continuation

JOHN A. DOYLE

With Founders Mutual

THOMAS A. UBER

Lyons

with

Depositor

Col. —William

DENVER,

associated with

Mutual

Founders

Corp.,

Investment Securities

us.

Tweedy, Browne & Reilly

Edwin L. Tatro Company

National

First

Bank Building.

50 BROADWAY,

With Merrill Lynch Co.

52 WALL

by the undersigned, as a

partnership, of the business of

(Special to The Financial Chronicle)

and

are now

general

STREET, NEW YORK 5, N. Y.

NEW YORK 4, N. Y.

Telephone: DIgby 4-2420

•

Teletype NY 1-3430

(Special to The Financial Chronicle)

MACON,
wards is

Pierce,
sey

Ga.—Prentiss

now

EDWIN L. TATRO

Ed¬

HAROLD

with Merrill Lynch,

Fenner

Hotels

&
'

Beane,
<

•

Demp-

January 1, 1951

de¬

out to
Dr.
Williams
pointed
out
in any event the pervasive

cisive

ford, Conn.—Paper.

government discretion and
labor's cooperation are so vital an
which

Hart¬

Company,

Employment

And

the

inflationary trend confronting the nation by raising the
reserve requirements of its member banks two percentage
points,
and thus help to curtail bank credit. This action, the board said,
will increase the reserves which banks are obliged to maintain
against deposits by about $2,000,000,000, adding that this $2,000,000,000 might otherwise be the basis for a $12,000,000,000 jump

683,

National

—

Company— Jordan

Further

Defense

was

Automotive

year.

with

Forum

Avenue, New York 17, N. Y.
—Paper—50c
(lower
prices
on

8,006,-

previous peak of 6,258,000 units established in 1949. The total for
1950 was made up of 6,663,000 cars and
1,343,000 trucks against
5,126,000 cars and 1,132,000 trucks in 1949.
In

trial

Control

quantity orders).

Total automotive production for 1950 was estimated at

forecasting

Association, the Ameri¬

Economy—Conference Board Eco¬

how

changes

niques;

ticipants appearing at the meet¬
ings sponsored bty the American

take

transition

War

War Bonds with the

the remarks

Statistical

reminded

Cold-to-Hot

also
A. Wilfred May

and

flexibil¬
of the

and

necessary,

Williams

Dr.

the

evidenced

again

rates

ity impractical, because
Treasury's needs.

expecta¬

the status of current schedules under the voluntary rollback
policy
of the Economic Stabilization Agency. Some steelmakers clid not

have requested

and

tions.

Price

stimulated

crisis

has

was

should

rate

(despite the Treasury's interests).

tional

authorities

the

interna¬

the

cal

weekly, finished Steel
well established at the higher levels effected early
But a note of
uncertainty prevails in the trade as to

to submit their

monetary controls through upping

which

the

of rate flex¬

bigger, theoretically the urge for

ob¬

great

consumer

over

The urgency

ibility is tied to armament neces¬
sities.
As the Federal debt gets

of
highlighting

the

controls

credit.

purpose

ness

At the turn of the year, states this trade
appear

'rect

economic, fis¬
'

supply and distribution disruptions.

prices

here,
served

arriving

months, and March quotas will be still smaller. This trend is
likely to continue through the first half of the year even though
larger production of steel is indicated than in 1950. All along the

have
F. B.

admitted

More controls are on the
way in the near future, but just
what final form these will take remains to be determined. In gen¬
War II

By A. WILFRED MAY

Co., 63 Wall Street, New York
City, since Sept.. 1, 1949, has been

Production

Business

International Crisis Pervades

(

T'i

CoV

G. HACKRADT

A. KINGSTON

GHEGAN

The Commercial and
6

Widespread
Equity Investment

The Need ol

Thursday, January 4, 1951

living
basically have the
something, to be

I believe there is no man

who

not

does

desire

own

Stressing need of fostering widespread
securities,

wealth.

Chairman

Stock Exchange
Fenner & Beane, Chicago

of the Board, Midwest

public to

ownership of equity
Midwest investment banker contends apathy of
stocks has been due in large part to demagogic

attacks

American business.

Says

must sell idea to

and

help finance industrial expansion. Points out
in
believe

own

business.

American

would

this

believe

make America stronger, more effi¬
cient and pro¬

place
better

the individual
too.

American

Furthermore,

We not

I think it is a

practical
for

goal

business

are

n v e s

tment

proud

job

the

American businessmen have done
and

doing, and we are equally

are

proud of the business we are in,
which is the business of selling
the

securities

busi-

American

rich

We sell them to the

nesses,

and to the poor man; we

sell
large fire, life and
companies and to the
banks who have, and are respon¬
sible for, the deposits and the sav¬
ings of the American public.
We
man

them

the

casualty

deal

securities

because

I think we should see

address

only believe in them, but

feel that more and more peo¬

business,

can

that

ders that this

who have been

written

have

libraries

Whole

been

country

this

how

about

and other similar territories have

built

and

settled

been

up.

from

intangible rights, such as
copyright or a patent, or any-

the

manufacturing earning power that
creates the base that warrants this

finds out that it

just

is from the

this

businessman.

American businessman were faced

few people own
everything, and that it just isn't
possible for them to ever get
their hands on any part of it.,
i j

told

different

How

American

with the beautiful backlog

whether in lands, goods or money,
or even

will-power to save a portion
earnings. This is a great

his

country and the American busi¬
nessman
has made it great, by

history, that we
We think we know that the in¬
were populated for the most part
dividual who owns a direct stake
by people who left their own
in private enterprise through own¬
country to come here, because it
ing a bond or a share of stock,
was not possible for them to own
representing a part ownership in
any property in the land of their
an American
business, is a more
birth.
We know that in earlier
vigorous champion of the whole
American system of business and years, and even now, in the minds
of many people, property means
thought, than the man who has
only one thing, and that thing is
never
experienced the thrill and
land. We hear now the same thing
the pride that goes with the own¬
that was heard in Europe at the
ership of a piece of property.
time many of our forebears left.
Property according to a defini¬ "All of the land is gone. It is im¬
tion
in
Webster's dictionary
is possible to acquire Yny of it. We
"The exclusive right to possess, must have collectivism* of some
enjoy, and dispose of a thing. kind so we can all own all of it.
That to which a person has a legal It isn't right for just a few peo¬
title, a thing owned, an estate ple to own it."

by Mr. Hargrave at the
Annual Meeting of the American Statis¬
tical Association, Chicago,
ill., Dec. 21,
1950.
-v .,:,
■-v".
♦An

possible in this country to own
great vehicle of investment. There
portion of it. In that I believe
is a great opportunity for every¬
the foregoing, I also believe that
the backdrop is already hung and one, whether he be a rich man or
a person of very meager income.
the stage is set, and that selling
You
possibly are now saying
the idea of ownership would be
there is a hole in my reasoning, a
a
very simple thing if we would
great flaw in my proposal.
You
all really try to do it.
are
saying to yourself that there
are
only just so many shares of
Myth of the Few Owning
stock in existence, and
just so
American Business
much money industry is capable
I think you in this room would
of borrowing, and therefore just so
be utterly amazed to know how
many • bonds
outstanding.
You
many people there are who either
are
thinking that this is already
don't know that it is possible for
owned
by
individuals,
and if
them to own a portion of Ameri¬
someone else buys some
of it, it

know

banking and
brokerage

Homer P. Hargrave

proud

for their own
good, and for the benefit of Amer¬
ican unity and stability.

the

been

ple shold own them,

to work

toward.
We

•:

ingenuity of the American busi¬
nessman.
We help make / sound
and fluid markets in these secu¬
rities because we believe in them.

for

good

-£>.■

their Exchange,
their floor,
the stocks and bonds that repre¬
sent the ownership of these fine
American businesses, Which
are
the fruit of the know-how and

lieve it would
be

...

and to have traded on

be¬

ever

devised.

to have listed

tion to defend

itself.

vehicle

of investment that has

The Stock Exchanges are

and
in a
o s i-

ductive,

investing savings

they are the finest

know

should

own

of combating inflation.

means

everyone

stake

direct

equities is

that

take away from

Amer¬

public that finest thing individual can do for himself
his country is to buy some ownership in a business and

ican

the possessor

it that everyone

broker to buy for you ex¬ came upon a very unusual sign by
the maker of a product. The sign
:
No potential farmer can buy a said, "We are sold out for the bal¬
farm one acre at a time, but any ance of 1950 and for 10 months of
1951.
If you should care to place
person 21 years or over can buy
the General Motors Company one an order for 1952, see Mr. So and
share at a time. He is only lim¬ So, Room So and So, at the Drake
ited in the amount he can buy by Hotel." There were not even any
his own desire to be provident, his samples of goods in the booth.
your

actly what you want.

of something no man
him. I think
everyone wants to be the owner
of a piece of property.
I believe
he becomes a different kind of a
citizen the minute he acquires the
title to a portion of the world's

Partner, Merrill Lynch, Pierce,

right

thing to which a man has a
to be protected by all."

can

HARGRAVE*

By IIOMER P.

•

Financial Chronicle

(58)

our

that

means

the

owner

now

must

nothing will be accom¬
plished toward really broadening
ownership and furnishing oppor¬

sell,

tunities for

new

people.

point, and one I am
most happy to discuss, and with¬
out attempting to be profound I
will
say
that this country has
This

grown

industrially' every minute

banker

his

was

orr

faced

have been in to

he would

with,
see

foreigner

immedi¬

almost

He would have been plan¬

ately.

plant facilities, he

for new

ning

raising

been

have

would

new

he would have been cre¬
ating new securities, to handle
the business he knew he could do,
rather than simply locking up his

money,

shop and telling people they could
business with him for

not do any
two years.

Postwar Expansion of

Investments

During the years since the end
of World War II there has been

expansion

enormous

American

industrial

in the
machine.

1945 to the

From the end of

end

of June, 1950 almost $74,000,000,000 has been spent by American

business

on new

plant and equip¬
that Ameri¬

ment. This is the sum

spent for new

has

business

can

machinery, new buildings and
other

the

paraphernalia

went to make up our

productive

it was founded, and there
capacity.
hardly been a time when cap¬
Where
did this money come
ital was not needed to build up
additional facilities. I know of no from? Where did businessmen get
Well, in the first place, less
business that doesn't have an ex¬ it?
than $3,000,000,000, or only about
pansion program, either in active
state of accomplishment, or one 4% of it came from new equity
The balance came froin
tucked in a desk drawer waiting stock.
since

has

an opportune time.
It is my
opinion that there will never be
a dearth of investment vehicles in

for

Fortunately for you and for me
and for the millions of other peo¬

ple in this country who have no
desire or adaptability to be farm¬
ers or landlords, and have not the

America.
We

are

little different in this

country than businessmen in other
countries, and my attention was
invited to this point most forcibly
at the recent International Trade
Fair that was held in Chicago, and
I will tell you

about it.

loans, term loans by insur¬
companies and other insti¬
tutional lenders, bonds issues sold

bank
ance

mostly to insurance and casualty
companies, with additional money
obtained through • the "ploughed
earnings"

back
you

ing

method.

think

agree with me that a
sounder method of financ¬

will

much

great

this

growth
period
companies to

would have been for

accomplished it, by the crea¬
tion and sale, of new equity sehave

wife and I were walking
miles of exhibits of
foreign countries at this fair, we
As my

through the

Continued

page

brains and the incentive to be in¬
20

etc.,
vehicle of
investment, another sound type of
owners,

another great

there

j/'anuary. /, 4954
"ife take pleasure in, announcing,

ventors,

0ine Street, tAew tyorlc

property, and it will increase in

i/iut

amount

creases,
power,

We take

the demand for it in¬

Mr. W. Truslow Hyde,

and as the productive
machinery and earnings of
increase. It is prop¬

has been admitted

this country

General Partner in

that is capable of furnish¬
with the same pride of
ownership,
the
same
thrill of
possession that comes to the man
erty

ing

lai i/iii

leen admiited

aeneral
e

fuvrtner in

will le i/ie resident

HHoiibn,

our

crd

firm,

property is the securities that
represent the ownership of Amer¬
ican business, and those securities

^jfice

available

are

all

ities

77.

provided for

the

brokerage

by the great

us,

Stock

American

Easily

MEMBERS

NEW

YORK
SINCE

WALL
NEW

STOCK
1872

STREET

YORK

tell

just
j/VE TAKE PLEASURE

ANNOUNCING THAT

buy it for you.

'y.
HAS

ADMITTED TO

GENERAL

OUR

If you

FIRM

1, 1951

120

New York

Broadway

January 1, 1951

own

.V..

broker
it.

Clark, Dodge & Co.
Established

61 WALL

We take

your

1845

STREET, NEW YORK

pleasure in announcing that

He will

WILLIAM A.

It will be yours
dividends. It

direct stake in in¬

HOBBS

JOHN W. DAYTON,

want to be a stockholder

lend your money

have this

Morgan & Company, the
Continental Bank here in Chicago,

PARTNER

the
JANUARY

Exchange

JR.

dustry.

j
BEEN

York Stock

York Curb

it will pay you

will give you a

S. TlLNEY

JOHN
'

your

New

Stocks

banker that you want
and

want to

you

Members New

•

part of
the company that furnishes you
with the light you read by, the
power
that runs your vacuum
cleaner, or if you want to be a
part owner of the company that
owns
the telephone
you
use
or
makes the automobile you drive,

EXCHANGE

investment

Public Can Obtain

and

Exchanges

and

fraternity.

banking

WOOD, WALKER & CO.

firm.

every

day in the year, through the facil¬

"flood, fftrui/ieri

our

Josephthal&Co.

That kind

landowner.

our

Jr.

who is the

partner in

pleasure in announcing that

There is plenty of this

property.

■

you

at interest to
municipality in which
live, all you have to do is to

city

provident;

save

your

money

have enough to instruct

da) become members of our firm
Clark, Dodge & Co.

until you

all

that

'January /, 1951

yolume 173

Number 4974

The Commercial and Financial Chronicle

(59)

listing houses) that cannot effectively be transformed into military power.

For Less-Than-Total War
Columbia University

Dr. Hart declares*as the immediate goals to be met
in

case

war

and

years;

guarantee
tain

by Amer¬
(1) getting set so

business, industry and agriculture:
to

the

difficulties

mobilize fully in months instead of
develop enough strength in Europe to

can

(2)

months in

necessary

involved

case

Cites

war.

cer¬

r^e^?iUld

a
is

stresses, this is not

about total

paper

title

Neither

war.

The

about pussy-footing
It deals with a problem

paper

strategy.

The

•

which

•

S? 1 *40S»S
fiS
Would

Than it

for ;an equal number, of Chevrolets. We will need more cars be-

readiness
■ ' •

fore

out of toe wooes.
Complete production of Cadillacs

pro-

are

is beyond our means; tout it is also
breafe out we can mobilize fully, beyond our means to thiow away
months rather than years-";y-V'those.that are almost produced
dpvplon
pnonuh-^
SJ5KS&V

irom

(1)

gpt

set

that

eu beUl

strength in the crucial European

theater to guarantee

can. put upon
it
is
all-out

the

neces-

sary. months fii case of war.

eventual

fool-proof road to profit. Inflation

impairs work incentives.

In par-

from too

succeeds, the
plateau of readiness can
without any un¬
strain.

plateau lies

all

the

incentive to

the

investment-hump of the Hick-

in order to

earn

creates

baked

are

direct

Worst Of

all,

Inflation

means

that

effort

But

make

world

the

sian trade-cycle

only

hal£l

form of

half-enforced

and

save

demand, for

tf,e

too apt t„ take

readiness-ecori-

aggression

maintained

and

a? well "sin c^trolsi Penalizipg good citizen"e ot fuTmobili- ^ anf

,_r zat/ioh:.T:.Since the

terring

bearable

diffw to kM

degree

If the American strategy of de¬

ticular, since most workers save
chiefly by acquiring liquid assets
or repaying debts, it cuts into the

counter-measures, which

The Mobilization Hump

efficiency by bending the
measll/ring.rod 0f cost accounting
and—m0re important—by making
the hoarding of scarce materials a

inflation

war

rpanv

-best

assemble them

presently-to

^duce^as
much transportation
;by
parvS-fabrication
plus- assembly

Goals

gram are:

many, ways
cutters

goals

unassembled - impairs

mparts of Cadiliacsmto scrap heaps;

will end with both evils of direct controls and inflation.
the

A good

■

hump on way into ;; ~
"a readiness economy," such as weakening of
people's savings s
incentives and sliding-scale wage arrangements. Concludes we

able

;

mobilization

run

♦

By DR. ALBERT G. HART*

ican

far

ahead of supplies avail- tagonize real enemies of inflation
for
military purchase.
It by charging them with
heresy,
deal, in the would be at lesat as reasonable to and
insisting that they produce
^perspective of a long period of stand this argument on its head
academically respectable reasons
readiness,* is what "the classical and argue for inflation as a crude for
their stand.
But neither can
economists
called
"productive but practical means to get "econ- we afford
to let people pin medals
consumption."
Attempts at mili- omy in non-defense expenditure" on
themselves as leading foes of
tary diversion of essential foods, by forcing each
agency either to inflation
if their diagnosis and
medical care, auto repairs,
etc., accept a cut in purchasing power
prescription are
grossly inade¬
would boomerang in the not-very- or else
persuade Congress (or a quate—or if
they are simply look¬
long run by reducing production, local government) to take
positive ing for a way to exploit inflation
There is also a long list of con- action to
increase its funds.
as
sellers
while resisting
it as
sumables
which
could
be
cojThe valid objections to inflation buyers.
verted
but at a loss rather than
are more sophisticated.
Inflation

Strategic Economic Policy

rOne

the

sight

between

hump

arrears—for

thing

same

model.

clearest

humps

military recruiting.'
is well under
Way, inductions will consist mostly
of young men just coming of age.
But during the build-up to readi-f
ness,- we will of course find all;
the military material we can in
slightly older age groups as well.
Once

our

program

Inductions will have

maybe not for (hither, if

war

quickly

comes

objectives

we have a prolonged armed truce, of political
r.' .This includes putting several mil-] efficiency,

years; may be

not ke

the decentralization

economic

and

■

power,

cOniiaence^tnat

of eco- r bargains will be carried out.. rif
Although the •> Payme ^ s regularly
f

preservation

Withou t? h°n man-years into military train^v. nomic opportunity.
guessing
at lug to build up ready strength^4 diversions for military use are m?an;
ltfS
waS uPd^rst°oa
Prof. A. G. Hart
the
relative and providing a large stockpile oft less intense in readiness than in
Vwn^P, they were, promised, tnis
probability of finished munitions, so that our full mobilization, many control* confidence
ls^shaken, and every
these contingencies (on which an ready forces (and those ofi our .problems are more acute. The lack s
f1?* * ^r?roHup susPlclon and
economist is no expert), ! pro- allies)
would not be scanted in of a vivid prospect of early vieis stirred up.
pose readiness rather than all-out the
early
months -if
lighting tory reduces the incentive value
Economists have an obligation
war as the proper hypothesis for
started. At the bottom of. the of opportunities to save, of keep- to interpret the problem in terms
.

this discussion.

two

This is

priority

partly be-

the differences between the

cause

models

whose

facts.

decide.

may

is merely likely,
certain, full mobilizabe a trap, as Secretary
has lately pointed out

Marshall

The strain
such that
rather

of full

12 million

mobilization

could be

nomic
a

men

worn

consists, of

reserves

Obvi-

afford

trainees

plus

trained

whose service is prolonged to
give ready military strength, the
hump in . total military numbers
may come later. But as organized

men

build

up,

need for ready

Continued

an-

page

afford' to treat up pressures * which will underthe difference in mine the willingness of the ma-

■:

PLEASED

;.:v A

TOANNOUNCE

HNCXXX-

THAT

MR. WINFIELD H. PERDUN

not

mean

that

the world

to live

plenty

fun.

Th?nAmfHca„bEcPo^m,fc'' wu«r
Association,

o£ our consumption

owe

it to

good

comes

deal

limit
-

such

discretion.

THIS

GENERAL

BECOME

DATE

PARTNER

Smith, Barney & Co.

omy by setting up "red tape" to

ex_

■

also danger of crippling the econ-

from

(notably occupancy o£

1950.

controller and controlled which
arise when the controller has discretl0n °ver matters of vital lmP°r^nce to a firm. But there is

softly and have

But

HAS

the corroding temptations for both

A
readiness
economy
implies
comfortable living for most of us.

war

ARE

'V1';

expense of the dif- jority. With a long time to go, we
resource-cost.
<
have to be more concerned over

ference in

in uniform and

comfort at" the

corresponding ecoadjustments.
Besides,
it
state

consumers

make full mobilization feasible.

Dec. 29,

Since the total number in uniform j

;

cannot

economy

down

the

clearcut

objections.

cannot

quickly just by keeping 10

making

real

n°t much more transportation coerced. But compulsion is necesthan a Chevrolet; but it embodies sary , to ke£p small unwilling
a good deal more materials and a minorities from getting rewards
lot more man-hours. A readiness for non-cooperation, and setting

war

these

ously,

the lay of the

rather than

takes

need

because of

•—and

cus-

exploration, value, but which as finished goods
The lack of wartime patriotic
have only peacetime value. An fervor implies more compulsion
Whether we will'have war example is the luxury aspect of behind economic policy. Not that
if so when—is for Russia to auto
production. A Cadillac is unwilling
majorities
can
be

partly

tion

list will
come' goods. ing the goodwill of civilian
ingredients have military tomers, etc.

a fairly early
early as sum¬
mer
1951), when student defer-1
ments expire in large numbers).
This implies also a slightly later;
hump (1952?) of men in training.

rPS8 hump (perhaps

Readiness

Members New York. Stock

is emphatically not a policy of
"half-way"—problem by problem,
its strategy is more exacting than

and other

WALL

Exchange

leading exchanges
5

STREET, NEW YORK

full mobilization.

January 1, 1951
The Inflation Problem

MORGAN STANLEY

CO.

Building up to a plateau of
readiness obviously creates an in¬
flation problem.

AXXOUXCE

THAT

arising

sure

suction

STANLEY

process

than

tense
HAROLD

But

Inflationary
the

from

may

full

pres¬

demand-

less

in¬

mobilization.

exchange the cost-push
with less patriotic re¬
straints, is more intense. Besides,
process,

WILL

BECOME

LIMITED

PARTNER

the

AD BIT 10 X

CONTINUING

cost-push

has been
modernized by widening the area
process

GEXERAL

PERRY E.

WILL

GEXERAL

sliding scales from farm prices
to wages. At the same time, stand¬
ards of enforceability for anti-in¬
flation programs have to be stiffer.

PARTXER.

HALL

PARTNER

flation reduces

AND

power

wishful

mass

MR. MARTIN

GEXERAL

LA SELL

lars to

ADMITTED

PARTXER

THE

FIRM.

goods

on.

Inflation

going
per

JANUARY

1, mi.

out

have heen admitted

the firm

General Partners

inflation, there

less

consumable

dollar of income earned.

that

have

to hang the price tags

who

believe
EFFECTIVE

buy goods unless

are

Those

Exchange

thinking.

the

goods

C. BRIGGS

Member New York Stock

Keeping pricetags constant does not enable dol¬

LEBOUTILLIER

MR. ARTHUR

living stand¬

eating away the buying
of the dollar smacks of

people to
price control—with¬

MR. BEVERLEY M. EYRE retired

encourage

rationing—can conjure short¬
building
false hopes.

General Partner

December 31, 1950

ages out of existence are
up

January 2, 1951.

2 Wall Street, New York

The objection that inflation de¬
values

dollar
time

Telephone

Teletype

Cable Address

WOrth 4-3400

NY 1-2900

Delafield

the

military-procurement
questionable, at a
when
appropriations have
is

also

January 1,1951

that

announce

Nobody needs to be persuaded
that inflation is a bad thing. But
riot all of the popular objections
make sense. The objection that in¬
ards

CHESTER II.

xi^at ty/or/

Ha//

PARTXER

MAX A GIX G

Exchange
Exchange
'i

AS A

Members New York Stock
Members New York Curb

The Commercial and Financial Chronicle

(60)

Thursday, January 4, 1951

...

Feb. 8-9, 1951

Simple Formula for Common

Board

Stock Investment

relation to their past

prices

average

(the "Dear Group") performed better than those stocks selling
relation

1932 to

their

1948 this

situation

was

Electric

Concludes latter

reversed.

mon

period's trend will continue, and selection of "Cheap Stock
Group" will offer simple and dependable key to successful

One; of

the

problems

investment

determination

the

been

value

central

primary

stock

common

about

some

which

mar¬

prices

ket
..

could

has

ex¬

pected to fluc¬
in

tuate

(m.

the
One

future.

approach
to
this
problem
has

been

based

upon

the

average

price
D

the

strial

Aver¬

Thus

age.

several

for¬

Stocks—Under

excess

profits

Loeb

Co., 15 Broad Street, New York 5,

all

The

cases.

of each

taken

the

past

phate

of the annual

mean

highs and lows for five years
prior to the date of selection. (In
earlier years the five preceding

prices were averaged.)
The period of testing covered the
35 years 1914 through 1948.
In
each year of this period we se¬
lected the two groups of stocks,
year-end

and then

tested

formance

Semi-annual

Beer &

Canada)
Investment

tion

available

June

memoran¬

Cummins

Engine

Co.

—

randum—A. G. Becker & Co.,

South La Salle Street,
Illinois.

Also available is

semi-annual

appraisal of City of Philadelphia
Bonds.
' 'y
i.'':V '"'i
;;

Mercantile Stocks

—

Analysis

—

Country Club, Oreland,

Pa.

Electric Co.

Dallas

(Dallas, Tex.)
Col¬

annual

Club

Bond

—Memorandum—Josephthal & Co., umbus Day outing.
120 Broadway, New York 5, N. Y.
Nov. 25-30,

Laughlin—Bulletin—

Bache & Co., 36

Wall Street, New

Investment Bankers Association

Over-the-Counter Index—Book¬ York 5, N. Y.
■'

',y;y'

V.-yy

4 '?■

' S"

■

(Hollywood

1951

Beach, Fla.)

showing an up-to-date com¬
the Average itself as shown by
the prices of one, two, and three parison between the thirty listed

Outing

Summer

at the Manufacturers

Oct. 12, 1951

International Hydro

Jones

N. Y.

Dinner

Golf and

120

Chicago 3,

Dreyfus & Co., 50 Broadway, New
York 4,

Philadelphia

and

Memo¬

Cp., Inc., 123 South Broad Street,

(Philadelphia, Pa.)

15, 1951

Investment Traders Association
of

Convention

Jasper Park Lodge.

Sulphur Corp.

General

Dealers Associa¬

Canada

—

Dallas 1, Texas.

annual

Club

June 11-14, 1951 (Jasper Park,

Co., Gulf States Building,

let

Annual Convention at the Holly¬

'.';

Kaiser Steel Corporation—Anal¬

wood Beach Hotel.

industrial stocks used in the Dow-

later.

years

Memorandum

—

(Dallas, Tex.)

Bond

Memorial Day outing.

Phos¬

Philadelphia 9, Pa.

against

group

Philadelphia Winter Banquet.

Dansker

—

Certificates—

appraisal—Stroud &

the market per¬

each

Steel

Sulphur

Corp.

Also

Equipment Trust

average

stock was usually

Analysis

—

Continental

dum

price

Copper

Brothers
&
Co., Inc., 511 Fifth
Avenue, New York 17, N. Y.

New York.

Jones

Stock

Henry S. Schneider

of the

use

past

Industries

Utility Com¬

Gas

and

tax—Study—Newburger,

stock selection.

Co., 40 Wall Street,
Y.

New York 5, N.

past

Continental

Support

—Gammack &

performance (the "Cheap
Group") from 1914 to 1931; but that in "New Deal Era" from
lowest

Firms

(Philadelphia, Pa.)

21, 1951

Dallas

of the Mis¬
souri Pacific Reorganization Plan
Brief

Associ¬

Exchange

meeting.

May 30, 1951

within Dow Jones Industrial Index discloses that those

stocks selling highest in

Stock

Investment Traders Association

firms mentioned will be pleased
send interested parties the following literature:

of market performance of two stock

Mr. Schneider's analysis
groups

Feb.

It is understood that the

Wertheim & Co., Members N. Y. S. E.

winter

Recommendations and Literature

By HENRY S. SCHNEIDER*
Market Analyst,

ation

Dealer-Broker Investment

(Dallas, Tex.)

Governors

Illustration

the

Method

Testing

five

Averages

and

the

ysis—Cohu & Co., 1 Wall Street,
thirty- New York 5, N. Y.

industrial

over-the-counter

stocks used in the National Quo¬

Gold Mines, Ltd.

Kerr-Addison

Bureau Averages, both as —Analysis—James Richardson &
yield and market performance Sons, 347 Main Street, Winnipeg,
an
simple and I shall illustrate by
eleven-year period—Na¬ Man., Canada, and Royal Bank
starting in the year 1914.
We tional Quotation Bureau, Inc., 46 Building, Toronto, Ont., Canada.
first computed the 1910-1914 av¬ Front Street, New York 4, N. Y.
Kold Hold Manufacturing Co.—
erage price for each stock in the
Preferred Stocks cumulative as Memorandum—Goulet & Co., 25
Index; we then took the market
prices of the individual stocks in to dividends and free of Penn¬ Broad Street, New York 4, N. Y.
the Index as of Dec. 31, 1914, and sylvania Personal Property Taxes
divided each by its own past five- —Tabulation—Newburger & Co.,
Missouri Pacific Railroad Co.—
year average price.
The result¬ 1342 Walnut Street, Philadelphia Analysis—Smith, Barney & Co.,
ing percentages were arrayed in 7, Pa.
14 Wall Street, New York 5, N. Y.
•^ • 'ji: ; N ;f". •
\'!
• '■ y v^•• l-' y
v '
numerical
order
ranging
from
Puts & Calls—Explanatory pam¬
the highest to the lowest.
Morris Paper Mills—Memoran¬
The
top one-sixth of the stocks were phlet—Thomas, Haab & Botts, 50 dum—Swift, Henke & Co., 135
Broadway,
New
York
4,
N.
Y.
chosen for the Dear Group and
South La Salle Street, Chicago 3,
Our method of

tation

testing

was very

Smith, Barney Go.
Admits Winfield Perdun

over

mula - timing
have been geared to the
this
Industrial
record
of

plans
price

Stock Index.
vestor

when

stocks

Under these the in¬

instructed

the

Index

purchase
selling

sufficiently below its previous
five-or-ten-year
average
price,
and

sell

when

the

Index

somewhat above the past average.
The

of our research
to test this criterion of past

'was

purpose

price, not as applied to
Dow, Jones Industrial Aver¬

average

the

itself, 'but to

age

individual

the

stocks within the Index.

pose

select

testing

two

decided

of stocks, each
roughly one-sixth of

groups

comprising
the

For pur¬

number

the

Index.

The

first group consisted of the stocks

selling highest in relation to their
past average prices, and the sec¬
ond

consisted of those sell¬
ing lowest in relation to their past
group

average

prices. We called the two

groups

"Dear"

and

spectively.

For

lection

used

our

"Cheap"

re¬

dates

se¬

year-end prices

...

the

presented

paper

Mr.

Schneider

the Round Table

jamin

Graham,

American
Dec. 29,

on
Investments, Ben¬
Chairman,
before
the
Association, Chicago,

- *

Illinois.

Bank of America N. T. & S. A.—
Memorandum

—

Floyd

Allen

Group, Cheap Group, Co., 650 South Grand Avenue, Los
Average it¬ Angeles 17, Calif.
self
one
year,
two years, and
Burlington Mills Corp.—Memothree years later, as though one
randum — Shearson, Ham mill &
share
of
each
stock
had
been
Co., 14 Wall Street, New York 5,
purchased on Dec. 31, 1914 and New York.
then sold out on Dec. 31, 1915,
Also available is a memorandum
of the Dear

and

the

Industrial

1916,
lowed

1917.

the

same

1915

fol¬

procedure

above in selecting

the two groups
of stocks; only this time we used
1911-1915 average

prices.

year-end
in

through
were

all

1948.

made

Central

Wood

Working Co.

Southwest

Corpora¬

tion—Analysis—Kidder, Peabody
prices and 1915 & Co., 17 Wall Street, New York 5,
The same was New York.

subsequent
Thus three

from

the

tests

groups

Collins

page

Radio

dum—Lee
South

Continued

Winfield H. Perdun

Stocks

Data

—

Insurance

Fire

for

Outlook

—

Laird, Bissell

—Analysis—Walston, Hoffman &
Goodwin, 265 Montgomery Street,
San Francisco 4, Calif.
Also available is a report on

field

memorandum

Card

Perdun to

Win-"

general part¬

Mr. Perdun's

nership in the firm.

was

Company-

Cement

admission

the

nounce

Exchange

exchanges, an¬

and other leading

admission to Smith, Barney & Co.

Harbor Plywood Corp.

Riverside

14 Wall

Smith, Barney & Co.,

Street, New York City, members
of the New York Stock

Company

Electric

Philadelphia

York

Meeds, 120 Broadway, New
5, New York.

—

Lerner

reported

previously

the

"Chronicle" of Dec. 21,

10 Post Office Square, Bos¬
ton 9, Mass.
Co.,

years

Finance

1950.

•/..yy.

the

We then measured
percentage price movement

done
*A

one-sixth

bottom

the

Cheap Group.

•

Co. —Memoran¬

Higginson
Salle Street,

Illinois.

Corp., 231
Chicago 4,

■'■ii;'

Ultrasonic

Corporation

—

Anal¬

ysis—L. H. Rothchild & Co., 52
Wall Street, New York 5, N. Y.

LAMBORN & CO., Inc.
WALL

9 9

STREET

NEW YORK 5, N. Y.

Union Bag and Paper Corpora¬
:

This

announcement

appears jor purposes of record only. These notes have been

placed

privately through the undersigned.

tion—Analysis—Hayden, Stone &
Co., 25 Broad Street, New York 4,

SUGAR

New York.
Raw

Control—Analysii
Co.,
148
State
Street, Boston 9, Mass.

—

Refined

—

Liquid

U. S. Thermo

$20,000,000

—

Raymond

Also available is an

HUGOTON PLAINS GAS AND OIL COMPANY
4% First
Due

Exports—-Imports—Futures

analysis of

Simplex Paper.

DIgby

4-2727

COMING

Mortgage Notes

EVENTS
Investment

January 1,1966

Established

1856

Field

H. Hentz & Co.
Members

William R. Staats Co.
ESTABLISHED

1951 (Point Clear, Ala.)

Jan. 15-16,

Association

National

of Securi¬

York

New

1887

ties Dealers,
ernors

BONDS and STOCKS

Inc., Meeting of Gov¬
and Election of Officers at

York

New

Chicago

640 SOUTH SPRING ST.

•

LOS ANGELES

TRinity 4211

San Francisco

Beverly Hills
Santa Ana
San Diego
Phoenix

Feb.

4, 1951

Board

Pasadena
<

Member

Los Angeles Stock Exchange

ation
winter

(Houston, Tex.)
Governors

Stock

of Associ¬

Exchange

San Francisco Stock Exchange

meeting..

Board
of

Governors

Stock

winter meeting.

Exchange

Cotton

other

N. Y. Cotton

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

ation

Board

Orleans
And

Exchange

Inc.

Trade

Exchange

Exchanges

Firms

Midwest Stock Exchange
Associate Member

New

Exchange

Curb

Exchange,

Commodity

the Grand Hotel.

Stock

Cotton

Associ¬

Firms

Exchange Bldg.

NEW YORK 4, N. Y.
CHICAGO

DETROIT

GENEVA,

PITTSBURGH

SWITZERLAND

Volume 173

Number 4974

The Commercial and Financial Chronicle

(-31);

Selection of Public

Utility
Stocks by Formula

Analyst,

loss

Auchincloss, Parker & Redpath,

Barrett's

summarizes the

paper

re¬

study covering the field
operating public-utility com¬

stocks for the years
Our research

mon

1930-49.

Additional

How

into

Determined

three

first

fort

ef¬

for

the

utility com¬
stocks,

mon

plete

total

exami¬

nation

single

(8)

mon,

com¬

the

most

Edward

B. Barrett

year's

the

characteristics and performance—
1948.

In the second stage, the cri¬

percent

com¬

earned

and increases

revenue

performance

casioned

performance

mon

quartile

only

cases

since

expenses,

1937.

from

years

1929

sults

from

such

selections

re¬

were

compared with those of the utility
group as a whole, and with other
indexes.

The

results shown

impressive

stage,

that,

the

were

third

these

rather

than

panies

alone.

culated

for

ratios

operating util¬

individual com¬
Similarly, we cal¬

market

grounds

paradoxically—that of
out"—i.e.

ported

"low pay¬

low proportion

earnings

dividends.

re¬

were

distributed

then

was

would be made by the application

The market per¬

formance of the successive groups
so selected was calculated on the
basis

one-year's

holding

without inclusion of dividends
ceived.

When

this

compared

was

criteria"
records.

that

found

the

trinsically cheaper than the others
because their small dividend held

the

cases

universe.

low

better

When

payout
than the

the

percentage
changes for each of the 20 years
added up,

were

showed

85%

the selected groups

universe—an

cumulative

totqj

capital.

were

exclusions would produce better
results in years of declining
prices,
but not in good and bad markets

relation

ities.

Such
increases,
if
they
eventuated, could be expected to

exert an
ence

clear

that

annual

showed

made
a

parisons

small loss of 3%.

made also with the

were

performance

Com¬

counter-group
consisting
of
the
high
payout
companies, to the number of one-

the

period

the

low

differences
Further

were

not unfavorable

shown

were

investigation

minor.

revealed

that

should

someone

entire

group

increases within
their selection.

from

dividend

short time after

This circumstance

undoubtedly explains in good part
♦A

by Mr. Barrett presented at
on
Investments, Ben¬
Graham,
Chairman,
before
the

paper

Round

jamin

American

Dec. 29,

Table

Finance

Association,

1950.

Chicago,

will be appointed
replace them.

shortly

gardly

dividend

holds

the

who

also formerly associated

were

E. W. & R. C. Miller Add
PHILADELPHIA, Pa.—E. W. &
Miller

Broad

Street,

Co.,

South

123

members

the

Philadelphia-Baltimore Stock Ex¬

price change, announce the association

down, and is clearly harmful to

with them

Formed in New Orleans
(Special to The Financial Chronicle)

NEW

Leonie

La. —Mrs.

ORLEANS,
F.

Landry and Robert D.

Alexander

have

Alexander

the Marine

Building, to conduct

securities
was

formerly
Alexander

porate

Landry,

with offices

business.

Schweickhardt,
Mr.

formed

Co.

;

Mrs.

partner

was

Bayard Wharton.

Howard,

Weil,

cri¬

the

Labouisse,

richs & Co.

Equipment Trust Certificates
(Philadelphia Plan)

Testing the Pay-Out Criterion
Over

did

Period of Years

not

compare

To be

annually $500,000

guaranteed unconditionally as to payment of the par value and dividends by endorsement
by The Netv York Central Railroad Company.

(Accrued interest

hypothetical touchstone, and
proceeded to test it out first for a

10-year and ultimately for a 20year
period.
Our
comparisons

(1) with the

group as

over

1957

2.65%

1953

2.15

1958

2.75

1954

2.30

1959

2.80

1955

2.45

1960

2.825

1956

2.55

1961

2.85

Issuance and sale

year

totals

the

course

1962

2.875%

1963

2.90

1964

2.925

1965

2.95

1966

2.95

of these Certificates are subject to authorization by the Interstate Commerce Commission.

Offering Circular may be obtained in any State in which this announcement is circulatedfrom only
such of the undersigned and other dealers^ast mayt lawfully offer these securitiesfin such State.

HALSEY, STUART & CO. INC.
& CO.

R. W. PRESSPRICH

of the

by the following
of successive
fiveof the annual per¬

The

These results have

seen

be added)

1.90%

paring the low payout issues with
improved

1952

favorable results obtained by com¬

their universe.

AND YIELDS

MATURITIES

ple years, but adopted low payout
as our

made

'•"r

orig¬

our

inal ten criteria in any other sam¬

were

each January 1, 1952 to 1966, inclusive

;;

HORNBLOWER

& WEEKS

BLAIR, ROLLINS &, CO.
■

■

•

yv;.y

INCORPORATED
in

■■■

L. F. ROTHSCHILD & CO.

FIRST OF MICHIGAN CORPORATION

THE ILLINOIS COMPANY
FREEMAN & COMPANY

centage changes in market price:
5 Year Total
for

Low Payout

Group

Entire

HAYDEN, MILLER & CO.

Group

Loss

77%

Gain

149%

Gain

79%

1940-44

Gain

166%

Gain

57%

1945-49

Gain

99%

Gain

39%

1930-34

WEEDEN

& CO.

INCORPORATED

January 4, 1951.

The only

WM. E. POLLOCK & CO., INC.

Loss 89%

instance in which the

low-payers performed significant¬

GREGORY & SON
INCORPORATED

McMASTER HUTCHINSON & CO.

Fried-

Equipment Trust of 1951

mature

cor¬

department

New York Central Railroad

To.

Co.

Landry1 &

trading

Landry

,500,000

2%%

Landry, Alexander Co. '

member of Prescott

Co.
Mr.- Smith, it is rumored,
forming his own securities firm
with Harvey and Dan M. Hawkins,

A nig¬

associated

•

became

Waterhouse & Co.

Lasell

Morgan

Stanley & -Co*- in
1935, having been previously with
J. P. Morgan & Co. and Price,

with Otis & Co.

truth is just the opposite.

Mr.

with

will become

add

general partner of the firm,

effective Jan. 1, 1951.

reported that Mr. Miller
will be joining Cruttenden & Co.
of
Chicago and that Mr. ^Cruse

Thereby Justified

terion.)

1935-39

the

ficers

Chester H. Lasell

limited partner in addi¬

Chester H. Lasell is admitted

and

CLEVELAND, Ohio—Glenn

tion to continuing as a general
partner; Perry E. Hall, a general
partner, will be managing partner

Miller, Executive Vice-President,
John : A.
Kruse, Vice-President,
and
Lyman
Smith,
Treasurer,
have resigned as officers of Otis
& Co., Terminal Tower. New of¬

the

It should be unnecessary to

make

price-earnings-ratio

that the low payout stocks bene¬ period, as is
fited much more frequently than comparisons
the

become

Make New Connections

group selected was aided signifi¬
cantly by these dividend actions;
it may have been helped as well

issues earning the larg¬
price came a close
(The suggestion has been

payout group, but the

con¬

whole, (2) with a sub-group
consisting of the highest payout
fifth of the universe.
These did stocks, and (3) with the two avail¬
able utility-stock indexes. Over
not do as well as the entire group,
the 20-year period the Dow-Jones
and they therefore fell far below
and the Standard-Poors Indexes
the showing of the low payers.
did not do quite as well as our
Comparisons of dividend yields
entire group—thus underlining the
during the second half of the 20year

not

Three Otis Officers to

study parallel to ours, but using

this

reinvest¬

456%, while the group as a whole

were

They indicated that such

Perry E. Hall

idend increases in these years, and
30 of them applied to stocks in

warranted.

The results

taken together

important upward influ¬
subsequent market price.

was

second.

annual

basis, starting in 1930 and
ending in 1950, the low payout
group showed a final net gain of

ex¬

clusive.

This corre¬
impressive than
that offered by any of the other
criteria—although the simpler one

of 16.8% against 4.3%. On

ment

sup¬

down

tiles of performance.

lation

gain of 337% against

the

for

average
a

net

determine

Furthermore, they
likely to benefit from

price

highest payout issues ap¬
in the two poorest quar¬

peared

est percent on

performed

was

"selec¬

perform¬
of

step-up

We made

their earnings.

Conversely,

of buying

group

out

expecting
study

market-performance
10 out of

top

quartile.

20 years.

portant

the

with

large group—the "universe"—sig¬
nificant differences (of more than
5%) were found in 13 out of the
In 12 out of these 13 im¬

various

oc¬

com¬

companies with the lowest payout
ratio no less than eight appeared

the

performance
that of the

with

tion
ance

—

re¬

Our next step
the

correlate

assumed

that each year a selection of onefifth of all operating-utility issues
of this criterion.

performance.

the group selected all
common
stocks with equities be¬
low either 25% or 20% of

in¬

performance

ward from the best to the poorest

for

of the dividend.

sought to ex¬
that the superior market perform¬
for each common-stock issue for
plain the highly favorably market
the 12 months from March 1948 to ance of the low payout stocks by
performance of the stocks selected.
March
1949, and again divided no means-justifies a corporate pol¬
The
criterion
discovered
and
them into quartiles ranged down¬
icy of niggardly dividends. The
used turned out to be—somewhat
reason was

ratio

clude from

the

low

The low payout issues

ities, the entire available field in
by anticipations of additional div¬
that year. We then divided the 49
idend increases.
companies into quartiles for each
criterion—prefering to study mar¬
Niggardly Dividends Not
ket
behavior
by
such
groups

successive

all

whether it would be better to

through 1949, and the market

Morgan Stanley & Co, 2 Wall
Street, New York City, members
of the New York Stock Exchange,
announce that Harold Stanley will

Structure

Explanation of Results Shown

worked

1948 for each of 49

Morgan Stanley Go.
Partnership Changes

ex¬

stock to total capital. In such
cases
we
do not have the usual

the

terion thus suggested was applied
to all available operating utilities

out

payout ratio is often

best

capital fund, (9) the main¬ the low-payer
group. This is near¬
and
depreciation ratio, ly three times as
many as their
(10) the relationship between numerical proportion would have

increases in

advantage of the less

their

the

tenance

and

take

A low

various

carried down to the

revenue

based

was

upon

siuciUioiaer.

The Factor of Capital

criteria, We assumed that later dividend
statistical performance would be found to
ratios. These referred to (1) the
yield-the clue to the favorable
percent of earnings paid out in market
performance, and studied
dividends, (2-3) earnings vs. price, the actual data over the
9-year
(4-5) capital structure, (6-7) the period March 1941-March 1950.
operating ratio and the percent of We found that there were 57 div¬

promising cri¬
selection

-47.1%,

We found that in 41

out of 82

tentative

representing

mine the most

terion

determining

different

ten

deter¬

for

was

dividend increases than other util¬

plausible criterion for selecting
utility stocks. First we made up

repre¬

sented

Criterion Was

the

groups.

their

details:

We devised the following meth¬

stages. The

ieiun.-cuiu-ju.it;

plemental

superior market performance
by our cri¬

terion.

year ;,

universe, and in
they fell into the
poorest quartile..

of the issues selected

divided

was

and

the

that

ranked

opportunities for buying low payout issues at unduly low prices.

This

cases

fully marketwise from dividend increases. Concludes niggardly
dividend policy favors sophisticated investor in providing

sults of

individual stocks in the low pay¬

analysis of past performance discloses those
issues distributing low proportion of earnings as dividends
outperformed the "high payout" issues, and benefited more

group

against 41.9% for the "universe."' pert among the public stockhold¬
We also made a check, covering
ers, by buying the low payout is¬
years 1941-1950, of the rela¬ sues at unduly low prices.
tive market performance of the
out

entire

the

Members New York Stock Exchange

Mr.

the

in the

early period of max-, favors the sophisticated and alert
imum depression 1931-1932. Their
investor, who is enabled thereby

By EDWARD B. BARRETT*
Market

than

worse

was

Commercial and Financial Chronicle

The

Thursday, January 4, 1951

(62)

week ended Dec.

history for the
Dollar

23.

Pennsylvania Brevities

Truman's Economic Advisers Urge

were
23.5%
the corresponding
■■■/>, v.
''•>/'

sales

greater than in
1949 week.

More Production and Consumer Controls

PTC Signs

2-Year Pact

PHILADELPHIA—Next Feb. 11
has

and

come

Union 234,

Local

transit workers voted
by a three to two margin to ac¬
cept the terms of a two-year con¬
tract containing a no-strike clause.
The

new

for

"dry."

operators

and
an

additional 2

and

employees

❖

Co.'s

Works

and wages, as
•

supplements of tha price system, in achieving

purposes

"The

Economics

of defense production.

Report to the President, which it entitles

In its Fifth Annual

National Deiense," tne Council of Economic

report

of the
Corp.

for one- pand its facilities in meeting ex¬ divert 11,005,000 automobiles an¬
man troiley, bus and elevated op¬
pected increase in gas consump¬ nually from the present Delaware
erators. Certain other groups will tion has been substantiated by an River Bridge by 1955.
receive advances up to 13 cents
The recommended tunnel site
independent survey conducted by
an
hour. Minimum pensions for Ebasco Services, Inc., New York
is about three-quarters of a mile
employees who have reached age engineering firm. The Ebasco re¬ farther south where considerable
65 with 25 years of service are in¬
port stated it had not reviewed all open ground is available for ap¬
creased from
$100 to $125 per items of the program but that on
proaches.
month. Other features are a guar¬ the basis of estimates "an amount
The Commission will later de¬
anteed work
week and an es¬ in the neighborhood of $30,000,000
cide upon which of the two types
calator clause based upon the cost should be considered," subject to'
of construction it favors and upon
of living.
'
upward revision if conditions so the exact location.
'
indicate.
"
Negotiations between the com¬
'/'/ ///''/; *
*
*
' /
pany and union representatives
Gas send-out in the week ended
Duquesne Light Seeks Increase
were speeded by a mutual desire
Dec.
24 was
1,138,513,000 cubic
to
reach agreement
before the feet, an increase of over 54% over / PITTSBURGH—A schedule of
possible imposition of a- wage the comparable 1949 week. The higher rates estimated to ' in¬
freeze. The adoption of a twocompany estimates that by the crease revenues by $7,720,612 an¬
year
contract is unprecedented winter of 1955-56, gas used here nually and the first general raise
locally.
:
■■
will approximate 407,000,000 cubic sought in the company's history
*
*
j
cents

maximum strength. Stresses use of full production poten¬
accompanying curbs on consumer spending, credit

tials with

yards in Camden. It was estimated
that a span at this location would

five years to ex¬

the

over

pro¬

$31,900,000

expending

gram

projected

Leon H. Keyserling,
Council of
speed to reach goal of building

Report to President,

Clark and Koy Blough, constituting the

Economic Advisers, urge more

last week
as being

delphia, to a point north
New
York
Shipbuilding

PHILADELPHIA—Philadelphia

Gas

favored a bridge
crossing from Oregon Ave., Phila¬

Double Check

Check and
,

sites

The

contract carries wage

hour
maintenance

of eight cents per

increases

wildcat
and
only
turned out to be

three wells have

engineers, reporting
River Joint Com¬

recommended
favorable for
bridging or tunneling the Dela¬
ware between south Philadelphia
and New Jersey. Estimated costs,
of either project were set at $50,000,000.' - /
'
T
" '

mission,
two

exploitation
is
restricted
risks are minimized. To date

29, the city

A board of

John

to the Delaware

each. Thus

shares of $100

Transport

(CIO). On Dec.

Union

Workers

and

local

groups

heretofore come to

•

Annual

Fifth

Sites Approved

Two Crossing

are held by
residents and
workers who have limited indi¬
vidual holdings to from one to five

taken

been

without what'
be an an¬
nual "show of force" between the
Philadelphia Transportation Co.
will

approximately $50,000. For the
part, land lease rights have

most

hour increase

per

Leon H.

•

John

Keyserling

Roy Blough

Clark

Advisers, set

;■'/

feet
V

Boom in

Gas

Pennsylvania

has been filed

daily.
tji

natural gas in Cen¬
tral Pennsylvania, notably Clin¬
ton
County, has reached boomproportions and development of
the new field as being commer¬
cially successful seems assured. At
present, 68 wells are in produc¬
tion, being drilled or projected.
Approximately 140,000,000 cubic
feet daily is flowing from 10 com¬
Drilling for

•

Public

vania

A decision

by Duquesne Light Co.
is expected by Jan. 10.

Speeded

Morrisville Steel Plant

with the Pennsyl¬
Utility Commission

U. S.
Corp.'s $300,000,000 plant to

Construction work on the

by the Employment Act of 1946, and now com-

posed of Leon H. Keyserling,

Chairman, John D. Clark and Roy

"speed and more<?>speed" as imperative to reach the ports (but allowing also for the
goals set for building-up our max- possibility -that. international demum strength. The report stresses
velopments might curtail some
need
for more
efficient use of imports) the only safe answer in
Biough,

our

urge

resources

and the importance

increasing military production
as well as enforcing effective controls to attain this end, and to

maintain stability of

company's brief stated
the increase was necessary to sus¬
be builtj on 3800 acres of land at
tain its credit and enable it to
Morrisville, Pa., across the Dela¬
ware
River from
Trenton, will carry forward its improvement
Steel

the economic

system.
Concerning

The light

cases is to expand production of these items,
" "Another
situation exists in
cases where the supply is sufficient
for military
requirements
and stockpiling alone, but not suf-

these

the importance of ficient to cover also the industrial
production and controls, the Re¬ and consumer requirements for an
economy supporting a high
and
port states:
"The programming of resources expanding mobilization effort for
start in March and be pushed to program.
a
long time. There has been a
and requirements serves to reveal
completion considerably in ad¬
4
ACF-Brill Order
shortages of varying degree in tendency in some quarters to sub¬
vance of original schedules. Some
tract
the military and stockpiling
ACF-Brill Motors Co. has re¬ many g^ods an^ services. In manv
finished products will be turned
cases,' the problem of shortages requirements from the total suppleted and producing wells.
ceived
an
order
from
Army
out six to twelve months after
In the Renovo district, gas has
Corps
to
build
602 can be cut, like the Gordian knot, ply, and to conclude that the situconstrutcion
starts
although its Ordnance
ation is not serious if the re¬
been most generally encountered
motor buses, the "largest single by rigidly allocating existing supultimate capacity of some 1,800,plies among various requirements mainder is well above zero. This
at about 6500 feet and the aver¬
000 tons a year will not be reached order ever received by ACF-Brill
according
to
priority.
But
restraint
neglects the fact that other essenage cost of drilling to this depth
for
motor buses,"
according to
until late 1952.
of demand will not and cannot tial requirements, even with reC. W. Perelle, President.
>
The new plant, to be known as
meet the whole problem. In many strictions and sacrifices, may be
the Fairless Works, will be wholly
instances, production must be ex- far above zero and may even ex¬
We solicit inquiries in
integrated, producing steel ingots,
Scott Paper Co.
panded—and in the long run, this ceed the military and stockpiling
blooms, billets, bars, rods, plates,
/
v i
E. & G. Brooke Iron
Sales of
Scbtt Paper Co. for is the more fundamental remedy, requirements.
steel pipe,
hot and cold rolled
"More generally, the experience
"It is obvious that, on the eco¬
1950 are expected to exceed $95,Leland Electric
sheets and strip, black plate and
in World War II illustrates that,
000,000, compared with $83,599,- nomic front, wars whether hot or
hot dipped tin plate. As by-prod¬
while many lines of production
American Pulley
^
960 in 1949, with earnings of about cold are won or lost on the pro¬
ucts, it will- produce lighk oils,
were cut back and many restrict
$4.25 per share on the 1,743,696 duction line and not simply by
A. B. Farquhar
ammonium sulphate, napthalene
shares now outstanding. On the restraints. This justifies discussion tions imposed, total output swelled
and tar.
basis of the same capitalization, of
Bearings Co. of America
why major emphasis in the enormously. On an annual basis,
Plans for development of the
1949
earnings
were
$3.04
per kind of mobilization now under it rose by about three-quarters
Riverside Metal
new seaboard
site set to coincide
share.
The
installation of new way should be placed upon pro¬ between 1939 and 1944. If this gain
with the availability of iron ore
had been only one-half as great,
high-speed
paper
making ma¬ duction.
from U. S. Steel's Cerro Bolivar
we
might have lost the war no
chinery last October has served to
HERBERT H.
"First of all, the current rate
matter what else we did.
deposits in eastern Venezuela, but offset higher material costs. De¬
of output of some items vital to
1421 CHESTNUT STREET
were
expanded and moved for¬ mand
for
company's
products the defense effort is not enough
; "In
some respects, the expan¬
LOcust 7-6619
ward because of the Korean War
continues at production capacity.
to satisfy even the primary mili¬ sion of total production, although
and the present national emer¬
in
an
entirely different pattern
tary and stockpiling requirements
gency: Until such time—probably
which we should now be meeting from in peacetime, may be just
1955—as Venezuelan ore becomes
Allegheny Ludlum Earnings
as
imperative
now
as
during
or will have to meet shortly. Even
available in larger quantity, the
PITTSBURGH—Per share earn¬ allowing for an expansion of im- World War II. In a total war, the
>
.

BLIZZARD & CO.

Pennsylvania Water

Fairless Works will utilize domes¬

& Power Co.

Construction
of the

Common Stock

add

ings for Allegheny Ludlum Steel
Corp. for 1950 are estimated at
around $8, compared with $1.15 in
1949. Sales are expected to exceed

other foreign ores.

tic and

and

maintenance

"steel community" will

new

greatly to the industrial, com¬
and residential develop¬

Free of Penna.
and

selling

ment of the area between Trenton

Personal Property Tax
under

1932

its

low.

"lift"

many

UU0 in 1948.

resultant

and Philadelphia with a

about

ploy

4,500

Co.'s

last six

months' earn¬

ings at $5.50 per share, compared

equal to the present population of

City of Philadelphia Bonds

the like 1949 period.

with $1.44 in

Morrisville.

Philadelphia 3, Pa.

Equipment Trust Certificates

Dow-Jones estimates Carpenter
Steel

about

workers,

activities. The plant itsef will em¬

BOENNING & CO.

■

business

Semi-annual Appraisals

$170,006,000, comparing with tne
previous sales record of $12u,500,-

mercial

6% yield

Sjf-

Aetna

Baldwin Strike Ended

Cambridge Bldg. 3s 1953
Leeds &

settled last week,

was

threat

Lippincott Units

which

taken

agreed

Reading

ending the

would
3. The

place .Jan.
upon
included

•

have
terms
10-cent

"package raise" retroactive to last

Sept. 1.

•

Samuel K. Phillips & Co.
Members Phila.-Balt. Stock

Exchange

Pennsylvania Bldg., Philadelphia
Teletype
PH

375

N. Y. Phone
COrilandt 7-6814

William
American

sales
both
were

Park,
Stores

the

on a

the

President
Co.,

grocery

said

31, 1950

The

Federal

Notv available for
Write

Reserve

for

distribution

your copy

Bank ' of

department

store

sales Jfor

week ended Dec. 23 as

the

13% above

corresponding 1949 week; 5%

for the four weeks and 2% up
for the 51 weeks ended on that

STROUD & COMPANY

■

—

Incorporated

•

^
Stockholders

of
that

store chain,

tonnage and dollar basis,

greatest

of December

Philadelphia reported central city

date.
American Stores Sales Up

lay-off of 4,000 other

employees

John J. Felin & Co. Common
Consumers Gas Co.

a $2,000,000 program of plant
expansion.

start

plant, of

the Baldwin-Lima-Hamilton Corp.

Lippincott 3%s 1952

Leeds &

of pattern

two-weeks' strike

makers at the Eddystone

Engineering

Standard

Co., Ellwood City, Pa., will soon

company's

PHILADELPHIA 9

Pennsylvania

Salt Manufacturing Co. subscribed
to

98y2% of the 124,879 additional
offered at $45 per share

in the ratio

of l-for-7.,

ALLENTOWN

•

PITTSBURGH

NEW. YORK, SCRANTON

LANCASTER

Number 4974

Volume 173

nation

had

heavily

down

draw

the

port

total

the

civilian

our

strength,

that

not know at what year

drain

used.

that

"But

strength
of a total

military

combine

backs

the

military
build-up
with the largest feasible support
of our underlying industrial and
civilian strength. This is necessary

the

.•is that to

achieve

are

and

1944, because
in

.now.

than

basis

bidding

cut¬
upon

are

competing
the

interest.

needs

priorities of
Such

period of

eco¬

brief,

pro¬

upon

the

peacetime

balance

mand and

traditional

free

market,
relied

are

supply

and

de¬

to respond to the rela-

tive wants of

free people as de-

locations

and

the

controls,

needed

Besides,

•production

the

does

the

used

expansion

not

cannot

and

that

the

income

re¬

ceeding

used

sumer

increases

posable income after taxes, which
people would normally want to
spend on consumption, from ex¬

consumer

demands

and

also

may

ducing

increases.

consum¬

in short supply.

(and thus available for spend¬
ing) is generated by the totality
total

the enlargement of sav¬
it will be extremely diffi¬
cult to prevent the amount of dis¬
ing,

specifically for

the

availaole

supply of
To enlarge sav¬

goods.

ing sufficiently, however, will not
be an easy task.
Several of the
control methods listed above oper¬

pur¬

chasing durable consumers' goods ate
to
encourage
net
saving,
and housing, and on credit expan¬
namely, heavy excise taxes, spe¬
sion generally. Third, allocations cific credit
controls, and rationing.
of supply operate to restrict the The central effort to increase sav¬

-ers

production,

placed

reduce demand for goods

ceived by producers and consum-

the

previously
saved
assets.
Strong emphasis will need to be

businesses have to spend.

credit

general

volume

and

Second, demand
be restrained through re¬
stricting the expansion of credit.
Limitations
may
be
placed on

production

inflationary
problem in a period of very high
and
constantly
rising
defense
spending. The reason for this is
remove

and

ers

in Heavy excise taxes

scarce

used

The

only
goods available for these buyers,
•however,
are
total
production
minus: the
large
amount
pur-

producers,

thus re¬
on'the prices of

pressures

materials.

raw

level,

rationing

restrict

ticular

goods

total

which

from

for

short

"The

re¬

saving

different

trols— priorities

should

kinds

con¬

and

in¬

eral

and

special—differ

their

from

rising.
This is the operation and effects. In
general,
hi which price controls and controls, when wisely used, sup¬
gap' is not filled simply by ex¬
panding production. - It is accord¬ wage controls help restrain de¬ plement
the
price
system
in
A rise in the prices
ingly necessary to reduce con¬ mand.
of achieving the purposes of the de¬
sumer
and business demand be¬ goods or services which a person fense
program
in three ways:
low levels they would otherwise sells results in an increase in in¬
First, controls can promote pro¬
come available for spending.
•reach.
■
•
.?
: '
• ••; •
duction by channeling resources
"Controls
both indirect and
"Finally, demand may be re¬ into the most desirable uses; seccomes

Thus, the 'inflationary

programs.

way

—

direct—are

needed

duced

with

deal

promoting

net

Continued

saving,

page

But current and foreseeable

any-

the diversion of

near

allocations,
price and wage controls, credit
controls, and taxation, both gen¬

pressures.

keeping

increasing

left unconsidered.

be prevented

may

increasing

patriotic campaigns to
buy Government bonds. No method

par¬

it does not

inflationary

Fourth, demand

by the Government for the
program -and
for other

defense

for

are

vigorous

con¬

may

demand

supply, although
duce

At the

ing will undoubtedly be through

have

.planning do not contemplate
where

that is, by decreasing the spend¬
ing of current disposable income

There

methods

down the amount which

to make scarce
and materials available

most

danger.

different

may be employed for re¬
straining demand. First and fore¬
most, incomes may be/absorbed
through
taxation,
thus
cutting

instances,

many

manpower

for

other

inflationary
several

which

specific commodities, it takes al¬

na¬ -chased

hectic

contribute to the inflationary

which

had more slack

1939

service

mechanisms

duction anywhere near to the ex¬
tent that we did between 1939 and

resources

Reliance

competitive

spiral.

optimum

strength for the long pull. >
>
"We cannot expand total

without

price
movements create grave inequities
which undermine public morale

these various needs

serve

elsewhere.

tional

must expand total production

.we

the

The conclusion

war.

; com¬

of the primary

build-up

goods which

not

-psychological strain involved, in
carrying a military burden in a
democracy without the pressure
all-out

are

•lines.

in short sup¬
ply relative to the total need, does

only
for
purely economic
but also because of the

prices, to determine the allocation
of

reasons,

various

are

meet the needs

military effort. The safest course,
under these circumstances, is to

not

can

,c>\VVv-

■-•.

there

they

pelling reasons why, in addition
to promoting production, it is nec¬
essary to
restrain demand: The
output of some items cannot pos¬
sibly be expanded rapidly enough

in future—

to the utmost in support

ap¬
nec¬

must be made before

if at all—we shall be called upon

suddenly

fundamental

most

the

essarily enormous requirement is
by accenting production. Goods

this

supplemented in

nomic mobilization.

proach to the satisfaction of

industrial and

because

termined by themselves, must be

to match these require¬
against available supply, ; "While the expansion of pro¬
requirements duction may
ultimately reduce
in accord with priority of need.:
the specific inflationary impulses
"It has also been pointed out
•which1 arise from
shortages of

now

draw down

now

to-define

ments

face, there is
no telling how long the burden of
the
military build-up will last,
but informed opinion is that we
face many years of very high de¬
fense
outlays. We
must weigh
carefully the extent to which we
we

competing require¬

(63)

and to service these

very

In the different situ¬

war.

ation which

mobilization

reconcile

ments,

sup¬

build-up. This
nature of

military

from

and

civilian strength
follows

nomic

very

its industrial
in order to

upon

The Commercial and Financial Chronicle

man¬

power and material from avail¬
ability for the production line to

service

the

Guaranty Trust Company of New York

that

forces

armed

'was undertaken in World War II;
this differential

and

in substantial
that
in

had

does

do not have

resources

have

"Moreover,
that

for the fact

slack

than

1939

compensates

measure

now.

not follow
great pro-

MAIN OFFICE

FIFTH AVE. OFFICE

MADISON AVE. OFFICE

140

Fifth Ave.

Madison Ave.

Broadway-

•

44th St.

LONDON

ROCKEFELLER CENTER OFFICE

60th St.

PARIS

Rockefeller Plaza

50th St.

■BRUSSELS

.duction expansion
cur

economy

C power

utilization

'full'

near

potential within
just because we were

>xi

man-

and plant by the middle of
a growing popula¬

J. LUTHER CLEVELAND

1950. We have

tion

and

growing

labor

WILLIAM L.

Chairman of the Board

RLEITZ

Condensed Statement

President

dnd must strive through

it to in¬
productivity. We can furapply the latest results of

DIRECTORS

Cash

crease

ther
"

tical problems of production. It
should be possible to increase

the
public out{put by about 25% over the next.
five years. This is a considerably
higher rate of growth than has
been
experienced
in
normal
peacetime, but the Council be-

private

GEORGE G.

ALLEN

Chairman of the Board, Duke Power Company

F. W. CHARSKE
„

and

•

Hand, in Federal Reserve Bank, and Due from

Banks and Bankers

science and invention to the prac¬

total

31,1950

RESOURCES

; We can work much longer hours.
We have a marvelous technology,

of Condition, December

force.

Chairman, Executive
Committee, Union Pacific Railroad Company
Chairman of the Board

J. LUTHER CLEVELAND

U. S. Government

Loans and Bills Purchased

Public Securities

Stock of Federal Reserve Bank

731,102,226.19

802,887,596.04

1,230,658,065.19

$107,007,990.32

.....

Other Securities and

W. PALEN CONWAY

Obligations

9,000,000.00

Obligations

19,693,338.04

;

lieves it

harder
•

which

can

be obtained with the

work
the

and

now

•

wide

skill¬
fully employed, will be needed to
expand the right lines of production with sufficient rapidity. They
include procurement policy, techrtological development, financial
aids for increasing 'capacity, in¬
formational guidance, and training
programs.
Even restrictive
measures, such as taxation, credit
controls, allocations of supply, and
price and wage controls

can

•

production, by selectivecurbing unwise resource use

without

•

Acceptances

8,202,255.82

President,

Receivable

8,771,883.87

Crane & Co., Inc., Dalton, Mass.

Real Estate Bonds and
President,
The Columbia Gas System, Inc.

18,041,983.18

Mortgages

JOHN W. DAVIS

of Davis Polk Wardwell

5,037,488.67

Other Real Estate

stifling necessary types
incentive, investment and expansion. It is not the Council's
role,, at least in this report, to
advance detailed production pro-

16,776.40

Sunderland & Kiendl

Total Resources
CHARLES E. DUNLAP

$2,940,419,603.72

President,

Berwind-White Coal Mining Company

GANO DUNN
;

President,
The J. G. White Engineering Corporation

LIABILITIES

Capital

WALTER S. FRANKLIN

$100,000,000.00

...

President,

The Pennsylvania Railroad Company

Surplus Fund

JOHN A. HARTFORD

Total

Chairman of the Board,

The Great Atlantic & Pacific Tea Company
CORNELIUS F. KELLEY

Chairman of the Board,

Anaconda Copper Mining Company
MORRIS W. KELLOGG

Chairman of the Board,
The M. W. Kellogg Company

WILLIAM L. KLEITZ

Deposits

200,000,000.00

......

Undivided Profits

LEWIS GAWTRY

Capital Funds

„

•

2,503,009,999.71
150,000.00

15,574,299.55

10,825,009.08

Foreign Branches

2,65 5,727.40

Acceptances
Less: Own

•

controls
fall

can

say

may

far short

Whatever
adopt, they will
this:

those

op-

ponent whose entire economic and
political system is founded upon
the most rigid control of every
button and every grain turned out
by. every factory and farm. But
we
can
enlarge our productive

superiority, and in setting out to
do so we will be choosing the
weapon which we know best how

CHARLES S. MUNSON

Acceptances Held for

Investment

■

4,749,290.47

Chairman of the Board,
Air Reduction Company, Inc.

WILLIAM C. POTTER

GEORGE E. ROOSEVELT

Dividend

Retired

of Roosevelt & Son

■-'!

President,

Chairman, Executive

Committee, Illinois Central Railroad Company

THOMAS J. WATSON :

■

"The'

been

argument

that

the

first

thus
task

far
of

has
eco-

.
,

$3,000,000.00
2,000,000.00

—

Items in Transit with

5,000,000.00
,

Payable, Reserve for
Expenses, Taxes, etc.
.
.
Total Liabilities

Chairman of the Board,

...

44,392,535.58

.......

62,873,272.06
1,940,419,603.72

International Business Machines Corporation

Securities carried

Chairman,

Executive Committee, The Coca-Cola Company

Uses and Limits of Controls

•

Accounts
EUGENE W. STETSON

ROBERT W. WOODRUFF

use.

•

Extra

The Prudential Insurance Company of America

Payable January 15,1951:

Regular
l

CARROL M. SHANKS

374,386,331.95

•

......^

Foreign Funds Borrowed

President

74,386,331.95

grams.

"We

170,717,451.23

Bank Premises

con-

tribute to

Credits Granted

Accrued Interest and Accounts

of tools,

range

•

WINTHROP M. CRANE, JR.

STUART M. CROCKER

all.

poses upon

President,
City of New York

im-

The Presbyterian Hospital in the

effort

larger

emergency

CHARLES P. COOPER

fiduciary

$94,779,111.47 in the above statement are pledged to qualify for
public moneys as required by law, and for other purposes.

powers, to secure

Member Federal Deposit Insurance

Corporation

The Commercial and Financial Chronicle

(64)

Thursday, January 4, 1951

been

The Fallacies of

Area Defense

Delegate

Our

Though asserting there is

occasion for complacency

Party spokesman

leading Republican

whitewash,

foreign policy decries suggestions
tion of free nations and restrict

our

people
challenge by

for
U. S.
or

of which

area

of defense to Western

(1)
within

well as North
Atlantic Pact, and points out, with aid of Western European
production, we can, in event of full scale war, maintain superi¬
ority of Russia in industrial and military potentials. Points
out Russia's internal vulnerability.
Hemisphere.

Defends U. S.

in Korea

move

responded to that
a five-year record
be proud.

can

International

showed,

our

own

revolution

violent
ism.

and

Through
estate

course

plan

end

the

future.

think

pause

This

year's

that,

and

should

that view,

could

creative acts needed
satisfy the material and politi¬
cal aspirations of the dissatisfied
leadership

and

grave

ideal¬

look

need

feel

de-

back,
not

There

are
are

labor

problems much time which predecessors
and production.

according to ability and dis¬
tribution according to need.

World

a
festering sore, has been sub¬
jected to orderly liquidation. Over

style

been

contribution

national
the

has

granting of freedom

the Philippines and the discredit¬

F. Dulles

ferent races,
Russia's

ahead.
patches of ground fog.

Communist Aggression

With

relationship

new

partnership

that

We Americans

for

great people
It is usu¬

once

lift

vision,

our

baseball is our
but I believe a
';V\

that

soul-

least

the

a| they

grow
of

The great

older.

time

our

been

has

unstoppable,

whether our Western civilization

was

had become

wagon

old and decadent

that it was bound to

pass

away,

Many thought that it

trend

and

getting

was

band¬
under

way.

At this critical moment heavy
responsibility fell upon the United
States. We were still a relatively
opt of the unholy union of Marx's,
communism and Russia's imperial¬ young nation, had not been devas¬
ist.
tated by war and were ion that

giving place to the younger, dy¬

namic and barbarian society born

*For

1,000

years

susceptible

less

Western account

our

than

veloping
hind

ways

those

put

be¬

power

judgments

promote collective justice and se¬

volume

broods
Nine

"The

exercised almost unlim¬

men

years

steer

evening,

winter's

often

were

"captains of industry."
meaning
was
plain—that

over

top

exec¬

business

free

were

longhorn

the unfenced range.

The

before whom

power

all of them had to kneel

the

was

choice of the customer; a

power,

incidentally, in spite of the efforts
advertising, which the cus¬

tomer still exercises

freely.

The Smaller Corral

(1)
a

Today the top executive of

business

stricted in
corral.

finds

himself

re¬

progressively smaller

The

posts, the barbed
wire, the boards and the brush of
this

corral

new

Shots

Bad

the

ago,

major

only superior

the

movement?

relatively

a ses¬

with

in¬

of the

The heads

corporations

Fifty

end

big laun¬

nature

utives
the

our

such

lead.
At

the

ited power within their scopes.
To a large degree that was true.

have

taken

these,

"empire builders."

The

second

and may

first

changes.
We used to speak
major
pioneer
businessmen

known

searching
close

the

clue

large

in with

question

executive

ordinary speech gives

(3) Since the end of World War hot
stove, the
the opposition and then moved II
we have provided, in loans and
tired
houseterrorism, subversion, and
that we see the present in the
grants over $40,000,000,000 for the w i f e
settles
civil war to gain political control.
relief of other people and the re¬
light of historical perspective, it is
Forest D. Siefkin
down with a
By those methods the Russian
^apparent that the five years have
construction of other lands, there¬
state
and
the Bolshevist
party
g r i p p i n g
been years of great achievement
by practicing the great command¬ little article
entitled, "Are You
working hand in hand brought
and that our people have already
ment that the strong ought to bear
about
800,000,000
people under
Blighting
Your
Child's
Life?"
surmounted great peril.
the infirmities of the weak.
their control. And still they were
The junior clerk measures him¬
INations are like people in the
(4) We took the lead in found¬ self against the factors set forth
rolling on toward their announced
sense that while they may die a
goal of a Soviet-designed- "One ing tfye United Nations as an or¬ in an essay called "The Ten Hall¬
violent death, they are more apt
ganization lor recording the moral marks of a Successful Executive."
World."
to* die in their beds, particularly
judgments of the world and de¬ And the executive, at home of a
Who was there to stop that
But

s en

.;,■•■■■

stant

could be made

sion

slogan they softened

are

self-examination.

dry and

and of equality.

dangers

great

colors

creeds and

himself,
As

750,000 people have peacefully
ally said that
political independence. Great national
sport,
Britain, as the principal colonial
good
case
power, took the lead.
Our own
direct

the

to finance

gave

Introduction

Won

litical power

spo'ndent
There

order as adding to the difficulties
emanating from
involving social security, fair labor standards, labor
relations and registration and sale of securities.
Maintains
today's senior executive compelled to devote to political and

tion

there, and from then ing of racial discrimination here
on
Russian state power and Bol¬ at home. But in many other ways,
we
have exerted a powerful in¬
shevik party power worked hand
in hand to expand their joint con¬ fluence in this whole great process
of building between men of dif¬
trol.

issues

Russia's

War I, the Bol¬
shevik Communists seized the po¬

us.

advantage

Taking
defeat

the

confront

that

masses.

ism, help to
clarify

claiming that the West

longer produce the vital

wisdom, expeproven

statutes

(2) Within five years the co¬
great civilization of the past.
The Communists in particular took lonial system, which had become

grateful to all
who, out of
rience

had rotted

top executives of business find themselves

other

infected

become

with the same decay as

it is par¬

ticularly im¬
portant

had

and

Counsel,
Company

executive

income
social secu¬

graduated

taxes, and

ter

custom

General

Harvester

progressively smaller corral, with posts, barbed
wire, boards and brush consisting of new legislation. Cites
new
concept of "national emergency" with the unpredictable

the Communist road of
and material¬

traveling

asserts

restricted in

justice could be had without

cial

about the past so that we can bet¬

good

Mr. Siefkin

example

country, that so¬

rity and pension plans, our capi¬
long time, eVen for a civilization, talistic society has come to ap¬
and many had come to feel that proach more nearly than the Com¬
Western civilization had run its munist world the ideal of produc¬

the end of the year it is our

By FOREST D. SIEFKIN*
Vice-President and

Consider these deeds:

abandon policy protec¬

Sabotaging

Of Business Executives

What U. S. Has Done in Opposition

Nations

United

the

Governmental

selves.

By JOHN FOSTER DULLES*
U.

encircled, isolated and fi¬
nally, engulied. Only as we sought
help others could we save our¬

those

in Golf."

consist

legislation.

fair

relatively

Such

involving

acts

social

security,
labor rela¬

labor

standards,
Because of this faculty for self- tions and the registration and sale
for the first time in examination- we have developed of
securities, to mention only a
world
organization an en or mo us descriptive and
few, involve the widespread prac¬
moved with force to halt aggres¬
critical literature
about
almost tice of government by adminis¬
sion. It seemed • that the hope of
every
phase of American life. trative law through boards and
ages
had come true — whatever And of all these, the literature of commissions.
Along with these
now
be the disappointments. We
business is among the most volu¬ laws has come the
curity.

This year,
all
time, a

concept of the

can know that sons of the United
"national emergency,"
minous;'
ppison that the Com¬
which, in
Nations, who in Korea lay down
munist
It is a solemn and chastening: turn, gives great impetus to the
party
distills.
We, if any, their lives do so for the noblest
the world. It won and held that
could
unpredictable
executive
perhaps
demonstrate
the
order.
experience for any business exec¬
leadership on merit. It produced
cause
for which men ever died

civilization had been dominant in

spiritual, intellectual and material
such as the world had

richness
nbver

before.

known

Western

society

everywhere,

and

The

elsewhere

men

faith

men

rather than

to destroy their source.

and

*An

address

thousand

Mr. Dulles before

American Association

for the United

tions, New York City, Dec. 29,

Here's

And

years

They have done the in-

watched

the

that

the-Communists

munism would have rolled

resistibly

with

of orders to buy

Plenty

of clients for friends

page

now

shall stand in

year we

W henever

book store—up where the
books

ness

There

usually
for

are

wander

can

kept.

and of so many

and

would

to sell

Cosgrove & Co. and of George R.
Miller
&
Co.
The
new
firm,

pause

which

ness

'member

Angeles

Stock

maintain

offices at

the

Los

hope

way—you'll

our

Trinity
r

Place,

And then

not attempt

today to

describe the functions of

an exec¬

utive/ Any of

that

see

dealer decides

York

City,

machines

men, • money,

materials.
tell

you

three

and*

Any of the books will

that

the

executive

has

plan,- to

or¬

functions—to

members of the New York Secur¬

test

John
Y our

needs and

Even

the "tough ones"

ours

can

often meet
.9

are

if you should want

Remember:

easy

to beat

r■■

•

to prove what

mean

Merrill Lynch, Pierce, Fenner & Beane.

Instead, I should like to use
time

for

the

changes

quick examination of
that
have
taken
Co., 63 Wall place and
are .still
going on,
Street, New York City, members changes in the political and eco¬

been

that John S.

admitted

general

Walker &

of the New York Stock
announce

.At

has

the

partner.

the

Exchange,

Tilney has
firm

Mr.

admission to partnership
viously reported in the

icle" of Dec. 21.

levels

sider
which
could

one

important to

that

forces

time, taxa¬

same

businessman
taxation

become

the

him

impact
to

con¬

decisions to
formerly thought it

many

apply.

Some Illustrations

ness

climates

nomic
the

executive's

and

changes

which
natural

the

compose

habitat,

nature

Tilney's
was pre¬

"Chron¬

address

(a)

by Mr. Siefkin before the
Association and the

and

busi¬

In the field

of financing a
Fifty years ago the
Corporation found itself in

need

out its

faced

greater

capital to carry
Its executives then

plans.
choice

from

among

sev¬

eral

alternatives.
They
could
borrow for the short term.
They
could borrow for the
longer term.
They could issue additional shares
and
offer them on the market.

Or, if they had been prospering,
they could add to their capital by
of

past

earnings,

thereby increasing production and
employment.

Today what do we see?
Bor¬
rowing is still possible, in most
.

cases.

Issuance of

totally
number

new

impracticable
of

processes

The

cases.

the

shares is

expense

Securities

prohibitive

timing difficult

large

elaborate

and Exchange Commission have

Economic

Chicago Association
of Commerce
Industry, Chicago, Dec. 27, 1950.

specifically in

administration:

company.

the
*An

American

important fields of

reinvestment
The Executive's Habitat

Tilney Partner

Wood, Walker Co.

Wood,

•

the

;

the books will tell

the

n
a

tion

management of a'
XYZ
business involves the management

you

ganize and to control.
Any of
ity Dealers Association, announce them
will
give
you
a
quick
the change of the name of the
resume
of
the
more
commonly
partnership to Troster, Singer &
used methods for doing those
Co., effective Jan. 1, 1951.
things.

try to give service the best

tions.

several

So I will

New

such

Trosfer, Singer & Go.
will be

time.

some

to consider that as a busi¬
executive you are supposed

South Eu¬

•

soon

Try

have

years

kinds as to make
government,, from a revenue
standpoint, the most important
beneficiary of business opera¬

will to have at least a smattering of To
illustrate
all these subj ects.

Exchange,

Firm Name Now

know well

have

clid Avenue.

nothing to dread

and on.

so on

merging of the business of Jones,

taxation

the

hours

texts on budgetary control,
corporation finance, industrial

ir¬

intervening

brought

Miller Is Formed

were

same

busi-

among

Jones, Gosgrove &

Troster, Currie & Summers, 74
of them

one

N othing

And

The

utive to visit the second floor of

and public relations, product de¬
sign, manufacturing, advertising,
sales organization,
taxation, in¬
PASADENA, Cal.—Jones, Cosright in the judgment that the
dustrial relations, accounting, and
West had rotted. The tide of com¬ grove
&
Miller
announce
the

Plenty

Each

in battle.

Continued
world

If, at that junctuie, we had
sought only to save ourselves that
would have been public confes¬

Na¬

usual

rally

see.

1950.

of human free¬

to Peace in the years ahead

business

Y ou're

cause

whole

The

sion

However,

needed

works

to the

dom.

spread

were

wanted to share them,

fruits

others to the

and

made

'the

impossible

Continued

page 38

Volume 173

Number 4974

The Commercial and Financial Chronicle

(63)

confidence?

Testing Formula Plans
By C. SIDNEY COTTLE*

aspects

These

activity must be
fully weighed.

'-V

Administration

Business

and.

,1'

...

Risk is

;

••

Associate

Cottle

and

Whitman maintain

constant-ratio

plan
is useful for institutional investors, particularly because of
simplicity and relative safety. Emphasize advisability of basic
features and operational procedures being understood by non¬
professional members of finance committees, investment trust
shareholders and other

owners

of the funds which

Recognition

the

fact

prove

The principal types of,risks in¬

volved

difficult

the

More¬

the

segregate

use

foregoing

always

the

nature

hazards

and

variety

ment

also

the

risk
a

plan

essential

explained

and

understood.

fundamental

vestment

program.

plan

handling the trust estates of in¬
dividuals.

such

instances

Continued

page

thai

in¬

any

effort

provide for these cyclical risks,
timing" has been
widely adopted. Specifically, most
"stock-market

investors

seek

the market
will

time

entry into

that stock

increased

undervaluation

holdings
periods of

and.

decreased

periods of overvaluation.

words,
bear

they

and

sell

In other

endeavor

markets

kets."

"buy

bull

mar¬

C. Sidney Cottle

There

general

agreement

to the difficulties of
timing satis¬
factorily the purchase and sale of
stocks

common

exists

troversy
for

but

much

the

overcoming them.

tems have

been

con¬

sys¬

with varying

grees of success.

significant

de¬

One of the most

recent

developments
has been timing by formula
plan.
Within

the

ten

past

vestment managers of

in¬

years

constant¬

ly growing number of insurance
companies,
banks, investment
trust

and

educational institutions

—as
well as individual investors
—have adopted the formula
plan
method
of stock-market

timing.

This

marked

widespread
mula
of

growth has created
interest in the for¬

technique

investors

all

among

and

types

students

fi¬

nance.

rises

ket

Nature of Formula Plans

objective

all

plans is to sell stocks
rise

In this
tect

losses

buy

fund

against

decline

with

price

and

contrast,

preserve

ratio.

the

crease

the

fund

securities

market

established

the

—

the

i.e., the direction and

ex¬

tent

the

division

course

given movement; (2)

any

the

investment

fund into aggressive and defensive

portions; and, (3) the employment
of rules
whereby securities are
systematically purchased and sold.
There

two

are

formula plans:

plan

seeks

types

constant-ratio and

maintain

variable-ratio.

termined

broad

prede-

held

the

when

Relying

constant-ratio

changes. An illustration will clari¬
fy these differences.
ccnstant-ratio plan

with, say,
relationship
the following

stock-bond

operate

When

the

value

of the total

market
and

two

bonds are soid
purchased until the

portions

versely,

equalized.

are

when
the

creases

value

portion

total,

say,

result

the

decline,

stocks

sive

stocks

to,

price
of

say,

are

in¬

aggres¬

55%

sold

Con¬

rise

toe

and

the

bonds

purchased until the 50/50 ratio is

Cottle

their

and

tests

role

third,

and

the-results

constant-ratio

plans,

the

American

-v.

'.,97

? ;;vA

•

"V- T.

•

•.

•

■:

?'"!V ' '*•••" \.VV •

$1,499,884,121.82

•

Obligations

1,477",758,049.01

Municipal Securities

174,288,180.62

Other Securities

205,103,370.02

Mortgages
Loans.

40,072,985.04

1,815,387,721.79

Accrued Interest Receivable

Factors of Analysis

the

surface,

might

seem

9,461,559.45

Customers'Acceptance Liability

that yield and capital appreciation
the only important considera¬

the

others

yield

and

foremost

require

appreciation

factors,

28,808,642.57

Other Assets

8,087,192.38

•

certain

careful

very

24,159,936.78

....

Banking Houses

tions in appraising a formula plan.

con¬

$5,283,011,759.48

sideration

prior to the adoption of
any
formula plan. Of primary
significance are: the nature of the
buying and selling action under

LIABILITIES

the

plan, including the duration
of periods of inactivity and" the
composition of the fund during
such

periods;

risks

the

Buying and Selling Action
Consider

first

For
has

intervals

solely

immobility
doubtful feasibility

psychological

but

•/.

^,f

Payable February 1, 1951

...

$4,871,424,027.90
2,960,000.00

...

may

would

Reserves—Taxes and Expenses

13,705,613.08

Other Liabilities

16,554,966.72

Acceptances Outstanding

28,036,105.85

Less: In

be fully justified,

management

Portfolio

2,675,961.92

Capital Funds;
Capital Stock.

$111,000,000.00

(7,400,000 Shares—$15 Par)

grounds.

instance, one plan examined
been inactive since 1945. This

inactivity

;

the

buying and
plan. Any
historically has pro¬

which

may

Deposits.
Dividend

comparative

the
under¬
standability of the plan; and the
administrative aspects.
The im¬
portance of these factors may be
readily illustrated.

plan

encountered;

—

Surplus

189,000,000.00

Undivided Profits

53,007,007.85

unable

353,007,007.85

establish with finality the re¬
liability of the formula followed
and subject to the pressures which

develop

falls—eventually

have

dence shattered by
of

this

inactivity?

hand, would
in

excessive
an

sawing

$5,283,011,759.48

the market rises and

its

confi¬

continuation

other

the

United States Government and other securities carried
to secure

public and trust deposits and for other

$300,217,095-00

purposes as

required

were

pledged

permitted by law.

plan which resulted

activity

be practical

administrative

stand¬

and

Finance

Association, Chicago, Dec. 29, 1950.

State and

plans,
testing
,7:

which has the possibility of whip-

before

'-J"'/*

Investments," Benjamin Graham,

Chairman,

•

f U. S. Government

discuss, first, the prin¬
cipal factors of analysis, second,

point? Furthermore, would a plan

RESOURCES
97

Cash and Due from Banks

"Round

Whitman
Table

Professors
presented
before

paper

1930

shall

from
*A

DECEMBER

equity portion is reduced to,
45%

■'

equity-type
market

problems of ana¬
lyzing and testing formula plans.

nounced

could

■

the

turn

the aggressive portion of the
port¬
folio
in
accordance
with
such

manner:

■

this brief review to

selling action under

50/50

STATEMENT OF CONDITION,

Ac¬

100.

of stock prices, whereas a
variable-ratio plan strives to vary

ratio.

provide sufficient background, let

level

' *

Plans

relationship
changes
in
the

OF NEW YORK
'

Analyzing and Testing Formula

stock-bond

irrespective

CITY

•'

are

THE

smaller percentage of

300 than at 200

plans, all plans are characterized
by: (1) the elimination—once the
been

BANK

bonds bought to de¬

stock-bond

cordingly

Although

As the market rises, stocks

sold ancl

are

Although important differences

has

NATIONAL

variable-ratio

bought to increase the stock-bona

exist in certain features of formula

forecasts

pro¬

of the gains of a rise.

plan

is employed, as the market
declines, bonds are sold and stocks

of the

some

fund

plan

decline.

mar¬

stock-bond

the

keep

the examination of formula

formula

they seek to

manner

the

some
.

and

falls,

will

the

50/50;

historical

The

Thus,

and

transfers

method

Many

been created and have

employed

again restored.

CHASE

THE

Dr. W. T. Whitman

;;

fund

viewed

with

This

is doubly important to institutions

marked
fluctuations occur peri¬
odically in stock prices and divi¬

dends

that

requirements.

involve

may

that,

of will not be consistently followed.

requiring considera¬ In addition,

Understandability

unsatisfactory.

exists

important consideration in
the adoption of a formula plan is
the ease with which it may be

basic feature in

prove

will

plan be determined
and appraised in terms of invest¬

in¬

possibility that

some

will

constant.

the risk

There

regardless of its correctness,

Through such classifica¬

the

the future

There

tion

have

not

for

may

hazards

in turn certain other risks.

formula

appraisal

in¬

and

creased. In seeking to reduce this
danger formula plans have created

plan

whatever

risk

eventually

characteristics of plans djffer, consequently the degree 7 of
risk attaching to various plans is

Owing to the greater
amplitude of stock-price and div¬
idend cycles over the last 25
years,

standardization

measurement.

capital

are:

which

undesirable.

The

risk.

come

plans and thus provide the basis

possible.

administered.

itself

rigidities

tion of the investor.

exactly the various types of risks.
Nevertheless it is possible to clas¬
sify roughiy the primary risks in¬
volved

being

are

tion will be brought to the atten¬

care¬

term which does

vague

accurate

over,

Professor of Economics,

School of Business Administration, Emory University, Atlanta, Ga.

Messrs.

lend

not

W. TATE WHITMAN *

other

Risks

Professor

and

Member Federal Deposit Insurance Corporation

;

''.V ■'

:-V

the

The Commercial and Financial Chronicle

(66)

insurance

Valuation oi Security Holdings
Of Life Insurance Companies

statement of income

The

the

system

life

for

insurance

valuing

insurance

the

assets

companies

considerable

change in
der to

commissioners

life

requires

or¬

be ap¬

the

needs

and

which

ute

until

which

and

contrib¬

would

dividends of funds which should

be retained for replacement of de¬

companies,

the

preciated assets.

They will result

overvaluation

times

policy¬
holders, and

the

assets

and under¬
valuation in times of depression.
They will tend to promote in¬
equities between withdrawing and

the rest of the
economy.

Unless

prosperity

continuing policyholders and make
difficult the maintenance of

changed, the
requirements
imposed by

solvency in times of business de¬
pression instead of cushioning the

the

losses

commis-

sioners

likely

Harold

are

Fraine

likely

occur

such

times.

investment policies need¬
ed for long-term protection of the
policy reserves and for the healthy

considering a possible
remedy, let us get a picture of the
principal aspects of the present
system and then note more spe-

and balanced

cifically how the continuance of

tion

the

courage

financing of produc¬
trade.
Unless changed,
likely to encourage in¬

and

they

are

vestment

policies

unsettlement

that

the

result

capital

mar¬

system is likely to contribute

to the unfortunate effects

already

mentioned.
Brief

address

ciation,
ciation

The
and

University
cago,

the

Prof.

Fraine

American

American
the

Description of Present
System

joint
Asso¬

Statistical

Asso¬

American

Teachers

Finance

Association

Insurance,

Within four days

of 1950 will

year

from

come

now

With, the end of the year,

future.
will

assets

that minimum

that

certain

growth

cient

rate

the

accumulated

the

rate

securities
value.
in

correctly reflect the amount of
for

the

does

the

business

each

state

others

and

could

opening

the

sentence

resolutions

Committee

other

National Association

It has been the custom

than

and

YORK

and

bonds

•

ARTHUR M. ANDERSON
Chairman

Condensed Statement of Condition December 31, 1950

Dec.

Executive Committee
ASSETS'

President

Cash

30,

1950,

I. C.R. AT KIN
Vice-President
PA UL C. CABOT

Hand and Due

United States
State and

$147,633,532.71

from■ Banhs.

Govern ment

Securities.152,210,062.84

Municipal Bonds and Notes

62,646,977.79

Stock of the Federal Reserve Bank..

1,500,000.00

President State Street
Investment

Corporation

Other Bonds

of Morgan

BERNARD S. CARTER

CHARLES S. CHESTON

d Securities

Grenfell

Limited

Banking. House
Liability of Customers

States

of America

Canada which
to

Dec.

•

Receivable, He,."

1,977,476.34
"

12332$61.59

H. P. DAVISON
-

$661,460,442.26

CHARLES D. DICKEY
Vice-President

LIABILITIES

k.
I

Deposits: V. S. Government

ncorporated

DEVEREUX C. JOSEPHS
President New York
Insurance

Life
Company

THOMAS S. LAMONT
Vice-President

All

Other...

$ 11,603,186.25

23,200,624.11

Payable, Reserve for Taxes, etc..

Acceptances Outstanding and. Letters of
Credit Issued
7.
...

L. F.

McCOLLUM

President Continental Oil
.

Company

GUSTAV METZMAN

Capital

7....:..

Surplus
Undivided

can

Profits

4,821,786.42

12,332,561.59

Corporation

Insurance

Company

Chairman Sharp & Dohme Inc.

must first
a

bond

the

basis

services.

the

market

bond

term

ment

bond

The

basis

also depend upon
its market yield

may

spread

from

yield of a gov¬
corresponding

maturity.

(The

govern¬

one

of those

must

purchase
by
national
Among the general class
fixed
income
securities, the
to

banks.)
of

basis

valuation

preferred

stocks is different than for bonds.
And

for

basis

that

stocks'

some

quotations

the

preferred

different than

Preferred

stocks.

common

active

have

market

differently
from unquoted preferreds.
valued

are

complexity and length of
requirements are chiefly due

two

the

One

causes:

that

most

securities held
by the life insurance business are
not quoted in the market; but the
system attempts to assign to them
corporate

value

made

for

securities

securities may be valued on what
is referred to as an "amortized"

maturity
a

the

This
is

cost

relief

available

maturity

dates

June 1, 1950, were rated

the top four ratings by two
recognized rating services

bonds

basis

with

which

alternative
as

between

value.

market

bonds

among

difference

any

for

$25,$05,202.62 in the above
statement arc pledged to qualify for
fiduciary poieers, to secure
public monies as required by law, and for other purposes.

annu¬

ally for the gradual amortization

12,295,032.27

closer

tests

the

can

basis

regarded

income
the

Member Federal Reserve

System

life

much

insurance

com¬

can
expect
to
get.
The
higher increment of yield that is.

received when

bond is

called at

premium does not usually repre¬
sent a gain, but in effect is rather
a

merely

partial offset to the re-"

vestment

curities
risk.
the

income

to be

the

almost

rein¬

upon

proceeds

the

that

suffered

se¬

degree

same

appreciation of
price above maturity

Similiarly,
market

value cannot

be realized

advantage.

Because

pulsion

keep

cost

rises

market

upon

com-'

the

funds invested,,
quotations above

rarely realizable to an in-*
surance company for reinvestment
would usually have to be made'
in other securities equally high
priced with relation to risk.
Although more than face value;
is unlikely to be gained, it is al-;
are

most

certain

some

ultimate

that

will

there

depreciation below

this maximum. An investment of¬

ficer

would

invest

not

his

com-'

particular cor¬
porate bond if he expected it to

pany's funds in

any

default. But such
not be

officer would

guilty of such optimism

to think that he will have

defaults

his

among

as-

no more;

corporates

than among his United States gov-:
bonds

ernment

term.

requires

corresponding

higher yield

to take the added default risk

volved

have

corporates.

occurred

the

in¬

Defaults
highest of

rating grades, Aaa,1 and yet
corporate bonds rated as low as
Baa are required to be valued at
their maximum values without al¬

lowance

for

impair¬

future

any

ment of that value

through future

defaults.
Market values, also, as
for

other

securities,

applied

required'

tend,

when'

periods of prosperity,1

overvaluation.

toward

This

surely true for the fixed income
securities and likely to be- true
also

the

for

dividends
ferred

stocks.

common

interest

and

stocks

pre¬

such

bonds

and

The

period
appear
more
amply
covered
by earnings than in a'
business
depression.
The
pros¬
a

perity values

maximum in the

are

with

that

sense

increased

perity such securities

pros-'

yield no:

can

higher income payments. Yet with
change

prosperity to de¬

from

pression there is
hood

interest

and

even more

suspension

payments

their number than

among'

the

likeli-.

dividend1

case

the bonds of the four highest rat¬

ings. To value these lower rated
bonds

such

housing

projects

mortgages. Of the

and

ance
or

for

less

preferred

prices

some

stocks

defaults, with

Continued

page

securities

vestment

1 From
rate

picture,

find

that

government, state, municipal,

tional

Bond

data

furnished

Research

Bureau

Project

the
of

Economic

under the direction of

Dr. W. B.

at'

allow-:

without

permanent impairment

types of United States and Cana¬

entering impor¬
tantly into the life insurance in¬

■

the

equivalent grade.

assets,

most

ma—

summarize, the valuation of

and real estate

dian

value must be

pany

independently
prosperity
of the valuation of other earning,

Deposit Insurance Corporation

face

investment

average

securities is treated

Member Federal

dis-'

valuation

gradually'

and

closer

and

the

pre-'

as a maximum value. The'
yield to maturity value on a fixed

The

and

Chairman Finance

JOHN S. ZINSSER

vestment

from

JAMES L. THOMSON

Committee Hartford Fire

If the invest¬
we

depends upon whether
high or low by the in¬

which

United States Government securities carried

can

bond,

it is rated

20,000,000.00

Vice-President

Chairman General Motors

valuation

30,000,000.00

$661,460,442.26

Company

SLOAN, JR.

whether

what

mortgage, it
face; if in ..a
be valued

security,

not

security. If the

run¬

whether the

basis; that is, cost adjusted

JUNIUS S. MORGAN

ALFRED P.

lengthy,

upon

valued

stock.

ket

$582,011,061.98

accumulation
move

The

amortization

first-

basis.

amortized

duction

with certain characteristics. These

President New York Central
Railroad

31, 1950.

appropriate market value. The
other is that an exception to mar¬

547,207£51.62

Official Checks Outstanding
Accounts

interest

D.JAY

Chairman Morgan & Cie.

political

not in default

are

principal

investment

the

of .Credit and Acceptances

Vice-President

and

tion requirements is

3,000,000.00

Letters

market basis. Let

certain

for

20,561,922.04

.7.
on

faith,
of po¬

subdivisions of the Dominion of

stocks the

and

259,588,908.95

Accrued Interest, Accounts

Chairman and President

Company

(including Shares
Co.

Loans and Bills Purchased

JOHN L. COLLYER
The B. F. Goodrich

Morgan fy Cie. Incorporated)

President

Morgan & Cie.
Incorporated

excepting

credit and taxing power

open
on

litical subdivisions of the United

ernment

HENR Y jC. ALEXANDER

shall

bonds secured by the full

valuation

regarded

the
.

sidiaries,

R. C. LEFFING WELL

be reported on an amortized basis"

systematically

valued at the market quotations

commonly called

NEW

and

likely to be true
are required to

turity value. Such

investment

This

whether the assets

(1) That all stocks, other than
of insurance companies and sub¬

ing to adopt resolutions defining

INCORPORATED

and

the valuation requirements for the

J. P. MORGAN & CO.

es¬

market

Weaknesses of the Present System

the

report and to delegate

Committee's

equivalent

count

Vice-Chairman

insurance

fair market value:

end.

DIRECTORS

subsidiaries,

ent, depending

next annual

perity.

as
of Dec. 30, 1950,
following basis is recommend¬

observe

jChairman

June

ning to 6V2 pages of fine print,
and quite complex. To appreciate
the complexity, it may be suffi¬
cient to note the following facts:
The system of valuation is differ¬

the

commissioners

gether into

timate

the

from

to¬

in¬

would

value.

associations
ed

require¬

banded

in¬
the

quality

bonds

the

mium

ment

GEORGE WHITNEY

released

follows:

housing project, it
at depreciated cost.

•

market

Although the concept is simple,
the complete statement of valua¬

"NAIC").

the life

it might seem a hopeless
task to try to summarize such
requirements.
Fortunately,
the
have

the

defaulted

purpose

as¬

ments,

with

insurance companies, societies and

considering

valuation

below

securities,

regarded

dicated by the Baa rating, all pre¬
ferred and common stocks, along

consider the

which

differ

time

Other

bonds

bonds in the annual statements of

company may have to
report its condition to the com¬

that

the

companies

the 1950 statements. That sentence

liabilities?

missioner of each state

cluding

Overvaluation in Prosperity

course, depends on how
assets are valued.
Consider¬

ing that

valuation.

Periods. The system tends to over¬
state values in a time of pros¬

This, of
the

30,

Does the statement of condition

available

stated

asset

tuary in setting the premium, y

high

1950, with regard to valuations for

accumulation assumed by the ac¬

sets

This concept is laid down

stocks,

off the face of the
the probable time of
death. The interest of the policy¬
holder is reflected in the policy
reserves, on the liability side of
the balance sheet, and these are

bonds

grade at the time would
be reported on an amortized cost

reported at the year-end market

practically all corporate

Resolved, that the inventory of

corporate

medium

valuation

reads

suffi¬

Thursday, January 4, 1951

basis for

pro¬

pay

policies

Com-

and

lutions is simple. The fundamental

assets

"the

sys-

Our

tern involved in these resolutions.
The underlying concept of the
system comprised by these reso-

ex¬

of income

therefore, be confined to the

should

re¬

can,

first

these

consideration

the

Reinvestment

least

mittee").

certain minimum

its Committee on
Securities (herein¬

of this association in annual meet¬

Chi¬

111., Dec. 27, 1950.

the

earn a

benefici¬

the

Most of the peo¬
not likely to die

of Insurance Commissioners (here¬
inafter
referred
to
as
the

■

♦An

meeting

This^ in¬
aggregate

paid

income.

duce

mainly

the

Before

dis¬

assets,

expenses.

assets.
be

the

far

pected to

that market.
Unless changed, the requirements
will encourage the disbursement
stability

meantime

fol¬

not

ple insured are

policies

otherwise

will

amount

rate

discourage

would

lowed

propriate for
the

ket

and

of the policyholders'

the

aries upon death.

over¬

for market fluctuations.

at present used by

income,

measure

terest

during prosperity ;and (4) resulting wide

reserves

detail

and

referred

after

commis¬

insurance

state

totals

interest

fluctuations in company surplus. Recommends valuation of
fixed income securities on basis of amortized cost, with provi¬
sion

the

liabilities,

present system of securities valuation
its weaknesses:
(1) overvaluation in prosperity

Valuation

tain

Prof. Fraine describes
and lists

ports of condition for submission
to

Commerce, University of Wisconsin

administration

quirements

The liabilities will consist

periods; (2) undervaluation in times of depression; (3)

the

begin

will

sioners. These statements will con¬

By HAROLD G. FRAINE*
Professor of

companies

the work of preparing annual re¬

of-

Corpo¬
the

Na¬

Research,
Hickman,

■

Volume 173

Number 4974

The Commercial and Financial Chronicle

(67)

for

program

supervisors in vari¬

THE

CHASE

NATIONAL

CITY

departments of the Chase. »'

ous

Dec.

News About Banks

CONSOLIDATIONS
NEW-BRANCHES
NEW

Tot.

;DeCoursey

Fales,

of New

and

REVISED

Anna

CAPITALIZATIONS

York,

pointed

announces

Flaherty has

officer

the

ap¬

bank.

and

(from

due

banks.

U. S. Govt.

sec.

'holdings

___

Isaac

Gilbert

and

Grainger

Perkins

-to

the

newly created positions of Execu¬
tive Vice-Presidents of the Chem-

the

National

Cuba.

vana,

York

1914

Manager

Banking

Undiv.

;

Mr.

Lazarus

for

and

elected

Gus

Isaac

Grainger

fiical Bank

Gilbert H. Perkins

Co.

profits-

New

and

New

York

Jan.

fice

under

direct

was

formerly Pres¬

the..': Montclair

(N/ j.)

Trust

Company,; joined Chemical

Bank

Trust

1943.

Vice-President

He has supervision

■.

Manpower'

Since

business

Mr.

then

consultants,

holdings

Public

Na¬

Ster¬

Undiv.
"

Trust

official

York.

For

half he has

the

past

and

year

conducted

Co.

;

a * active;

14,085,284

14,065,284

THE

NATIONAL

CITY

NEW

BANK

Dec. 31, '50

:!«

MARINE

992,078,627

75,111,116

Cash

—

due

Govt,

rity

$354,668,900

327,037,005

121,212,890

98,159,811

due

banks..

1,437,981,108 1,300,558,046
!

secu-

holdings. 1,724,232,775 1,711,027,802

Loans

and

bills

discounted

1,664,941,944 1,500,435,838

Undivided profs.

from

banks
U.

and

U. S. Govt,

375,476,603

secu-

58,075,826

56,079,891

n
-

rity
Loans

holdings— 135,011,553
&

discounts

Undivided
V

MORGAN

J '

;

128,043,699

.3,577,562

3,314,531

S'fi

INC.,

& "due

rity

Total

Cash

—113,331,634

and

banks

147,633,533

165,297,631

152,219,063

197,154,588

divisions.

and

U. S. Govt, security

•

22,448,822

81,616,668

—

89,610,125

Loans & bills -dis-

counted
Undivided

259,588,908 ,213,927,640

——.

12,295,032

profits—?

1,010,771

10,654,930

Continued

11,753,219

•

1,395,376

„

>•

profits.

Loans and bills dis-

over

10,640,671

page

of the

personnel

Mr.

Grainger, a native
Carolina,
was
Vice-

North

President of his father's bank

Wilmington, The Murchison

TTlfoe
JL

t.t-.;

Na¬

tional

Bank, and later Executive
VVice-President of the North Caro¬
lina Bank & Trust Co. at Greensboro, N. C.

Marine. Midland Trust

iMr. Perkins has spent his entire

& business

cal

with

career

the

Chemi¬

Bank,

starting as an office
boy in 1913 and serving in almost
department.
He
became
Vice-President in 1933, and has
jurisdiction over all of the outevery

STATEMENT OF CONDITION

of-town business of the bank. He
is Chairman of the Committee on

DECEMBER 31, 1950

...

Correspondent Bank Relations of
the

Association

Bankers

and

Reserve

member

City
Cash and Due from Banks

eral Legislative Committee of the
American Bankers Association.

United States Government
State and

;

■

Kleeman,

Colonial

New

Trust *

York

pointment
and

President

Terrence

Secretaries

and

ap¬

Blake

Assist¬

Assistant

Except

service

the

announces

Treasurers.

years'

for

three

the

Coast

with

Guard during the War^'Mr. Blake
has been with the banking house
since

1940.

the

American

ing.

Before

joining

Bank¬

Colonial

had

been

Company in this city.

with

will

ciated

continue

with

joined
in

and

ican

;

Bank

Mortgages

Street.

New

Trust

York,

Company
the

Amer¬

«•

Banking

in the Army.
with

office

the

He will

bank's Bay

6901

Acceptances

Accrued Interest Receivable
Other Resources

.$ 23,577,562.11

3,577,562.11

Provision for Taxes, Interest, etc.

2,300,348.72
1,797,014.05

15,000,000.00

....

Liability

1,616,471.98

1,982,483.62

Acceptances

Other Liabilities

1,687,856.34

1,014,946.05
.

.....

2,000,167.57

135,459,535.97

*.*•

Customers'Liability

•

;

"Deposits.

662,620.71

.$404,340,976.84

TOTAL RESOURCES

Securities curried at $9,350,588.56 in

T.\

♦

•

TOTAL LIABILITIES

375,476,602.79

•

$404,340,976.84

the above statement are pledged to secure public deposits and for other purposes required by law.

DIRECTORS
CHARLES It.

Yorktovcn

HERBERT

DIEFENDORF

South

President, The Marine Trust

Chairman, Advisory Hoard,

and

Fifth

...

EDWARD

Ridge

BAYARD

II. LETCHWORTH

PAUL H. HUSTEJ)

JAMES C. BLAINE

LUGIUS D. CLAY

Chairman

of the Board,

EDWARD G. LOWRY, JR.

Chairman

..•t

Jachson, Nash, Brophy,

and President, General

;

llarrinper & Brooks

Reinsurance
'

SEYMOUR H. KNOX

Chairman

Honorary Chairman,-

Executive Committee

The

•

Corp.

CLOUD

Treasurer and Director,

President, Carrier Corp.
BURDETTE S.

;
.

McCarnpbcll & Co.

of Buffalo

Macy & Co., Inc.
WAMPLER

STUART McCAMPBELL

of the Board,
Marine Trust Company

R. II.

of the Board

SAMUEL 5. CONOVER

Sullivan & Cromwell
EDWARD K. STRAUS

Vice President,

Buffaloy N. Y.

President

POPE

EUSTACE SELIGMAN

Kenefick, Bass, Lclchwortli,
Baldy & Phillips, Buffalo

International Salt Co.

IFinJield Baird Foundation

Chairman,
Executive Committee

EDWARD

L. FULLER

President,

Trustee,

con¬

Avenue,>

H. LEONARD

Shaftsbury, Vt.

Company of Buffalo

Office

DAVID C. RAIRD

Continental Can Co.

tinue

•.

■

Undivided Profits

JOHN G. JACKSON

during the War served for three
years

«"'•

•

...

•Surplus

4,281,900.78
600,000.00

asso¬

office

28th

attended

Institute

Loans and Discounts

•

Mr.

bank's

Colonial

1941.

GEORGE M. ADRIAN

the

City

„.

/•'.

Gubiste, previously with Na¬

tional

Other Securities

Manufacturers

Madison Avenue
Mr.

.........

graduate

Institute

Trust

Blake

Municipal Securities

$ 5,000,000.00

Capital

135,011,553.38

......

•• •

Company,

Joseph P. Gubiste

ant

$121,212,889.61

••

Obligations

Stock of Federal Reserve Bank

Arthur

LIABILITIES

RESOURCES

the

Executive Committee of the Fed¬

WRICHT

Leesburp, Va.
HENRY J. WYATT

President, Crum & Forster

Brooklyn.
#-

William
elected

•

Lazarus

has

been

Vice-President

the

American Trust Company of New

York,

Harvey

MAIN OFFICE

Schwamm,
110 William Street

President,
He

will

eign

announced

banking

Lazarus

was

charge of

Jan.

37th Street

Park Ave.

all for¬

first associated

•

120 BROADWAY

46th Street

Battery Place

3.
Member Federal

operations.

Seventh Ave.

Mr.
with

99,223,220

41,131,215

—

•

operating

from

due

—

holdings

147,467,492 133,225,754

resources—

Deposits

593,305,153

«> .

secu-

holdings

counted

i
"

■

Sept. 30, '50

from

Govt.'

Undivided

COMPANY,

YORK

Sept. 30, '50

582,011,062

Krohn
u.

NEW

resources—$661,460,442 $671,822,030

banks

NEW
■"

...■

Dec. 31, '50

Dec. 31,'50

CITY BANK FARMERS TRUST
'

CO.

Deposits

Maurice

115,836,520

135,459,536

profits-

i:.As Chairman of the Management
general

5,130,853,626 4,823,894,308

Sept. 30, '50

resources—$404,340,977

Deposits

Deposits
Cash

5,526,348,028 5,209,097,814

from

MIDLAND

Total resources.

Dec. 31, '50
Total

993,379,420

•

74,386,332

Sept. 30, '50

..the bank's investments and its
ibusiness in;:the financial district.

Committee, he has charge

YORK

■;

802,887,596
.

profits™

capacity, and has been
the
banking business

70,001,#24

Capital and surplus

30, '50

•

training; since 1922.

69,722,504

1,230,658,065

tional Bank &

firm.',
New*

50,072,585

I—

589,402,962

....

—

discounted

connect¬
the

57,209,719

bills dis¬

....

731,102,226

sec.

Loans and bills

Cash

Camp¬

been

the

vwith

Com¬

".Sept.

due

banks-

U. S. Govt.

Total

bell has been President of

ident'of

mission.

War

jand

from

Krohn 1 has

Grainger, who

the

—

Loans and

re?.ources-$2,540,419,604 $2,749,679,129
Deposits
2,503,010,000
2,312,110,134

Chanin Build¬

by N. Baxter Jackson, Chairman
of the Board of
Directors.Mr.

56,297,596

COMPANY

Dec. 31, '50

66,026,213

security ■'

Tot.

Cash

the

area

TRUST

holdings

51,750,814

from

due

U. S. Govt,

NEW YORK

the bank's of¬

have

Campbell
of

Na¬

located

Dec.

GUARANTY

New

221,024,643 209,959,297

and

banks

256,695.373 247,654,523

resources.—.

Deposits
Cash

1,587,141,192

53,007,008

York and will

1,302,922,651

i'iK'.'

Trust

Co; >of

been

announced

Ad¬

31, '50 Sept. 30, '50
$

i,492,793,271

CO.,

National

Bank

20 years

of the Chase

ling

tion of the War Production Board

was

designated

will

and

York

and

.bank j.iir ing ; at
42nd
charge of personnel. During the' S t r e e t": and
last war Mr. Campbell conducted
Le xington
a
war plant
training program in Avenue.
Mr.
the

Trust

import
business.

Vice-President

;

than

The directors
Bank

firm

Company

general

tional

financing

■'

HARRIMAN
YORK

Dec.

advertising

vertising Manager.

Foreign
of C.
B.

the

formed

Lazarus

he be¬

the
■

bank's

continue

NEW

1,815,387,722

She is in charge of

York

conducted

export

the

BROTHERS,

counted

Commerce

*■.

New

1930

In 1926,

Bank

Company, members of
Maurice
L.
Krohn ;has
Stock
Exchange.. elected a Vice-President
of

the

William

New

National

in New. York.

joined the Na¬

Department

Richard

the

Cuba, Ha¬

came

and

tional Park Bank.
came

Bank

BROWN

Total

1,499,884,122

discounted™

Flaherty joined the bank in
1929, having formerly been with

THE

■

1,477,758,049

Loans and bills

Miss

Election

Sept. 30, *50

resources.$5,283,011,759 $4,864,416,007
4,871,424,028
4,448,165,040

Cash

that Miss

been

31, '50

Deposits

President

The Bank for Savings in the
City

OFFICERS, ETC.

BANK

NEW YORK

Deposit Insurance Corporation

128 Chambers Street

143

Liberty Street

The Commercial and Financial Chronicle

(68)

third World
cope

vasion

would
of

South

Undoubtedly he

of the News

in the cool of

State

The unusual freedom in
which
have

the

correspondents

given

when

they

heavily censored.
It is doubtful, in fact, if
i anything was ever more beclouded by the
propaganda and conflicting statements.
And

were

clear

moving about and in their reporting
Korea have enjoyed seems not to
picture of happenings as in other wars
in

•,

if the truth
V,

at the Pentagon here, it is carefully hidden in
the

■

the approximate truth is known

impressive 'domes

of' the

high

policy

vene.

armed state to

John O. Dresser

was

Invasion

purely the machinations of

was

cheer leader but authorities

evening, have told me, this invasion

had

Department

John

taught to believe that the North Korean in¬

Korea

Stalin.

Asia here,

was a very

The country couldn't exist divided,

logical thing to happen.
By CARLISLE BARGERON

have got to go into

the world

informed

seemed

most

natural

our

it would not inter¬

thing

for

the

ment Stalin

was

supplying them with.

convinced

trace

lot of

our

Washington.::

troubles and

VV «•'.

attack Jan.

heart

was

West Coast manager

later

wonders, for example, what has be-

come

those

better than

•

of Russia's

Co.

own

investment business.--—

and

the

Melbourne F. Middleton died at
the

age

of 73

juries received in
iaccident.
ident

propa¬

He
the

was

result of

a/former Pres-i

Philadelphia

Bargeron

Russia
her

Manchurian

the

Siberian

tremendous

plant, it

was

border

Russian

equipped.

were

modern

equipment
superb industrial

and

place and to within

one

another.

nothing

tanks.

Then

the

Chinese

way

miles

moved

of their being equipped with
what they have is sheer

now

that

seems

numbers which they throw into
mine fields and keep on coming.

the

face

tanks

our

and

our

Indeed, in the welter of propa¬
equipment is doing more harm

hearing that our
that it gets in the way and militates against

are

bility.
I
There

were

completely and moved all the

border

We hear little

than good,

■

boys again with their backs to the wall.

our

ganda we

'/••

added proof

were

Koreans

pouring

about to

routed

the

modern

Exchange.

mo¬

our

to be little doubt that General MacArthur him¬

seems

self has exaggerated

on several occasions the number of Chinese
His public statements are not borne out by the con¬

facing him.
fidential

reports to the Pentagon from his

own intelligence staff,
a fact, too, that these confidential
reports have never taken
the enemy's equipment seriously. Yet there is no doubt that we
are
taking a beating and except for a relatively brief spree of
success, we have been taking it ever since we landed on the
peninsula.

it is

I was talking recently with

high

known for sometime and who is

officer whom I

certainly in

have

position to know

what

going on. I asked him bluntly what we had to gain by
remaining in Korea; why not withdraw to Japan and also protect
Formosa. He was indignant.
"Let

those

claimed.
He

"Why, it would be
seemed

the

ignorant, unequipped Chinks
to

have

that

would be

position to be in

in Korea in

war

order

jwere to be washed

the

able to

officer,

know, he said

at .home.

rearm

friend, and

had to keep

the

things down there

usual.

we've got to keep

In other words, according to this

the Korean

war as

part of the National

quite

have

sure

$5—build it
have

this

were

actually at
The

sort

never

really at

war now with

propaganda

•

Stalin's

better

off,

searched

picture

North

think, if

can

got

us:

Korea

and

dismiss.

away

diligently for the truth.

aren't

China

And if

in Asia

from

the

are

his

What has

own

been

right and

any amount

simply

would

propaganda

Bank

open

little

$7,500. You

$15,000. Or
have
to

from day

can

names—

deposit
annual

a com¬

dividend

$30,000.

Come in—open your account
—or

today

by Mail. Write for forms.

and

There is undoubtedly collabora¬

scracely be considered

can

Joint Account—in two

husband and wife may

apprais¬

are

tion between Stalin and the Chinese
bandit but the latter is

shot

bination of accounts up

It's all Russia.

plans-on what has happened

before

with North Korea and

war

the Chinese.

that

stcoges of Stalin, I think,
ing

muddled

large—is

Individual Account with

our

I don't know what is going on in Korea or
high Administration planners. But I certainly
about conscientiously trying to find out.
am

in the minds of

account—small

.very

welcome at "The Dime." You

Emergency excitement.
I

stay

he said, the American people would want

up,

jto return to business
man,

•••Where

SAVINGS

ex¬

peninsula, either.

Talking subsequently to another high
;in

out," he

outrage."

doubt

run

big

stooge.

Everybody Knows...

the extent of Stalin's

cooperation? If he is sup¬
plying the Chinese army, if he supplied the North
Koreans, either
one
of two things must be true: He isn't
supplying the Chinese

well if we are to accept the current reports of their ox cart
equipment and their coolie methods of
transportation, and that

/very

North Korean army which he

-strongly, toppled
We
our

would

plans, to

over

have

far

was

supposed to have equipped

house of cards.

mind, if

enlightenment
approached

matters

which
more

base

directly

instead of going after them obliquely and
trying to read Stalin's
or somebody
else's mind. Certain facts stare us in the
face

insist
There

munists

was

steady warning
channels

fied

were

home,

moving

they would

Arthur

looking for intrigue.

upon

for

intrigue, in

into
if

Korea.

passed

over their

period

excursion

that

DOWNTOWN
was

at least to

least

two

weeks.

to do this to

Well, they

our

exactly

were

and

General

now

see

BENSONHURST.

...

FLATBUSH

Mac-

CONEY ISLAND

....

.Fulton Street and DeKalb Ave.

;....

86th Street and

Ave. J

19th Avenue

and Coney Island Avenue

^ . .Mermaid Ave. and \V. 17th St.

being justi¬

if the Chinese

this means

government, that Stalin has

what

38th

to the Manchurian border is

telling the truth.

SAVINGS BANK OF BROOKLYN

Com¬

parallel; they kept up a
Peiping radio and through diplomatic

the grounds that he had

opinion, in the Chinese

They said
the

but

here at

started

the

MEMBER

FEDERAl

DEPOSIT

INSURANCE

in¬

automobile

wonder that our boys were
pushed off the peninsula. - •>
Well, we routed that well equipped army;

and have

North

With
from

Carlisle

which

tanks

he i$n't going to sit around until we rearm.

say,

his

M. F. Middleton

military might; Earlier dispatches
them and told of other ways in

emphasized
which
the

Russian

and which

ours

gandists

for Blair

conducted

and

thinkers.
One

M|
away

Mr. Dresser before his retirement

our

World War III, and has such a war machine

passed

One thing would seem to be certain:'If Stalin is determined

upon

Dresser

North

the so-called thinking that goes on in high places in

perils to

can

«•

following

Koreans, and to repeat, whatever became of that modern equip¬

Thursday, January 4, 1951

with it.

[head

War and

...

CORPORATION

Stock

Volume 173

The Commercial and Financial Chronicle

Number 4974

y.-

buy?1 stocks

The

Plight oi the Investof

By E. W. FLENDER

?'J'

Flender points out the Investor is in
clear

steer

fixed

interest

ket

tion

The American investor is great¬

and

taxation
other

are

now

much closer to Eu¬

thought. The individual is
being blanked out in favor of the
"common interest" represented by
the State. Free capitalism is gone

are

wages

American

the

years,

ropean

In¬

creases

philosophy of the State propound¬
ing the supremacy of the indi¬
vidual has had a complete change.
We

reasons,

cut.

last

from

purchases of stocks.
ly disturbed about the future. His
dollar is buying less and less and
his net income, owing to heavy

in¬

Profits

another

time

one

and

make

may

other will again be established eventual¬

promising investments ly and whatever stocks

number

The

years.

will,

behavior of the Investors in times

mention the fact that

for instance, excess
profits taxes, may seriously affect
prices of certain groups of stocks,

the

ary measures,

while

the

other

Investor

will

well

would

not

The American
sav¬

ing is not yet
decried

Ernest T; Flender

one

will

sin, butthe

vestor

mind to the changed

is. "Redistribution
wealth" is no longer a slogan

but

fact.

•

real

well

threat

diversified

climate.

list

age.
The
of the French As-

pound after the Napoleonic Wars
that

American

the

dollar

after the Civil War were comfort¬

ing experiences. It was not until
the 192Q's,

became

when the German mark
valueless, that the world

shocked

realization
that the value of a currency could
be wiped out completely within
the time
span
of a few years.
Since then, the German mark has
was

another

valueless

become

French

the

franc

went

time,

down

less than 1% of its gold value, and
every

European currency has suf¬

fered

smaller

very

matter of fact,
there is now not a single currency
in the world, including our own,
which has not lost greatly during
large degree. As

the last 30 years
and

buying

in terms of gold

power.

the

wonder

feels

Investor

perplexed and harassed. He wor¬
ries about what the

buying power

of his dollar will be in
10

20 years.

say,

In the last 10 years

it has shrunk to half of its former

value. Norwithstanding all public

utterances

"no

the United

sees

gaged in

war

inflation,"

States Forces

in Korea

in many other parts of
he staggers at the cost

the world,
of the re¬
armament figures and he shudders
at the thought of what his dollar
may be worth if we should find
ourselves in

long drawn out war

against the Communists.
As

person

Investor finds

some means,

the
un¬

popular and badly treated. If he
holds bonds, his income has been
reduced by government manipula¬
tion

of the money

relies

market;

if he

stocks for his livelihood,

nobody will concede to him higher
dividends in proportion to the ris¬
ing

cost

finds
but

the

taxes

of living; he not only
corporate tax increased
profits tax imposed

alone.

part

the

Revenue

Department

through still higher corporate and

unavoidable

for

ourselves bled

this

respect

will

the

price

level.

The

cessitates

utterly unselfish
or all round price
and
wage
controls with teeth.
Both are possible at best only in
actual

ciplined Socialist state, but
Russians, after the last
to

even

war,

52 Branches Overseas
\

•

oj Condition

1,724,232,775

60,599,854

426,364,539

and

Discounts

•

of December 31, 1950

•

and

■

137,186,350

»,

Items

with

...

Total

7,800,000

•

Portfolio

15,316,547

Foreign Central Banks

Branches

8,657,198

2,371,117

19,532,918

12,989,000

for:
and

Other
.

....

7,000,000

Capital

11,562,252

Surplus

.....

30,699,406

.2,635,000

$124,000,000
{6,200,000 Shares—$20 Par)
.

...

Undivided Profits

Total

$5,526,348,028

Figures of Overseas Branches

watching the electorates'
reactions, seems to be the one evi¬
dently visualized by Keyserling
before
the
emergency,
namely
one of mild
progressive inflation.

.$5,130,853,626

Interest, Taxes, Other Accrued
Expenses, etc.

26,970,778

Transit

$34,849,465

Unearned Discount

15,819,426

Bank Premises

Other Assets

Bills

Unearned Income

Dividend

Reserves

6,422,939

International

Banking Corporation

{In Foreign Currencies)

1,664,941,944

Accept¬

Less: Own Accept¬

Federal Reserve Bank

Securities

ances in

;

>'4c^eptancts:.^'.|'.;;Stock

Liability

ances and

•:

Cus#6mers' Liability

Ownership

Deposits

Due

always

are as

y;.

58,075,826

318,075,826
$5,526,348,028

;

136,000,000

of December 23, 1950.

$283,763,467 of United States Government Obligations and $15,014,100 of other assets are deposited
to secure $208,701,191 of Public and Trust
Deposits and for other purposes required or permitted by law.
(MEMBER

It causes the least amount of ten¬

Chairman

sion. It is the easy way out.

Wm, Gage Brady,

the

their

cut

FEDERAL DEPOSIT INSURANCE

Chairman

of the Board

CORPORATION)

of the Executive Committee

President

W. Randolph Burgess

Jr.

Howard C. Sheferd

expectation of a likely
trend of uncertain

inflationary
duration
tense

and of less

character, what will

vestor

for

his

our

financial

in¬

In¬
se¬

curity? The general rule demands
that he steer clear of

CITY BANK FARMERS TRUST COMPANY

cash, bonds,

Head

mortgages, etc. as compared with
tangible assets not subject to what
may

City,

consider

State

Federal

form of stocks
representing shares
in the nation's
enterprises, in min¬

ing,
manufacturing,
tion, etc.'

transporta¬
'

''If.:',.

Condensed Statement

stocks

should

argu¬
rise in

line with commodities. This is not:

correct.
ties.

Stocks

are

not commodi¬

Ordinarily, their prices

are

determined by the profits a com¬
pany is expected to, show and the
dividends it is likely to pay. In¬

is not direct but indirect.

and

Due

Banks

from

there

will

State

and

...

81,616,668

1,846,782

.......

Advances
and

Deposits

Reserves
.

Municipal Securities

Real Estate Loans
Stock

$ 41,131,215

Other Federal

Other Securities

Loans

U. S. Government Obligations.

Agencies.

of December 31, 1950

.....

.$113,331,634

3,480,928

{Includes Reservefor Dividend $155,295)

12,074,089
3,393,501

Capital

....

$10,000,000

Surplus

....

10,000,000

1,395,376
Securities

Federal Reserve Bank

600,000

Bank Premises

2,819,012

Other Assets

2,590,848

.........

Total

$147,467,492

Undivided Profits

Total

10,654,930

30,654,930

.$147,467,492

$11,898,528 of United States Government Obligations are deposited to secure
$3,446,921 of Public Deposits and for other purposes required or permitted by law.

■

progressively slow inflation, what
will

of Condition

LIABILITIES

(member

future

separate

functions

ASSETS

Cash

Obligations

frequently hears the
that

trust

controls.

people, however, are not farmers
and they will buy
property in the

ment

City Bank of New York for

administration of

Farms have always been the most;
ideal inflation hedge for those who
are
able
to
work
them.
Most

One

Office: 22 William Street, New York

Affiliate of The National

unreasonable

visible

Rea^IEstate Loans

currency in the
proportion of 10 to 1. The simplest
way for a Democratic government,

thoroughly dis¬

the

had

$1,437,981,108

Other Federal

•.

Municipal Securities

and

Loans

war

•

;

LIABILITIES

Banks

from

Other Securities v .;

civilian morale

away.

frankly admit that the
Investor is in a tight spot. In the

State

complete price stabil¬
controlled economy, ne¬

Agencies

consumer

individual taxes, takes his breath
us

Obligations

have

ity in

Due

and

U. S. Government Obligations

pays.

the Investors do? Some will

Chairman

of the Board

W. Randolph Burgess

federal deposit insurance

white

prove

founded.

Office: 55 Wall Street, New York

;^.ASSETS

Cash, Gold

Barring unforeseen events and
in the anticipation that in the

Let

financing

the program pro¬
flation generally gives companies
posed by President Truman in
fair inventory profits and business
his message on Jan. 7, 1949, and
usually resulting from
he wonders whether he is justified activity,
in hoping for a repeal when the inflationary pressure, is conducive
to high earnings. The influence of
"emergency" is over, if ever. That
rising commodity prices on stocks
another slice of his income should
gress

find

prolonged global war. We all
hope that the anxieties now felt
a

serious

inflationary. While some taxes are
deflationary, corporate taxes raise

sharply curtail normal profits of
his companies and their dividends;
he recognizes in the measures that
are now being put through Con¬

Deficit

seems

excess

top and mandatory price ceil¬
ings
set
at levels which
may

further

number of years. Its effect will be

one

himself rather

avoid

\v.

Condensed Statement

inflation, but its ability to do so
must be questioned. We doubt that
the rearmament plans, calling for
total government expenditures of
$75 billion can be financed by

en¬

stationed

financial

wishes

money

signats was soon forgotten. The
Quick full recovery of the English
and

calamity
possibly if we

Investor's

the

sad experience

little

little
looked

the

century,

should

61 Branches in Greater New York
'a

;

forward serenely to old

over

with

Head

adjust his

security is the uncer¬
tainty created by the declining
purchasing power of the dollar.
Undoubtedly,
the
government

For

man

ragged.

THE NATIONAL CITY BANK OF NEW YORK

another direction. Our In¬

result of saving
of

Investor

and

questfor a
higher income
is
rejected.
virtue of

happening except

his financial advisers and

prop¬

segment of our population,
practically ; all
our
recent
laws, economic, social and finan¬
cial, show this shift. The trend is
worldwide and not likely to be
changed by a new Administration,
except possibly as to emphasis in

re-

far

consult

purchase

ertied

less

cannot visualize any such

Investor's

the

trade in the market at all but will

living, but the

creased cost of

prop¬

time, lighten their of
uncontrolled inflation
generally can, at the inception of a
commitments and go into cash and
caused or accompanied by record drastic inflationary move,
know
be ready to take
advantage of
the
expansion
of
the
political
and
social
currency.
We what
more favorable
buying opportuni¬
touch on this subject as a matter climate will be at the end.
Capi¬
ties as they arise. This seems to
of academic interest. Based on the talism, as it is now
practiced in
us the
safer policy to follow. It
experience
in
Britain,
is
European
pretty
countries,
shop-worn. Ours
is obvious that counter-inflation¬

hand, large
stocks and hold on to it. His entire
and is being replaced by "con¬ government orders
(e.g. aircraft)
policy
will
be
guided
by
the
trolled economy." Political power
on the basis of the 62%
all over
thought that the disease will run
has shifted from the wealthier and
tax as provided in
the Excess its course, that a stable currency
middle classes

granted on the
grounds of in¬

erty he has retained will, in terms

switches, for' instance, made by of the stabilized
currency, repre¬
Investors during the last few sent a substantial
salvage.
months, selling public utilities and
This presentation of protective
buying rails, or selling building
measures in a period of wild in¬
stocks and buying machine tools,
flation is admittedly
over-simpli¬
have turned out very profitable.
fied, but it will show the differ¬
Entirely different will be the ence in approach. We only need to

corpora¬

they

Bill,
very

some

make switches from

make„ selective

and

them

they will do in normal
times; they will follow a trading
policy based on careful security
and
market analyses;
they will

Mr.
tight spot and should

securities

in trend. More experienced
Investors will treat the stock mar¬

living costs,

rising

hold

verses

•

Partner, C. B. Richard & Co.

Members, New York Stock Exchange

and

(69)

definitely,- irrespective of the like¬ shares
lihood
of
temporary sharp re¬ for
a

Squeezed between high taxes and

f i - -

;

corporation)

President

Lindsay Bradford

un¬

The Commercial and Financial Chronicle

(70)

Continued jrom

Abramovitz,

and

first page

Dewey and

over

Dakin, and numerous others.
If this were a world in which

Curbing Civilian DemandCritical Economic Problem

orthodox analysis, we would,

and
I

that traditional

could rely on

strong

some

expect

be
to

convinced,

reasonably

finding

reasons

decline in the volume of
1951.

business and employment in

chums south

Western Hemisphere
of

Asian
in the United Nations,
Grande,

Rio

the

ingly unhappy. If we do it well,
we
can
repel the threat to our
freedom without seriously harm¬

confreres

our

ful consequences

important acquaintances and
in Africa.
The Soviets

our

and the Chinese want

differs

ladies and gentlemen.
do I.
And, in addition—
this the present situation
from much of history—

nearly

all

And

and

exert
in

who

means

money

The Outlook in

present fact, to use
our
more complicated words for
Oliver's
simpler and more ex¬

and

constitutes

and

industry"—to use

for finance
the rest of

pre-eminent economic social
political problem of the next
year and probably longer is how
the adjustment of the limited sup¬
A

resources
is to be

labor

and

this

made

unnoted.

remain

should

Suppose—

cellent work of Haberler, over

demand.
If we as a
country solve this problem poorly
the consequences will be exceed¬

engulfing

records

four

two

Both
have signaled a
in general busi-

ago.

years

already
coming decline

groups

ness.

Second, there are the set of 16
leading and coincident series selected by

Dr. Moore in his paper,
Indicators of Cyclical

"Statistical

Revivals

work

done

reau

for the National

Economic
Burns

and

Mitchell

Research

and

the
Bu¬

this

two

would continue to
residential units

new

by for every newly formed family.
Fourth, a decline in automobile

Moore

will

trucks

BANK
Sc.

Founded 1824

CONDENSED STATEMENT OF CONDITION

of business December 29, 1950
ASSETS

boom,

indexes

trend,

such

bility

that

were

large

consumer

raised

the

vestment

$1,714,391,241.70

scribed

$25,000,000.00

have

caused

16,799,989.66 $ 116,799,989.66
.

$23,792,286.71"

urgent

needs

might

soon

developments

be
de-

principle of accel-

not

arrayed

which

these

might
about

concern

under

have

busi-

more'normal

by knocking down

prowess

man.

should, I think,

have the whole picture before us
when
attempting
a
prognosis;
,

14-099,225.85

perhaps, other doctors will weigh
the evidence

1,552,289,581.77

Deposits

the possiinventories

conditions in order to demonstrate
straw

21?143,541.00

should

differently, and
be

not

concealed

...

•

$55,703,636.21 in the foregoing
statement are deposited to secure public funds
'
and for other purposes required by law.
I

Securities carried at

P.01^?.
sion

discussion at this

one

way

the

what

is sweeping over.

wave

ses-

of demhnd and

But the students of the future—
includes, notwithstanding

and this
their

financial

many

supercilious

counterpart

the

distribution and utilization of

tremely mundane are interested
in the stock market, and most of
those who forecast on this subject

want a fee; my impression is that
niost expect higher prices than at
present sometime before the end
°f 1951.
summary,

the great majority

of the vocal students of the future
expect
a
continuation
through
1951

condition of

excessive

The aggressive "Please,

sir> I want some more" is expected to be the theme song for
1951, sung by a truly international
the
domestic singers omitting the
''please."
chorus,

with

and

some

•

com-

ments, all businessmen, most governmental, and much academic

inflation.

Higher Output and Higher Prices
Are Likely

j share the

demand.
rise

each of
percentage ranges provides
a gross national product of about
$320 billion compared with $275

midpoint

billion this year, or an increase of
a
little more than 16%.
On the

assumption

that
the
order
of
price and physical

magnitude of
volume
near

changes

are

1950.

somewhere

correct, there would still be

That

the

for

postulated
But

■

al¬

are

53/2% from the levels of the
quarter of 1950.
This I can
accomplished by the following

third
be

combination of forces:

rise

productivity, plus a 2V2 % rise
in hours of work, plus a rise of
400,000 in the civilian labor force.
The first two require no expla¬

400,OuO

the

rise

could

force

from

result

military withdraws of 1V2 million,
offset

by
a
reduction
employment of 400,000,
rise

the

1,000,000,

labor

the

and
force

labor

un¬

a "nor¬
force of

into

pulling
500,000

above

This would by no means

normal.

exhaust

our

labor

resources:

for

example, there are about 14,000,000 women between ages 18 and
children

whose

are

over

years of age and so presumably
school most of the time.

physical
viewed
this way, it cannot be viewed as
much of a strain.
I suppose a rise
in productivity is difficult with
the

When

volume

rise

the

production

the turnover involved in losses to

military service and redirection
of tasks; yet the 2% here used is
not high.
A rise of hours of only
21/2% is very small for a nation
in emergency, and so is an in¬
crease

the civilian

labor force

only 400,000.
This country is
perfectly capable of far more of
a
rise in production than 8V2%,
and in the national interest there
ought

8j/2%.

a greater rise than
greater rise is needed

for the three purposes

of protect-r

security, preventing in¬
flation and meeting our demands
ing

our

for such

...

high standard of living

have.

....

Now let's look" at things from a

different angle.

virtually unanimous

the

8%%.-

ready above the average for 1950,
so what is contemplated is a rise
in physical output of something

these

Saying
,

Using

What the Bold Forecasters Are

there

this environment, a
physical volume of
output of from 7% to 10% seems
to me to be likely.
In this environment I expect that the price
level
will rise by
5% to 10%.

of showing how

great

Charter Member New York Clearing House Association
Member Federal Reserve System

Member Federal Deposit Insurance Corporation

con-

expectation of continued excessive

glected.
But also, the array of
what might have been thd central

spiral

rise

over

the

are

somewhat more
the
subject of
production
and
distribution
of
physical resources than there is

1951

future

the

that

percentage

mal"

waiting

ne-

$1,714,391,241.70

demand.

decline

ness

1,125,000.00

2,648,745.71

;

evidences

75,000,000.00

and

in the

eration.

LIABILITIES

the

filled
would have
question whether in-

activity

bedeviled

secular

Barron's,

finally,'

Eighth, and

1,613,658.44

portfolio)

for

T. and T. and the Cleveland Trust,

held in

measured

adjusted

the

look

should say
far as the vocal

breath,

least

are

modity
prices.
Almost
none
have given attention to interest
rates.
Of course, only the ex-

Other Assets—

Other Liabilities

bated

you

gone much higher
and lasted much longer than any

well

Acceptances Outstanding
(Less own acceptances

sure

monetary income.
Few published
forecasts are specific about corn-

and thus the threat of some more
turns

labor

Seventh, would be the fact that
the great American boom would

have

rise in prices gives impetus

every

to demands for increases in wages

$4 nation;

the numbers
have arriVed, and for

which j

that

tell you

construction

explicitness

fairly

1,' 1951

cerned,

18,556,343.67

Expenses, etc.

rise in pro¬

abroad there would
certainly be apprehension of what
the multiplier of these would do
to personal incomes and the gross
national production.
and

already

4,602,531.54
4,331,371.88

Before

students

5,416,013.90

Reserves for Taxes,

faced

■

'Dividend Payable January

searching

1952.

Receivable

Undivided Profits

with possibledeclines in investment
inventories, housing, automo-

Reserve forContingencies

heart

many

decline
billion,
a

2,228,953.63

Capital Stock.
Surplus

Private

accumulation, with

probable

•

Acceptances

severaljpreced-, ducers' durables about balancing

with

$ 475,474,045.78
433,228,132.31
U. S. Government Obligations
160,916,823.61
State, Municipal and Public Securities
5,459,967.69
Other Bonds and Investments
611,027,408.40
Loans and Discounts
469,894.27
Banking Houses.

Accrued Interest and Accounts

something

contemplate.

shall Aid in

Cash and Due from Banks

Other Real Estate.

this year.
For governpurchases
$60
billion is

billion
ment

which

biles,

Broadway, New York

pro-

pected to be insufficient to satisfy

agreed . upon by the students of Undoubtedly the redirection of
the future, the specific numbers production to larger output for
at which they arrive for the vari- military uses can be best effected
providing the incentives of
ous grcss national product items by
spread over a considerable range, higher prices and wages in the
The numbers for gross national areas where expansion is wanted.
production, measured without al- The problem, therefore, is to pro¬
lowance for any change in prices, vide sufficient incentives without
range from $290 billion to $340 setting
off
the
spiral—a nice
billion and center around some- problem in balancing.
thing like $295 billion, as com'Evidently a greater rise in the
pared with $275 billion for this physical volume of production
year according to
my
estimate, than the 81/2% here indicated
Personal consumption
expendi- would be most helpful. So let's

questions would face us about the
economic position of foreign
countries with the end of MarSixth,

TRUST COMPANY

been

have

of high production.

years

Fifth,

these increases must also be

so,

number many
domestic
production would almost cer- investment is expected to be down
tainly be widely predicted after a ^bout 5%, substantially accounted
year in which about 8^000,000 cars
for by a decline in inventory

ing

Credits Granted

and

Recessions,"

and

economy

build

and

At the close

ago

years

of consumers'

particularly

tion,

durable goods and housing. Pos- demand so that a price rise seems
sibly plant and equipment outlays likely. I think it is extremely
and expenditures on consumers' important that the rise in prices
nondurables will also rise and, if be curtailed to the utmost, for

met by the sum of increased output and diversion,
of these ' While the general pattern is

duced—following

165

inventory

personnel—do not expect "nor- some decline, but not a large per¬
mal" conditions in 1951. A col- centage one, in the number of
lection of the major forecasts dollars spent in 1951 on con¬
that have been made during re- sumers' durables, construction and
cent weeks on aggregate totals or inventory investment, while all
important constituent parts other categories would rise.
discloses that those students of
the future who have become vocal
The Real Present Economic
share the same general expectaProblem
tions.
They expect government
expenditures to rise sharply in
Now, having established some
lbol from 1950; they expect the numbers that are wnnin tiie gen¬
increase in government use of eral range of expectations, I want
resources to be supplied partly by to talk a little about what they
a significant rise in gross na- mean.
An 8V2% increase in the phys¬
tional production, and partly by
diversions from civilian consump- ical volume of production is ex¬

God that it could be so— the comprehensive series -used by
we were
looking at the outlook Dr. Mitchell in his great but unfor
1951 in an environment in completed synthesis of this econwhich there were sufficient in¬ omy
and
its fluctuations, now
ternational
tranquility that no being edited by Dr. Burns, and
increase in defense expenditure soon to appear.
These two sets
were in prospect;
We would then of series indicate that the econ- tures are estimated over a range
be examining the business out¬ omy is just now moving into its of
$190 billion to $220 billion,
look in terms' of' the techniques peak stage.
r
centering about $200 billion still
of
Third, there surely would be in terms of present prices, as
analysis of business cycles.
We would be going over the ex¬ pointed question as to how long compared with a
probable $190

and

materials

demand
noneconomic

wave

significant point which

not

the title assigned to me.

ply

•

the

are

and pray

"Implications

defense program

ob¬

that international politi¬
cal developments have built it up.
Yet, though trite, this fact needs
to be observed in order to make

judge it.
This
transcending, the

the

sources,

can

the

overwhelming

obvious

from

arisen

has

even

This is the outlook for
1951 about which I am supposed
to talk—so far as one who has not
access to
either the Pentagon or
Kremlin

and

the

that

serve

is ended.

the

trite

stronger
implacable before 1951
become

there

by my colleague, John M. Hartwell, Jr., ;and discussed by .me
from this platform in Cleveland

"Normal"

Conditions

pressive ones, is that demand in
later 1950 is excessive.
It seems

not be amiss.

First

Research

influence or power.

The critical

likely

that

adjust the investment series
suggested by
tidal
wave
of
demand to re¬ Dr. Abramovitz in his excellent
stricted
supply without inordi¬ new
book, "Inventories and Businately
disturbing the economy ness Cycles," and the 23 statistical
and society.
I shall spend the series with the best records of prerest of my time in explanation of
dicting downturns selected from
this proposition.
the National Bureau of Economic

want more also
in some form to
effective demand, either

the

have

may
■

brief summary ,of
prominent in the
would be stressed

would

I believe that we can

some more.

do you,

to our economic

system.

associates

Perhaps
what

evidence

Thursday, January 4, 1951

...

Is this price rise

that should be curtailed by

higher
caused by such great
demands for military use that ci¬
vilian scarcity threatens? The fact
is very much the reverse.
The
production

total

increase

government

penditure for all
being generally

for 1951 is

ex¬

that

contemplated
only something like $20

billion and this is
the

purposes

increase

little less than

the

physical vol¬
of production if we accom¬
plish a rise of only the 8%% gen¬
erally expected.
In short,
the
whole presently expected military
outlay for a" condition less than
ume

full-scale

war

could

met

diverting to it only the 8y2% rise

Volume 173

Number 4974

The

production.

durables

consumer

The Commercial and Financial Chronicle

expected

offset

in¬
personal, consumption

creases

declines
are

than

non-durables

and services, so
that while the composition will be

little changed, total consumption

will be higher in 1951 than in 1950

according to most estimates. This
certainly does not look like aus-,
terity.

\y-f

...

This brings us to an identifica¬
tion of the real problem of the
United States in 1951. That prob¬
-1

lem

that

not

sources

productive

or of an even larger
without
hardship
and

re¬

part time.

that

should

templated;
the

decline

living
effort

the

being

intend to

military

con¬

day,

many

Business management

for

such

nance

and

mon¬

tected,

while

than

adequately
at the same

could

pro¬

two-thirds of personal
exempted from income

income is

time

substantially

increased.

less than 3% of personal

come

in the third quarter of
this

proved.
need

They

were

and

closing,

assertion.

one

performance

Fourth, personal savings should
be

Bruns,*

accomplish much.
This

Jan.

in¬

not

gains;

can

just isn't enough to fi-

and

Sutro

fearful

the

Bros.

rise.

but

The

that

New

York

couraged about the economic out¬

partnership

business

case

and

consumers

enterprises

have

very
•

•

high monetary incomes as a result
of
high production, have very
large resources
of
money
and
liquid assets accumulated in the

!<<)• '

ii ■

from

the

Nearly all of
being spent for
consumption—the
1950
savings
years.

current income is

ratio

promises to

lowest of

the

accumulated

"II

;

! ^ ii o!

ill,

I ,

1I'

NEW YORK

the

one

past 25

Irving Trust Company

high levels of the

very

past several

■; I

;•

past and especially in World War
II, and are trying to increase their
consumption
substantially
even
<

'•>

years—and

past savings

are

be-

witness

the

ing

drawn

upon

excess

Bond

redemptions

STATEMENT OF CONDITION DECEMBER 31, 1950

sales.

over

Here is

the real tap root of the

problem of excessive demand, the
heart of the question of how much
defense effort the United States is
-

capable of making, the core of the
of how much inflation

DIRECTORS

ASSETS

-question
the

United

perience.
•

States is going to ex¬

Here

the

Cash and Due

engulfing, seemingly im¬
placable and inexorable "Please,

than

some more." The Amer¬

its

manding
to

tion

the

This

incomes

are

the

President

Mortgages

•

10,082,454

•

Loans and Discounts

3,150,000

its

First

Mortgages

Headquarters Building
Customers'

•

WILLIAM K. DICK
New

Liability

the

Other Assets

suitable

♦

•

I. J.

Vice President,
L

national

emergency,

LIABILITIES

The

most

problem

critical

Capital Stock

how

right

now

Undivided Profits

this

curb

ebullient civilian consumption and
the voracious civilian bidding for
If by

-more.

Russians

Total

Deposits

•

50,000,000
IIIRAM A. MATHEWS

•

55,000,000

•

12,600,284

•

MICHAEL A. MORRISSEY
Honorary Chairman,
The American News

Capital Accounts

Company

117,600,284

•

«-i ••*••••«

1,218,560,042

President,

Pennsylvania Co.

Reserve for Taxes and
LeROY A. PETERSEN

Other

existence,

heavier restraint will be needed.

Expenses

Dividend

Payable

•••••••

•••••«•

President, Otis Elevator Cornpanj

4,843,498
2,000,000

J. WHITNEY PETERSON ' ~
l'resulent,

....

United States Tobacco

Acceptances: Less Amount

Conclusions and

in Portfolio

•

10,710,083

JACOB L. REISS

Other Liabilities

My analysis of the "Outlook for
-

elusions

I'm

not

and

supposed

tions;

offer

but

when

the

Greenwich, Conn.

•

„

having

are

•

United States Government Securities

long

this

held

the

Of these, $29,104,940

was

its

monies and for

association

are

pledged to

stated at amortized

«.

secure, deposits

New York,

of public

other purposes required bylaw.

going

My conclusion is that this

•

President,
t

econ-

range

$30-50

•

MEMBER

billion

which have been mentioned in the

•-

FEDERAL

DEPOSIT

INSURANCE

■

Francis II. Lcggett & Company

in¬

is perfectly capable of mak¬
ing defense expenditures in 1951

N. Y.

FRANCIS L. WHITxMARSII

President—that

eunuch—I'm

cost.

omy

the

WILLIAM J. WARDALL

make them.

FLETCHER W. ROCKWELL

recommenda¬

analyst should not be

tellectual

6,755,917
$1,360,469,826

view that Dr. E. A. Goldenweiser

.expounded

recommendations.

that forecasters

sure

»»«••«•

positive con-

some

Company/*

President,
V
•'
:.
■
lleiss Manufacturing Corporation

Recommendations

1951" leads to

Senior Vice President

New York &

War,

the curb need not be very severe;
if we must unsheath the sword to
defend the right of free

(

LUKE, JR. t

PETER S. PAINE

the grace of God the
not force

.••»•••••

Surplus

economic

1951—and

^-therefore

DAVID L.

President, Went Virginia
Pulp and Paper Gmipany

ex¬

cessive.
■

Deering Millikcn & Co., Inc.

Ameri¬

consumption

HAROLD A. HATCH

But it is to assert that under

civilian

HARVEY, JR.

President,
The Flinlkote Company

4,048,344

•

$1,360,469,826

the very limited willingness to try
to raise production and the very
real

9,075,599

Acceptances Outstanding

.»

can

York, N. Y.

PHILIP F. CRAY
Senior Vice President«"

for

-V

C. A. Auffinordt & Co.

14,033,600

JOHN F. DEGENER, JR.

1,253,412

Real Estate

Chairman of the Board,
lJristol-Mycrs Company

519,323,848

«...

manner, nor that a country derives
.strength by making itself miser¬
able.

Honorary Chairman
HENRY P. BRISTOL

consump¬

most

HARRY E. WARD

23,122,304

Stock in Federal Reserve Bank

defense

over

RICHARD II. WEST

its

i?, no sugges¬

and

EfiSTROlUSfcS

the Board

insistently

that they are distributed

.population

F.II.A.

de¬

Chairman of

"369,389,749

•

Other Securities

excessive,
measured
ideal, nor necessarily

any

•

pro¬

r-.

>■

■

value

perhaps

well.

that

tion

much

some more so

and

against

back

freedom—and

threaten

money

effort

its

and

tecting
as

times

seven

stomach

WILLIAM N.

406,990,516

•

U. S. Government Insured

ican civilian economy already has
"much the highest standard of liv¬

ing in the world, is spending

•

U. S. Government Securities

sir, I want

from Banks

really in-

sistent

'CORPORATION

Admit
Co.,

Stock

Feb. 1.

instead, expect it to

critical fact of the

American

120 Broad¬

Exchange,

will admit Raoul Cohen to limited

dis-

decline in total consumption what¬
soever,

partnership

New York City, members of

way,

need not be persuaded
are

Sutro

im¬

vastly

not,

be, satisfied with small

by those who

1950,

should

Jr.,

17.

economy has enormous resources
and capacities and strength.
Its

taxation.

ment.

any

taxes

budgetary

employ¬

organize to provide

opportunities

dollar

could be employed

carry on

without

completely untouched,

ard

serious

income

increased

the

strain if the people of this country
wished.
And the problem is not
of

personal

Second, the civilian labor force
be increased. The biggest
potential is women with children

in school.
While most probably
they cannot work the full stand¬

any

should

requirements call for

for production could easily be in¬
creased substantially and without

standard

Third,

government
requirements look or our ability to support the
capital needs and prevent in¬ defense of our freedoms.
With
flation. The depression-bred view determination
and resolve, accom¬
that
ey, as they certainly will.
There
saving should be discouraged plishment can exceed almost all
solve. I think the following pol-: is a limit beyond which personal still
lingers as a curse in this pe¬ anticipations.
icies and
actions are
especially taxes cannot be imposed without riod.
Very little ingenuity has
needed.
j
' i risking economic harm, but at been applied to the stimulation
First, work hours should be in¬ present, with personal taxes tak¬ of savings and a major effort is. Bruns, Nordeman Admits
creased.
Another
two
to
four ing less than 10% of personal in¬ needed. A combined and coordi¬
Bruns, Nordeman & Co., 60
hours a week would not hurt any¬
come, that limit is not nearby. nated effort by government and Beaver
Street, New York City,,
one.
Such
an
increase
shouid The additional taxes should cover private
organizations, utilizing the members of the New York Stock
make possible a significant rise in a wider part of the
population: many
techniques
and
methods
Exchange, will admit J. Bowling
freedom cannot be defended and largely or
production.

amount,

without any serious inflation. All.
we need is just a little firmer re¬

should

really being strained,

are

estimates,

(71)

The Commercial and Financial Chronicle

(72)

ward

Continued

jrom

page

With

the

water

The

Security I Like Best

waited

sound

dust

exhaust

much greater

from

possible

recovery

acoustic power than
heretofore. Based upon
research

extensive

thousands

result

intensive

the

search work done

inant

position,

patent

re¬

for

both

esses,

apparatus and adaptations, but en¬

making

joys

water

ture

details and

individual mechanical

chemical

the general scheme

design and application.
Although the potential uses for

sonic

energy

seemingly

are

un¬

limited, the most important field
for this new

technology has been

in the collection of dust

particles,
other

fumes

gases.

It is planned to adapt the

from

soot

air

applica¬

created

foam

wear

canned

juices; these

the many

are

but a

possibilities for

time

models.

use

one-

conven¬

little
imagination to appreciate the po¬

homogenizing

process,

sonic

for

with virtually

the fabric and in

the

tional

paint, improvement in the taste

designed

energy can operate

few of

machines

spray

removal

In Year-End Bond

problems there is no feature

by faster removal of
fourth
through sonic treatment,

thus

Protection

well.

afforded

broad patent struc¬

very

number

Corporation. Ac¬
drying proc¬
improvement
in
paper

celeration

dom¬

often for

Ultrasonic

by the corpora¬

it not only occupies

tion

gases,

cessfully, economically and safely
eliminate
the
problem
of
air
pollution.
There are many other uses for
sonic energy, all being explored

power, a volume of sound suffi¬
cient to accomplish many purposes.

Foresees Sustained

Thursday, January 4, 1951

Capital Financing in 1951

Survey, Halsey, Stuart & Co. Inc. predicts

substantial amounts of most types of capital securities will
reach market in 1951 with little or no increase in interest rates.

pollution
While
some
retrenchment
in interest rates will be, but
by
industry.
This
campaign,
evi¬
though still in its infancy, has al¬ municipal financing is probable, dence of the supply-demand equa¬
ready had its effect in several the overall outlook is for most tion indicates little increase, if
metropolitan areas. An economical types of capital securities to reach any," the survey stated. "Due to
and
effective
method
will
be the market in 1951 in substantial extraordinary conditions, the
eagerly sought out by both in¬ amounts, with little or no increase amount of new borrowings by the
in interest rates, Halsey, Stuart & government cannot be estimated.
dustry and city government alike.
Co. Inc. predicted in its annual Rates may be determined by such
A perhaps little known but very
Year-End Bond Survey just issued. borrowings, and in the event of
important development is the use
"Some restrictions on the vol¬ widespread war the Treasury may
of sonic energy in the laundering
be expected to establish rates cer¬
of fabrics.
It has recently been ume of state and municipal bonds
tainly no higher than those cur¬
demonstrated that washing may be expected in 1951 in view

tions for machinery that will suc¬

acoustic

watts

unlimited

exception

possible

at the elimination of air

problem

value as for reasons of
health. There is, in fact,

public

the

work

Corporation has de¬
signed and produced a sound
generator able to deliver many
Ultrasonic

having

collection

fume

rapidly growing busi¬
fields of application.

of city life today which has, or
will receive the attention directed

method to all industries

the develop¬

upon

ment of devices able to produce a

all

ness

requires

tential of this market.

the

ment

necessities

program,"

rent."

arma¬

said.

Pointing to the growth of infla¬
addition, states and munici¬ tion in the United States in recent
palities, faced with higher oper¬ years, Halsey, Stuart said that in
ating expenses necessitating high¬ 1950 "the meaning of inflation and
er local taxes,
value
of
the
dollar
were
may find a public the
survey

"In

disinclined
for

income

the

high
still

prospect

same

taxes

higher

enhance

taxes

proposals brought home more forcefully to
time, the man on the street and the
and
the woman in the home."

approve

debt.

new

Lastly, mention must be made continuing
of a growing branch of the com¬
pany's business not strictly along
sonic lines but requiring parallel

the

Federal

the

Credit

desira¬

tive

restrictions-are

ineffec¬

anti-inflationary measures
long as Congressional action,
and inaction, allow the continua¬
search work. Inasmuch as the new
tion and growth of great Federal
ultrasonic method is safer, better tro-mechanical devices for auto¬
The supply of real estate mort¬ deficits, the survey said.
and considerably less expensive, matically controlling motion and
gage investments also will be re¬
"The basic blame for renewal of
machinery. Highly technical in
than
the old electrostatic
one,
duced, by the diversion of mate¬
inflationary forces rests squarely
nature and of the greatest impor¬
rials from building to armament
there is every reason to look for- tance to the
military, this non- and the Federal restrictions al- upon the Administration and the
anti-economy blocs in Congress—
sonic department of the company
ready in effect on mortgage fi¬
especially for the stages of infla¬
may well become of equal impor¬
nancing, Halsey, Stuart declared.
tion that preceded the outbreak of
tance to any other. Contracts have
The
armament
program
will war in Korea," it continued. "All
already been received for initial
the

company's

products

and

re¬

bility of their tax-exempt feature,:
engineering skill. It concerns the and municipals face an increased
manufacture and design of elec¬
demand in the coming year."

•

have its effect

research work.

The Public National Bank

Financial and technical aid for
the development of the Ultrasonic

Corporation

AND TRUST COMPANY

American

ment

NEW YORK of

came

Research

Co.,

Mj.I.T.

principally from

Office, 37 Broad Street

Develop¬

from
organization

former

The

has four members

Main

Boston,
on

and

the Board of

Directors and the latter is repre¬
sented by Dr. Richard Bolt, con¬

sidered by many to be the world's
leading sonic engineer.
.

CONDENSED

STATEMENT

The company has passed through
the period of experimentation and

CONDITION

development

RESOURCES
.

U. S. Government Securities

State and

•

•••••

•

Municipal Securities

Other Securities

•

Loans and Discounts
F. H. A. Insured

Customers'

$141,939,131.66
123,270,950.13
19,419,834.14

8,433,461.87

234,313,765.35

Mortgages.

3,096,199.11

Liability for Acceptances.

Stock of the Federal Reserve Bank

•

during this

period

Dividends

8,611,726.42

....

Regular

$32,611,726.42

453,750.00

Unearned Discount

1,613,840.95

Reserved for Interest,Taxes,

Other Liabilities

Deposits

•

Contingencies
$5,980,086.24
4,942,566.70

1,037,519.54

•

•••••••

773,449.41

•

•••••••

492,859,736.58

$534,747,521.49

; |

United States Government Securities carried
are

5,397,498.59

•

pledged to

public and trust deposits, and for other
as required or permitted by law.

MEMBER: N. Y. CLEARING HOUSE ASSOCIATION
FEDERAL RESERVE SYSTEM
FEDERAL DEPOSIT INSURANCE CORPORATION

25 Offices Located

The

rhafk^t

for

the

common

the

staff

Chait

has

Ticker

Publishing

Company, publishers of the "Ma¬

also

the

company

become
as

associated

circulation

with
di¬

rector.

Throughout Greater New York

bring about

our

downfall

Daniel F.

Rice & Co., members

of the New York Stock

will

admit

partnership

Robert
on

national

Increased
avoidable

because

York

Exchange,

magni¬

its gift and lending

and

railroad
field,
public ity that Congress will levy enough
financing of equipment was down to effect completely a tax-as-itin 1950 but may show an increase spends policy.
\
in 1951, said Halsey, Stuart. "The
railroads not only will be encour ¬
aged but will be pressured to buy,

equipment ^ they'
possibly can, and the equipment
manufacturers will be given the
all

Clark, Dodge & Co.

rolling

rthe

materials

meet

the

Admits New Partners
Clark,

demand,"

the survey pointed out. ."In addi-

Dodge

Co.,

Wall

Street, New York City, members
of the New York Stock Exchange,

to new railroad financing to
for the equipment,vthere are a! announced that William A. Hobbs
and John W.
number
of
possible
refundings,,
and a
continuation
of improve-,
Dayton, Jr.,
k

in
earnings
may
refunding plans to

ment
these

have been ad¬

permit
be ef-'

mitted

firm

fected."
There will be ample

available

funds

eral

investment,

take whatever-

obligations goes to
market Jn 1951, said Halsey, Stu¬
art, pointing out that;"a vast res¬

will

continue

World

grow—just as
the big in¬

War II created

vesting

reservoirs

which

partners.

Hobbs,

former Vice-

Chief

and

Invest¬

ment Officer

of the National

City Bank of
Cleveland, has
been in charge
of the re¬
William

search depart¬

Hobbs

ment of

Clark,

Dodge & Co!
joining the firm last May.
Before going to Cleveland in
1941,
since

"Life

insurance

funds

New

companies

has

become

life

available

aside

insurance

for

invest¬

reinvestments,

from

probably are running at a rate of
$4 billions annually, the survey
continued.

market

Besides these

with

may

another

funds, it
be in the

billion

and

banks may be expected to contrib¬
ute substantially to the demand.
Bond

"No

gen¬

President

have

since grown apace.

the

to
as

Mr.

volume of debt

interest

rates

one

can

tell

now

Mr.

Hobbs

with

had

Bankers

New

York,

been

associated

Trust

Company,

member

its

research staff.

Mr. Dayton, with Clark, Dodge
Co. since 1945, is active in the
firm's underwriting syndicate and
&

retail

activities

assistant

man¬

of its bond department. From

ager

1941
to 1945,. he was on active
duty with the Navy in command

subchaser

ranean

the

and

the

Mediter¬

destroyer escort in

Pacific, attaining the rank of

Lieutenant
1941 he

Commander.

was

Seligman

Prior

associated with J. W.

Co.

and

Union

Se-

probably * curities Corporation,

Sully to
will
continue
at
about
present
Mr. Sully
of the firm's levels in 1951, said Halsey, Stuart,

Fifth Ave.

un¬

the

office, 521

debt

nation's preparedness

of the

program

Jan. 11.

is resident manager

New

Sully

free

said, pension trusts

Admit Robert F.

as a

nation."

the

ment,

Danie! F. Rice to

giv¬

of living and who
doing everything possible to

are

tude

principal field for savings of indi¬
Analyst."
Mr.
Chait -will viduals and increased sales of pol¬
serve as Assistant to C.G.
Wyck- icies have enlarged the already
off, President of the company. He tremendous sums available for in¬
was
formerly Advertising Man¬ vestment by insurance companies.
ager for Arthur Wiesenberger & Pension funds, also stimulated by
Co. and prior 'thereto was with the desire for security and
protec¬
Dow, Jones & Co.
tion, likewise will provide a huge
On Jan. 15, Robert B. Birnbaum amount of investment money."
will

are

oppose our way

activity of normal business plus
the
stepped-up
armament
pro¬
gram, and these investment funds

joined

way

ing aid and comfort to those who

ervoir of funds available for bond
stock is currently about
153/4-163/4..
investment will be created by the

$12,597,270.21

secure

purposes

ter market.

that

any

offerings, utility financing programs abroad, the survey said.
could
easily match 1950's vol¬ Higher taxation is inevitable, it
ume."
'
:
stated, but there is little possibil¬

ness

151,250.00

......

speculation in the over-the-coun¬

start

gazine of Wall Street" and "Busi¬

$302,500.00

Extra

Less: Own in Portfolio

mendous growth and profit I con¬
sider the company an
outstanding

Lawrence

Payable January 2,1951

Acceptances.

Ticker Publishing

24,000,000.00
Undivided Profits

expansion.

Corporation
many possibilities for tre¬

13,412,500.00

........

Ultrasonic

Lawrence Ghait With

.$10,587,500.00

........

management

realize

should

new

pay

will

fense and armament program.
In
this case, between refundings and

tion

Because

344,368.40

•

equip¬
tapering off in,
1951, but "these projected pro¬
grams may be subject to a speed¬
ing up process as the public utili¬
ties
are
encouraged to expand,
rapidly to keep pace with the de¬

tarily. In the meanwhile, control

able

utilities finane-- Americans

tures for improvement and
ment

of the company's Board of Direc¬
tors
assures
the
stockholder of

259,480.01

LIABILITIES

Surplus.

per share. Many of the
important fields of applica¬
tion are just being opened up and
large orders are expected momen¬

720,000.00

$534,747,521.49

Capital

earnings

653,483.25
•

most

consistently

2,296,847.57

Accrued Interest Receivable
.

stage

acceptance
of Ultrasonic's ; pro¬
ducts will support a very strong
up-trend in sales-and consequent

has

Banking Houses
Other Assets

the

commercial growth. In 1951, I am
certain that operations will be in
the
black
and
that
the
rapid

December 31, 1950

Cash and Due from Banks

into

ing too, the survey continued. As those who contribute in
projected, the utilities' expendi¬ to the forces of inflation

what

the

Admission of the two
ners

the

was

new

part-

previously reported in

"Chroncile" of Dec. 7.

Volume 173

Number 4974

The Commercial and Financial Chronicle

partner in the

The British Rearmament Drive]
By PAUL EINZIG

Dr.

Einzig, in commenting

ment, points

developments in British

out main problem

lies not in raising

v-:

rearma-

revenues

obtaining dollars for additional government expenditure,
but rather in finding necessary manpower and raw materials.
or

Looks for

intensified civilian controls in Britain.

LONDON, Eng.—One of the results of the Brussels meeting
of the Atlantic Treaty Powers has been the British Government's
decision to intensify the rearmament drive.- The proclamation of
state of emergency in the United States, and the addition of
further

billions

the

astronomic

figures

the American Rearmament

profound

Budget has created
in Britain.
It is felt

impression

in many quarters that Britain must follow the;
American example, both in respect of the in¬
of

crease

the

expenditure and the

arms

tailment of production for civilian

means

the

view

ment

controls.
taken

was

already
for-

needed

Until

that

the

quite

recently

British

Govern¬

the

legal

reestablishment

powers

wartime

pal

Shepherd.,
^
During the war, Mr. Shepherd

With Benj. D. Bartlett

served

the

Cincinnati
was

the

York

New

Stock

announced.

and

the

Exchanges,, it

firm

ried

Shepherd, a native of Cin¬
a graduate of Harvard
University, was connected with a
Mr.

investment

from

1934

turned
time
in

the

1942, when he re¬
During that

and

the study

1942

returned
to

nicipal bond field

with

associated

become

for

controls, so that there was no need
enacting any legislation corresponding to

Logan Morrill, Financial Counsel,

proclamation

and

the

the United States.
rect.

Under; the

state

dent

Truman

January,

1947, became

Pickard,

Inc.

Supplies

retary;

Steinhoff, : ViceFlanagan,

G. M.
Secretary.
and

Goldman, Sachs & Co., 30 Pine
Street, New York City, members
Exchange,
announce that John W. Callaghan,

of the New York Stock

who has been associated with the
firm

Vice-Presi-

dent of Artemas G. Pickard.

for

Pickard

named

Mr.

many

Services

and

Act
of

state

with the notable exception of the
The question is, to what extent these
powers
emergency,

fixing of wages,
will be used.
It

now

fairly advanced
to

probable that the government will resort to

seems

of controls in the

measure

future.

near

MANUFACTURERS

TRUST

It intends

take

steps, if necessary, to direct labor into arms industries,
to requisition private
property, to fix prices and to allocate raw
materials.

the

absence

of such

measures

would

the cost of

arms.

supplies of

raw

Condensed Statement

the

United

military aid.
as

that amount

about

the extent

form

and

State and

the increase of Service pay.
Even £1,200 million per annum
obviously modest compared with the American arms expendi¬
ture, allowing for the difference between conditions in the two
countries.
Any substantial increase would mean, however, con¬

unless

pressure

there

million for

Any reduction of real
fits would

cause

rearm

than to unbalance it for the sake of
In respect of the

building up national defense.
budgetary policy, the government is pursuing

strictly orthodox principles.
ment

must

does

not

encounter

needed

1951-52

current

major

any

can

ville

resistance

the

for

need

means

burden will

Dividend

main

necessary

Liability

the

Needless to

say,

in Escrow
.

increased

12,836,541.72

•

2,581,949,234.47

•

An addition of

$4,000,000 wan made to Reserve for Bad Debts for 1050, of which $2,140,000
transferred from Undivided Profits. The total Reserve for Bad Debts was $10,709,265.48
at the year end; neither the addition to the Reserve nor the total amount thereof has any
relationship to current or anticipated losses.
United States Government and other securities carried at $100,506,541.06
V

public funds and trust deposits and for other

purposes

required

are

pled/ted to

secure

permitted by hw.

DIRECTORS

revenue

will

expenditure,

nor

even

how

money

find

the

balance

Thanks to the improve¬

position, the latter problem does not at present
even

though

sharp decline of the gold

reserve.

the

raw

necessary

stage

may

be reached

men

and

The present problem

materials.

key materials, Britain is

some

the

PAOL1NO

EDWIN J. BF.INECKE

BLOOM

FREDERICK

absence

American

respect pf

dependent
allocations

the
zinc,

Co.

JOHN

DANA

output.

This

fact

increases the

United States Government to

bargaining

power

JOHN

L. A. VAN

BOMEL

President, National Dairy
Products

MACUIRE

President, John P. Maguire &

Corporation

HENRY C. VON

Head Office: 55 Broad Street, New York City
MORE

THAN

IOO

BANKING
Federal

OFFICES
Deposit

Gil FATE II

NEW

Insurance Corporation

terrified by the prospects of unemployment result¬

ing from shortage of

raw

materials.

ELM

President

Co., Inc.

Member

are

President, Home Insurance Co.

Savings Bank

JR.

City

HAROLD V. SMITH

MADDEN

New York

United Biscuit Company

President, Emigrant Industrial

the

slight degree, because all Socialist

of America

Lines Company

GEMMELL,

F. MacLELLAN

President,

FRANKLIN

Clyde Estate

Vice-President

HAROLD C. RICHARD

President, United Slates
JOHN

PATTERSON

Coal Co.

KILPATRICK

KENNETH

FLANIGAN

Chairman, Board of Directors

JOHN M.

President, Scranton & Lehigh

Executive Vice-President

Chairman, Dana Corporation
C.

GEORGE

L. JOHNSTON

WILLIAM C. RARE
HARRY

President, George A. Fuller Company

HORACE

PALMER

Simpson Thacher & Bartlett

Vice-President

CRANDALL

CHARLES

Director,Cluctt Peabodv&Co., Inc.

JOHNSTON

Director, Lambert Company

CHARLES C. CLOUCH

OSWALD

Corporation

Administrative

Executive Committee
C.

Chairman, American Ilom$

LOU

Chairman

GRETSCH

Chairman, Lincoln Savings Bank

ALVJN G. BRUSH

Products

george v. Mclaughlin

CERLI

President, Gerli & Co., Inc.

Chairman, TheSperry & Hutchinson Co.
EDGAR

Chairman, New York and Cuba

dollars to meet the additional burden

States.

politicians

3,162,738.26

.......

sulphuric acid, etc., many British factories would have to reduce
their

when the additional

problem is not how to find the necessary

supply of

United

Acceptances and Foreign Bills

Collateral

1,511,700.00

10,451,692.84

was

rearma¬

incapable of solutiom

find

12,856,488.25
,

$2,772,539,261.05

the

at which American financial aid would become essential in order
a

Endorser

" a

moderate

149,770,865.51

Payable January 15, 1951

DepOSltS

into billions of pounds instead of mere hundreds

ment of the dollar

to avoid

Outstanding Acceptances

taxation encountered the utmost

payments resulting from rearmament.

appear

29,936,865.51

Reserves for Taxes, Unearned Discount, Interest, etc.

making sacrifices in the interest of balancing the

run

the

6,138,789.90

$2,772,539,261.05

69,444,000.00

the

9,247,636.18

Undivided Profits

Mail Steamship

meet

•,

$50,390,000.00

part of industry and finance, while at present

have to be abandoned.

260,994.84
.

Surplus

days that in 1937 Mr. Ne¬

millions, the idea of meeting it out of current

The

14,151,669.73

Capital

Cash held

amount

Equities

present this

It is characteristic

prewar

new

budget is generally realized.

because

rearma¬

743,860,413.92
.

In 1952-53, however, it

Chamberlain's effort to raise part of the

ment expenses

the

difficulty,

measures.

change of mood compared with

revenue.

easily be raised.

"heroic" fiscal

will call for

Mr. Gaitskell declared that

financed out

3,595,050.00

LIABILITIES

way

better

43,640,413.56

\:V; 14,514,364.57

•;

runs in the following way:
curtailment of social service bene¬

grave discontent among the workers, and would
for Communist propaganda. According to them, it
on a modest scale only and
keep the British
workers content and immune from Communist propaganda.
This
argument recalls the suggestion made by dogmatists of orthodox
financing in the late '30s when they sought to persuade the gov¬
ernment of the day that it is better to maintain a balanced budget

the

pave

66,264,330.12

Accrued Interest and Other Resources

Their argument
wages or

21,720,592.89

Customers'Liability for Acceptances

The left wing of the Socialist Party is
degree of rearmament which would cut into

the standard of living.

Other Real Estate

three years.
a

Banking Houses

curtailment of civilian production.
The government is likely to encounter political difficulties
if it should decide to raise arms expenditure well above
£3,600

firmly opposed to

Mortgages
.

Mortgages

corresponding

Loans, Bills Purchased and Bankers' Acceptances

inflationary

Municipal Bonds

i,'Other Securities! V.

siderable

818,188,456.59
1,030,956,543.75

Stock of Federal Reserve Bank

three

was

U. S. Government Insured F.H. A.

American

£3,400 million was given
years' military expenditure, and in October
raised by a further £200 million in consequence

close of business December 31, 1950

U. S. Government Securities

In August the figure of

total

States

as at

RESOURCES

tensify rearmament, without awaiting the outcome of negotiations
with

of Condition

Cash and Due from Banks

Likewise, it is essential to prevent the scarce
materials from going to the highest bidder.
government realized the need for taking action to in¬

The

COMPANY

idle to

try to intensify the rearmament drive.
Owing to the increase of
profits and the limitation of dividends, it would be possible for
industries engaged in civilian production to outbid arms indus¬
tries in respect of wages, and any effort on the
part of the latter
to recapture their lost workers would mean a
steep increase of

SAVE

FOR YOUR

INDEPENDENCE—BUY U. S.

SAVINGS BONDS

YORK
<

been

their Syndi¬

head of the munici¬ cate Department.

was

has

years,

Manager

anything which Presi¬

entitled

firm

Callaghan Syndicate
Manager For
Goldman, Sachs

the associa-

and

tion with the firm

the

bett, Jr., Vice-President and Sec¬

This is beyond doubt cor¬

the government can do
Paul Einzig

of emergency in

by their growing Invest¬
Advisory Department.

111.—Martin, Burns
Corbett, Inc., 135 South La
Street, announce a change
firm name to Burns, Corbett

officers

mu¬

the coun¬

over

include; John J. Bums, President
and
Treasurer; William J. Cor¬

Assistant

Salle

Cincinnati

Other

try.

President,

CHICAGO,
&

se¬

lection of investment securities.

.' He

He is well known in the

Pickard-New Name

con¬

and

with William R. Compton

was

Co.

engaged principally

analysis of economic

ditions

in¬

and

that

Burns, Corbett &

this City.

was

research

ment

firm

counsel

the

dividual counseling activities car¬

cinnati and

Boston

department

Company in Chicago
for the past 19 years and prior to

Naval Reserve, re¬
CINCINNATI,, Ohio—Alfred P. turning early in 1946 to resume
Shepherd, formerly a partner of his investment counsel activities.
Morrill
Shepherd,
Financial
In
his
new
association
with
Counsel, has become associated Benj. D. Bartlett &
Co., Mr. Shep¬
with the investment firm of Benj. herd will devote his
primary at¬
D. Bartlett & Co.,, 313 Vine Street,
tention to assisting members ofof

bond

Childs and

commissioned officer

(73)

economic

Dr.

the

all

possesses

cur¬

requirement

firm of Mor¬

new

rill &

members

(74)

The Commercial and Financial Chronicle

British Industries Fairs Aided Overseas Business
One

important
factor
that
Britain in 1950 to

helped

overseas

trade

contribute

and

pension

than

year

the

sus¬

Plan

aid

Marshall

ahead of sched¬

the British Industries Fair

was

in London and Birmingham

held

in the

early part of the year, ac¬
cording to the American Commit¬

Miles of "Heavy"
In

Birmingham,

wich

(which

than

the

Madison

Castle

times

larger

New

York's

resulted

making Great Britain

self-sustaining in in¬
ternational
trade, so the forth¬
coming
1951
British
Industries
Fair
is
expected
to
contribute
substantially to further improve¬
ment of Britain's economy—a vital
factor in North Atlantic security.
The
British
Industries
Fair,
once

Birmingham—in one day
they desire to do so. Dis¬
plays also have been arranged so

that

lines

shown

are

Edwin

business

the

shortest

Edwin

possible

gan

Spotlight Textile Displays

which

infre¬

not

followed up during
the rest of the year by re-orders.
are

Thousands of Items Featured
The

BIF

1951

amount

wrapped

will

year's

Tatro

Fair

trade

some

one

attracted

This

19,005
established

year

fairs

record

Because

prehensive than

continue

to
firm

will

the

same

continued

Broadway, New York City.

Transfer of the

Exchange

mem¬

1951

Jan.

11.

Augustus

Knight retired from
partnership in Bacon, Whipple &

London, two of the largest exhibi¬ expected to set a new high record'
Co. Dec. 31.
tion halls in the world, half a mil¬
in the number of buyers drawn to
lion square feet of space will be
G. Harold Pfau withdrew from
the
exhibits
from
the
United
devoted
to
the light
industries.
partnership in Robert W. Baird &
and
other
Here
parts
of
the Co. Jan. 1.
buyers will find Britain's States
latest and finest in such merchan¬

dise

world.

textiles and apparel, shoes
and leather goods generally, pot¬

Interest

furniture

jewelry,

verware,

and

clocks,

David

Thomas

Moore

the age of 78 after
Prior

bedding,

his

Harry

Friend^Jlr., with¬
in

Mc-

Moore &

the

late

Shashkan in Shaskan & Co. ceased
Nov. 30.
/
^ ;

Co.

PRIVATE
NEW

Business Established 1818

YORK

BANKERS'

BOSTON

Stephen Y. Hord

Thatcher M. Brown

F. H.

Prescott S. Bush

Ray Morris

H. D. Pennington

Knight Woolley

■

ASSETS

Limited Partner—w. A. Harriman

Cash

Hand

and

Due

from

Banks

United States Government Securities

State, Municipal

and

Other Public Securities

Other Marketable Securities
Loans

and

$66,026,212.75

57,209,719.05

....

>
.

Discounts

Customers' Liability

69,722,504.26

Acceptances

16,613,489.85

....

Other Assets

1,508,592.36

Managers
Edward Abrams '

$256,695,372.52
Edwin K. Merrill

David G. Ackerman

M. D. Morehouse

R. H. Chamberlin

Ernest E. Nelson

Joseph R. Kenny

William F. Ray

John A. Knox

LIABILITIES

Deposits—Demand

John G. West

Howard P. Maeder

Acceptances

i Gale Willard

Less Held in

publicat ion

tioned

generalized

distribu¬

tion of
ment

state¬

reference to

hearing
Oct. 20

Assistant

fect

fund.

Surplus.

...

Arthur K. Paddock

14,085,2B3.54

$256,695,372.52

Graham

$l,600,000 U. S. Government Securities

are

Pledged

Secure Public Deposits

FACILITIES
Complete Facilities

tor

Deposit Accounts

George E. Paul, Treasurer

~
.

•

Domestic
•

Loans

Commercial Letters

Brokers

Gray, Auditor

and

criticized

Acceptances

•

the

Purchase

and

work¬

follows:

1950,

while

shown

was

docu¬

ment

labeled "Preliminary Draft
—Condensed Statement of Thomas
Graham before SEC."
Since
my

Washington I have had

occasion

examine

substance of

conference

had,

re¬

informal

at your

request,

with certain members of the Com¬

mission

Oct.

come

wide

20, 1950. It has
attention that this

publicly

was

you

rather

mailing list before either

existence
known

Credit

Sale

this

consider

contents

•>

Securities

Custody of Securities

particularly

the

matters

of real

are

un¬

impor¬

and

us,

made

were

that

printed

its

final

form

also

same

that

any

connection,y we
fair statement

views would require some
indication that
we
advised
you
of

our

that

did

serve

any

cuss

did

For

wish to

the merits

Frear

for

would

disr

points

you

the

example, you will
informed you that I

that I

not

you

think

not

purpose

number

raised.

again argue with
or

Bill; that

demerits of the

had

done

in the past, and that it was quite

plain that

ject

this

document, which purports to
late the

for

views

The misleading ef¬

created

discussion

recall

On Nov. 10,
business trip, I

our

wish

not

moment that

concerned

tion

strenuously
use

for

that

has

in any way
dissemina¬

views

these

do, however, object
to the unauthorized

conference

and

what

inaccurate

reporting

been

suggest for

the

own

Since

ments.

Commission

distorted

the sub¬

are

purpose,

seems

about

your

matters.

views

diametrically opposed. J

were

the

our

and

com¬

possible result

create

confusion

position on important mat¬
received wide public distribution.
ters, we believe it is incumbent
...It is regrettable that you have, upon you to rectify whatever mispermitted your obvious enthusi¬ impressions you may have caused
asm for the views
by distributing this letter to the
you espouse to
lead to this action.
We feel sure same mailing list to which your
would not have followed this
its

propriety.

con¬

Surely

that

aware

present at

not

you
Commis¬

the

our

release
would

and

mission,
to

you

personal

seek

so.-

The

was

private

Had

for

even

our

known what

mind,

hardly is
likely that the conference would

certainly

sisted

upon

written

statement
cared

avoid

would have in¬
giving you a formal

that

express,

our

comments

would

dangers

the

followed

are

highlighted in this instance. Your
recollection of precisely what
at
the
meeting from

was

the

Commission side of the table ap¬

certain

suggested

that

aware

statements

which

the

Commission

certain

"would
and

the

regulations of the NASD

keep

small

the

investors

Bond

Club of Buffalo

elected

the following officers for 1951:

President

—

Carl

Schoellkopf, Hutton

Haller,
Pomeroy,

&
'

Inc.

Vice-President

—

-.4■

Albert

Wright, 2nd, Bache & Co.
r

Treasurer—John A. Lautz, Tru-

bee, Collins & Co.
Marine Trust Company of Buffalo.
Elected
for

small

dealers

from

partici¬

directors of the Club

two-year term were: Walter

Boyd; Edward Cornelius, Edw.
& Co., Inc.;
John G.
Krans, Manufacturers and Traders
Cornelius

Trust

Company; and Edwin W.
Wunderle, Liberty Bank of Buf¬

falo.

Hayden, Stone Opens
Branch in

problems

relating to so-called "gun-beat¬
ing," at no time did I state that
compliance
with
the
securities
laws

an¬

Secretary—Walter H. Boyd, Jr.,

inherent

have

you

truly,

BUFFALO, N. Y.—At their

views

you

nual meeting and Christmas party
held at the Saturn Club Dec. 27,

in context.

appear

The

such

misconceptions and to:

any

insure

from

Bond Club of Buffalo
;
Elects New Officers

time, authorized
Indeed, we cannot

prepared,

use.

had

you

The Commission

hear

Commissioner,

Com¬

recall that you indicated that
any
memorandum of our conference

RICHARD B. McENTIRE,

for

support

views.

sent.

Yours very

in¬

our

was

this regard at the earliest possible
moment.

conference

contemplate that

publicize
your

was
for

24)

neither
I nor any of the other
Commissioners made. Although I

Foreign Banking

Private Bankers and subject to examination
and regulation by the
Superintendent of Banks of the State of New York and by the Department of
banking ol the Commonwealth of Pennsylvania.
Subject to supervision and examination by the Commissioner of Banks of the
Commonwealth of Massachusetts.
as

16,

The text of Commissioner
Mo
Entire's
letter
to
Mr.
Graham

Investment Advisory Service
Licensed

Nov.

ing of the SEC Acts and expressed
opposition to the Frear Bill.

the

Federal securities laws.

(see

parently is extremely faulty. Thus
you
have incorrectly attributed

L. W. Simonds
*

mu¬

statement

said
As Required by Law

Arthur R. Rowe

J. McElrath, Comptroller

his

Mr.

further

tance in the administration of the

"Chronicle,"

practice

12,085,283.54

der

Richard B. McEntire

the

return

thus

endorsement

one

dangerous since

regarding the formation of
tual

any

set forth.

you

Exchange

1,500,000.00
2,000,000.00

L. J. Newquist

C. F. Von Glahn

Herbert

246,296.87

......

Arthur L. Nash

William C. Horn

Thomas

19,839,1-49.27

Contingencies

Managers

Herbert Muhlert

Farley, Jr.

William A. Hess

John B. Madden

Merritt T. Cooke

Elbridge T. Gerry

for

etc.

Capital

J. Eugene Banks

James Hale, Jr.

Reserve

Expenses,

5,556,635.49

almost

and

meeting
is
so
it
could
well
to
constitute

that

interpreted

before

Securities

of the matters

the

measure

the

25,395,784.76
;

having

most

$219,590,538.51

Portfolio;

voiced such definite
Your statement as to

concern expressed by me
re¬
garding "some of the points" men¬

have been held; in any
event, we

1,434,104.33 $221,024,642.84

Accrued Interest,

Louis C.

Deposits—Time

Harry L. Wills

L. Parks Shipley

Joseph C. Lucey

40,471,958.32
5,142,895.93

some

formal conversation would be the
basis of any such public release
or the vehicle
by which you would

and

not

you

and

did

Kingsbury, Jr.

Thomas McCance

Louis Curtis
E. R. Harriman

which

opinions.

sioners

Moreau D. Brown

such

make

ment with

the

you

of Condition, December 31,1930

has been my view.
Furthermore, it would be most

exception
t o
Mr. Graham's

must

Statement

that

which he took

sider

PARTNERS

issues

new

want

never

procedure had you stopped to

PHILADELPHIA

clear

very

Louis¬

Ky.,

statement

Brown Brothers Harriman

large

unfortunate if any person on your

distributed

George

mailing list should get the im¬
pression that I expressed agreed

"preliminary draft"

was

Co.

toys, photographic equip¬

late

drew
from partnership
Kelvy & Co. Dec. 31. *

Interest

senior partner in

cutlery, sil¬

died

retirement

the

Theodore W./

long illness.

Moore in Hallgarten & Co. ceased
Dec. 31.

David T. Moore

and

novelties,
and

•

china, glass and glass¬
ware, sporting goods and camping
equipment, gift shop items and
tery

pating

securities."'

Com¬

Commission

bership of the late Henry H. Cone,
Jr., to Robert D. Danks will be
considered by the Exchange on

before, it is

ever

Offices

the

of Edwin

changes:

never

the

formation

partnership

Ghe¬

The New York Stock Exchange
has announced the following firm

achieved in the Fair's 35-

history.

Harold

Kingston

Exchange
Weekly Firm Changes

Fair will be larger and more com¬

At Olympia and at Earls Court in

Ghegan

New York Stock

buyers.

overseas

business of the

The 1950 British Industries Fair

before

huge package.

Kingston

Tatro,

and

Company

name.

in this field.

effect

announce

general

Birmingham
from
April 30 to
will be the textile
and
apparel
May 11, is more than an event on
a tourist's itinerary.
It is a place sections, which will be more than
twice as large
and much more
where overseas buyers and pur¬
comprehensive than they were in
chasing agents from all parts of
1950.
The industry has selected
the
world
converge
once
each
1951 as a "major year" for dis¬
year to cover the entire British
playing
its wares at the BIF, as¬
market in both retail merchandise
and
in
heavy industry, and to suring an extraordinary showing
orders

Hackradt

time.

Highlighted at this

quently

Tatro

sire to specialize to complete their

which will be held in London and

place

position

by SEC members present.

Bankers

pany,

gether, allowing buyers who de¬

mutual

statement of

the

ville,

to¬

hearing before

President of
Bond

should

formation of

gave erroneous

tire, of the Securities and Ex¬
change Commission, has addressed
a
letter, dated Dec. 6, to Thomas
,G r a ham,

machinery.

and

improper and

was

Commissioner Richard B. McEn-

Garden)
will
house miles of heavy industry dis¬
plays, ranging from agricultural
equipment to mighty industrial

produce the overseas business that

fair

1950

Oct. 20 with reference

taken

Square

tions of the Fair—those in London

the

fund,

Brom-

helped

Just

1951 fair.

Louisville, Ky., of what transpired

pany,

the SEC

arena

Thursday, January 4, 1951

Holds publication by Thomas Graham of Bankers Bond Com¬

Partnership

Displays

Special transportation
arrangements have been made to
enable visitors to attend all sec¬

the

tee for

Now

Com. McEniire Takes Issue With Dealer

mar¬

volume of goods to enable
to balance her international
a

her

ule

into the

out

move

kets

Great

Edwin L. Tafro Go.

musical instruments, sta¬
tionery—in all, thousands of items.

ment,

Albany

ALBANY, N. Y.—Hayden, Stone
& Co., members of the New York
Stock

Exchange, announce the
opening of an office at 130 State
Street, under the direction of Wm.
Minot

Thomas,

resident

partner.

Volume 173

Number 4974

Continued

from

The Commercial and Financial Chronicle

program, and the billions
dollars we are going to

ness

page

(75)

spend on

The Need of
...

„

Widespread
Equity Investment

There

was

reluctance, I be-

the

part

company

to
finance
themselves by the equity route, or lack
of desire by'most
companies to
management

sell

America

demonstrate

to the world

the

advantages of

free economy.
It is

Our

The government security market was under pressure most of

*1950, especially during the latter part of the year. Higher money
"

rates

lief and armament of one kind or
another will be perfectly gigantic.
If we can believe what we hear,
American industry will operate at

Governments

By JOHN T. CHIPPENDALE, JR. i

Reporter

and

program of loans to other
nations, and the general proposigoing to be facing us for years to tion of seinng the advantages of
come.
Government expenditures ^bjg
grej^t country of ours, and the
for military and for foreign re- s y s t e m of private ownership,
„

curities, and by having the employees, the customers of these
companies, plus the great American
public, furnish the money.

lieve,

it, outside of putting ourselves in
a
position to protect ourselves,, is

brought

about* by

against inflation

the

lower

for

authorities

monetary

responsible

were

prices

fight

the

of Treasury

wmcb is our

keystone

trvim?

obligations.

■

<?p11

™„ntrv

own

nrooStv

influence

chnnhf P P ?

record levels.
Large, new plant
s. y
•
^
/
capacity will be demanded by in-We are trying to sell a free
pay dividends up to a bigger per- dustry.
Present machinery will Process that gives every citizen a
centage of their earnings, that wear out rapidly as plants operate right to select his own piece of
forced them into the debt method at 100% capacity.
Replacements property, whether it be an acre of
,

the

pattern of rates

new

into being in 1950 with

came

the yields of the longer maturities.

upon

2V2%

for the

rate

distant

most

Nonetheless,

obligations

government

re-

mained inviolate. The

sponsorship in 1950
Liquidation

financing, rather than equity, will have to be bought at increas- land, his own home or a share of
caused them to use such un- ing rates, and possibly at much stock
representing ownership in
usual amounts of their earnings higher than present prices.
Old an American business,
during this period. It was simply machines and old products will
The American system is an exa
proposition of a bad climate, rapidly become obsolete, as re- cellent piece of merchandise. No
marketwise, for equity securities search laboratories and designing salesman could hope for a better,
caused in large part by demagogic engineers create new ones.
Tre- It has in peace time created for
attacks on American business in mendous sums of new working its
citizens
the
highest
living
the early thirties, and the threat capital will be needed to finance standards ever seen in the world,
to
the
economy
some
political all of these goods through the In war time it has succeeded in
plans and utterances had caused, countless processes from raw ma- winning two very large wars for
Common stocks for the most part terial to finished product. Where us and now is charged with the
all through this period had been is all of this money to come from? responsibility of getting ready for
selling far below book value and
I hope it will come from indi- a possible third,
at prices considered too low by vidual investors. I hope the AmeriHow unintelligent it is to try
company
management to make can public will furnish it. I cer- to sell this system to the world
equity capital financing a feasi- tainly hope it will not be dished before we have really sold it at
ble thing. There were also some out
by benevolent government home and to ourselves? I feel it
unusual tax advantages too im- agencies, helter skelter, in "easy really isn't sold very well at home,
portant to be overlooked. If you to arrange" loans and advances. I and that we either haven't tried

short-term yields being pushed up sharply, which in turn had an

pattern of yields that evolved under Federal

was

from about 1 ¥2% to 2%%,

government

mainly the large life

owners,

securities

insurance

1950

companies

nonbank

and

savings

add

this

the

bank loans

have

the other

and

mentioned

have

you

the

financing

with

ease

could

loans

made,
debt
attractive in

why

reason

was

which

this period than equity
The ideal and happy

financing,
economy,

I feel, would be one where capital

expenditure

for

(and naturally

type
by

sale

most

depending

business)

the

and

the

financed

were

equity

part

securities,

surance

loans

company

will not fall for

men

some

easy

and quick means of emergency
financing, but will avail themselves of the machinery that is
open to them, and take the trouble
1°
to the public for their
money, and thereby create more
owners of American property.
We have a large debt. We are
a11 agreed, it should not be larger.
We have high taxes, and while

dislike higher taxes, we are all
found pretty well agreed that our taxes

where bank loans and in-

one

also hope that American business-

tried

Chairman

recently

the

Board

United

States,

reported

basis as we can. year or so ag0 hy the Federal ReW we can do this we will not serve Bank, it is safe to say, I
create a new era of inflation and think, based on the Tokyo contenmini( \izing or attempting to speak one that could well be a disas- tion, that a far smaller percentage
lgly of that sum of $3,- trous era of.inflation.
of the American population own

tal

for permanent capi-

used

money

as pay-as-you-go

tpenditure.

Pkpse

believe that I

don't

000,01 ^,000 which I said was the
amount of new capital created in
the last

figure it is obvious that there

very

thousands

were

America who

individuals

willing to put

were

their money to work in American

Industry.
think

the

other

hand,

curious

rather

cir-

cumstance that individual Ameri-

provided
proviaea

cans

directly
airecuy

only

savings

from
irom their
ineii

about

the

bv
American
Dy American

snent
spent

monev
money

indusinaus

try to finance the great
era
era

Equity Investment

postwar
and
expansion
evnans.nn
nrnnrn
and
expansion pro¬

huildina
h,,,lri,n"

building

gram.

shows

though this small
an
improvement over

sum

the

period of the early war years of
1942 and 1943, where the government
put up the bulk of the
money
and individual investors
only provided lk of 1 % of it, yet
ahead

too

sure

fndkation
indication thaf
that e'aSftv'financina
equity financing
ise

be done, and we should promourselves
that
we
should

not let government do it again

stock ownership popular. We
c°uld even create a big
buy a
sh&re of stock ern 3nd mske it 3

Stock

There is
done

We
lic

and

Ownership

big selling job to be

know it

can

done.

J^ust
sell the American Pubthe
worker,

professional

the

man

farmer

and

the

clwk,

that the finest thing he can do for

himself and for his

finance

nnance

himself

some

business

what

when

mean

this

movement

this

country,

the

last

Tne

the

...

American business will be sounder
nprmanpnt

Pnnuai

nhtainod

ute, he becomes the owner of a

bt b

crea^e r

doesn't have

sman

subscribe to the proposition that
must do something to make
stock ownership more popular for

that

j^d

Stock

fine, well respected, the

nnP

nf fbp

WPii

IrMn.

Exchanges of this

coun-

rank

citizens

and

that

file

American

must out of

our

f XI1U&1

own Pockete. and from our own

savings, furnish American busiknows the people who have the ness with the capital it needs for
try

bag

tbe

know-how.

money; that is his business'

that is necessary is
wlth the securities

high,

are

customers

selling at

peIndividual
market for securities is

stocks, while
not
up
to book value in many
cases> are stiTl not so low that new

financing

would

anrt ,that

...

purpose,

the creation of

will'; make; ; this

used

entirely in mortgages and other nongovernment
sellers of govern¬

were

principally for loans, which advanced

These monies

very

were

sharply last year.

Fear of
1

larger

requirements hung heavily

reserve

ment market because of the uptrend

of the September-October
*

in loans.

over

the govern-

The colossal "flop"

refunding by the Treasury was

the outstanding events in the money

one

markets in 1950.

1950 Performance Record

Higher
in
'

reserve

the

money

opments

rates, the last minute announcement of increases

requirements,

minor lengthening of - maturities, and

l%s

the

reappearance

were

among

the important devel¬

affecting the eligible taxable list.

year:

The results for the

Eligible Taxable Bonds
12-30-49

12-29-50

Price Range

—Closing—
Issue-

—Closing—

Price

Yield

Bid

Chge.

Bid

Yield

Price

High

Low

Price

1950

Yield

32nds

27o

9/15/51-53

101.12

1.17

101.12

100.10

1.47

—1.2

+ .30

12/15/51-55

101.17

1.17

101.18

100.14

1.48

—1.3

+ .31

2 V2 %

3/15/52-54

102.24

1.20

102.26

101.2

1.54

—1.22

2 %

6/15/52-54

101.27

1.23

101.27

100.18

1C0.18

1.57

—1.9

+ .34

2'/4%

6/15/52-55

102.12

1.23

102.15

100.28 ■'

100.28

1.58

—1.16

+ .35

102.4

1.26

102.5

100.21- *

100.22

*1.61

—1.14

+ .35

102.9

1.30

100.11

—3.2

+ .31

12/15/52-54"

27o

1%%

3/13754

l'/2%

3/15/55

1%%

12/15/55

'•-'—1.1,
—

—

100.7

■

99.7

1.61

99.9

1.66

100.2

1.73

100.5

100.2

;,.+ .34

——

—

2 V-2 %

3/15/56-58

106.4

1.45

106.9

103.14

1.79

—2.22

+ .34

2 Va'JO

9/15/56-59

104.31

1.46

105.3

102.11

1.81

—2.20

+ .35

2V2%

9/15/67-72

105.31

2.09

103.30

103.7

103.17

2.24

—2.14

+ .15

"•The

Korea, rearmament and higher taxes made the
performance of the tax-protected obligations in 1950 not too bad.
The

last

Changes

war

four maturities
were

the market-leaders

were

follows:

•

this group.

■

•

Eligible Partially-Exempts

■12-30-49

12-29-50

Price Range

—Closing—
•

Issue—

Bid
Price

Tax-free

1950

Yield %

Price

Yield

' Tax-free

Chge.

Yield %

32nds

Price

Low

High

—Closing—
Bid

2%%

6/15/51-54

102,26

.66

102.26

100.24

.80

—2.2

+ .14

37o

9/15/51:55

103.24

.65

103.24

101.10

.82

—2.14

+ .17

.83

—1.21

.86

—1.20

+ .13

.90

—1.29

+ .10

.93

—2.18

+ .8

2 ]/4 %

12/15/51-53

102-24

.70

102.24

101.3

6/15/53-55

103.25

.73

103.28

102.1

6/15/54-56

105.20

.80

105.23

3/15/55-60

•

101.3

103.19

102.5
103.23

+ .13

2%%

'109.15
110.27

9/15/56-59

.85
.90

109.20

106.23

111.2

108.3

106.29

108.14

.96

—2.13

+.6

2%%

6/15/58-63

112.4

1.05

112.12

109.31

110.12

1.02

—1.24

—.3

2% %

12/15/60-65

114.3

1.17

114.12

112.17

112.29

1.08

—1.6

—.9

Heavy liquidation of the ineligibles by nonbank investors, was
care of by the support
buying of the Central Banks. The

taken

record for

1950:

Restricted Taxable Bonds
12-30-49

12-29-50
Price Range

—Closing—
Issue—

Bid

Yield

Price

1950

•

High

Low

—Closing—

Price

Yield

Bid

Chge.

Yield

Price

32nds

2 V4V0

6/15/59-62

103.11

1.85

103.31

100.15

100.22

2.15

—2.21

+ .30

2'/4%

12/15/59-62

103.10

1.87

103.21

100.13

100.18

2.18

—2.24

+ .31

2%%

6/15/62-67

105.19

1.99

105.22

102.13

102.21

2V2%

12/15/63-68

105.2

2.07

105.4

101.20

101.22

2T2 %

6/15/64-69

104.22

2.12

104.24

101.3

101.4

2V2%

12/15/64-69

104.17

2.14

104.20

100.31

2V2%

3/15/65-70

104.13

2.15

104.16

2V2%

3/15/66-71

104.11

2.18

104.14

2.23

—2.30

+ .24

2.34

—3.12

+ .27

2.39

—3.18

101.1

2.40

—3.16

+ .26

100.29

2.42

—3.16

+ .27

100.27

100.28

2.42

—3.15

+ .24

+ .27

2VZ %

6/15/67-72

103.27

2.23

103.30

100.22

2.44

—3.5

+ .21

2 Vz %.

12/15/67-72

103.27

2.23

103.30

100.22

2.44

—3.5

+ .21

its

new earn-

Brooke-Willis Inc.

Salomon Bros. Hutzler

in Richmond

Admits M. D. Freeman

Salomon Bros.
& Hutzler, 60
John, W.
Robert H.
Brooke,
Jr., Wall Street, New York City, mem¬
George P. Kenny and Charles E. bers of the New York Stock Ex¬

RICHMOND,

Willis

Va.

—

announce

formation,

Brooke-Willis, Inc., to transact

R. G. Nussbaum With

< new

The funds that

liquidation of Treasury securities were

Commercial banks likewise

country

anc* anxi°us to copy.

money

.anitaI

unduly

and
in - that the
needed would have

made in not too siz¬

were

selectivity.

which the world wiu be willing Ayres,

dilute the equity of present stockhoIders,

thi,

"s' and that,this, capital be in
the form o£ e1ulty
there-

20-year strong and successful and a model

vibrant.

eqUjty

he needs.- by
a

important

AI1 the great expansion period ahead

to furnish him
and the help,
to educate the customers he has,
new

the

only

real, direct stake in American
business, then I know you will

There is

town

considerable

the

was

ments, although in more moderate amounts.

2 7/a "Id

becomes a better citizen the min-

sovern-

Federal

pro-

machinery is all here.

do nQt bave
not

basis,

where

war

did

cash

obligations.

2j/4%

versus

preparedness

war

from

reinvested almost

say,

funds from individual
by the issuance of equity secur"ave wun lunas irom maiviauai
ratbpr tban fiPht nhliaations
Americans. Let's let business and mies, ratner tnan deot ooiigations,
businessmen fjnance thjs next war ,f you agree with me that a man

gram,

obtained

were
*

to a comparison
this, the situation is in-

might " Permanent capital is obtained

country is to jng power and consequent added
ownership in.profRS ^be dilution angle is of
and help firelatively small importance anynance this next period
of indus- way> when the other great benefits
trial expansion.
that would accrue through such a
From everything any of us can program are included.
glean it seems quite evident that
As I understand it, the basic
a
war
or
a
threat of a war is purpose of this entire preparedbuy

American

•

thins

tning

whatever big expansion

Securities

Must Sell Idea of Widespread

natriotic

patriotic

scale.

with

and

nif deed shocking and forcibly illus-

most

amounts

reduced

the surplus earnings of this next American business needs - more
big ^nod ^ equity securities stockholders, and that we should
and by selling stock and by mak- create a big «buy a share of stock»

by and ^be

the debt route.

trates

mprTrbpr

t5iat pr?g,res?, !s being made. We
can

When

fiJn™ th^

should not make

today than do the Japanese.

such

ir,

/
perJ? J
competent securities dealer,
and believe the im-

provement shown in the last few
years

Means of

wiw

Even

stock

Avoiding Inflation

4V? years, because by that

large

vmatever it may be, on as nearly the

source

Tokyo Stock Exchange that 12%
0f the population of Japan owned
securities of Japanese businesses,
Regardless of the accuracy,-©! the
figure of 6,000,000 stockholders in

ing,

the

toid

was

should be higher and that we
should do this next chore of ours,

than

hard

haven't
I feel this is

was

buyer, although at times these purchases
able

or we

true, for if it were not true, we
would not be faced with a situation where only some 6,000,000 of
our citizens own stock in American busines, and thereby own a
stake in the thing we are trying
to sell to the world,

their place, only as the temporary
and short-term variety of financ-

rather

sell it,
enough.

very hard to

banks,

Bache Co. in Chicago

general investment business.

change, announce that Merrill D.

Freeman who has been associated

The

firm will maintain offices in Rich¬

with the firm for many years,

has

been admitted to general partner¬

Bache & Co-> 135 South La Salle

Mr. Freeman's admission to
was previously reported
!
ager of the municipal bond de¬ ,in the "Chronicle" of Dec. 7.
partment of Scott, Horner & Ma¬

Street, Myron F. Ratcliffe, resi-

son,

;

CHICAGO, 111.—Robert G. Nuss¬

baum has become associated with
n

dent

partner,

announced.

Mr.

mond, Va.

Mr. Brooke formerly was Man¬

Inc., Lynchburg, Va.; Mr.
formerly was Manager of

Willis

Faroll & Co. and prior to that

Horner & Mason's Rich¬
mond
office, while Mr. Kfcnny
and Mr. Ayres were salesmen in

with the Inland Steel Co., Chicago.

the

Nussbaum

was

formerly
.

with
,,,

Scott,

latter office.

ship.

the firm

Leslie H. Bradshaw h
Leslie H. Bradshaw

passed away

suddenly Dec. 28 at the age of 55..
He
was
editor
of
"Investment
Timing."

Continued jrom

first

Council,

is its custom, ventures estimates as to

possibilities of expansion in our production mech¬
It apparently is of the belief that by such expan¬
sion it may be possible to limi); the sacrifices all must
make if any such rearmament program as is now appar¬
ently envisaged is to be brought into reality. How much
dependence can be placed upon such estimates, we do not
know. We are always distrustful of these vague, general,
"over-all" statistics. In any event, the Council is appar¬
future

be much quarrel

can

Rauscher, Pierce
Elects Three V.-Ps.
DALLAS, Tex. — John H.
Rauscher, President of Rauscher,
Pierce
&
Company, investment

importance.

bankers, has announced the elec¬

Presidents

van,

inherent in

kins, Houston;
and Arnold J.

inclined—possibly for

reasons

Mr.Cana-

any

the investment

business in St.

and

Pierce in 1936,

Dallas Chapter 47 RAM;
Dallas Council No. 18; Dallas ComA.

KT; 32nd degree
Knight Commander of the Court
of
Honor
of Dallas
Consistory

GRACE NATIONAL BANK
OF NEW YORK

HANOVER SQUARE,

Statement

NEW YORK

of Condition, December 31, 1930

Temple.
memberships

Dallas Athletic Club,

the

Club, Lakewood Country Club and
Club.

the Cipango

joined Rauscher,
after serving as
Vice-President of the Ennis State
Hawkins

Mr.

Pierce

He
also
in
the
Dallas Bond

Hella

and

holds

through with any such herculean arma¬
now
contemplated. We can not have
consumption as usual if we are to devote a very large
part of our effort to armament—certainly not consump¬
tion as usual of such things as are made of the same
materials and in the same factories as guns and planes
and tanks and all the rest. That we might conceivably
make up the difference by producing goods not partic¬
ularly wanted by anyone is beside the point.
effort

ment

M.;

mandery No. 6

to go

are

F. &

politan Lodge No. 1182, A.

part of the workmen of the country will not be enough
we

Dallas; Metro¬

Methodist Church,

of living while this emergency exists.
Of course, it is
nothing less than essential that such an attitude be adopted
by the great rank and file of wage earners, along with
the rest of us, if serious inflation is to be avoided. Equally

Manager of the trading depart¬
He is a member of the First

ment.

It, for example, remarks that it is reason¬
able enough to ask labor to defer efforts to raise its plane

joined

Rauscher,

John L. Canavan

mental issue.

course

1927

Louis

to wince and relent and refrain when it faces this funda¬

entered

van

to be a
of political strategy—

obvious, though, is the fact that such

San

Kocurek,
Antonio.

It must be admitted that the Council appears

little

Dallas; E.

Clyde Haw¬

which we are launching ourselves, or, if
they be led to see plainly what is involved? Of
are

firm:

John L. Cana¬

upon

these sacrifices

three

Vice-

new

this advisory

such program.
There is. no real possibility of escaping them. The question
is whether we are ready to accept this plain truth and to
take those steps which will minimize the hardships and
make sure that the sacrifice is equitably distributed among
the people.

with

tion

aspects of the matter

now

are

course,

goods. Its vigorous support of the

consumer

Thursday, January 4, 1951

what

the flow of income after taxes—not to

availability of

that

not, can

seems

Chronicler,

body realizes it or not, and upon the answer to questions
thus raised will depend the final economic outcome of

program

recognize that if inflation is to be avoided
giant corporations,
not to the already over-soaked rich, but to the rank and
file—which feeds the demand for consumer goods must be
reduced in close relationship to the curtailment in the
that it

w »\$The Commercial and Financial

planning. That fundamental is essen¬
tially this: Are the vast rank and file of this country
prepared to undergo the sacrifices entailed in the defense

It is also to the credit of the Council

this latter view.

touches certain fundamentals, whether or not

To the Council's Credit

how there

The Council's discussion of these

ently quite certain that the volume of ordinary civilian
goods available to each of us during the next few years
is not likely to be as large as at present.

see

matter of vital

anism.

We do not

•-!

pay-as-we-go.basis, by means of taxes so far and so long as
humanly possible, and its recognition that when such a
basis ceases to be humanly possible the avoidance of infla¬
tion becomes for all practical purposes humanly impos¬
sible, should, if widely understood and accepted, prove
to be a real contribution to the shaping of popular thought

page

We See It

As
The

'r->

<76)

1940,

Ennis,

Bank

Texas.

has

Houston offices of
the company since 1944. He served
as a 2nd Lieutenant in the artil¬
the

managed

lery in World War I and is a mem¬
ber of the Methodist Church, a

member of

and

Shriner,

Mason,

Forest

the Houston Club and Pine

Country Club.
•'

Demand Loans

$ 37,664,891.95

.....

Brokers, Secured

1,800,000.00

U. S. Government Securities

41,879,927.32

State, Municipal and other Public Securities

6,053,594.98

Other Bonds

32,256,917.30
180,000.00

Stock of Federal Reserve Bank
Customers'

would

100,316.25

Loans and Discounts

Liability for Acceptances

Accrued Interest and Other Assets

....

$3,000,000.00
...

3,000,000.00

Undivided Profits

Deposits*

...

Certified and Cashier's Checks

.......

Outstanding

7,912,998.77

104,638,093.63
6,644,367.70

Contingencies, Interest, Expense,

$124,392,435.81

D. C. Keefe
President,

which

has

become

The Cuban-American

Chisholm

F. G. Kingsley

President, Oxford Paper Co.

Robert

Sugar Company

Vice-President and Treasurer,
*

Funk ^

This

•;v

■

President

Vice-President

;

Harold

Executive Vice-President

Anaconda Copper Mining Company

John C. Griswold

•

Keating

;

MEMBER

would result in

W. R. Grace

DEPOSIT

31,

the

partner

general

effective

Eyre,

1950.

Admission

of the

previously

new

reported

partners

the

"Chronicle" of Dec. 7.

Royal Bank of
v
Canada Appoints

good deal

any among

we rearm.;

.v—

Fetzer Stock

Co.

Dept. Mgr.

For Kean, Taylor Co.
Voan

Kean,
'

Chairman, Executive Committee,
Comerford Theatres, Inc.

has been identified with domestic and international
banking and commerce for almost a century.

giving

Are there

rr0,rw

Taylor

-M

Co., ,14

Won

Wall

Street, New York City, members
of the New York Stock Exchange,
that

Louis

Fetzer

has

name

FEDERAL

member of

Toronto

Garrard

Ont

ha's

Canada-R F

b;en

appointed

bank's foreign
branches, it was announced by
vThe Royal Bank of Canada.
* Y supervisor

■

of the

Mr., Garrard

was

born in

the

South
Africa,; and
joined the bank at Winona, On¬
tario, in 1922.
In 1941 he was
made Assistant .Manager of the
r' bank's main branch in Winnipeg
.Transvaal,

announce

The Grace

have
part¬

announced

also

firm

Beverley

was

terms of money) than they ever gave up!:

J. Roig

Vice-President

Kirlin, Campbell, Hickox

Director

Frank C. Walker
•

Briggs
general

Griswold and Company, Incorporated

Cletus Keating

course

(at least

If so, we can -control inflation while

not

James H. Sharp

President

C.
as

Briggs is

retirement

the leaders
of labor* or of ? the farmers who have the understanding,
the courage and The influence to create such a state of
mind among their; followers?
^ .^Y •/":!•:*? 61'"J
.

General Foods Corporation

Robert E. Dwyer

Mr.

The

accus¬

William M. Robbins
David Dows

ners.

during World War II.

Honorary President,

Co., Inc.

admitted

the New York Stock Exchange.

not

Inc.

International General Electric !.

Chester R. Dewey

Arthur

and

been

Dec.

•_

Clark H. Minor

Wagrialls Company

lier

them

Chairman of the Board,
Mercantile Stores Company,

J. Cuddihy

14 Wall

Delafield,

Street, New York City, members
of the New York Stock Exchange,
announce
that Martin LeBoutil-

tomed in recent

Hugh J.

Admit Two Partners
Delafield

give the go-ahead signal to Washington on this same
Is there anyone in Washington who can persuade
such men and women—so far as they need persuasion—
that they must do some such thing?
;

President

C. R. Black, Jr., Corporation

Club,

Delafield & Delafield

basis?

David M. Keiser

President

conveniences

Ki-

Church, Alamo

Catholic

Oak Hills Country
Club,
San
Antonio
Club, and
Knights of Columbus.

:-'v

other

Ingersoll-Rand Company

C. R. Black, Jr.

wanis

years? Is he ready to make out without
only for the duration, but to continue to do
without them after that except so far as they are pur¬
chased out of then current income? Is the farmer ready

DIRECTORS

Vice-President

These two elements are, of course, the

and

♦Includes U, S. Government Deposit? aggregating $2,379,349,50

Robert F. C. Benkiser

flation is avoided.

question comes down to this: Is the ordinary
man who
draws a weekly wage ready—never mind his
strong language when referring to the Kremlin or to Mao
—to make out as best he can without many of the gadgets

775,956.55

etc.

the

Now the

4,421,019.16

308,330.67

close to deciding whether ruinous in¬

true.

4,729,349.83

Acceptances >
,
V
Less Own Acceptances in Portfolio
Reserve for

1,912,998.77

Co.

Municipal Department of the San
Antonio office. He is a member of

cjome very

population and the wage earners, including for pur¬
here in hand, so-called white-collar workers so far
as
they are organized in aggressive unions. We do not
know precisely what part of the normal output of auto¬
mobiles, washing machines, radios, television sets and the
like flow into the hands of members of these groups, but
it may be taken for granted that the portion is more or
less controlling. And, of course, politically the same is

$124,392,435.81

Kocurek

Mr.

Pierce

poses

LIABILITIES

Capital Stock
Surplus

joined Rauscher,
graduation from
the University of Texas with a
BBA degree in
1934 and since
1945 has been in charge of the

Question

farm

4,067,883.67
388,904.34

take

strictly practical view of this " situation,
let us confine our attention to two groups in the popula¬
tion whose political strength is such and whose volume
of consumption is such that the course of their behavior

RESOURCES
Cash in Vault and with Banks

A Practical

•'

INSURANCE

CORPORATION

Triesler Joins Hecker
■

and

two

years

later

assumed : a

'Philadelphia, Pa;—Hecker similar post at Ottawa branch.
& Co> members of the New York In 1946 he was appointed inspecstock Exchange, announce

the re-

m0Val of their

Hagerstown, Maryfand office to the Hamilton Hotel

Building,

10 Jonathan St.

foreign

department

head

tor' loreiSn department, at nead
office and in that" capacity tra-

Henry veled extensively throughout the

arZLgSrTf^^tockdepa™

C' Triesler has j°ined the organi" countries of the West Indies> Cen"

ment.

zation

with

Mr.

Fetzer

was

formerly

Hayden, Stone & Co.

as co-Manager

ard W. Goslin.

with Bay- tral and South America, where
the bank has branches.

-v.:-

yolume 173 rvNumber 4974

'tThe Commercial and Financial Chronicle

(77)

Continued from first
page

expected
net

Survey View of

resource

allocations for continued
expansion.
The views of the
retiring Presi¬
dent of the American
Economic
Association stand in
future

striking

trast.

He found little warrant for
that "built-in sta¬

conclusion

bilities"

con¬

and

and social

other

institutional

changes had minimized

the extent and duration of this re¬
cession. Instead, as he viewed

it,

•

recession

tion

was

itself

sufficient

produce drastic curtailment in in¬
dustrial
-

output and

sharp rise
This, to him,
a

unemployment.
far from

was

that

convincing evidence
could rightly be inter¬

1949

preted

test of the depressioncharacter of the postwar
as a

proof

economic

system.*

stimuli

once

test, of

the

The

new

war

postponed the

true

quality of the
prosperity and its dur¬

postwar

ability.
1950

Retrospect
somewhat

was

sharper

than

anticipated, particularly for
housing and automobiles, but the
general

trend

formed

favorable.

various

types

statistics

ready

By mid¬

grown

foreshadowing

better

maintained

months ahead than

was

gen¬

erally expected. Consumers, when
polled, said that they planned to
continue purchasing automobiles,
homes, furniture and other con¬
durables

sumer

rate.

The

1950

the

try.

outlook

and

other

order

new

unabated

for

profits in
according to

brighter,

was

Board

surveys,

was

position of indus¬

;v;v,

Thus

the
forces
of
recovery
all in their ascendant phases

were

when

the

initial

broke upon us.

Korean

ices

crisis

Even before mid-

1950, the nation's plants

were once

pouring out goods and
at

serv¬

record-breaking
in turn, were en¬

volume.

We,
joying
the
fruits
of
recovery
through further increases in our
already high living standards. For
months thereafter

some

clung

to the belief that domestic

recov¬

could go on apace, while con¬
currently we provided the token

ery

forces

and

instruments

Not

weeks

1950

the

cessfully
had

war

which

must

program

underwritten

troops moved into

our

again

to defend

we are

the

recognize

economy

exposed, if
we

did

dislocations

civilian

halt the Korean ag¬
until
the
closing

necessary to

gression.

•

The

short
not

makes

weeks

difficult, if
for
even
the

impossible,

trained business analyst to specu¬
late about the pattern

of business
in 1951. This can be illustrated by
the experience of the Conference
Economic

Board

Forum.

ar¬

ranged for them to meet early in
December to appraise the busi¬
outlook for 1951

ness

of what

known

was

that time.

in the light

discernible

few

those
the

days there¬

balance

of power,

the mem¬

world's

bers

their findings

sharp upturn that took shape long
a

pre¬

dominantly civilian character
throughout the year.
While the
'last"half of 1950 certainly found
of its stimulus in the events
Far

carried
economy

mestic

East, rearmament

forward

still

behind
1 See

Studies

slowly,

dominated

civilian

expenditures
1949

must

nation

was

Policies,"
Economics, No. 25,

though the survey indicates that
plant expansion may reach an alltime

peak

1951,

the

early part of
military orders

increased

and

serious

ages

will reduce the goods avail¬

raw

able for the

material

half

1951.

The

civilian economy.

elec¬

first half

their rate would be
for the

last half of

believed

1951

efficient

companies

new

of labor.

The salient

findings of this

result

new

highs

1951,

are

expected

the

providing

there

part

are

from

decline

fense

"Manufacturing Profits Hit by
Threat,"
The
Conference
Board
Business Record, January, 1951.

short¬

struction

Although a third of the partici¬
pating companies are producing
little or no military goods,- the

production.

the

of from

capacity

to 50%

first

half

facilities for

civilian

Continued

Trust Company
REPORT OF CONDITION

agreement that the year ahead

posed difficult challenges

At the Close of Business, December 31, 1950

the

home

front,
even
before
the
Korean catastrophe. The resources
of
our
economy
were
already
strained in late 1950 to supply the
high level of civilian
consumption and investment un¬
der full employment. The Forum,
therefore, viewed as remote, at
least for the months immediately

prevailing

the possibility of further
marked expansion of total output,
as
in the initial phase of World
War II. For reasons developed at
ahead,

length

later

this

commentary

they held that expansion of war

production- would take an increas¬
ing toll of civilian industries, with
growing dislocations for civilian
consumers and enterprises alike.
The inflation problem, accord¬
ing to the Forum, therefore will
also

confront

than

did

likelihood

disposal in

the

before

ever

will

all

have

their

voluntary
ahead than

year

this

ago.

individuals

income

earlier

much

decade

nation's

his¬

tory. At the
of

ume

same time, the vol¬
goods available for con¬

will

contract, even as the
output of war material is multi¬
sumers

phasis

U. S. Government Securities

$244,151,012.70

..••••••

State, Municipal and Public Securities

•

436,463,943.38

23,227,448.48

...

Federal Reserve Bank Stock

1,200,000.00

Other Securities

849,940.00

Loans and Discounts
Real Estate

Customers'
48

112,109,409.41

Mortgages

Liability

490,637.32

1,286,761.31

Acceptances

Banking Houses

7,409,776.64

Accrued Income Receivfible
Other

1,862,155.70

...........

Assets

286,173.15

$829,337,258.09
LIABILITIES

Capital (750,000 Shares of $20 Par Value)

Surplus

$15,000,000.00
25,000,000.00

Undivided Profits

7,773,638.56

........

Reserve for Taxes,

Expenses,

etc.

$ 47,773,638.56

1,500,870.65

$ 2,613,164.17

Acceptances Outstanding
Less: Held in Portfolio

1,234,990.35

1,378,173.82

Deposits

778,684,575.06

(Includes $12,915,652.74 U. S. Deposits)

>',4;

$829,337,258.09

its

previous discus¬
Forum places its em¬

higher
taxes, ex¬
savings, curtailment of
non-military
expenditures
and
upon

panded

Memorandum:

U. S. Securities pledged to secure

deposits and for other

purposes as

required by law

$27,768,085.21

indirect

controls, as the
primary mechanisms of price re¬
straint, rather than price, wage
and

ASSETS
Cash in Vaults and Due from Banks

direct

controls.

BOARD
RALPH

ROBERT A. DRYSDALE
Senior Partner

DIRECTORS
HERBERT J. STURSBERG

PETERS, JR.

President

-.V'

'■.

'.4

Drysdalc & Company

Business Expectations, 1951—
Lower

Profits, Civilian Cutbacks

Treasurer, Livingston Worsted

•

JOHN H. PIIIPPS

DUNHAM B. SI1ERER

Mills, Inc.

JOHN R. McWILLIAM '
Executive Vice President

Chairman

Manufacturers, too, have found
it

difficult to predict the outlook
for their businesses in 1951. There

is, however,

one

point

most of the executives

the

Board's

which

cooperating

annual

survey,

agree about the prospects for the
year

ahead—net profits will

cline.

High

material

and

de¬

labor

business, and
2 See

Studies

"Business

civilian

larger tax bite
Outlook

for

are

1951,"

in Business Economics, No. 27,
The Conference
Board, December, 1950.

EDMUND Q. TROWBRIDGE

C. WALTER NICHOLS

GEORGE

Inc.

BRUNSON S. McCUTCHEN

DOUBLEDAY

E. MYRON BULL

President, A. II. Bull & Co.,

Chairman, Nichols Engineer•
ing & Research Corporation

SIDNEY A. KIRKMAN

Consulting Engineer

Chairman, Ingersoll-Rand
Company

WILLIAM G. HOLLOWAY

HENRY A. PATTEN

The

ALICE E. CRAWFORD

Chairman, W. R. Grace &
Company

Senior Vice President

Corn

Exchange Safe Deposit Company operates vaults in
branches located throughout the City of New York.

59 of the 77

Member Federal Deposit

defenso

shipments
20% wero

Economic Forum

1951,

ranging from 5% to
anticipated in the electrical

the

Corn Exchange

significant that virtually
all of our Forum participants were

Cutbacks

remaining
companies to defense orders is re-

War

the

industries, most notably tho
tool and building ma¬
terial industries, will continue to
make the same products, but a
substantial
proportion
of their
output will be used in the con¬
machine

credit restrictions.

diversion
3 See

material

raw

Some

controls, and
shrinkage
induced
by

market

to reach

early

governmqnt

ages,

(1) Capital expenditures, which
were at peak levels at the end of
year,

foresees

its production. These declines will

sur¬

vey are:

last

the
foundry,
heating
and
plumbing, general industrial ma¬
chinery, instruments and controls,,
and steel industries, according to
the survey, will be diverted to de¬

four out of ten expect to put idle

capacity to use or operate new
facilities, and thus increase their
over-all output. Only one in six

use

six months. The

equal to that
1950. At least

plant facili¬
ties, improved tooling, and more

the

within

machinery,
heating
and majority of companies,
however,
plumbing, instruments and con¬ acknowledge that any increase in
trols, chemicals, paper, and steel military output may necessarily
industries
report
the
largest result in a proportionate decline
planned increase in capital ex¬ in civilian
output, since operations
penditures.
V
are
at capacity or raw material
(2) Over a third of the com¬ shortages
prevent
further
in¬
panies who were willing to com¬ creases in production.
ment on their expected operations
More than 15% of the output
in the

Many companies were already
operating at capacity at the close
of the year. Expansion of manu¬
facturing output in 1951 is, there¬
fore, • largely dependent upon the
construction

re¬

short¬

It> is

do¬

mid-No¬

Board, 1950.

Even

first

Board

Conference

costs, low-profit government

Business

trical

ESTABLISHED 1853
Views

orders, smaller margins

"Pros and Cons of CEA

The Conference

1951.

the

The

future.

maining third have already cut
such shipments or expect to do so

assume.2

now

running

the

Military

late

goods

in the light of the

acceleration

still

peacetime

immediate

the

their rate of investment in

plant and equipment during

new

com¬

reexamine

demand.

were

necessary for them
their shipments

growing burden of war we in this

the

Basically
" '"

Forum

the

sions,

continuing of all-out war
duringr the past six months should
not be permitted to obscure the

in the

back

in¬

the

reduction in the
fulfillment of peacetime orders in
panies foresee

survey

either maintain

peactimd

supply

felt impelled to ask

the

suc¬

our

Nations.

United

the

The

some

will

cut

light of this sudden alteration

against

before Korea and retained

crease

operating in this month's

the

Two-thirds-of

after, the shape of world events
drastically altered by the re¬
versals suffered by our troops and

basic trend of business in 1950; a

•

rapid change in the se¬
of world events in a few

quence

other

Civilian

4
4

anticipatory buying reactions
on
the part
of consumers and
business, and their inevitable re¬
percussions on prices.

plied.

the aggressor.
The 1950 Expansion

had

inventories

action

when

action

credit

consumer

con¬

ment, output or sales. The most
notable impact of Korea appeared

were

And

conspicuous reflection in employ¬

possess were al¬

impressive than they
were a half year earlier.
Capital
outlays by business, accord** 2 to
both private and public
samples,
the

placed
business

and

materials
much

pretty

resources.

inevitable

had

The results of the

now

dating

business

own

trols

con¬

year the consensus for the months

immediately * ahead

left

its

business

expectations.

forward

orders

expect

amounts

DO orders

Although military orders have
not
been
placed in substantial

ducing
goods.

was

The actual rate of upturn in the

first half

and

almost

exclusively
originating from inventory correc¬

Lead-time

vember.

Over half of the companies co¬

yet, over a third of the
cooperating companies report that

Business in 1951
had been sufficient to
provide the
necessary correction of price and

serious shortages of building ma¬
and industrial equipment.

terials

record output.2

the

to substantially reduce
profits, despite an anticipated

Insurance Corporation.

page

ap-

(78)

The Commercial and Financial Chronicle

Continued

from

the primary
possible for
war production to be a net addition to, rather than a substitute
for, civilian production throughout
the entire conflict. Expanded ca¬
pacity, gains in technology and

CiifWAff

If lAVif

View
VIvW oi
UI

MtllVvy
*

Business in 1951
New

It is normally expected that on

upside

the

higher

The

spectacular

ratio

than

the

held,

will

medium

priced
quality or the more
speculative low priced issues. Last

shares of like

year

witnessed

striking

ex¬

ing

new

market

(Nickel
off

182

(6 Mi

points
had regis¬

the

year's top) it
price gain of
100%- from the 1950

tered

performance is

even

than

low.

This

notable

would

imburse

further

similar

proportions,

the in¬

over

termediate term.
Nickel

plate

special

very

traffic

is,

course,

From

operating

ferred

further

was

materially
bettered late last year by consum¬
mation of a lease of the
Wheeling
&
Lake Erie, of which it had
been, and is, the majority stock¬
holder. Nickel Plate's
major dif¬
ficulties in the depression decade
stemmed almost entirely from a

relatively heavy debt structure
and,
probably more important,
periodically
recurring
maturity
These

weaknesses

were

some years

ago, but one
of the results thereof has
lingered

on.

Faced with

maturity problem
discontinued divi¬

company

dend payments on the 6 % cumu¬
lative preferred stock in 1931. It
hot until 1946

was

resumed

were

and

that

to only $4.00. By that time
had mounted to $87.50 a

year

arrears

Started in 1947, but until 1950 it
was considered that the
only feas¬
in

would

through

stock

them

reasonable

any

italization.
mon

eliminate

way

stock recap¬

Holders
were

en¬

time

the

com¬

unwilling to

ac¬

cept any appreciable

dilution of
their equity in any such
recapital¬
ization so a stalemate
developed.
Their

stand

been

now

this

matter

than vindicated.

dition to the regular
$6.00. At the
end of the year the

unpaid bal¬

stood at only $45.00

share,

aggregate dollar obligation

$16,226,010. Considering the
company's
earnings
prospects
(more than $60.00 a share should
be reported on the preferred 'for
1950)
and
its
financial
status
there should

be little

problem in

liquidating the entire
the

course

been
be

split
the
common
which should materially
its

market

accomplished

opened for the

high earning
developed.

amount

1951. When this has

to participate

Plate's

little
are

with

appeal

heating and
tools, and general industrial machinery
feei reasonably siyfe of

growing dislocations in the
civilian sectors of the economy
figured s l g n lf 1 c a n11 y in th
Forum's findings of a gain m outP") in 1951 far below the 19411945 total experience. Their anticiPa«°?s centered about a possible
5% increase in total industrial
production (or real gross national

peak

output)

ever, a few industries which

high priority ratings
last

the

will

way

common

directly in the

stock
very

power that has been

expected

tax

and

results

continue

this

legislation.

For

so,

de¬

year

considerable

have

phenomenal,

extent

the

months

through November 1950
on
the common, after
only
the
regular dividend
re¬
quirements
on
the
preferred,

earnings

amounted

$51.19. In November

alone, when
experienced

eastern

many

heavy

connection with

roads

expenses

storms, earnings

amounted to $5.57 on the common.
A year

earlier,

clude

adjusted to in¬
Wheeling lease, earn¬

the

ings for the 11 months amounted
$35.40.

earned
year.

Probably the company
$55.00 for the full

around

Even

its

after

spectacular

rise, then, the stock is selling only
3.3 times current earnings.

Kidder Peabody & Co.

dustries
and

Willard

change firm of Kidder,
& Co., 135 So.
La-

Salle

Peabody

general

the

part¬
firm

announced.
Mr.
in

the

Times

25 Broad Street

Telephone BOwIing Green 9-6400
Members Nat'l Assn.
Securities Dealers, Inc.

even

percentage.

note

that

shortages of

skilled labor may prevent
to

much

they would

undertake.

summary, the expectations of
manufacturers who will be called
upon to

tions

supply the bulk of muni-

and

material

for

the

ex-

panded defense war program
for modest increases at best
1951 rate of

are

operations, particular-

terms

total

output,

ac-

companied by a decline in net
profits. Defense expenditures for
the first half of December totaled

only $800 million,

little

than $19 billion at an annual rate,
Even at the low rate of
placement
of defense contracts which char-

acterized

1950,

however, it remains true that a third of the
respondents
reported
that
cutbacks
ontheir
pioduction
of
civilian goods would be

Required
in 1951.
True, four of every 10
responding hoped to put idle or
new

capacity to
their

and

use

total

thereby

output.

But

sion

non-labor

production

Forties.

Industrial

than

rnore

government

f output
to prelevels.

even

the

lower

views

the

profes-

sional analysts and those of the
operating heads of manufacturing
enterprises converge on one com-

marked

in-

with
th

wlr

Wnrw
World
War

worth

performance.

that

versity school
of

Board at their

commerce.

mOQ+inrt

joined
Pea¬
Chi¬

This

Grimm

was

formerly

lest

any
ease

tion, and is

two

director of Roberts

Master

Omaha,

and

Manufacturing

Grimm's

war.

the

previously

reported
the "Chronicle" of Dec. 21.

The

DENVER,

Financial

Chronicle)'

Colo.—Jack

lesson

was

not

curity Building. Mr. Adams and
Mr. Morey were
formerly with
Hamilton Management
Corpora¬

i-jui

the

vast

the United

invasion

able

were

precious time

war

borrow

which to prepare

production of muni-

week

of at least 44 hours. Exten-

sion of hours would without
tion

contribute

ward

greater

its

ques-

movement

net

output.

costiy hours, however,
only in terms of overtime

mium

but

also

because

to-

These

are

not
pre-

they

ap-

proach the margin at which output per unit of labor input deFor

creases.

analysts

these

contend

some

reasons

rise

the

work week

add

beyond 44 hours may
to demand than it con-

tributes to supply.

Manhour
Far

Input

not

This
be

tooling-up

how

tam

vouchsafed

capitalize

gained ln.this
up-to-date

must

the

war

Plans

for

the

steps
know-

for

economists,

will

again,

take

•+
i

process

main-

rapid
emer-

crease in industrial output.
All
other factors in the production
equation were dwarfed by the
absolute

expansion

the

safely

said

The total labor force

rose

by about

million

during World War II;
in addition, the number of unemployed declined by almost a
Currently unemploynearing its functional

minimum, and the possibilities of
picking up* additional labor force
recruits

from

groups are far

fringe
more

labor

force

limited than

decade

the

slack

groups. Their number in April,
1945—the war peak—was
approx-

imately double their peacetime
figure. While the total population
of the country has increased by
nearly 20 million over the decade,
number

aged
14-19
years
dropped by 1.5 million from 12.3

The

number

aged

about

rose

300,000

19-26
over

the decade, or only 2% as
against
the national average of 15%.

The number and relative
percentage of women in the labor
force is significantly above pretren(js

war

before

Many more married
in the labor force than

the

against

war

15%

(4) Married
heavier

—

23%

family

the number of

1949

1940.

women

today have

responsibilities;

women

aged 15-49

with children under five
years

nearly
1940.

fourth

Labor

higher

force

than

is
in

participation

rates of this
and

were

pansion

group are very low,
not subject to much ex-

even

during

our

expanded

volume. As a result,
warned that civilian consumption and private capital formation would have to be reduced

subsistence

Is it likely that

bedrock basis,

shall again be
in retrospect for
believing that this time we would
proved

wrong

not repeat the

error of a decade
Recall the "it's only 10% of
gross national product" argument
which gained wide acceptance un-

ago?

weeks, or its companion
piece, further expansion of capacity to meet the defense load
without curtailing the take of raw
materials and strategic metals by
civilian industries. Have we underestimated

fense

World

War

the

impact

de-

this time?

war

at full employhyper-full employment
find it far more difficult

economy

ment—or
may

to increase manhour

input than

decade ago. On the basis of labor
force trends during 1920-1940 our

Stal

labor

force

already

was

"normal." ®

following

million

the

April!

2.7

further

was

1950
above

months

seven

number

unem-

reduced

1.5 million, so that today we have
a fully employed labor force not
far below the 1944 peak of 66 million, including the Armed Force of

million

over

peak

labor

rates

that

force

World

time.

participation

War

II—that

under "forced draft"—our labor
force currently would gain little
more than 5%.
To

restate

force
II

this comparison for
of emphasis, peak labor

participation at World War

maxima

labor

would

force of

Allowing for

mean

about

total

million,

military drain of

3.5 million, would leave a civilian
labor force of 66.5 million. Assum-

ing

civilian

million

labor float of 1.5
about 2%, total civilian

employment

then
would
equal
about 65 million. This would
permit a

envision of about 5%

of the

peak

labor

work;

force

for

war

beyond that point, and I suspect
we are already at it, recruits for
war

industries would be drawn in-

creasingly from civilian industries.
These, then, are the major factors behind1 our Forum's belief
that the elasticity of supply would
be low, at least in the early transition phase of 1951. Labor

That

the

manpower

element

worthy of the stress I have placed
upon it is readily evident from
appraisals of performance of war
economics
to

estimates

tion

the
of

past. According

the

War

Produc-

Board, total manhours worked
industry
were
about
75%

input,
productivity, yields
national output. Forum viewpoints
on possible gains in
productivity
coupled with

1951

were

for labor
would

about

input.

arise

the

shift
of
workers from industries with low

value-added

characteristics

makes

value-added sectors (e.g.,

allowance for the additional drain upon the labor force
for

military

service.

Expanded

the

however,

same

Some increases

from

the

upon
restraining influence of a tight
supply upon the 1951 pro-

re¬

labor

many

million in April, 1940 to 10.8 mil(2)

economic

our

force—could make toward sharply

lion in mid"1949-

years

—

(i) The greatest gains in total ployed
labor force, including the Armed
Forces,
came
in
the
teen-age

the

en¬

general

underestimate of the contribution

greater in 1944 than in 1939.5 This

labor

sources—particularly in

like amount.
ment

that

placed far greater emphasis
the

Actoraing

moui.

til recent

sobering, however, are
the demographic
changes in the
labor force over the past decade,

tions that doomed the Axis to defeat.

.,a

WPB estimates, "increased input
of manpower accounts for about
three-quarters of the total ln~

may

has

belligerent until

after

years

Poland.

mobilization

Se¬

against

warn

Adams,

been added to the staff of
Invest¬
ment
Service

tion.

the

In the recent

ineretore,

With Inv. Service
Corp.

complacency regarding the
of mobilizing the nation for

States

for

admission

lose

taught us, I wish to

member of the executive commit¬
tee of the central states
group of
the Investment Bankers
Associa¬

Company,

indeed the record

great American achievement, but

was

half

tered World War II with

already
averaged
42.5
implying a nominal work

hours,

women are

...

serving The First Boston Corpora¬
in its Chicago, St. Louis and
St. Paul-Minneapolis offices.

was

Witht

tion

m/is

s V

Willard T. Grimm

cago manager
in 1937, after

Mr.

,nfn?ntf fi* p' 1 ^ prefniLZ
p
oduction accomplishments

body

hundredth and

one

nv,

output

doubled

manufacturing, the work week in

compaiison

recalling

con¬

great expanof the early

decade, increasing by
oyer 15%
annually, or twice the rate of increase in World War I. The loot
core of this expansion was greater

purposes

Uni¬

Kidder,

inputs

number

raw

the
Chairman of the War Production

Hours o£ work are admittedly force, coupled with an extension
lower than they were during the of the work week by abou?
last war- In the durable sector of
With the benefit of hindsight, it

ago, reflecting primarily
the low rates of the
depressed
materials or_ Thirties.
Some
of
the
salient
restrictions
which statistics in this connection
are:

shortages of

POmt

Corporation,

New York 4, N. Y.

gains

from

Malcolm A. Jones, James L. Lar¬
son
and Wendell F.
Morey have

peaks

and

crease^iri production thlS
of war goods

North-

western

small

undoubtedly yield

Grimm

graduated
1924

the

mon
characteristic of the year
ahead—a low elasticity of
supply,
Alteration of the product-mix or
composition of production should

St.,

has been made

ner,

foresee

paper

material supply. But some

raw

Thus

—

companies

Grimm,

(Special

all

against annual

of two to four times that rate during World War II.

(5) At the moment, labor sup¬
ply does not seem to be as critical

manager of the Chicago
office of the New York Stock Ex¬

111.

food

1950 maintained

surpassed

now

first

chemicals

petroleum

of late

vauing

Mr.

Situations

V&
mntni

CHICAGO,

firm

Selected

during

<A\

saw

Co., Fairfield, 111.

SECURITIES

operations

six months of 1951

somewhat larger proportion fore-

Admits W. J. Grimm

Chefford

RAILROAD

the
machinery
plumbing, machine

electrical

war

boost

Dairy

Specialists in

had

during

expansion of output as

earnings

short

actual

pendent
on

was

against arrears last
year totaled $28.50 a share in ad¬

pro¬

Nickel

been
and

has

Payments

ance

price

stimulate higher prices.

share.
Gradual liquidation of the arrears

ible

the

yet been set the

that payments

aggregate disbursements amounted

tirely

While

arrears.

proposes

the

but

the company should be
the neighborhood of at least
million. Also,
the company

standpoint

has long been recognized as a
strong and thoroughly sound rail¬
road property. In this
respect its

crises.

capital

years

(3) Most steel fabricating companies fear that a steel shortage
may curb their operations. How-

nke

and

corrected

treasury for

sale of stock will,
obviously
least, indirectly release cash to
expedite final liquidation of pre¬

increase

status

the

5-for-l,

situation.

ten

duction equation than did the industrialist. That, coupled with retardation in productivity under

ceeds

analysts visualize
rise, perhaps reaching

each

and

supplies, hardware,
non-ferrous metals, steel, chemicals, and paper industries.

the

even

railroad

the

price for the shares. The
of the offering is to re¬

expenditures of recent

has not

most

below the then current

when it is realized that it is not

paying dividends. Moreover,

for

offer¬

to
present
stockholders
subscription
rights.
No
price has as yet been set for the
offering but it was stated that it

purpose

Friday's close of

one

recently
of

stock,

common

New

Chicago & St. Louis
Plate) common. At last

has

intention

under

ception to this normal pattern in
the railroad field. This was
the

York,

its

was

tributed toward the

management

announced

priced
be considerably less
percentagewise than

stocks

York, Chicago and St. Louis
pliances

the

input

which made

factor

Thursday, January 4, 1951

manhour

page

source

industries)

(e.g.,
high
aircraft,

electronics). The entrance of new,
highly efficient plant and equipH
^
—

4 J.

Krug, "Wartime
Production
Achievements," Report of the Chairman
of
the
War
Production
Board, Oct. 9,
1945, Washington, D. C.

5-War
Production
Board,
"American
Industry in War and Transition," Part II,
"The Effect of the War on the Industrial
Economy," Document No. 27, July 20,
1945.

6 See

"Manpower Problems Are Different This Time," The Conference Board
Business Record, October,
1950, for further
development
of
this
and
earlier
comments

labor

force trends.

Volume 173

Number 4974

The Commercial and Financial Chronicle

(79)
ment into

mass

production during

increase

1948-50 has been reflected in im¬

real

proved output per manhour and
this, would carry over into 1951.

pected

These plus

factors, in the Forum's
judgments, would be about offset

25%

by dislocations in civilian indus¬

might

terials,

substitute

imperfect

through
lems

flow

industry,

ma¬

the

15%-

1941-1944

rise of 3% to
national product

labor

reflect

the

index

modest

The

maximum

increase

in the index of industrial
produc¬
tion and this would, in good
part,

war.

imperfections

the

measure

that

war

out¬

for

about

sixfold

"After the
central

increase,

which

prevailed

demand

it is

insurance

during

the

deposits at central

•In

talk

before

the

New

but

above

requirements

most of the

Rochelle

(N; Y.) Rotary Club at
Wykagyl Country Club on
Dec.
27, Merryle Stanley
Ru¬
keyser, e d i -

out

the

to rial

war

that

"The

International

world

the

ards
Merryle S. Rukeyser

the

American

such

tional
the

subject to the will of aggressive
international communism. Since
has

clearly

the

become

Pollock

associated
&

DENVER, Colo.—Felix R. Bai¬
ley, Arnold B. Gibbs, Carlton W.
Harrod, and Stanley B. Paynter
have

with

been

Hamilton

added

the

Management

staff

served

sistant
War

The

Manhattan

American

side, the

Board

the

new

well

extent that

For

apart

spirit

United

States

and

net

Central

Chartered

this

time

pursuing

mili-

little

fatuous

and

CONDENSED
ViPV.

v■

:r-

y •■■■;

•.

Federal

for

the

System

Obligations

....

■' •*

Mortgages

•

Other Assets

Jan.

11, 1951

Jan.

25, 1951

12,674,582.99

•

.........

Bills Sold Endorsed

..••**••

16, 1951

From 13 to

14%

Feb.

1, 1951

6,176,739.10

$1,320,605,359.75

LIABILITIES

Capital (Par $10.00) .........
Surplus
....♦••••••••
W&m

Undivided Profits
Dividend

$25,000,000.00
40,000,000.00
15,652,845.00

..........

Deposits
as

Collateral

80,652,845.00
875,000.00
1,212,071,132.34

Payable January 2, 1951

5,982,279.99

.......

Acceptances Outstanding
Other Liabilities, Reserve for Taxes, etc
Bills Sold With Our Endorsement *

8,375,488.54

......

6,471,874.78
6,176,739.10

*
'

$1,320,605,359.75

reserve

city and
city banks:

From 5 to 6%

_Jan.

other purposes;

From 5 to 6%

Jan.

taken," the Board stated "as

16, 1951
a

toward

pledged to secure public deposits and for
and certain of the above deposits are preferred as provided by law.

Of the -above assets $41,989,011.37 are

11, 1951

Country banks:

Member Federal Deposit Insurance Corporation

Member Federal Reserve System

further step

restraining inflationary expansion of bank credit, in ac¬
with the statement issued by the Board
Aug. 18, 1950,
the Board and the Federal
Open Market Committee 'are

cordance

means at

their command to restrain further

expansion of bank credit consistent with the policy of
maintaining
orderly conditions in the government securities market.'
"The volume of bank

credit and the money supply have con¬

tinued to increase despite previous actions
by the Federal Reserve
and

other

supervisory agencies, and

.to be restrictive in granting credit.

efforts of individual banks

Loans of member banks have

Increased by about $7 billion since June,
sonal

prices.

This is

tributed

with the end
banks

will

purpose

reflecting in part

unprecedented rate of expansion and has

excessive

rise

the

money

of usual seasonal demands

have

the

additional

announced

to absorb such funds and

funds

increase

banks from

the

timed

sea¬

absorb

J. H. Whitney & Co.

NEAL DOW BECKER

The

requirements

inflationary

reserves

pressures.

coming

currency.

into

the

Colpitis

HARRY I. CAESAR
II. A. Caesar & Co.

McGraw-Hill

Trustee, Emigrant

Industrial

Savings Bank

Vice-Chairman

JOHN C. BORDEN

President, Borden Mills, Inc.

President, States Marine
Corporation
GEORGE L. MORRISON

President,
General Baking

Company

WILLIAM J. MURRAY, JR.
ROBERT M.

CATHARINE

President, Dollar Savings

Publishing Co., Inc.

GRAHAM B. BLAINE

currency,

lending.

Coverdale &

ELLIOTT V. BELL

Committee,

GEORGE W. BURPEE

President, Intertype

Corporation

HENRY D. MERCER

JAMES F. BROWNLEE

Chairman

WALTER H. BENNETT
con¬

Moreover,

generally to reduce the ability of banks

post-holiday return flow of

for

reserve

further to expand credit that would add to
The

supply.

for credit and

available
in

DIRECTORS
J. STEWART BAKER

Chairman, Executive

influences and in part accumulation of inventories at
rising

2,284,109.12

1,732,026.24
11,134,301.72
7,271,849.16

Liability of Others

Cash held
Jan.

385,377,437.38

292,312,413.55
69,805,452.51

.......

Mortgages
.
.
Banking Houses Owned
Customers' Liability for Acceptances

11, 1951
25, 1951

13%

all the

'■

^531,836,447.98

Other Real Estate

The increase

From 12 to

use

:•

U. S. Government Insured F.H.A. Construction

Effective

Jan.

prepared to

•>

December 31, 1950

city banks:

Jan.

was

"/>/ >

CONDITION

Cash and Due from Banks and Bankers
U. S. Government

policy of 'too

Reserve

From 22 to 23%

"This action

1799

STATEMENT

demand deposits—

reserve

ASSETS

late'."

too

From 23 to 24%

Central

(A.

again through

err

On time deposits—

that

Board.

na¬

Country banks:

;

Nelson

inevitably

would

United States to

Governors of the

reserve

Bank
F.

A'
of the City of New York

ABBOT GOODHUE
Trustee

WILLIAM V. GRIFFIN

Chairman, Brady Security &

Realty Corporation
LAWRENCE C. MARSHALL
President

Chairman,
McKesson & Robbins, Ino.
FR ANK F. RUSSELL

Chairman, Cerro de Pasco

Copper Corporation
FREDERICK SHEFFIELD

Webster, Sheffield & Horan
PHILIP YOUNG

Dean, Columbia University
Graduate School of Business

Special As¬

was

well

From 18 to 19%
From 19 to 20%

war

Strategic

from

Reserve city banks:

•

*
AV /

following schedule:

(

Donald

Production

aggressive

would

members of the Federal Reserve
System.
will become effective
according to the

•i

the

Office

Company
•.

are

years'

YORK, N. Y.

huge in¬
the

isting

the

NEW

re-

Dec. 29 announced it has
increased the amount of reserves re¬
quired to be maintained with the Federal
Reserve banks by banks

During

the

many

mean

Federal Reserve Increases Bank Reserves

foreign.

Bank of the

free

Loans and Discounts

which

offer

service,

securities analyst

Services, and also

Corpora¬

tion, Boston Building.

Public and Other Securities

The

broker.

and

Rudd has had

experience

(Special to The Financial Chronicle)

brokerage

domestic

Mr.

Irving G.

office will

new

complete

With Hamilton Managem't

Co., Inc., 231

The

the

collapse over here of ex¬
high
levels
of
material
being. Accordingly, the most
ghastly improvidence conceivable

demon¬

men

The ill-advised dis¬

the

Rudd.

pride, the overpowering of

mean

peace

mantling

der the management of

during

turn

whole

doubtless

survival.

Communism

Kremlin respect naked
power, the
rebuilding of American strength
will be a contribution to the
of the world.

office in the Denrike
Building un¬

sacrifices in living stand¬

matters

of the American
system would be

that

in order to pay the

assures

strated

after

1945

economic

worth while to

insurance," Mr.
declared, "the future

experience

rush

premium. But
insurance
commitment

policy

perpetuating

"Without

banks

the

announce

Washington, D. C.,

invita¬

surance

system.
.

dangerous hazards.

the

current

insur-

Hukeyser

these

York

demobiliza¬

the

exposed
to

"On

should

ance

for

New

into

mobilization will

regarded
an

has

date, and the principal element of
uncertainty is the time factor.

United

States
b

per¬

South La Salle Street.

fire power at the earliest
possible

pre¬

paredness

opening of

the

remedy is in rebuilding American

viewpoint that

military

voluntary

victories

armed)

Service,

e n e

net

period."

American swords into plowshares
(while
Russia
remained
fully

umnist for the

hpig h t

members of
Stock
Exchange,

regarded

great

col¬

expressed

Co.,

tion to aggression.

daily

News

armies

by the Red Fascists

p apers

the

Opens New Branch
WASHINGTON, D. C.—Sutro

the Soviet
Union upset the balance of
power
the world, and was

writer

economic

commensurate

Requirements

city banks will be two

prevailed

CHICAGO, 111.—Robert L. Mey¬
Wm.

fpr the Hearst
n e w s

tion

credit

both

ers

tary machine after V-J Day with¬

period.

war

reserve

Wm. E. Pollock

policy for

bank

centage points less than the maximum under existing authority

Rukeyser Galls for Armed Preparedness
says

city banks will be at the maximum legal limits

reserve

put.

perpetuating the American system.

increase

reserve requirements at banks other than

Robert Meyers With
Economic columnist

Sutro Bros. & Go.

in the banking system as a whole.

in the second half

emerge

anticipated by any participant was
a
rise by the year-end of 10%

for

was

our

the

increase

will be to raise the
required
total of approximately $2 billion
fractional reserve banking system, could other¬

basis

this

wise

effect

of member banks

which, under

in real gross
1951.

reserves

group ex¬

goods

majority view

Forum

Instead,

prob¬

tors encountered in the last
:
On balance, the
our

"The

force, the resort to submarginal
plants and similar negative fac¬

our

repetition

output
product

having

recruits

new

industrial

national

increases

period.

tries,

resort

gross

1951. No member of

I
1
.

the

(80)

The Commercial and Financial Chronicle-.

Continued from page 13

sales is guided by the Dow-Jones
Industrial Average (DJIA). This

to be

may appear

procedure.

Testing Formula Plans
basic

features

procedures

and

have

operational

under¬

stood not

only by the staff mem¬
bers of the institution but also
by
those whose funds they adminis¬

ter. The same is true of investment
trusts seeking to sell their shares
to the public.
Finally, it is essen¬

flect

those

well-managed fund. For this pur¬
one has the alternative of

pose,

selecting a specific port¬
or using stock and bond in¬

folio

dexes

to represent the
tions of the portfolio.

The

specific

portfolio

which—particularly

the

in the case
institutions—are

educational

composed

sional

business
drawn

men

part

and

profes¬

from

fields

other than, finance.

our

advantages

of indexes.

use

increased

With these

primary factors of

analysis in mind, let
mext

historical
in the

role

consider

tests

and

their

examination of form¬

would

arise

both

1934
the

nature

market

action,

not

its

possible

plan be fully

the

operating

terms of

re-

types of stock-market
tests

future
to

answers

What

such

cannot

reveal

they
provide
questions as:

would

happen under the
another 1929-1932 type

plan

market
1939

but

encountered?

type?

market?

would

Could
under

type of market
prolonged inactivity?
fund
b e
whip-sawed
Would the plan
in an unsatisfac¬

over selected past periods?

detailed

formula

plan

examination of
is

hypothetical fund
lished

and

position,
other

must

operated.

fluctuations,

characteristics

estab¬
com¬

yield
should

and
re¬

these

provision

Furthermore,

cedures

must

pro¬

sold

these

and

the

h eld.

income

N otwithstanding

difficulties,

solutions

be found which render the

may

use

plans.

ever,

It is to be stressed, how¬
that careful consideration

must

stock

and

-given

the

bond

specific

indexes

________

stock

portfolio of the
institutional investor in¬

railroad

■order

public

common

utility

stocks.

For

this

Standard

Index

Although

Poor's

purpose,

general measure of
formance.!

Poor's

satisfactory
portfolio per¬

use

Standard

90-Stock' Index

January
1930

1'/■v

repre¬

fund,

1939
1940

____

1942

1943
___

1945
1946
1947

1948

8,940

13,589

10,249

10,947

8,127

12,453

9,268

12,258
11,361

9,160
8,426

10,342
11,007

7,709
8,167

12,032

8,926

12,859

9,546

14,751
13,905
13,707

10,994
10,299

13.706

10,152

14,536

1950 (Oct. 31)

15,482

the

(1)

presently in use are based
on
the DJIA. Thus the analysis
should be in terms of the plans

bonds
of

composite

the

market

12y2

taken

June
1935

March
1937

It is to be

pointed out that this

procedure

assumes

ing.

change

Any

10.154

10,772
11,556.

15,342

9,733
10,341
11,007

fers

price rise preserve some of the"
gains and transfers from bonds to
stocks in

turning points of both series
for

all

practical
purposes
analysis
shows
annual deviation
of the
DJIA
(adjusted to base
1926 = 100) from the 90 Stock In¬
dex was less than minus 8%. (3)
Research by ourselves and others
on
formula plans using moving
are

identical.

Also

that the average

averages, trend lines or the "in¬
trinsic value" approach have been
of the

terms

DJIA...

the

sale

periods of rising
from

not

holder.
that

the

rise above

bond¬

well-known

early 30's, the proposed technique
with
in

stock

favor

the

other

ion the

a premium. In our opin¬
remaining bias is not suf¬

ficient

This

fund.

index typifies

con¬

servatively

managed bond port¬
folio and yield-wise is comparable
to New York
legal bonds (ex¬

detrimental

that

assumed

chased

yield

all

several

bonds

par

the

knotty

are

pur¬

prevailing

if the
average yield on Al-f- bonds in
January, 1926 was 4.80%, the as¬
sumption is that any bonds bought
For

rate.

example,

in that month bear
of

4.80%

manner

rate

coupon

sell at

and

the

In this

100.

complications result¬

ing from buying
discounts or
premiums are avoided. Second, it
is

that

assumed

deemed

bonds

are

re¬

Third, it is as¬
composition of the

par.

sumed that the

bond portfolio is always spread
evenly between maturities from
1 to 25 years. Thus in the absence
of marked refunding, 4% of the
portfolio
matures
annually.
In
those years in which heavy re¬
funding occurs the 4% rate is in¬

creased.

this

connection

re¬

funding schedule developed by the
Trust Investment Study Commit¬
the

New

York

State

Fourth, it is assumed that the refundings do not change the com¬
position of the fund maturitywise. This point may be attacked
the most readily, because clearly
heavy refundings would tend to
"stack up"
bonds in the longer
maturities.
But
any
attempt to
compute probable maturities and
to
make
compensating
adjust¬

On the basis of the preceding
assumptions, the market value of
the
bond portion at
any
given
time is arrived at by (a) deter¬
mining the weighted coupon rate
bonds

the

current

yield

the

market

Poor's

After

of
20

90-Stock

study of

Index

industrial,

railroad

common

numerous

meas¬

common-stock

device.

Test of Constant-Ratio Plans

preceding technique
has
been employed in analyzing and
appraising several kinds of plans.
To demonstrate the

through such

Alfred

Cowles,

3rd,

Common-Stock Indexes

data.

See

and
Associates,
(Bloomington, In¬

diana, Principia Press, Inc.,

1939), p. 35.
Furthermore, Standard & Poor's 90-Stock
Index has been

employed in a comparable
by other research groups.
For ex¬
ample, see Arthur Wiesenber^er, Invest¬
ment
Companies
(1950
Edition;
New
York, Arthur Wiesenberger & Co., 1950),
pp. 74-76 et seq., and A
Report by the
Trust Investment Study Committee (New
way

York,

New

tion, 1949),
2

Op. cit.,
.

York
p.

pp.

State

Bankers

constant-ratio plan.

second

Table

I
the

number

plans

and

1937 had

low

the

1930

started

years

market-value be¬

original

indicated

fact

the

investment.

the

stress

point that

developed

let

tests,

ing of constant-ratio plans.
Al¬
though
several
constant - ratio
plans were examined, considera¬
tion is

given to

50/50

plan employing

stock-bond

ratio.

This

plan is better known and more
readily lends itself to explana¬
tion.

—>

Specifically, there is an under- *
lying prediction that in the course
of

their

stock

tended

number

below

the

plan
the

fluctuations

prices will

level

the

ex¬

remain

years

inaugurated.

limited

common-

for

not

time

the

Because

capital

appreciation
a
constant-ratio
plan, a
error in this one prediction

under

small

involve

a loss which will re¬
considerable number of
years to recover. The plan estab¬
lished
in
January, 1930 had a

may

quire

of the

most

below $10,000

value

market

over

15-year period up to

1945.

previously stated, the ob¬
jective of a 50/50 constant-ratio
plan is to equalize the stock-bond

proportions

price rise
to

whenever

the

cause

stock-

decline is sufficient

fund

substan¬

tially out of balance. Prior to the
establishment
extent
be

the

balance

transfers

bond

such

which

out

others,

the

stock-

must be

with the tests

portfolio when

por¬

20%

25% rise occurred in

DJIA.

fund

should

equalize the two

tions of the

decline

fund

before
made

are

decided. In line

plan, the

This

being

resulted

adjusted

the

when

the

proportions had reached 45/55
55/45.
As

the date of establishment

January, 1926, in
begin at a moderate level
prior to the 1929-1932 episode;
January, 1930, to determine the
at

is originated

high point in a rapidly de¬
clining market; June,
1935, to
start at a reasonably recent mar¬
level

employed
in
Oberlin plans:
initiate

peak

the

the
and

fund

lines

Vassar

and

March,

1937,

near

which

from

trend

there

recent
was

marked decline.

The

dollar

results

applied to

set

forth

stand

October,
ond,
der

First,
1950,

some

those

points

Table

out.

water"

function

Two

started

were

are

facts

high
"un¬

considerable

the

explanation

these two facts lies the key to an

Consider

constant-ratio

the

capital

ap¬

preciation which occurred.
Al¬
though the level of stock prices at
the

October, 1950
higher
than
at

somewhat

starting

funds,

point

the

three

appreciation

buying and
the
plan

interval

the

selected

points. As the in¬
terval employed rests with the in¬
vestor, the amount of activity may
be

controlled

considerable

degree. The primary factor in this

respect

avoid

over-action

with its attendant brokerage com¬

constant-ratio

should present no major mechan¬
ical

problems of administration.

Our studies indicate that

worthy of care¬
by certain in¬
stitutional investors. Although the
gains are not great and although
it may be outperformed by other
plans, the constant-ratio plan is
characterized by simplicity and a
notable degree of safety.
Restricted

this

has

been

the

general results of examining
a
single plan, only the broader
aspects of historical tests of for¬

mula

plans have

been presented.

Further insight could be obtained
from
as

following tests step by step

the

this
a

tion

market

manner

plan

points

rises and

falls.

such separate features

intervals between

ac¬

precentage ratio be¬

stocks

and

bonds

may

evaluated. In addition, the results
of

these

basis

was

tests

we.

constitute

the

have found for

the

parative analysis

of plans.

thp

historical

shown

con¬

stant-ratio plan is
ful consideration

tween

first

the

under

between action

tests

of the end of

market

for

the

all of the funds
appreciation. Sec¬

funds

the

$10,000 fund

found

action

reasonably satisfactory. The fre¬
quency
with which stocks
are
purchased and sold under a con¬
stant-ratio
plan is primarily a

ket

outstanding feature of the
plan is its
sim¬
plicity. Thus from the standpoint
of
understandability,
this
type
plan presents no difficulties. Fur¬
thermore, for the same reason, it

selected:

fund

tests.

order to

analysis, the other results lof our
selling

missions and administrative prob¬
lems.
V

primary importance, the fol¬
lowing significant starting dates

results when

summarize, in terms of
previously set forth factors of

the

were

Let

our

provide

opinion,
the

investor with

best
com¬

Thus,
tests
infor¬

Associa¬

does

et seq.

not

result

solely

fact. This may be

99.
.

can

here consider briefly the test¬

understanding
type plans.

States

significant in¬

historical

structed

United

The

repeated gains lies the

timing contrary to general belief—some
forecasting is involved in estab¬
lishing
a
constant-ratio
plan.

periods.

from

returns

and

tion

of stock prices, the Cowles Commis¬
sion
concluded
that Standard &
Poor's
indexes
are
statistically the best con¬

ures

but

wish

opera¬

The

Since the valuation of the bond

that

study seeking to test the

cluding 7-a rails).
Valuation of Bond Portfolio

100

$10,000 50/50 fund would
$125 capital gain. In these

small

hand, it is to be pointed out that

ings at

Poor's

100,

strength of

Composite

illustrate, if the market

from

bonds.

Al-f- Bonds is used to
represent the bond portion of the

Standard
Index

level. To
falls

show

no-allowance -is made for refund¬

or drop below a start¬
ing level and then return to that

Thus
comparison
experience is biased

bonds.

favors

modest appreciation whenever

—a

the

bonds

downgrading
and
defaults
widespread throughout the

were

simple technique assures
as timing
is concerned

market completes a "round
trip." In other words, some gain
must result whenever stock prices

confront

Because

these

rates and
other haz¬

money

any

which

ards

decline reinvest

gains at lower levels.

the

from

fact that

to the

constant-ratio plan trans- from stocks to bonds in a1'

only

1926-1949 reveals that

1926 -was

the period

stocks.

9,736

under

DJIA and the 90 Stock Index over

the

composite index
public utility and

9,872

difference is due

This

1 Standard

12,884
14,768
13,857
13,675
13,665
14,542

downgrad¬
the market

established

—insofar

$7,671
8,703
8,537
8,040
7,285
7,743
8,493
9,111
10,560

plan

plans

nearly $5,500 whereas that of its
counterpart
in - a
buy-and-hold
plan was less than $3,000. The

value of the bond portion is con¬

showed

10,859
12,443
12,114
11,253
10,327
10,952
12,011

yielding

bonds

2.55%.

with 50/50 >
initiated on the same dates. For example, the
appreciation, under, the equalizing»
buy-and-hold

fined solely to a change in the in¬
terest rate. Thus losses can occur

13,736

the

value

strated by a comparison
•

A comparison of the

(2)

held, (b) assuming that
12 y2
years
is the average ma¬
turity of bonds held, (c) deter¬
mining the current yield on Al-jcomposite bonds, (d) determining

$12,238

the

year

2.55%,

was

value

Thursday, January 4, 1951

presently constituted and em¬

ployed.

whelming difficulties.

5,898

11,794

1949

employed

for the following
Nearly all of the

guide

timing
reasons:

7,478 ""

1938

ments in the fund presents over¬

'■■

$10,264
11,930

7,400

1937

the timing of stock
purchases and

9,855

1936

90-

sent the stock portion of the

9,742

1935

DJIA

Bankers Association is employed.2

$8,603
6,246

The

tee

average or index composed
the three types of
equities is

13,006
11,303
8,189
7,749

1934

then

■

13,909

1933

Al-f

stock

1929

1932

reflect the

price move¬
ment and earnings of a common
stock portfolio
so
diversified, a

1928

1930

employed.

Constant-Ratio Plan

1926

indexes suitable in testing formu¬

Year-End Values of Funds
Established

January

factors,
must
be

Year-End Values of Four
§10,000 Funds
Operated Under 50/50

1926

1944

for

made for them.

Stock

Its

the

poses?

fundings.

consider

bonds in the fund

3% and the current yield on

em¬

Bond indexes make

illustrate, if
weighted

the

was

and

not be

rate

coupon

1949

TABLET

Date

1927

made,

end

ployed in this respect. First, it is

preferable.

Procedure for Historical Testing
If

that

the

formation which

and

the plan?

to the bonds held. To

problems, we should also like to
explain briefly the techniques em¬

typical
cludes industrial;

operated
tory manner
over
any past
periods? What yield and appreci¬
ation would the plan have pro¬

dded

bought

can

the

folio, one is confronted with such
problems as maturities and re-

The

What

have

can

mar¬

and

portfolio presents

type

cause
a

assume

Stock aiid Bond Indexes Employed

1937-

1946-1949

fund

ployed as readily. In the opera¬
tion of the bond portion of a
port¬

Historical

stock

relatively minor,

index

bonds

plans in

fluctuations.
the

employment of

are

reasonable

bonds

another and in terms

one

of various

selected

the

developed for
determining the market value of

cults derived from such tests proVide the basis for evaluating the

performance of

the

accordingly

which it will operate under given
market conditions be determined.

Furthermore,

through

stock and bond
indexes,
procedure, in turn, presents
other
problems.
Those
arising
use

allowance

manner

eliminated

the

is it not preferable to use
the same index for timing pur¬

sold. A bond index

Experience
reveals
that
.only
through historical tests can the
and

creep

may

stock

periods of the past
is essential to adequate appraisal.

essential nature of

inevitably

Although such vexing difficul¬
ties as selectivity and
hindsight

effectualness

selected

understood

period.

an
undertaking
extremely time con¬
suming and the results would not
justify the substantial statistical

would

index

with certainty. Nevertheless testin detail the operation of a plan
over

points

numerous

testing

be¬

in, Finally, such

from

unforeseeable

it is

determine

the

this

ula plans. As the success of
any
formula plan is dependent largely
on

that

method

cost involved.

Historical Tests

return

costs of alterna¬

this

would involve numerous difficul¬
ties. Serious problems of selectiv¬

ginning and

against

anticipated

end against the
tive methods.

apparent

However, based

following

Prior to the adoption of a
plan ^throughout
the
the administrative costs should be
Hindsight would
ostimated
and
weighed
-any

experience and

own

others,

ity

Administrative Aspects

W'^t.

method

the

of a 12Vz year bond pay¬
ing the weighted coupon rate, and
(e) applying this market value

plans

had

successful

■

por¬

realism and simplicity and avoids
certain problems which arise from

usually

two

the changing

yield,

either

tial

that
the
plan
be
clearly
understood by finance committees

representative

value

ket

contradictory

If the 90-Stock Index

best represents

value

...

if.'

from

this

readily demon¬

mation essential to

formula plans.

appraisal of

Volume 173

Number 4974

The Commercial and Financial Chronicle

(81)

Continued

from

ated

page

made

redeemable

The

still

they
do

should

alwavs

not

the

Urgent Need lor
Monetary Statesmanship
have

wise?v

ballot

but

mint dictatorship
Slv
must retain
retain
they must

it.

their

use

to'be

They
of

nower

govern-

avoided

storehouse of value

paVmfnts
international

medium

and a
a gooa
good
ana

power

nor

control

feetivelv

the

directlv

use

ef-

and

ex-

reserve
againstt
es
v saga

public

the

Brvan's famous speech
on

the

Cross

ou?

mealed

purse
P

When

irredeemable currency

has

iL rn'Zn,

don'ars

holders of

toilSignal5^station-to
banks.and Treasury

The

lights

the

t™

ceT

to the

the Reserve

were cut

central

signal

svstem went
went out.
out The
could
system
ine neonle
people couia

longer

fears

and

their

nrotests

doubts,
choosing

P?!S'
and P^0test?^by Cb°°S_ln?
from among our various types of
dollars

the

they

ones

preferred

Though legally all dollars, whether
*?nld
cilvpr
goia, suver,

posits,

nanpr
or
in
He
paper, or in hank
oanx ae

declared to be equal

were

metallic

coins

the

are

major political parties
and head the fight for a redeemable currency.
'
The officials of the United States

particular enjoynot far-sighted

are

They are

vent any

individual from issuing

our

intend
deem.
such

to pay that he does net

redeem

The

reason

promises

dishonesty.

cannot

involve

Just

re^

for that is that
an

how

act

irredeem-

able promises become honest when
issued by our Treasury and Re-

•

the

exhilaration

initially

without
hiiitxr

corresponding

responsi-

onH

the dishonestv is

large scale

uie aiwiunesxy is on a targe scale.

and their subjects

,Smce our g°vernment

-for example, they need have lit-

are

big lie
required to

accept it, to repeat it, and to be-

c—lAle utonTem ££ « *

_.A Pu" T°Ward Socialism

ment.

are

VV* *
substlnHally

doing

is manned tie concern over the fact that their that in respect to our use and dereserves, which they do not pay fense of an irredeemable currency.

almost exclusively by advocates of

"the common man." In more recent decades the people have also

been urg d b

one

be "d"

money

th,e natural consequences of trag- rangement. They escape the re?dy> suffering' and tears, are to straints on the issuance of money

United"States°in'iKJ? ® the® golden mZey ^whUe paper® and* dfeap
ril

enToytag^s

repiace

per-

thinkfnl

people's

This

quickly should a great
statesman become the leader of

feelings

government.

situation, but it could be promises

f pel*?'selves willinetoZfend th^Z" Modern governments have devel?,
?
redeemable cuirency it selves willing to defend that ar- oped the technique of the

conffrZng'Vvtufno-

P-haps

this
they

people

ev^rionf.0j

"Crucified

Gold"

the

responsible leaders.

•

they should retain the power, paper money and bank deposits.
provided by a redeemable cur- It seems highly probable, also, that
to

Men

currency.

the^patfenT
ban^lfke^redeemaW^
currency
ba"ks
,has "eve*
patient enjoying nis panKs
luxe irredeemable currency been made clear. There is no log*pipe ?f 0pmm that there -1S tragT becaus.e they are freed from the Cal process of reasoning by whidi
ed^ aLtbe end of such enjoyment necessity of meeting their prom- dishonesty can be converted into
and, thaL sanity must promptly lses to pay. They have privilege an act of honesty merely because

rencv

the

changed

regarding

good

side

ominous

ment. But

good

ir-

who

confoim

good stand-

ard for deferred

nowlt just
ilst Jhanle
cnange,

this
tnis

of value,

standard

good

possible by

float with the tide at this stage of
events are popular because they

£&£

the

^ of
t since
th^^e^-ation^f
relic
DOlitical

relieve tnat gold is a
barbarism, that it places undesir-

scientists

ecLoli^s S

and

sociolo-

notes and

denosits

thev

The S'mple faCt is u"avoidable

*»£ h|entustandbe honest
peop^
a direct rela~

that tbere

issue

p. .r■
nx sis, a a socioi
tes ana deposits tney issue.
t
between the promises to pay
gnuprnmpnt'c
gists have gone political—strongly
The fact that the issuance of
QpppofiVniir'x*
government s c0pjaliqtjrlin thflir aPtivitiPc as nromises to nav without intent to and a base or
of general acceptability
proper management of the people's
lr* tnen activities as promises to pay witnout intent to
^
which they are convertible it
monev.
that it. canspd
or
at least
scientists,
the people of the redeem is an act of dishonesty is +.
.
ho ?pct
'
money, that it caused, or at least T; Vf ,r
+
Lae peopie Ui ',
reaeem ib an act ui aisnonesty is th
are to be honest and reliablo
did not save.us from, the economic
_ngiy^s_in nature. The base for converts
aDle

llm"s

-nj

oro

collapse
collapse

beginning in
beginning'in

that

1929, and
1929,

^SlVcZZcy
and The'reI Y e
a
" y. ?.
Yu

that

instrument

lated

^Pngs

These

narm

contentions

xnan

gooa.

pull toward Socialism than

fore

Our

svstem

irre-

irredeemable currency, iney
Vc^«.»:uii«itj;
simply avoid the issue; or they m.

sist

that

there

matter

biIity should have the qUality °*

Qpr>entahiiitv riohi
widest nnscihio
possible acceptability..Goltl

the

most

universally-accepted,

5ver Deiore* uur syscem or irre sisi inat xnere is no matter oi
and the most widely understood,
of gold after Jan
31
1934
th! strengthened greatly what appears deemable currency has the sup- dishonesty involved, without stopbase mankind has thus far been
people were no longer permitted tc) be man's eternal hope that by port of the President, the majority ping to explain why this can be
able to devise. An irredeemable
to obtain the type of dollar
they means of an irredeemable money 0f Congress, the United States the case.
Every adult person
preferred. They were compelled to a Pe°pl® can really get something Treasury, the Federal Reserve au- knows that we have a
large body currency and the government se-5

the

rate

fine

ner

onnre

take irredeemable promises to pay
and an overvalued minor coin. In

respect to their currency they bethe

came

wards

their

govern-

ment; they were deprived in high
degree
of
their
Constitutional
position

its master and ultimate

source

power.

j]°

try'

With
The

Responsible Government

management of

money

from the

freed

restraints imposed

redeemable

currency

without

power

people's

government

effective

case

control

by the people. It is incompatible
with responsible
government. It
is perhaps the most potent device
a

government

employ in leadpeople into a
governmentally - managed
economy
just as a redeemable
currency is a people's most power¬
ing

ful

can

forcing

against

weapon

totalitarianism in

Socialism

some

other form,

The people of a nation
are

not

vote
not

ordinarily
given an opportunity to
whether they will or will

have

redeemable currency.
Governments plunge them into ira

various

ana

oiner,

retain

control

engage

of spending,

human

various

activity, resting

tricacies

understood

specialists, the field of
one

which the

must

fields

depend

upon

in-

only

money

of people
their statesmen
mass

upon

to obtain the proper guidance and
to write into law provisions for
the best or proper type of mone-

tary standard and system. There
is no such thing as
educating the

of Federal debt,

few

■

buy sufficient support to keep itself in power since 1933.

complaints, the public

'■

people in other

TEN ROCKEFELLER PLAZA
MADISON

If, therefore, a people are to
be saved from the evils of an ir¬
redeemable

must be taken by
men

who

the

currency,

provide correct guidance
seeking reliable advice,

The
want

of people

mass

the

type

nation's states-

understand

the

shift

from

the

evils

dangers of an irredeemable
to the benefits and
greater safety of a redeemable
money.

Neither of

parties

has

our

major

produced

poa

will fight the battle necessary to
give the people of the United
States a redeemable currency,
Considering the fact that money

generally to prefer irredeemable

is the lifeblood of commerce, and

redeemable

currency.
This
" to
prefer

that

good

monetary

standard

popular ?? inclination

and

money that is injurious probably

fundamental to the well-being of
a
nation, the absence of such

rests

the

chiefly

mass

the inability of
people to think be-

upon

redeemable

currency

are

statesmanship in both major poyond the convenience function of litical
parties today bodes ill for
certain types of
currency to other the people of this nation. We are
functions of far-reaching
impor- in the process of enjoying many
tance such

those

of the

intoxicating effects

ASSETS

Root, Ballantine, Harlan,

Bushby & Palmer

Cash

JOHN E. BIERWIRTH
President, National Distillers
Products Corporation
~

STEPHEN C. CLARK '1
The Clark Estates, Inc.
WILLIAM F. CUTLER

gener-

J Due from Banks

United States Government

$224,369,970.51

Obligations....

289,534,175.89

;

Stock of Federal Reserve Bank
.

1,650,000.00

Vice President
American Brake Shoe Company

Other Bonds and Securities

14,355,506.34

RALPH S. DAMON
President

Loans and Discounts

261,691,616.16

Trans World Airlines, Inc.
FRANCIS B. DAVIS, Jr.

Customers'

Liability for Acceptances

3,285,713.42

Interest Receivable and Other Assets

2,581,820.59

New York

HALE HARKNESS

WILLIAM

New York

HORACE HAVEMEYER, Jr.
President

$797,468,802.91

The National Sugar Refining Co.
B. BREWSTER

JENNINGS

President

Socony-Vacuum Oil Co., Inc.

LIABILITIES

J. SPENCER LOVE
Chairman of the Board
;
Burlington Mills Corporation
#

ADRIAN

Capital

M. MASSIE

$15,000,000.00

Executive Vice President

Surplus....

40,000,000.00

Undivided Profits

13,322,812.14

68,322,812.14

Winthrop, Stimson, Putnam
& Roberts

they prefer paper
to gold and silver and, if
they have an opportunity to express
their ^opinion,
they seem
to
■

can

'Jr

Colt's Manufacturing Company
ARTHUR A. BALLANTINE

lgr\0I?nCj.j
people,,
and b® dld
u"
-acet °I- a
^fn,erai Pubbc hostility including
J at 0 many business and other
}ea, j?rs
®b°uld have been upb()ldin£ Ala aads in every Possi^
After the people got their
bearinSs, John Sherman went
doYn ln our bl^tory as a great
statesman as indeed he was.

or leaders in a position or
positions of key importance who

convenience,

39TH STREET

Chairman of the Board

accordingly. When John Sherman,
as United States Senator and
Secretary of the Treasury, led this

litical
that leader

money

AND

December 31, 1950

GRAHAM H. ANTHONY

neces¬

of its

currency

AND 40TH STREET

SEVENTH AVENUE

CONDENSED STATEMENT OF CONDITION
New York

sity for such action and will act

in general

injures them most. Because

•

MALCOLM P. ALDRICH

CHARLES J. NOURSE

upon to

MADISON AVENUE

52ND STREET

DIRECTORS

step

CHARLES S. McVEIGH
Morris & McVeigh

for those

AND

BROADWAY
•

tries.

currency

depended

AVENUE

■

coun¬

and

Company
100

*?ot ior a redeemable currency but
.r. morY dollar income to meet
flsing prices. This popular attitude
1S tyPlcal of our history and of
that of the

General Reserve,

RICHARD K. PAYNTER, Jr.
Financial Vice President
New York Life

Dividend

1,686,786.57

Payable January 2, 1951.......

600,000.00

Acceptances.............................

3,297,756.50

Accrued Taxes and Other Liabilities

5,003,798.44

Insurance Company

SETON PORTER
Chairman of the Board, National
Distillers Products Corporation
ROBERT C. REAM
Chairman of the Board
American Re-Insurance Co.
MORRIS SAYRE
President

Deposits

718,557,649.26
$797,468,802.91

Corn Products Refining Co,

CHARLES J. STEWART
President
WALTER N. STILLMAN

Stillman, Maynard & Co.

VANDERBILT WEBB
Patterson, Belknap & Webb

United States Government obligations carried at $19,872,714.30 in the above state¬
ment are

pledged

to secure

30
..

The'

demand is

and

can

on page

New York Trust

Although the persistent decline
^., e Purchasing power of our
do"ar appears to be generating an
increasing number of fears and

eluded,

few

Continued

pre-

college students have
careful training in such
principles
very

and to

Without statesmanship of the
mass of people in
the principles Sherman type, there is no way in
of good and bad
money. Indeed,
which a people, ourselves invery

of contract law designed to

leaders out-

redeemable currencies and restore
redeemable
currencies
without

rencies.

many
j

the

pile

naUon back to a redeemable currf^cy> after 17 years of irredeemtheir consent and with little un- able
y !?ean?
a law
derstanding on the part of the Passed in 1875 and made effective
'masses as to the virtues,
defects,
.ai?'
*
he did this as a
and
implications
of
these
two statesman, not as a politician reradically-different types of cur- sponding to or capitalizing the

thorities, and

other

various

Pe°Ple s purse, to
mountain

Irredeemable Money Incompatible

and

have

contentions have enabled our
government to perpetuate an irredeemable currency in this coun-

orgy

•

l.nese>

seem

United States Government deposits of $13,827,316.72

and other public and trust deposits and for other purposes required by law.

AI ember Federal Deposit Insurance Corporation

The Commercial and Financial Chronicle

(82)

Continued

from

its

page

existence

ratio

Canadian Securities

Thursday, January 4, 1951

while

The Urgent Need for

ratio of 8.6%

average

years 1915-1932

By WILLIAM J. McKAY

its

Despite

little

Under

understood

existing

status and the complexities sur¬ both the registered and the unreg¬
rounding its negotiation, the Do¬ istered bonds are an attractive
of
minion of Canada internal bond is form
investment.
Obviously,

nevertheless

desirable

medium

however, the registered bond is to
of conservative investment. There be preferred unless the unrecord¬
are
however two
distinct
cate¬ ed variety can be obtained at a
a

In
recent
at worthwhile discount.
years the U. S. investor has come
ed bond which is purchased on the to consider the Dominion of Can¬
Canadian market and registered ada internal bond as a security

gories^of obligations which
times confused.

are

One is the record¬

Foreign Exchange Con¬ that does not belong in the usual
trol Board.
This variety is traded category
of foreign investments.
with the FECB registration form It has become the next best thing
No. 106 attached, and commands a to the highest grade U. S. obliga¬
premium
over
the
unrecorded tions. At the present time in fact
bond. The latter form of Domin¬ there are many close observers of
ion

internal

bond

compares

un¬

favorably with the registered type

Canadian

the

that

lieve

situation
their

who

be¬

level

current

The recorded bond the Dominion internals are more
can
be sold on the government attractive than U. S. Governments.
bond market in Canada with no
Among
the principal
reasons
other formality than the produc¬ given for this opinion are the fol¬
tion of the Form No. 106.
The lowing:
of

obligation.

proceeds
dated

market

can

the

then be freely liqui¬
(1) In a broad
widely expanded dian economy is

now

the

for

Canadian

The market for the

bond

dollar.

unregistered

the other hand is almost

entirely divorced from its natural
market

sold

the

Canada.

can

not

Canadian market and

the Cana¬
at a stage of
dynamic development, which is in
no
way impeded by any lack of
readily
available
natural
re¬
On

sources.

sense

other

the

possibly

has

economy

reached

hand

peak level where fur¬

price has no direct relationship ther expansion places an intoler¬
with the exchange value of the able strain on the domestic sources
its

Canadian dollar. The market level
of

this

ternal

category of Dominion
bond

dependent

estimate placed on its value by the
or other non-resident invest¬

Naturally
in

market

the

Canada

status
and

of
the

in¬

the

U. S.
or.

curities against which it may be
can
be expanded without

the
ex¬

materials.

raw

(2)

tary

Canadian fiscal and mone¬
policies are generally more

conservative

than

those

south

the border.

(3)
Foreign flight capital is
commencing to show a preference

change rate of the Canadian dollar for Canadian rather than U. S. in¬
afford a basis of appraisal, but be¬
vestment. The abolition of all re¬
yond that these factors have no
maining
FECB
restrictions
on
practical bearing. The important
capital movements would greatly
distinction

between the two vari¬

any known

limit with the conse¬

cannot

that the purchasing power

herent

quence

fiat

money

irredeemable

Nor

deemable currencies.

The proper
whether we can

in business activity

by the

Our

System Is An Unsound
Currency

the value of which
be impaired or destroyed be¬

can

the

cause

nature

against which

the

nation in both

the

chosen

unless

that

pref-^
and,

are

ourselves

reverse

matter

sible,

unsound

to the sound currency;

erence

promptly as pos¬
destined to suffer

sad consequences in the end. The
lessons of the past, revealed again
and

again,

have

can

up-and-

inherent

irredeemable

currency.

It has been asserted
many times,
and with accuracy, that there is
no

subtler, no surer, means of
overturning the existing basis of
society than to debauch the cur¬
rency.
And an irredeemable cur¬
regardless

debauched
The

turies

old; it has been

in op¬

seen

It apparently

type,

currency.

freedom

only to

our

present generation whose leaders

the

people

not

nation
rency,

back

In their efforts to

justify and to
irredeemable cur¬

redeemable

cur¬

would have the farreaching benefits of the best type
of monetary standard and paper
known

money

tom

public purse.

national

urgent

statesmen

of the people

need

United

States

who

today is for

will

look

beyond
symptoms, which are the play¬
things of self-serving politicians,
who

understand

Dominion*internal bonds

The discount

(4)

dian

On such occasions

bond is

one-way mar¬

ket usually develops and the pre¬
mium
in favor of the recorded
bond widens
recorded

for

bonds become attractive

with

ercised by our system
of irre¬
deemable currency and who will
the leadership in demand¬

ing a redeemable and therefore
honest currency for the people of
the United
States.
There is
no
better

simpler

nor

there is

way—indeed

other way—to restore

to our people their
proper power
to control their
purse and thus to

protect their freedom against the
encroachments of totalitarianism.

Recognition
action
vide

these

appropriate

the

facts

2%%

rate

com¬

south

of the border.
The conclusion is reached there¬

fore

that

Dominion

current

prices

Canada

the

internal

investment

as they offer the
bonds deserve more than casual
security as the regis¬ attention on the part of the U. S.
tered bonds. It is possible also investor.
that before the maturity of the
During the week there was little
obligation the FECB regulations change in a quiet holiday atmos¬
phere in either the internal or ex¬
Ihight no longer be in
same

basic

in this event

vantages of
would

for the dollar, a symp¬
defective
currency,

disappear. Private enter¬
prise in foreign trade should re¬

the unrecorded bond

disappear.

good faith would ever suggest
that the best currency known to
could have

man

prevented it.

A sound currency is like sound
rails on the roadbed of a railway

tinued firm but the Canadian dol¬

Weak

lar in the

ever,

closing sessions of the

remained
the

under

the weak side

influence

the

cus¬

tomary year-end selling. This
the

Canadian

dollars

CANADIAN BONDS

the

was

demand

final

tions

Government

removal

Provincial

Municipal

greater in view

even

ginning of the

for

year

the

be¬

of the restric¬

broken

wreck

demand

it has

issued

should

and

people

and
most funda¬
mental test of the
degree of states¬

manship of those who profess to
wish to serve the best
interests of
the people of this nation.

Pains, Webber Go.
Admits Two Partners
Paine, Webber, Jackson &

Cur¬
members of the New York
Stock Exchange and other lead¬
ing
securities
exchanges,
an¬

tis,

direct

tends to be,

and

For information
on

oil

A. E. Ames & Co.

can

help

you.

INCORPORATED

JMLilner, R- oss &Co.

New York 5, N.Y.

Members:
The Toronto Stock

1-1045

Exchange

The Investment Dealers' Association
'

330

Bay St. Toronto, Canada

Hamilton

Brantford

Sudbury

Windsor

Brampton

that

public

of the people under
to

re¬

cause

its
profligate
people's
national
Restoration of a re¬
end

the

deemable currency would free

our

people

the

Mr. Davis will
be resident in
New

York;
Manning
in Los Ange¬

Mr.

les, Calif. The
firm

also

prospects

an¬

the

nounced

retirement

James

general
partner of
a

Stanwood
continue

Bradlee, who will
partner.

limited

Mr. Davis' entire business career

firm

successor

Jackson
1925

and

trader.
and

from

inherent in

irredeemable

cur¬

irredeemable cur¬
Dictator has been a

From
to

common

experience in the history

of nations.

the

the limits imposed by such a cur¬

from

But

even

able currency

with

and
appropriate to it,
and

redeem¬

management
we should ex¬
a

downs

business

activity—even booms and depres¬
the

reason

that

these

arise from multitudinous forces of

which

the

higher

redeemable

currency

1945

Mr.

Manning joined Paine, Web¬
& Curtis in 1946
when the firm opened in Los An¬
ber,

Jackson

1942

service,

Mr.

the

Pacific
with

1946

served
the

armed

area

the

from

rank

Prior to his Army

Manning

had

been

would tend to force
the managers of our money

Company
with

San

Francisco

and

Blyth & Co.

as Manager of
municipal department
in Los Angeles.

that firm's

Supply of Gold Ample

the

sions—for

honesty which such associated with the National City

possible

the best type
of management operating within

ups

currency

upon

exchange—a redeem¬

able currency—and

rency.

honest

benefits

standards
a

and credit structure.

Our need is for the best
medium

and

the

firm follow¬

ing his discharge.

Lieut. Colonel.

exclusively,

various

1942

the

blessings

sometimes al¬
to the defects

served

Guard

returned

most

started

capacities until he became senior

traced in large part,

can

disaster inherent

progressed

seen

Paine, Webber,

Curtis.

ever

great trouble

Davis
;

has been spent with the firm of
& Curtis and with the

Coast

should

currency

Congress

1951.

geles.

pect

of Canada

worst

have

their

over

effective protection
against Socialism. The fear of the
deemable

forces

rency

the

very

well-

Jan.

■

■'

irredeemable currency. Our
people would once more have the

has

world

rency.

quotations
any industrial, mining or
security, consult us.
We

Some

can

There

once

power

im¬
portant causal factor in economic
be,

dangerous railway rails,

same

partners

trade,
Jackson
prosperity. Our

safer

would

prominent.

credit.

money and other forms of

revival

investment,

patrimony.

paper

upon
these

planning
for
the
future
and
greater incentive for more work,
more
production,
more
saving,

management

de¬

grounded confidence in individual

power

bad

holders

against gold.
a

cannot prevent

the wrecks arising

out

banks and governments. The

purse and an

currency

and

paid

all

principle would apply to the gold
reserves held by the United States
Treasury against the paper money

metals, and industrials especially

SECURITIES

all

is a better fa¬
cilitating instrument than is a
weak (irredeemable) one, but it
deemable)

notes

which

against

claims, not just to foreign central

waste

SERVICE

(re¬

good

held

Reserve

would

A weak—irredeemable—currency,

CANADIAN STOCKS

Boston 9, Mass.

Federal

from

CANADA

Fifty Congress Street

regardless of the
of the engineer and

Similarly,

crew.

the

how¬

can,

train

competence
his

rails

causal factor; they can

wrecks.

WORTH 4-2400

ostensibly

imports. Stocks
wound up the year with scattered
gains with Western
oils, baseon

Corporation

Two Wall Street

the Federal Reserve banks
are

pro¬

would

acquainted with the causes of such
posits
economic fluctuations and acting

system. They are a great facili¬
tating instrument, but they cannot
existence;
ternal sections of the bond market. prevent wrecks arising from bad
the technical disad¬
The corporate arbitrage rate con¬ management of the rolling stock.

year

■■i

currency had nothing whatever to
do with that collapse, and no one

and

them

first

the

3% level in

ex¬

assume

Multiple

man.

now

parison

considerably. During

these periods of weakness the un¬

dollar

the

far-reaching influences being

vive. The return by other nations
rency in this country, leading ad¬
to redeemable currencies should
the Cana¬ vocates
in officii girdles have
nounces
the
neigh¬
contended that a redeemable cur¬ be, made easier. The present dis¬ admission
of
borhood <■- of
5%;
it
is
con¬
crimination
against
our
own
securities is favorable.
On
the
rency did not prevent or save us
James E. Da¬
anticipated that parity
other hand whenever the U. S. fidently
from the economic collapse begin¬ people and in favor of foreign vis
and
Ste¬
with the U. S. dollar will ulti¬
central banks and governments in
opinion of the Canadian situation
ning in 1929. That is a deplorable
vens Manning
the redemption of dollars would
is on the bearish side the unregis-. mately be attained.
method of misleading our people.
as
general
tered bonds are highly vulnerable.
(5) The longest term Dominion The facts are that a redeemable be eliminated. The reserves in
eties

is often disregarded when the gen¬
eral market outlook for Canadian

ca¬

takes possession of their quotations

rency and

sys-'

Should a statesman or group
of statesmen emerge and lead this

to understand or

past regarding what happens when
a
government plunges a people
into a system of irredeemable cur¬

given it by

powers

tem of irredeemable currency.

respect the lessons of the

either not

seem

the

our

lamity.

statesmen

Economy

rency,

to fundamental causal factors—for

Danger Of Overturning Existing

the United States is now deeply
meaning for us. There is nothing
involved. It has been impaired in
new, in basic principle, in so far
as
world experiences go, in the a multitude of ways because our
course we are pursuing.
It is cen¬ government has taken advantage

eration many times.
is regarded as new

be confronted with

The

ter

devaluation

monetary unit. Should
that situation arrive, then we will

of the

other

radical contraction of credit

particular type of

use of

injurious

and peace.

war

another

currency; it is, rather, whether we
have the wisdom to avoid the far-

Despite this fact, our government
has

avoid

asset

issued,

unsound currency and is
to

question is npt

reaching evils and possible disas¬

A currency,

out
or

standard

down swings

redeem¬

money

1920.

it will be too late to redeem with¬

not

was

6.7

currency resting upon government
debt can be destroyed. This can¬

happen to
able in gold.

sense

the catastrophes

cause

1917

Considering
the
road
we
are
traveling, a day can arrive when

except in the

ratios

yearly

10.9

for the

during which time

range

from

preventive
that it
in¬
in, and traceable to, irre¬

one.

force

perpetuate

accentuate this factor.

not

issued

the

with

the

Monetary Statesmanship

circumstances

The

can.

gold stock to total
money and deposits is approxi¬
mately 12%. This compares with
our

There is

people

obstacle to prevent

obtaining these great and
far-reaching benefits except the
unwillingness of government of¬
ficials to return to

our

basic freedom which
currency

provides.

people the

New

York

New

York

have

supply of gold to support
such a currency at the present
rate of $35 per fine ounce of gold,
we

Couig to Partnership
Hirsch & Co., 25

redeemable

ample

and

Hirsch & Co. to Admit

off the United States

should take advantage of

Broad Street,
City, members of the
Stock Exchange, will

admit J. Dalton

ship

Jan.

Couig to partner¬

11.

Mr.

been with the firm for

of years.

......

•

Couig
a

has

number

Volume 173

Number 4974

The Commercial and Financial Chronicle

(83)
Continued

jrom

page

pleasures and put our economic
machine into creating weapons on
a

The Fallacies of
dispensable by showing that world
is a practicable possibility.
Nothing now can s op the deter¬
mination of the people to achieve
solidly that goal.
order

Area Defense

an
United

States

who

has

not

con¬

sciously made some sacrifice, out
the highest motives of which

human
process

beings are capable. In the
they have ennobled their

character, have given new
hope and courage to millions else¬

have

great

Ground for Criticism

Now, I do not claim for

ment

what

nation

our

mo¬
done

has

where

and

have

psychological warfare.
Despotism, when looked at from
without, looks solid and formid¬
able, whereas free societies look
divided and weak.
is

Actually, that
The reality

optical illusion.

just the opposite.

That is not
respects has been per¬
done.
Our
own
social* belittle; nor is

changes

have

may

gone

far

to curtail incentive and
self-reliance. In some cases, po¬
litical

independence

given to

peoples

who

experienced in the
them

in¬

of self-

will

be hard

me face

inde¬

that

preserve

pendence

are

ways

that it

government
for

have

may

of the diabol¬

the

that

crea¬

new

has

the

and

out

gushed

faith, if sustained,

healing

assures our

at least

overcome

one

dangers jvhich, at the

World

been

be confident that

can

of the twin

War

confronted

not doomed

are

die in

much

look

for

the

past.

to the future.

now

Let

Have

renewed our

the United Stat:es and the United

youth like the eagle's
only to be shot at in battle? That

Nations

might be.

have

may

Both

strength.
assumed

po¬

litical responsibilities which they
did not yet have the power io
back
up.
Policies,
themselves
good, often lacked efficient and
timely execution. There have been
grave
and perhaps unnecessary
setbacks. Almost surely the free
world

erred

potential

relying too much
and in not

power,

people

That

took
die

not

the risk

was

when

they

our

decided

from the internal dis¬

of old age.

eases

The

leaders

munism

Soviet

have

would

Com¬

preferred

sickness

passing.

They have great skill in

the

method of

our

spreading malignant germs and
they prefer to practice that art

creating enough military strength rather than the art of open war,
where
in being.
their
nation
may
have
There is no occasion for com¬ quantitative superiority but has
qualitative
inferiority.
placency or for whitewash. There
Party
is

need

point
use

expose

the

way

leaders have always distrusted the

better

army and the generals, and are
reluctant to give them the power

the moral and material

of all

assets that our

they

making

and

errors

could

people have shown

provide.

Such

con-

that

exacts.

war

use

any

use

some

If they have to
they would rather

army,

needed and
those who

party.

But since it

that the free

seems

But surmounting

whatever may world has gained a certain im¬
and inade¬ munity to the Communist party
quacies of leadership, the deeds of poison, their leaders 'must now
our
people over the past five decide whether to accept one of
years emerge as a testimonial to those waiting periods which Stalin
greatness and to achievement.
has taught from time to time be
A year ago, on Jan. 1, 1950, necessary in order "to buy off a
"Izvestia's" leading editorial wel¬ powerful enemy and gain a res¬
comed the new year with these pite," or whether to resort in¬
creasingly to open war.
words:
have

been

the faults

"The

forces

this

The

camp

are

multiplying day by day. The camp
of democracy and socialism today
includes the great Soviet Union,
democratic Poland, Czechoslovak¬

ia,

Bulgaria,

Chinese
German

Hungary,

free

the

world

succeeded, to the degree it did,
in slowing up Communist success
by methods short of war, auto¬
matically increase the risk of war
itself.

editorial concluded:
is

seek

must

also

surmount

the peril of full-scale foreign war.
Our search must be for effective
to

Russian

armed

ag¬

year,

in greeting
I do know that, whereas
1945

and

1950

conquests

Free World Has Superior Military

Potential

was

the
rate of over two nations
there are, this year, no
new

new names

The

of which to boast.

free

certain

world

assets

would

all

being

starts

with

out

which, I think

agree,

U. S. Unprecedented Foreign

Aid

U Communism

developed

forced

are

one,

party fac¬

in high

even

of the satellite

case

the

situation

carious.
much

au¬

For

even

the

example,

unrest

countries,
pre¬

there

China

main¬

Russia.

course,

people who, when

under pressure, did not decompose
factionalism

and

frustration.

Unitedly, and with unpartisan and
bipartisan leadership, they joined
in an outpouring in compassion,
fellowship and material succor
such as history has never before
recorded.
There
is
scarcely
a
woman

child

the

terms

aluminum, electric

power

the United States has
or

steel,
and oil,

superiority

Russia.

over

That

the
and

industrial power of the

Western
the

there

the

are

free

power

Europe and

Middle

East.

impediments

world

has

which operates

Ruhr

the oil

long

that,

economic

major

deterrent to open Russian
aggres¬

sion, particularly if

the

some

will

forego

also have
of

our

impregnable defense, a China
Wall, a Maginot Line, a Rock of
Gibraltar, an Atlantic and Pacific
Moat.
such

But

the

mood

defense

that

carries

self the seeds of its
A defense that

quickly

plans

within

own

it¬

encircle¬

decomposes.

That

has been proved a thousand times.
A United States which could be

zation would not be the kind of a
United States which could defend

Fortunately,

have to

we do not

choose between two disastrous al¬
ternatives.

either to

spread

around

the

tempts

not

world

defense,
into

nor

our

necessary

strength all

our

create

back

When a few men rule despot¬
ically 800,000,000, that is bound to
be

vulnerable position.

Many of

the 800,000,000 are sure to be sul¬

len,

resentful

and

for a
others will

eager

change. Most of the
hive been so beaten

into

sub-

missiveness

by the harsh disci¬
pline of the police state that they
have lost all

of personal re¬

sense

sponsibility and could not respond
to the needs which war
disrup¬
tions would impose. War can be
unkind

very

rulers

who

are

despots and who have systemati¬
cally
destroyed
the
individual
initiatives

their

people. They
we can increas¬

know

that, and
ingly help them to

the light.

see

No Abandonment of Our

not

are

the

fu ile

at¬

everywhere a
need we crawl
hold

own

bankrupt in

North

did

the

Senate,

ratification

Pact,

our

dictate to

own

Korea,

forces
of

trying
for

repel

Nations

handicap
aggressor

area

tary

strategy,
the
free
world
momentarily, in a mood of

some

confusion

and

without

world

the

enough

the

free

world

and
are

and

with

methods

dictated

the

has

concentrated

economic

and

create

political

vigor,

enough military strength
enough will to resist so that
these areas
cannot
be
cheaply
conquered b,y subversive methods,
by trumped up "civil wars" or
by satellite attacks.

the

se¬

weather

loyally, sacrirightly backed this
historic first attempt at
organized
ficially

and

suppression

have done

despite the fact that

the inevitable
defects of any first endeavor. But

instinctively feel that there is
something wrong about the meth¬

ods

and

mitted

around

the

with

the possibility of full-scale attack

by the Soviet Union itself.
As
against that, there is only one ef¬
fective defense for
is

the

attack.

and others.

capacity to

counter¬

The existence of that

ca¬

com¬

any

Union

power as

can

marshal,

protects

against

Then the force that

protects

one

there is good chance

all,

aggression.
The United

and

States

is not with¬

this

respect.
We
air force, a

power

strategic

potential

ground.
needs

naval

weapons,

strength

Much

power
on

to be brought into be¬

now

ing. Total reliance should not be
placed on any single form of war*
fare

any

of weapon.

relatively untried type
The arsenal of retali-

Continued

Company

page

;:i

342, 344 and 346 FULTON STREET
BROOKLYN

1, N. Y.

east

along the border of
Greece, Turkey, the Arab States,
Afghanistan, Pakistan, India,
Burma, Indo-China, and Malaya;

Capital

Iran

Formosa,

Japan,

500,000.00

7,500,000.00

Korea

Undivided Profits

nations with overwhelming

many

Surplus

then northward close to the Phil¬

720,000.00

OFFICERS

force.

may

WILLIAM J. WASON, JR.,

possible, by

prear¬

ranged defense, to make that at¬
tack costly, particularly where sea
air

where,
there

power

depth

play a
Western
and

experience

role

CARL

ALLEN, Vice-President

MEHLDAU,

LEONARD D.

iron

curtain

and

which

build

which

could

not

possible to
defensive forces

static

make

each

nation

impregnable to such a major and
unpredictable assault which Rus¬
That, however,
that

idea

STATEMENT

build
the

the close

our

Cash

Hand

Cash

Banks

U. S. Govt.

New

LIABILITIES

1,087,142.22

does not

mean

security

defense

area

and

14,093,848.33

18,843,658.24

Bonds

with

Surplus

...

Stocks

...

Due

7,193.628.70
8,937,107.05

Checks Certified

Purchased
.

720,002.74*

44,594,287.10
■

74,756.81
2,600.36

for
Taxes,
Expenses and

1,260,108.42

Contingencies

545.000.00

Official Checks

312,931.82

Recerves

391,772.28

500,000.00

7,500,000.00

Unearned Discount

661,033.50

Collateral,

Real Estate

Depositors

824,764.31

Demand and Time

Other Assets

$
....

Undivided Profits

York State and

City Bonds
Other Bonds

Bills

Capital

Bonds and Mortgages

collective
own

of business December 29, 1950

RESOURCES

Loans

should abandon the whole

HAROLD W. SCHAEFER, Comptroller

the 20,000 miles of
it

CUMBERS, Asst. Sec'y

LAMBRECHT, Asst. Sec'y

than 20 nations

along

JOHN V.

O'BRIEN, Secretary

But with

Vice-President

draw.

strung

President

RICHARD C.

Europe,

numbers
on

CHESTER A.

Outstanding

618,751.05

140,596.81

help of such other countries
$54,150,994.87

as we might pick because' of their
capacity to be useful to us.

♦Note—In

The whole world

can

confi¬

paid

out

May
for

the

$54,150,994.87

this year $301,550.00
Company's

Pension

was

Plan.

dent the United States will not at
a;

moment

supreme

danger,

shed allies who are in danger, to
whom we are bound by solemn

KINGS COUNTY TRUST COMPANY

treaty,

The

by common heritage
past fellowship in war

and

and
I do not interpret any one
urging this. Any nation doing

peace.
as

that would scarcely be in a posi¬
tion thereafter to do much picking

Kings County Trust Company offers to its depositors every facility and
accommodation known to mcderr. banking.
If you are not already availing
yourself of the advantages offered by this institution, the Kings County Trust
Company

will

be glad to

have

you

open

MEMBER FEDERAL DEPOSIT

the

of all of this

Kings County Trust

swings south along the border of
Norway, Finland, Sweden, West
Germany, Austria and Yugoslavia;

and

of deterring

men,

tanks, artillery and strategic and

all

globe.

the aggressor.

dealt

Koreas

counter-attack

our

collective security depends on ca¬

pacity

stock

series

Soviet

have

leaves

not want

That instinct is quite sound.

out

aggression.

Attack

That

this effort involves

Possibility of Full Scale Soviet

tactical planes around the hub of
the great circle of its control. The
rim starts near the North Pole,

then

lected.

Against such military
captive

can

and

agreed deterrent program.
The Soviet Union has interior
lines.

se¬

attack, at the time

which

terrain

grave

limited

selected

war

aggressor could

United

the

lected
he

the

suffer

within

us.

When it comes to straight mili¬
seems,

took

area; it
action, but ac¬
choosing rather

than action that

pacity is the ultimate deterrent.

World-Wide Defense

the

Atlantic

commit

tion

resource¬

Around the rim of the

That

was

for

the position that it did not
commit
the United States to the land
de¬
fense of any particular

fulness.

even

Our people have

itself.

static

forced to

are

When

working

collapse.

accepts

ment

Poland and Czecho¬

be found at home.

persons can

ratio of superiority would not, of

hold if Russia could take

paper what it seems should

people

sia could launch.

inventive, resourceful and
free society has given industrial
productivity far greater than that

its

somewhat in

solitary defense is
impregnable. You can pian

never
on

account.

dangerous

accept officials of Russian na¬ vain
hope of defending ourselves
tionality because no trustworthy against all the rest of the world.

Our

dismay,

think

material terms.

pitted
its youth
against what it thought was our
isolationism;
its
revolutionary
practices against what it thought
was cur static mood.
It found, to

man,

peri¬

are

thority, feels personally safe.
the

capable of
into deterrents
are

not

check the ability to expand by
cheap methods, short of open war,
that is no mean accomplishment.

into

tions.

military

of a general war of Russian origin.
predict the end of
Soviet Communist expansion but Since moral factors do not weigh
the free world has found a way to heavily in the Russian scale, we

there

odic purges as between

and

will say next Monday

average

through with distrust

and suspicion and

orbit, a single will can, in secrecy,
plot and act to strike any one of

the

Korea,

conquering,
Communism will triumph!"
deterrents
I do not know what "Izvestia" gression.

boasting

political

Republic,
the tainty. Just as we surmounted, in
recent years, the primary peril of
Republic,
the
inner decay, so, in the year ahead,
Democratic Republic."'

Northern
People's
People's

"Communism

between

The

and Alaska. From within this vast

And the

to 1951.

itself is shot

ippines,

But risk is not the

party.

same as cer¬

Albania,
Mongol

Romania,

that

fact

200,000,-

own

for

prisoners number from 10 to 15,- an inactive spectator while the
000,000, or twice the total mem¬ barbarians overran and desecrated
bership of the party. The party the cradle of our Christian civili¬

else's.

one

Also, so long
as they hold the Red Army in re¬
I
have been among
gought to create them. Under our serve to be only a threat, they
political system that is a special can still get the advantage of their
responsibility of the opposition "peace" propaganda.
s.ructive pressures are

are

slovakia
us

;

only about 6,000,000,
members of the ruling

Communist

land, and

beds.

our

relief rather

than incentives to bold

have

capacity to

us.

that

foundation

our

which

end

tions of unuy and

faith

waters.

Communism. Our loans and giants
to
others
may
sometimes have

temporary

rejoice in the renewal

can

rock

ically clever apparatus of Soviet

provided

people,

3%,

reversed.

"We

unduly

performance
ihe mood one

Take Russia. Out of its
000

the

leaders of Soviet Communism.

these

fectly

discomfited

waging

choosing for its

course,

possibilities

own

mass-production basis.

and

It would have elected

account.

INSURANCE

CORPORATION

The Commercial and Financial Chronicler,.

(84)

Continued

from

page

Continued

from

Monetary-Fiscal

page

Fallacies of

Strategic Economic Policy

Area Defense

counter-attack,

ihe right to determine

aggression
charter

being used

save

force

shield

Europe will ease
off; so unless other danger points
call for more, we can expect the
number

in uniform to crest over

(rather

than

merely ievel-off)—

perhaps in 1953.
Procurement
also
presents
hump phenomenon—both item

item

and

various

The

total.

a
oy

the fact of types of supplies needed in train¬
insure the ing will show requirement-sched¬

goal of armed forces not

the common

Interest.

of rather the

ules

the

inductions

curve

shape

same

—

with

In such ways the

idea of collec¬
security can be given sensi¬
ble and effective content.

munitions.

case

actual war, we would
able

have to be
give the Atlantic Pact
in Europe not merely an

Final Will to War Made

forces

in Kremlin

initial

Cash

flationary gap." But we repressed
the inflation through price control
and rationing. The resulting build¬

liquidity

was

the

had

postwar
without

not

avoiding

the

much

the

pass

will

outgo

spring

$60 billion
1951. The

presumably
level in

the

peak of the
cash-outgo hump is hard to place

either

time

amount; but if
prices hold, we may take as rough
figures $90 to $100 billion per
year in the latter part of 1952.

inflation, but
advantages in

feared

balance

mon¬

etary policy left a substantial "in¬

lags. Overshadowing this
with
problem is the need to stockpile
finished

tax

system.

diverse

tive

begin with, the standard of
between Treasury cash
income and cash oulgo quarter by
quarter is probably a good ap¬
pounding the difficulties of 1952
proximation
to
a
stabilization
and later years.
rule. (At least, it will be if we can
keep bank loans tight enough to
Equilibrium vs. Disequilibrium
pass war-plant financing through
System
the Treasury.)
In applying the
As Galbraith has pointed out,
standard, we might well substi¬
we got through World War II un¬
tute accruals for receipts for the
expectedly well on the disequi¬
major item of corporation taxes.
librium
Our
and

For Less-Than-Total War

ation should include all forms of

with
maximum
flexibility, mobility and the pos¬
sibility of surprise. The places of
assembly should be chosen, not as
places to defend but as places
suitable for launching the means
of destroying the forces of aggres¬
sion.
The United Nations, if it
shows that it has the requisite
moral courage, should be given

Possibilities

combating defeat¬
ism on monetary-fiscal policy, we
may profitably run over the field
of possibilities.
way

demobiliza¬

($90 billion implies good success
trimming
civilian
expendi¬

tion unemployment.

It does not follow that the dis¬

tures.)

The 1944 ratio (29%) of
rapid flow of equilibrium system is a good one
Treasury cash income to personal
for handling the problems of the
supplies.
There
is
no
use
in
hav¬
We cannot be sure that any¬
income would yield roughly $75
are
trained
as mobilization hump. Galbraith has
thing we now do will, in fact, ing men who
billion at presumptive
1951 in¬
armored
divisions
or
given
us reasons to doubt that it
fighter
prevent the awful catastrophe of
come
levels, so that taxes on a
groups in the Air Force standing would work as well in a World
« third world war. The final deci¬
World War II scale would appar¬
War
III
as" in
World
War
II.
sion will be made in the Kremlin. empty-handed after their initial
ently carry us on a cash-balance
Adapting
his
list
of
reasons to the
equipment
has
been
used
up
in
Perhaps it has been made already.
basis into 1952,
still more difficult situation of a
That we cannot know. We face a the first weeks of a campaign; to
Projection of tax possibilities
mobilization hump on the way
period that is bound to be one of put meaning into our training and
from recent experience is if any¬
into a readiness economy, it sug¬
grav<* anxiety. But so long as the organization of men, we must not
thing more encouraging. To begin
die has not been irrevocably cast merely catch up but pull ahead on gests that a disequilibrium sys¬
tem is a very bad gamble at pres¬ with, the argument for stiff ex¬
for war, we must assume that the procurement side.
cises on scarce items (which econ¬
ent;
righteous peace may yet be pos¬
Humps are also in sight for
omists but not politicians found
sible; and we must work with all various types of munitions-pro¬
(1) Savings incentives are weak¬
convincing in 1940-42) is over¬
the power that lies within us to ducing equipment, and for types ened by 1945-48 experience, and
whelmingly
convincing
today.
achieve that peace.
of facilities
steel plant, electric by lack of vivid images of post¬
While revenue is merely the by¬
It is not pleasant, at this holiday generating
capacity, railway war bliss;
product of such taxes, it is apt to
ceason, to talk about instruments equipment—which would be over¬
(2) Liquidity at the outset is as be a very handsome
byproduct;
of death.
But events in Korea burdened in a later full mobiliza¬
great as in 1945.
we
may expect $5
billion from
have shown that peace is not 10 tion. Besides, there is the prob¬
(3) Motives to hoard commodi¬ this source. When we reckon that
be found in an unbalance of mili¬ lem of civilian protection and dis¬
ties, in the light of 1942-46 ex¬ this represents in good part price
tary power. To correct that bal¬ persal
of
concentrated
targets.
perience, are much stronger than increases that buyers would very
ance is a grim necessity.
But it Needs for these (to reduce incen¬
in World War II.
likely have to meet anyway, and
is a necessity which also requires tives to aggression)
may
have
(4)
Black-marketeers
would that in the absence of such ex¬
that we be vigilant co preserve had their peak month-before-last.
cises
much
of
these
not be handicapped by
increases
inexperi¬
and
relax
not
the moral
safe¬ Actual
provision
is
apt to- be
ence, nor by restrictions bn use might go into tax-evading blackguards with which military power largely postponed by the priority
market income, this program is
of passenger autos.
needs always to be surrounded.
system till we are over the muni¬
(5) Patriotic incentives to com¬ very attractive.
We can rejoice that the United tions -stockpile hump. The
hump
If the
standard
ply with controls are weakened,
for corporate
Nations forces in Asia and the in
military-and-related uses of
and publicity for non-compliance taxes was to hold aggregate cor¬
North Atlantic forces in Europe metals
and
building materials, is
fuller, making an epidemic porate income after taxes to the
are
under the command of two therefore, is apt to stretch out for
more likely.
record levels of 1948 (a standard
men, Gen. MacArthur and Gen. several
years
(being
squeezed
(6) Sliding-scale wage arrange¬ with much appeal in relation to
Eisenhower, who have demon¬ against the ceiling, in Hicksian
ments promise to
stabilization),
something
amplify the de¬ wage
strated, in peace and war, that imagery).
We can hope to get
fects of policy errors.
like
$5 billion could be found
they put material values second over the hump much sooner for
Controllers as well as evaders here. If we set the Unemployment
and moral values first. That should textiles and
perhaps even chemi¬ have
more
experience to draw Insurance account to balance with
be the mood of all people.
cals.
upon, of course. But initial moves mild unemployment (comparable
It is not easy to do what has
Counterpart of these humps, of suggest chat much of this is run¬ to late 1949), well toward a bil¬
to be done without whipping up
course,
is a consumption-goods ning to waste, and that
Congress lion would be added to contribu¬
emotions which are provocative
trough, beginning in 1951, and and the White House are
Stiffening of estate and
of war. Now, if ever, is the time
setting tions.
running for years. Once we are patterns which
imply any direct- gift taxes could add something;
when our people should preserve
over the munitions
hump, we can control system must reproduce though this is not very anti-in¬
the calm resolve which, in mo¬ not
only release resources from most of the
early fumbling of flationary money.
ments of peril, is the hall mark
military uses, but put our eco¬ World War
The main tax possibilities lie in
II, without the off¬
of true greatness.
outfit but

would

hurt—as much

mists."

asv,

expansion to work for the
Some

consumer.

Josepbthal Admits
W. Truslow Hyde, Jr.

be
as

key items

may

the upgrade again as soon
1952. Other items, on the other

setting
and

hand,

may

trough

very

down

into

the

gradually (because of

inventories and of the output from
we can afford to use but

facilities

advantages

revenue

freshness

Hesitancy to
two

come

that

out

seems

for

to rest

misunderstandings.

taxes

commodities and

personal income taxes. A Federal
retail sales tax would presumably
yield around $1 billion per point
of tax. Rather than accept such a

enthusiasm.

equilibrium system
is

One

most of us would choose
lowering exemptions of the per¬

tax,

equilibrium
system
turning our backs on obvi¬
ously useful direct controls. This
an

means

sonal
income
tax,
and
raising
during the muni¬ is simply not correct. Any work¬ first-bracket rates, as a lesser
tions hump), and may still not able model
A one-third cut in exemp¬
of an equilibrium sys¬ evil.
have reached bottom by 1953.
tem implies many direct controls tions would yield about $4 billion
Unfortunately, many key policy in the mobilization process itself, of revenue at present tax rates.
not

rather

above

all

rate

possibilities, we may
this spring—just
munitions, and considerable ra¬ think (as suggested recently by
before
the demand-suction side
tioning.
Besides, an equilibrium CED) in terms of capturing part
of inflation is
ready to show its system implies direct controls to of the balance of income left after
true power.
The late winter of limit the cost-push.
exemptions
and
present taxes.
1951
is tax-making season, and
The second
misunderstanding is With exemptions reduced to $400
also the crucial period for
an
many that
equilibrium system sets per head, this balance in 1951
other lines of policy. But this is unattainable
goals for fiscal and would be close to $100 billion.
just the time when taxes hit their monetary policy. This
may
be A 10% slice (implying a firstseasonal peak
(which seems to true for the most intense part of bracket rate of 28% instead of
W.

price control

actual

climate

have produced
sonal deflation

perceptible

the

20%) would yield roughly $10 bil¬
lion.
A 20% slice
(implying a

hump.. But
the
Hyde, Jr
monetaryin several recent fiscal goals
implied by the equi¬
Josephthal & Co., 120 Broadway, years).
Besides, inventories and librium system for 1951 and early
New York City, members of the
goods in process will hold volume 1952 are attainable. Beyond
that,
New York Stock
Exchange, an¬ high for spring clothes, consumer in view of uncertainties about
T.

sea¬

nounce that

has

been

W. Truslow Hyde, Jr.,
admitted as a general

partner in the firm.
Mr.

Hyde's

} nership

was

admission

part-

tion.

14.

Harry Downs Co. Admits
Harry

Downs

Co.,

Wall

Tower, New York City announced
the admission of Henry G. Hull
to their partnership on Jan. 1.

first-bracket

rate

36%

—

roughly the rate the British ap-

during

pled

the

war

the

cash income. The rough tax
calculations just sketched suggest"
ury

that the maximum attainable rev¬
enue is not below
$85 billion. The
economic ceiling is

probably set
by enforcement limits; the incen¬

tive argument against
high taxes
which
tends
to
underrate
the

"income-effect"
effort

keep

incentive

having

standards,

the

scramble

living

discounted

taxes.

The problem

political

ceiling
ceiling.

to the economic

accustomed

may

this range of
is to get the

monetary

side,

much
keep the
monetary
policy
from being sacrificed to
tap bank
be

can

done

substance

can

credit

for the glory of
Treasury
security-flotation engineers. (An
adequate
tax
policy,
avoiding

growth of debt, will reduce temp¬
tations for such

evisceration of

monetary policy.)
A move

which would be strik¬

ing enough to change the whole
liquidity picture is to serve notice
that marketable bonds; callable in
1951 will not be redeemed before

final

maturity

capital

1953-55.

The

this announcement
create
would t" largely go

would

The

liquidity of the
bond
portfolio
reduced; and the Treas¬

public's

whole

would be

would

ury

gains

unrealized.

during

get

two-year
all
bond

spell
sales

which

could

used

refinance

shorter-term issues. Savings bond
maturities and redemptions can be
dealt with along lines suggested

CED—by essentially extend¬
ing present contracts, with attrac¬
tive
yield
and
tax-deferment

terms, in consideration

of reduc¬
tion in the liquidity of these con¬
tracts. Such extensions (and new

sales)

might

rewards
take

well

offer

holders

bonds

interest-

who

would

redeemable

only in
personal emergencies, rather than
bonds redeemable
Bank

reserves

demand.

on
can

drawn

tight enough to reduce the avail¬
ability of credit—and to persuade
banks to

shorten loan maturities,
increasing debtors' need for liq¬
uidity. This implies use of some
combination

interest

curity-reserve
(rather than of
tions)

which

refund

debt

ury

find

that

for

short-term

estate

most

effect
of

posi¬

easy reserve

holders

real

their

se¬

issues
Treas¬

it matures.

and

requirements

Qualitative controls
ment

install¬

credit

compounded

drastic

will

powerful when

shortages of

with
new

durable goods to buy. This effect
should help
us
over
the early
months
of
the munitions-stock¬

pile hump.
Margin of Safety in Economic

Strategy
The

shrink

The

monetary

casts about situations
program

through

1951

and

plan

jerry-built

"temporary" direct controls,

com¬

the

future

economists

should

from

over

year

not

divert

pressing

mone¬

tary and fiscal programs.

property income
giving
the

and

Bureau of Internal Revenue more

staff could
enue.
s

tax

add

considerable

rev¬

An all-out personal income

could clearly yield
$25 billion of added rev¬

program

at least
enue.

A more modest program to

yield $15 billion would be quite
simple to design. Such taxation

kind

fore¬
ever,

incomes

will

will work out.

policy this points
by the per¬

rate,

and

Fortunately,

make

from time to time if

come

taxing

tax reduction is
easy. The upshot
is to set
a
very high
standard

source

fast

to may be illustrated
sonal
income
tax.

and

economic

great

how

direct controls

the

rise; how much people will insist
on
savings; how compliance with

world

only sensible policy is to try
see.
Since a disequilibrium
try to get off too cheap system has more chance of suc¬
economically. In particular, they ceeding with all-out' monetarymay
be tempted to lay out a fiscal policy than with a pussy¬
frankly inadequate fiscal and footing policy, divergence of fore¬

are

though their form has changed.
We simply cannot forecast accu¬
rately how
fast
supplies
will

show

hazards

casting

For

£130
of
taxable
income)
spending,
about first
yield
possibilities, and
about would
roughly $20 bil¬
consumer and business
Locating
unreported
in¬
reactions, lion.

late

supply

get

l."\

■-

"I sour«es,

revenue

1951 levels of
income, would
yield around $50 billion of Treas¬

government

ers

■

Present

metal goods, and a host of prod¬
ucts.
If by any chance there is
also
a
temporary reduction of

tension, there will be acute
previously reported temptations for our
political lead¬

in the "Chronicle" of Dec.

econo¬

replace

decisions will be taken in
unreal

for

anybody—but
if
would not hurt as badly as infla¬

—

nomic

Thursday* January 4, 1951

tax

can

afford to collect less.

legislation,

enacting two

witholding

abatements

developments

this

implies

three alternative

schedules,

deciding

from quarter to
to

quarter which is
force, and tuning the

annual rate at the end of the
year
to the withholding rates

actually

applied.
In

the

monetary field, the

allel strategy is to create
of safety by

funds and

par¬

margin

postponing bond re¬
by taking up the slack

yoliime

173

Number 4974 7:r: The Commercial and Financial
Chronicle

(85)
in

bank

reserves""'(including

potential
bank

reserves

curities

under

toward

the

These

government

present

those ' of

controls.

This

se¬

problem.

The

policies

security
will

moves

the

represented

holdings of

market).
harm

inflation

holds off, but will
help
to brake it if other
policies prove

inadequate.
In

haps the key point is
of

the

game

in setting up
This greatly

pects of
in

whole

improves

has

expected

the

policy

holes,
us

By H.

their

keep

direct

possible,

use,

to min¬

get the

same

really drastic taxes,

and

approach

and

money

(Special to The

Financial

CLEVELAND,

deferred

Patterson

customary

has

Ohio

—

become

Robert

associated

Exchanges.

In the past he

partner

Greene

was

Brock

firm

44 Wall

many years.

Banks

Utility Securities

been able to drive

the

creased

from

question

Mr.

some

good

the

date.

bargains

carry

Louis

his

have been

institutions and

His

largely

with

dealer

due

part

book

profits

might well be asked—since

the

has

company

(and

eventually sell) remaining .distributing systems. The best
way out is to sell as much as possible of, the property as a unit if

of its
with

be obtained.

recent years

the company has been

concerned

about

sale

property in the city of Seattle, where it competes actively
municipal system. The franchise expires in 1952 and there

have been

some

fears that the company might

then be "dispos¬

sessed" without proper
compensation.

city council and the

price of about $25,850,000.
voters Nov. 7, and the vote
was

After long negotiations the
arrived at a compromise base sale
The agreement was submitted to the

company

was

favorable to

exceedingly close. The final count
small margin, but a recount was

the sale by a
ordered Nov. 23 and final results of this recheck have not
yet been
announced.
The Seattle competitive
area,
while it represents
about 40%

cf electric revenues, is only about 25%

of the electric

issue

large majorities
stimulated

other

favor

cities

municipal

consider

ownership

similar

action.

this

and

Even

has"
the

Supreme Court declares the law constitutional, the new competi¬
tion between various public power
groups may make it difficult
to develop the "single sale" idea.
A number of condemnation actions have

by PUDs and cities which

now

been

instituted

seek to

acquire properties of all kinds.
nine such actions against
company properties, and
major hydro plants (aggregate capacity about 225,000
kilowatts) are involved in these condemnations. This leaves only
There

are

all

the

rising

declining market, insurance stocks tend to lag

Earnings in the

months

ended

Oct.

dividend of only 80 cents.

were

$1.88,

but

the

company

pays

;

the

following tabulation the 1950 and 1949 price ranges
of the principal stock fire insurance companies are "presented.
The market prices at the end of each period are also shown as well
the changes between the two periods.

Co., Inc. and
offering today (Jan.

are

$7,500,000 New York Central
RR. 2%%
equipment trust cer¬

interesting to note that the shares which have shown

the best gains are among

through the medium of stock dividends.

—Price Range—

yield from 1.90% to 2.95%, ac¬
cording to maturity. The group
award

comnetitive

the

sale

certificates

yesterday

1950

Aetna Fire

Agricultural

The

certificates

will

issued

under the

Philadelphia Plan, and
being offered subject to ap¬

are

proval of the Interstate Commerce
Commission.

They will be secured
by new standard-gauge railroad
equipment estimated to cost $9,631,380.
Other

members

group are:

Boston

the

offering
R. W. Pressprich & Co.;

High

48%

15%

22%

21%

Insurance_____

61%

45%

587/s

58%

56V4

70%

50%

62%

45%

70%

62%

Ins.

______

70 Va

_______

Association_______

Fireman's

(Newark)—

Glens

Falls

Great

American

__________

61%

74%

54%

46%

61%

40%

47%

38%

57%

23%

18%

55%

45 %

32%

14%

22%

20%

53%

241/4

311%

25%

57/a

32%

Hartford

Fire

144

107

124

A._—___

132%

Fire

98%

65%

136

88%
27

1111/4

:61/

55%

30%

331%

Insurance™__

Michigan

Security Insurance—™
Spring!ield Fire & Mar.

38 %

291/4

37%

31%/-

31%

48%

411/4

41%

63 %

56%

"18%

22%

18%

Hayden,

Miller

Pollock &

& Co.; Wm. E.
Co., Inc.; Weedon & Co.,

38%

Paul

Fire

Mar.__

Fire__—_

40%

•

—

37%

—

67%

83%

63%

•f

28%

36%

30%

—

103

75%

103

114

?•

—

47%

—

66%

—

22%

%
5

+ u

,37
'

+ 18

60%

36%
114

Fire

Westchester

30%

—

110

Union

+ 20

34%

128

National

_______

—

116

34%

Phcenix

Providence-Wach.

91/e
3%

+ 11%

47%

National

31%

37%

+
—

54%

Fire

Insurance

61%

70%

.47%

—

57%

Hanover

St.

Blair, Rollins & Co., Inc.; Horn-

Co.;

—

blower & Weeks; L. F. Rothschild
& Co.; The Illinois Co.; First of

Corp.; Freeman &

Change

Insurance

Co.

1949

61 %

17%

Fund_:

Ins.

1950

57%

Fireman's

Home

Points

Dec. 30, Dec. 31,

62 «/4

76 y2

Fidelity-Phenix
Fire

49%

23%

Insurance-

Ins.

Continental
Federal

Low

(New'k)

American

bid of 99.03%.

Market Bid Price

1949
Low

High

those which have increased their distri¬

butions to stockholders either in the form of higher cash payments

6%
61/4
1%

—

Inc.; Gregory & Son, Inc., and McMaster Hutchinson & Co.

I. Emerson in

Cornell Univ. Post
Willard I. Emerson has

Vice-President

become

DALLAS, Tex.—Ellis C. Huggins is forming Huggins & Co.
with offices in the National City
Building to engage in the securi¬
ties business.
Mr. Huggins was

for

Development formerly an officer of the Liberty
of Cornell University, it was an¬
State Bank and the Empire State
nounced by the institution's board
of

trustees.

Mr.

Emerson

was

Bank of Dallas.

Joins Boettcher Co. Staff
(Special to The Financial Chronicle)

DENVER,
Col. —Herman
E.
Aulmann, Jr., has joined the staff
of Boettcher and Co., 828 Seven¬
teenth

New
was

Street,

York

members of
Exchange.

Stock

formerly

Pettis

Co.

Kirkpatrick-

with
Omaha

E. Wood & Co.

1110Ho

of St.

and

Harold

Paul, Minn.

formerly a partner in Hemphill,
Noyes, Graham, Parsons & Co.
His
as

new

duties will include acting
director of the

executive

Cornell
ized.

Council,! recently

He is

now

the 80,000 kilowatt Shuffleton steam
plant (of the major group of
power plants) which is not involved in condemnation
proceedings.
This complex legal situation makes it
very difficult for the
Wall Street
utility analyst to attempt any estimate of liquidating
value. In the past,
liquidating value figures for the common stock
in the range of 18-23 have
been mentioned from time to time. The
stock is
currently selling over-counter around 16.
12

pending is the decision of the
Washington State Supreme Court as to the constitutionality of the
1949 state law
authorizing two or more PUDs acting jointly to
purchase an entire utility system such as Puget's. The Court on

pany has become a "bone of contention" among the various PUDs;
and municipalities. Four small
municipalities on Oct. 17 voted by

/./■

insurance shares is considered favorable.

Stuart &

Associates

still

Sept. 5 heard the appeal taken from the decision of a lower court
upholding the validity of the law. Meanwhile, however, the com¬

Dec. 28, 1950, was

;

Huggins & Co. Opening

Another important

;

the other hand,

Halsey,

plant.
:■

gain of 15.2%.

average,

change in the two groups is small.
Insurance shares, because of their investment standing, tradition¬
ally are more stable in price than most other stock groups. As a

Equipment Trust Olfs-

won

the company's production facilities and make it difficult
to operate

insurance

approximately 124.44 and

The difference between the

Offers N. Y. Central RR.

properties.

efficiently operate the remaining
The power situation in the Northwest is
very "tight"
and it is difficult
enough now to obtain power for all needs, even
though hydro conditions in 1950 were favorable. Puget Sound
along with other utilities is dependent on Federal power for part ■/
of its requirements.
Sale of too many properties might cripple

Barron's

In view of this and the fact that underwriting operations have
not been quite so profitable this year as last, the market action of

Halsoy, Stuart Group

next.

behind the general trend.

tificates maturing annually Jan. 1,
1952 to 1966, inclusive, at prices

143.33

new

million

the

result, in

financing and also reduce its long$13 million during 1944-49. Surplus was in¬

Industrial Averages ended 1949 at 200.13 and at
30, 1950, stood at 235.41, or a gain of 17.6% from one year

started the year at

organizations.

Dow-Jones

Dec.

sales¬

followed,

general, that of the stock market, the gains made during the
have not been quite so large percentagewise.
For example,

the

Co.

been able to make such
good bargains with earlier sales, why not
this piecemeal disposal of the
system. The answer is
that such
dismemberment, if carried much further, will reach a
stage where the company cannot

fair price can

as the year closed.
insurance stock prices has

year

and

with A. S. Becker & Co.

with

the best levels of the period

Although the trend of

until

career

beginning of the Korean conflict at the end of June
sharp reaction in stock prices and the trend continued

or near

formerly

was

likelihood of larger dividend disbursements

for about two weeks, reaching the low of the year
July 15. The recovery of prices after this adjustment was
rather sharp and most issues continued to show improvement
throughout the final months of the year.
Most shares were at

and

H. Whitehead

the outlook

The prospect of larger invest¬

around

During

Board

during May and June

downward

official of

Stockpiling

Holcombe

the

sales activities

about twice what the districts considered the

$15

to
was

Production

started

man

continue

The
caused

partner in Luke,

1948

War

with

properties sold.
The

was

improved

continued favorable.

later in the year also aided some issues.

distribution
"

number of companies at that time.

ment income and the

Shipping Division.

company in 1948 sold properties to the
$14 million and in 1949 for about $16.5 million.

some

for business

Louis H. Whitehead

funds.

paid by

Quotations

Holcombe,

during 1944 and 1945 he served

The

about

and

wholesale

mutual

Co.

Actions brought by five PUDs, for
example,
awards under condemnation proceedings aggre¬

normal expansion without

term debt

also have been the inclination to liquidate stock dividends which
were

the

Mr. Banks has been in Wall
Street since 1923 when he became
associated with Dominick & Dom-

Previously the company had disposed of its transit, gas and tele¬
phone properties. As a result, the company was able to
,

World War II he

making these sales.

formed

Street, New York City, as

successors

Co.

have

Banks & Weeks from 1929 to 1946,
was with Louis H. Whitehead

was almost identically the same as in 1943—around the $100 mil¬
lion level—since natural
growth was offset by property sales,
mainly to public utility districts.

worth.

■

very favorable showing of 1949, there was a tendency during
March and April for prices to decline.
A contributing factor may

Holcombe, Jr.

and

Puget Sound' Power & Light Company is one of the few
remaining "special situations" among the electric utility operating
companies. The company's net plant account at the end of 1949

about

Jr.,

for

Puget Sound Power & Light Co.

PUDs for

F. J,

Morton M. Banks and Frank J.

Holcombe,

Director

properties

the

jury
gating $22,100,000

general

above the level existing at the end of the year and when it
became apparent that results for 1950 would not likely equal the

By OWEN ELY

trend to

showed

move

inick.

resulted

The

Stocks
shares

the early months of the year insurance shares f ol-'
lowed the general trend of the stock market.
Most issues did not

Morton M. Banks

the New York and Midwest Stock

and

The company has

market

higher prices was not uniform, however, and
while many individual issues reached new
highs, others ended
the year below the level
existing at the start of the period.
*

Chronicle)

with Ball, Burge &
Kraus, Union
Commerce Building, members of

between the evils of inflation and

;

The

prices of five insurance
improvement during the year 1950.

Bali, Surge & Kraus

to-say that if
monetary controls are
scamped, the resulting, inflation¬
ary gap will force us to choose

JOHNSON

This Week—Insurance

controls

Robert Patterson With

Public

During

instantaneous adjust¬
ments—which I would /.widen the
is

want

effective

fresh

and

reasonably

safety .margin.

public debt management.

sliding-scale
on

full

Bank and Insurance Stocks

Form New Firm

strong,

than

the farm

agree

large gap will force

answer:

pros¬

greater

with
can

are

accept both sets of evils, Whether

imize

rather than

margin of safety,
runaway
inflation
is

groups

controls

that

arrangements

taxes

the patterns of direct control
feasible

Banks and Holcombe

the

demand

direct

now

behind

price line"

are

clearly forestalled,
labor

than

If stabilization

-that

be ahead

political

and

per¬

rationing machinery.

strains

forecast.

rather

"defending

case

field,

direct

understates

for

the direct control

across-the-board

activities

widely known for his

versity and

organ¬

NATIONAL BANK

oi INDIA, LIMITED

behalf
was

Bankers

uni¬

the

Government

Outlook For

Fire Insurance

Kenya Colony and Uganda
Head

president of his

Stocks

Office:

26, Bishopsgate,
London, E. C.

class.
Branches in

Colony,

Askew Co. Formed

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

Subscribed

DALLAS, Tex. — Askew Co. is
being formed with offices in the
National
in

Askew

City Building to

securities

engage

business.

Mr.

formerly with Dallas
Rupe & Son.
was

Paid-up
•

Reserve
The

Bank

Zanzibar

Capital

Capital.,
Fund

£4,000,000
£2,000,000

£2,500,000

Laird, Bissell & Meeds
Members New York
Members New

Telephone:

conducts

benking

every description of
and exchange business

Trusteeships and Executorships
also

undertaken

York

Stock. Exchange
Curb

120 BROADWAY, NEW

Bell

(L. A.

Exchange

YORK 5, N. Y.

BArclay 7-3500

Teletype—NY

1-1248-49

Gibbs, Manager Trading Dept.)

Specialists in Bank Stocks

•

(86)

earlier the market value

year

Stock Series'

By ROBERT R. RICH

Calvin Bullock
Prospectus upon request from
your investment dealer, or from

SECURITIES

RESEARCH
120

Government

efforts

expansion

restrict

may

seri¬

ously hampered by the fact that

somewhat

CORPORATION

vate

half

over

debt

net

pri¬

the

corporate
category and will have to be in¬

BROADWAY, NEW YORK 5, N. Y.

creased

support

greater

duction

for

defense

and

higher priced

pro¬

carry

materials, Cal¬

raw

vin Bullock concludes in the
rent

cur¬

"Perspective," entitled "Eco¬

nomic

Aspects

the

Private

Debt."

BULLOCK

The report
of

FUND

means

states that

number

available for direct¬

are

ing the flow of

greater propor¬

tion of the gross national product

into

goods and services for

ernment use,

including direct

con¬

which

rate

would

leave

greatly decreased spendable in¬
restriction of credit.

come, and

/The analysis points out that di¬
controls

rect

CALVIN BULLOCK
Established 1894
One Wall Street

New \brk

and

high tax
rates are inadvisable, because di¬
rect controls for a long period of
emergency
are
"unsuited to
a
democratic economy" while ex¬
treme tax rates "destroy incen¬
tive to produce the things essen¬

1927.

Since

1932

Vice-President

has

been

Pacific

Coast

of
Loomis,
Sayles &
Company and is a member of the

firm's

executive

committee.

is Vice-President and

Director of

Fund,
been

Loomis

Inc.

Sayles
Second
since 1938 has

and

consulting

former

President

Alumni

Association

Business

Rufus Carter

Elected

Simonson, Jr., Presi¬

Henry J.

dent

it affects

Jr-.V

one—and

about

the

it.

One

cost

what
chart

living

shows

results

$10,000 investment made

terms

1950

power for each

purchasing

type of asset

arc

shown.
?•:■/

ey stone

Cash

Custodian

_____________

Bank

INVESTMENT FUNDS
investing their capital
'

Value

Power

$10,000 $10,000 $5,750
7,060

High grade bonds—

10 000

13,360

7,720

Real

10,000

20,000

11,560

10,000

24,170 13,970

estate

u_____

com.

Stocks

tor

Lee

stocks,

performance

and

as¬

divi¬

dends

equal to that of the Dow-

Jones

Industrial

Stock

Aver¬

age, not

only kept pace with the
73% rise in the cost of living over
the past
decade, but showed an
increase in real purchasing power
gests

PREFERRED STOCKS
•

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

period. The booklet sug¬
that if stocks are decided

may

Incorporated,

in¬

of Boston
Congress Street

Jan. 2,

L.
50

Company,

Boston 9,

Massachusetts

McElroy
the

Mr.
a

as President, effective
1951, the 25th anniversary

firm.

The

resident of

San

until

series,.

dividends
paid - to
1950 were as

great or greater than those of the
.

stocks, 45.67%;
21.01%; bonds

Increases in Divi¬
share ranged from one

year..

dends per

twenty cents.
Total

net

assets

New

York

Technical

Stocks, Inc. at the fiscal year-end
were over $34
million, while total
dividends
paid
during
the
12
months'
period amounted to'
$1,974,694.
i

000 compared

outlook in his letter to sharehold¬

Report*//

with approximately
$150,000 in November, 1949, when
the fund began sales to the public.

ers;

commenting

the business

President Hugh W. Long said,

"The business outto'blr in general,

Stockholders have increased from

and

less than 20 to over 700.

Fund, which is a tim¬
ing fund, follows the policy of
being completely invested in com¬

for

prospects

dustries,

Technical

Carter

are

direction

and

scope

individual

dominated
of

by
our

in¬

the
gov¬

ernment's armament expenditures.

pleased to

are

that

formerly sole proprietor of Louis H. Whitehead Co.,

the* dis¬
on

mutual

joining

Securities'

organization

our.

and member of the

Vice-President

Policy Committee /

Mr. Whitehead will direct the Distribution of

mutual funds under

Century Shares
today the ap¬

announced

announce

Louis H. Whitehead

o.,^will

the

National

trustees of

Trust

business under the

tury

name

our

sponsorship and management

recently

NATIONAL SECURITIES & RESEARCH CORPORATION
120

Cen¬

Distributors.

Ripley & Co., Inc. and
predecessor has been the un¬

derwriter

the

Trust

since

Broadway, New York 5

January 2, 1951

Harriman

its

organization in 1928. Mr. Swaney,
who

has

been

banking

the

business

investment

for

over

WE ARE

years, has been the wholesale dis¬
tributor of the Trust for the un¬

derwriter for

During

over

oldest

and

largest

PLEASED TO ANNOUNCE THE FORMATION

BANKS

years.

this

period
Century
Shares Trust, which is one of the
open-end

in¬

companies

specializing
stocks, has
$11,500,000 to more
than $30,000,000.

and

HOLCOMBE

WALL STREET

NEW YORK 5, N. Y.

TELEPHONE; WHITEHALL 3-6B50

MORTON

in bank and insurance

' •

M. BANKS

FRANK J. HOLCOMBE, JR.

from

grown

The

Trust

opening

its

own

LOUIS

office

at 10 Post Office
Square,
Boston 9,
Mass., which is also the
address of the new underwriter.

THE

SUCCESSORS

CO.

H. WHITEHEAD

WHOLESALE

DISTRIBUTION

MUTUAL FUNDS

Bullock Fund Assets
I

At Record

High

net investment income
year

also

were

the

dur¬

cording to

EATON & HOWARD

BALANCED FUND

STOCK FUND

highest

record.

PROSPECTUSES OF THESE TWO MANAGED INVESTMENT FUNDS

Total net assets

the

Nov.

30,

ac¬

MAY

OBTAINED

annual

report for
the fiscal year ended on that
date,
were

$8,672,659, equal to $21.05

share, compared with $6,896,199
$17.80
ket

McElroy,

four

shareholders during

Governments,
17.22%; U. S. Government bonds,
12.27%; and cash, etc., 3.83%.

Century Shares Trustees
Appoint Underwriter

ing the

vestment consellors, have elected
Robert H. Loomis to the office of
Chairman of the board and Floyd

Keystone Company

under

from

The directors of Loomis, Sayles
&

Tke

Coast

McElroy Elected
Loomis, Sayles President

be obtained from

port of the company released to-»
day. With the exception of only

shares out¬

sponsorship and management.

Protpeclus

ended Nov. 30,

year

1950, according to the annual re¬

has

hedge against inflation,
Bullock Fund reported
proper
yester¬
selection,
diversification
and supervision are important in¬ day the largest total net assets for
the
close
of
vestment principles to follow.
any fiscal year in its
history. Dividends per share paid
upon as

ing the fiscal

proprie¬

rect

Carter

Pacific

vestment

investment

for the

BONDS
(Series B1-B2-B3-B4)

(Series K1-K2)

Real

Buying

12,210

The

1950

Dollar

10,000

suming

Certificates of Participation

1950

1940
Dollar

deposils_..___

Indust.

Fun is

■

increases
share dur-t

recorded
per

and other than U. S.

pointment of John Swaney as the
principal underwriter of Century
Shares Trust. Mr. Swaney will do
fol¬

in 1940 in various types of asset.
Dollar value in 1950 and the val¬
ue

stocks,

Stocks,

in net asset value

the

over

past 10 years has risen 73%.
The
booklet features the

comparison

can

York

formerly

&. C

funds

York,

investment funds comprising New

elected

tribution

ject of inflation—what it is, how

1950 of

preferred

dent. Mr. Car¬

the

discusses in simple terms the sub¬

lowing

common

timing.

New York Stocks

that date. - /
Net assets as of Nov.. 30, 1950;
were invested, percentagewise, as
follows: in

and information on

news

Reports Gains

continue to di¬

rities & Research Corp., New

905,445

Vice-Presi¬

1950.

that

the

which

Record"

investment

monthly

the

in¬

for

exclusively

dealers

Resident

provide an even
persuasive reason for infla¬
tion-hedge investing in 1951 than

"Inflation and I," a new 24-page
booklet issued by National Secu¬

Street, New York 5, N. Y.

need

Carter
been

Issues Inflation Book

63 Wall

Re¬

Corp.,

anno u

inflation

done

Securi¬

that Rufus Lee

Rufus

Group, Incorporated

Na¬

and

National Securities

Distributors

tional
ties

digest of

outstanding

$12,887,501, equal to $13.56
on

timing.

"Technical

shares.
A year earlier, on Nov.
30, 1949, total net assets amounted
to

inr

advisory publication, for
major conclusions on policy

Prepared

reports
$14.90

the

Technical Trend,

vestment

Fund, San Francisco,
reports that its assets are $3,600,-

National Vice-President

sole

investment dealer

$15,601,721, equal
on
1,046,779

Technical Fund

fied

from your

the

sions

"/■....''/ :l
conclu-;

■

vestment

its

Club of

very

eer,

request

and

STOCK FUND

Stanford

School

rate, which itself is decreasing at
a
decreasing rate, then the ob¬
vious implications of an intensi¬

prospectus

in¬
the

of the

Harvard Business

San Francisco,

professor

management

THE COMMON

■■•/ / /

Twenty-one of the twenty-four

Securities

bull markets
completely defen¬
during bear mar¬

during

portfolio

and

of Nov. 30,1950, total net assets

standing

with the result that credit expan¬
sion will increase at a decreasing

Group Securities, inc.

and

ment, that direct controls and in¬
creased taxation are inadvisable,

the
"to

year

Reports

Nation-Wide

cepts

during

fiscal

stocks

sive

omy.

Loomis-Sayles Mutual Fund, Inc.

long period." If one ac¬
the premises of this argu¬

over

and

Director

tial for national defense if applied

.7!

investment
banking
experience
prior to joining Loomis, Sayles in

University.

tax

the

making

Stanford

School

holdings

Holdings of oil, railroad and
his steel stocks were increased sub¬
headquarters in the firm's New
stantially, and principal reduc¬
York office.
tions took
place in holdings of
Following
graduation
from
public utility, automobile acces¬
Stanford University in 1921 and
sory,
container, food and phar¬
the Harvard Graduate School of
maceutical groups."
Business
in
1923, Mr. McElroy
had public utility, insurance, and
Nation-Wide
He

Graduate

labor, imposition

half

•

The Fund relies

bring them more closely into gear
of the with the conditions of a war econ¬

one

company,

of materials and

individuals and corporations with

your

dealer

gov¬

the

vestment

investment

Loomis,

trols upon production and the use

Prospectus from

Mr.

founders

President.

credit

NATIONAL

succeed

Analyzes

American Private Debt

last

Thursday, January 4, 1951

kets.

made in the company's com¬

stock

mon

and retaining a

Fund, said that extensive changes
were

mon

$202,844 greater than cost.
Hugh Bullock, President of the

was

Mutual Funds

The Commercial and Financial Chronicle

value

was

year

EATON

YOUR

INVESTMENT

DEALER

HOWARD

INCORPORATED

FROM

BOSTON
INVESTMENT MANAGERS FOR

OVER

TWENTY-FIVE YEARS

earlier. Mar¬

$1,410,542

greater

than the prices at which they were

Francisco, will purchased by Bullock Fund, Ltd.

24 Federal Street

BOSTON

333

Montgomery Street

SAN FRANCISCO

Number 4974

Volume 173

The Commerc

...

At this

writing, projected Federal
spending appears to be sufficient
to maintain the country's indus¬
trial activity at
or
near record
levels.
This would permit many
to enjoy good earnings,

cpmpames

and to pay good dividends."

Continued

The State of Trade and
those of the

and zinc for six months was

urged

by Frank L. Valenta, President of
Natural Resources Fund, Inc., in a
ihessage to stockholders.
emphasized that
holiday is necessary be¬
of increasing shortages of
for

metals

duction.

pro¬

explained that the
stockpile
of
copper

present

amounts to
tons

and

calls

for

the

industrial

approximately 400,000

that

the

1951

program

storing from 15

world

Natural

nine

were

made

to 25%

output.

Resources

ating

months

Fund, oper¬
since shares

available

Feb.

23,

increased its net assets to $665,000
at

of the fiscal

the end

year

and

nearly $775,000 when this re¬
The $775,000
figure represents an increase of

port went to press.
than 700%

over

the Feb. 23

The Fund has nearly 600
shareholders located in 22 states.
amount.

Investments

securities

broad number of natural

fields.

source

the

include

than 60 companies operating

Fund

During

realized

the

re¬

year,

capital profits

of $15,868 and on Nov. 30 had un¬

realized

appreciation

invest¬

amounting to $22,456.

majority of

Higher Output Despite
Year's Holdiday

&o4tcn

All-Time Peak

Dun & Bradstreet
a

r« r*

C»ra«f

NPA

this week

Mandatory price-wage
the magazine adds.

controls will

are

convinced

probably

come

The first enforced controls will be

selec¬

The

than

materials sources are being exploited to meet the de¬
stepped-up capacity.
Steel production in the United States during 1950 was equal
to the combined output of all the other countries of the world,
according to "The Iron Age." American steel companies produced
96,954,000 net tons of steel ingots and castings last year, com¬
pared with total world output of 194,154,000 net tons.
United States steel production was more than three times Jy-v
raw

mands of

U. S. output,
96,954,QpO^ Russia, >26,500;and U. S. allies are included, the

countries

that the operating rate of steel companies having

week ago,
is

the

or an

week

capacity

week's

ingots

steel

1,930,600

tons

included.

amounted

castings

for

the

entire

industry,

to 1,938,400 tons,

year

ago,

The

weather

oyer

much of the nation contributed

to rising

The aggregate

amount of apparel bought rose slightly in the

week; dollar sales were somewhat above the level of

a year

Handkerchiefs, hosiery, neckwear and similar small objects of
attire were increasingly popular with shoppers; the interest in
coats and suits rose slightly in scattered sections, while requests
for dresses were largely unchanged from the week before.

Slumps in Christmas Holiday Week
by the electric

Food

the nation's stores rose

buying in

the past week to

tions, fresh meats, poultry, and produce were especially sought, as
well as bakery products and confectionery.

Auto

Combined motor vehicle

production in the United States and

and

failures

declined

125

week, Dun & Bradstreet, Inc., reports.

Despite this decrease, cas¬

ago.

by the

Northwest +2 to +6; East +3 to +7; South

Southwest —1

+4;

and

Pacific Coast

Christmas within the period ended on

countrywide basis, as taken from

index for the week

ended

23,

;

1950, advanced, 17% from the like period of last year. This compared with an increase of 9% for the previous week. For the four

tered

Reserve

Board's

Dec.

advance of 5%.

Retail trade in New York last week was brisk with food sales

setting

all-time

high

dollar volume and

departmnet store

sales for the closing week of the year estimated at
1949 level.

10% above the

According to the Federal Reserve Board's index,
in New York City, for the weekly period
1950, advanced 17% from the like period of last year.
ceding week an increase of 9% was registered above
week of 1949. For the four weeks ended Dec. 23, 1950,

store sales

the

a year

weeks ended Dec. 23, 1950, sales showed a rise of 7% from the
corresponding period a year ago and for the year to date regis¬

Sharp Contraction in Christmas
Holiday Week
industrial

Department store sales on

year ago.

Commercial

ago,

period ended on Wednesday

estimated to be from 1% to 5% above

the inclusion

the Federal

Canadian output in the week totaled
6,645 units compared with 8,207 units a week ago and 5,269 units

holiday-shortened week ended Dec. 28 from 174 in the preceding

year

almost unchanged from last year.

106,744.

Distributors, Inc.

Midwest

With

against last week's revised total of 152,705 units, and in the like

Failures Show

Wednesday of last week, there was a mild decline in wholesale
ordering. Order volume was appreciably above the level for the
similar week a year ago. The number of buyers attending various
wholesale markets dropped sharply from a week ago, but was

'•

one

with that of

-j-1 to 4-5.

week, according to "Ward's Automotive Reports,"
totaled 130,200 units, compared with the previous week's total of
160,912 (revised) units and 113,026 units a year ago.
Ward's blamed model changeovers by Chrysler divisions and
the Christmas holiday for the decline last week.
Total output for the current week was made up of 94,394
cars and 29,160
trucks built in the United States and a total of
4,710 cars and 1,935 trucks built in Canada.
For the United States alone, total output was 123,554 units,
of last year

was

New England and
and

Canada the past

week

even

Regional estimates varied from the levels of a year ago
following percentages:

22.8% above the comparable period of 1948, which

Output Lower for Week But Higher Than Year Ago

about

was

Total retail dollar volume in the
of last week

revenue

Christmas Day.

unit volume

While

reported for the corresponding period two years ago.

ago.

previous week, 986,628,000 kwh., or 18.0% above the total output
for the week ended Dec. 31, 1949, and 917,070,000 kwh. in excess

includes

spending during the

price increases for some items helped dollar volume rise above the
mark of the similar 1949 period.
In line with seasonal expecta¬

138,505 cars,

Spring St., Los Angeles 14, Cal.

consumer

trade.

freight for the week eqded Dec. 23, 1950,
totaled 747,204 cars, according to the Association of American
Railroads, representing a decrease of 25,698 cars, or 3.3% below
the preceding week.
The week's total represented an increase of 123,947 cars, or
19.9% above the corresponding week in 1949, and an increase of

further rise in

553,438,000 kwh. lower than the figure reported for the

was

Loadings of

650 S.

sales, states Dun & Bradstreet, Inc., in its current summary

Carloadings Turn Downard

American Funds

was

ended

Institute.
It

by Seasonal Weather and

point slightly in excess of last year's level.

of the output

Prospectus from your locol Dealer, or

of 41,178 bales, the latter comparing with 35,037 for the
period last year.

seasonal

it stood at 92.9% and 1,-

electrical energy distributed

$ 'A1-

light and power industry for the week ended Dec. 30, was esti¬
mated at 6,479,302,000 kwh., according to the Edison Electric
investment dealer
or

amount

Wednesday, reflecting a sharp influx of lastminute Christmas shopping.
Total dollar volume was -slightly
above the level for the corresponding week in 1949. The arrival of

a week ago, in which the Christmas holiday was
month ago the rate was 100.5% and production

Electric Output

PHILADELPHIA 2, PA.

-t .-Mit

There

opera¬

compared

T A A*' >"i'
-tu
Mill consumption of cotton, according to the Bureau of the
Census, totaled 1,008,872 bales for the November period, or a daily

period

771,600 tons.

your

Cotton.

Heavy Christmas Sales

operating rate is equivalent to 1,963,400 tons of

and

mill price-fixing against textile oper¬
order did not apply to

Late strength reflected

Trade Volume Boosted

tions.
This

fairly wide

ations and the belief that the price freeze

94% of the steel-

above

over a

some

this week

advance of 1.7 points.

successive

fifth

irregularly

the result of uncertainties caused by the gov¬

a voluntary price freeze, at Dec. 1 levels.
easiness at mid-week, the market recovered to
close about unchanged from a week ago.

Age," concludes.
announced

The latter compared
and 35,000,000 in the

request for

Following

same

a
This

r^xj^'^prospecius from

ernment's

average

more preponderantly in favor
barring unforeseen trouble, the steel industry in
produce more than 100,000,000 net tons during 1951,

S. and

Steel Institute

export requirements.

crop

last week

of the U.

Iron and

corn

Domestic cotton prices moved
range

weight of steel production is even
can

little change

than ample supply

daily average of about 45,000,000 bushels.
with 40,700,000 bushels the previous week,
like week last year.

con¬

history. Earnings for the past two years have been
highly satisfactory, due chiefly to the high rate of operations.
Expansion plans are being encouraged by fast tax-write-offs.

the U. S.

indicated

at 3,131,000,000 bushels was 248,000,000 bushels
less than last year and it is the belief that farmers will have to
rebuy some grain from the government. Corn prices the past
week were stimulated by good demand from exporters as well as
from feeders and processors. Sales of grain futures on the Chicago
Board of Trade increased to 269,901,000 bushels last week, or a

dition of its

"The Iron

.'u:^rT.-A

the continued lack of moisture in

was

Final estimates for 1950 grain crop yields showed

anticipation of a controlled materials plan they are all
vying for available tonnages of "free" steel. Defense and essential
civilian steel orders are growing rapidly.
Within a few months
they will be taking at least one-third of total steel output.
Of

satellite

contributing factor

of wheat for all domestic and

When

from previous forecasts and

staff of ESA is increased.

that of the Soviet Union.

T-

■■-r

the southwest Winter wheat area.

Nonferrous metals, scrap, and steel will probably be
covered in that order. Controls will be broadened to include more
commodities and industries as the administrating and
policing

special concern to steel consumers, they will be taking more
half total production of flat-rolled steel products.
The steel industry enters the new year in the healthiest

A-Av.:;V-

good demand from both mill and export interests.

sooner,
a

basis.

100.1%

earlier, and with 245.55 on the corresponding date

Spurred by talk of inflation and the possibility of price ceil¬
ings, new high prices for the season were established in all grain
markets. Cash wheat as well as futures continued firm, aided by

making capacity for the entire industry will be 101.8% of capacity
for the week beginning Jan. 1, 1951, compared to an average of

Q/sr

week

last year.
close

sources

that a
controlled materials plan is only a question of time.
However, it
will take from three to five months to collect sufficient
personnel
to administer the plan.

tive

daily wholesale commodity price index rose to
of 317.62 on Dec. 26. This compared with

all-time peak

new

315.36

orders.

The American
Putnam Fund Distkibutou. Inc.

Commodity Price Index Reaches New

Although movements were somewhat irregular the general
price level continued to edge higher during the past week. The

having difficulty locating a steel source, states "The Iron
Age," national metalworking authority in its current summary of
the steel trade. NPA personnel were
being hard-pressed to answer
inquiries and render assistance to frustrated holders of priority

000.

FUND

general use and its chief function is to show the gen¬
prices at the wholesale level.

Wholesale

are

Even

;

eral trend of food

is clear that steel priority machinery is being
utmost.
Many steel consumers with DO orders

the

below the 190 in the
j

This week it

strained

they were 34%

The index represents the sum total of the price per pound of

;

31 foods in

PUTNAM

level;

prewar

Steel Mills Schedule
New

the

In one of the sharpest gains of the year, the wholesale food
price index, compiled by Dun & Bradstreet, Inc., rose to $6.90 on
Dec. 26, from $6.80 a week previous.
The advance brought the
current level to the highest since Sept. 14, 1948, when it stood at
$6.95. It represents an increase of 20.6% above the $5.72 recorded
on the corresponding date a year ago.
'

month ago occurred in three areas; the
England, Mountain and Pacific Coast regions. In the last,
failures were the most numerous of the
past six months.

New

ments

increase

retail enter¬

among

New

Valenta

those

principally

While marked declines from 1949 took
place in the

regions, increases from

cause

liabilities.

moderately above a year ago when 109 occurred,
slightly below the 1948 total of 128. Failures continued

were

Wholesale Food Price Index Attains 27-Month Peak

prises; manufacturing failures were the same as in the previous
month and wholesaling failures increased slightly.

the United States Government

$100,000

similar week of 1939.

Industry

preceding month and reflected primarily

The month's decline occurred

VV'A stockpiling holiday for copper

such

ualties

page

below

of failures with

Asks Stockpiling Holiday

Mr.

jrom

(87)

but

Resources Fund Head

il and Financial Chronicle

department

to Dec. 23,
In the pre¬
the similar
an increase
of 8% was recorded over that of a year ago, and for the year to
date, volume advanced 2% from the like period of last year.

The Commercial and Financial Chronicle

(88)

Continued

from

stituted

page

Simple Formula for Common

able

Stock Investment
each year of
course,

selection (except, of
for 1947 and 1948).

Results of Study: Two Periods
After

preliminary

divided
into

two

Deal

periods:

Era

New

Era

for

Pre-New

(I)

and

(1932-1948).

this

tests

our

(1914-1931),

Deal

reason

study,
of

results

the

division

(2)
The
the

was

ob¬
tained in
For
we found that during the 1914-31
period the Dear Group performed
considerably better than either
the Cheap
Group or the Dow,
Jones Industrial
Average.
But
with the advent of Roosevelt, the
strikingly

situation

Cheap

different results
the two periods.

reversed

was

the

and

in b,y far
the best performance, consistently
as well as
in the aggregate.
For
purposes
of presentation I have
Group

broken

down

period

into

turned

the

two

results for each

the

(1)

groups:

aggregate percentage pluses and
minuses for each group for the
one,

and

and three
the number

year tests,
of tests in
the Dear

two,
(2)

which

the

Cheap

Groups did 5% (or more) better
than the Dow, Jones Average, 5%

(or more)
as

poorer, and the same
the Dow, Jones Industrial Av¬

erage.

Dividend receipts and

missions

excluded

are

com¬

from

our

Comparison oi the Two Periods
In

tage

first

the

shown

appears

would

period
the

Group

not only in the better ag¬

gregate percentage gains, but im¬

pressively also in the number of
Pre-New

Deal

extraordinary.

transformation

ground, relatively, in subse¬

lose

Total

Grand

that in only one test out

Cheap Group per¬

the

did

enjoyed by the Cheap

advantage

Group in the past 15 to 17 years.
What can this advantage be, and

Let

nomena.

that the

assume

Quality Differentials Established
Early

nent

Dow,

large

consists of 30
with consider¬

list
companies,
Jones

quality

further

price-earnings
cepted views

quality.

the

that

ratios

reflect

ac¬

to differences in

suggest

(We

average

fhese

that

(1914-1931)

Results

ket of the late

Total Percentage Pluses and Minuses
One-Year

Two-Year

Three-Year

Tests (IS)

Tests ( IS)

+469

minus

—276

years____.

Total

+ 210

years

valued

came

Total

+378

+ 507

+ 592

—187

—252

—238

+ 191

+ 255

+ 354

+244

+ 431

+ 487

—173

—221

—227

+210

+260

Dear

(B)

Group

Cheap Group

the

and

quality issues

had

mar¬

1914 the

17
was

Total number of tests...

was

Total

(A)

quality issues ap¬
justify the favor pre¬
viously accorded them, because
they showed better resistance to
hard

times.

finally

suggest

differentials

quality

the

that

had

been

fully established by 1932, so that
the
bias in favor of
the
good
stocks
was
now
completely re¬
flected in their

basic

the

prices.

From then

element

fluctua¬

tion reasserted itself: good stocks,
like

good markets, went up, too
high; unpopular stocks, like un¬
popular markets, went down too

explanation

our

Tests (17)

Total

Grand

plus

■

£+■';:

minus

years

....

Total

—

Two-Year

Tests (1G)

future

years

Average

180

was

Dow-Jones

+115%
+ 15%

plus years

•'

this

;

that

study yields sufficiently def¬

inite

and

impressive

offer something of
to investment

tional

results

tangible value
Many addi¬

policy.

investigations of the same

type remain to be made, of course,
before the ideas set forth may be

considered

there

However,
when

the

action

comes

further

with

becomes

investiga¬
.

this

closing

Total

minus

+ 516

—

+ 707

Dear Group:

Grand Total

years

plus

Total

minus years

years__

■

Walter

Mr.

Menko

Schloss,

Dow-Jones Industrial Average:
Total of plus years

Total

Grand

minus

"In

+406

Total

plus years

—129

—134

Total

minus

+160

+201

+272

+335

+417

Total

—74

Total

+ 248

+ 343

Group

Cheap Group

—

some

+165
+
165

Dear

(B)
*

yvi

—

— —

acceleration

and

better than Dow-Jones Average

Number of tests in which group did 5% (or more)
poorer than Dow-Jones Average______
Number of tests in which % movement was simi¬

lar to Dow-Jones Average

(remaining tests)..

■'

Total

—

help

minus

expansion of total production.

controls

garded

the handmaiden of

kinds

Tests

many

are

re¬
pro¬

ordered
of

production
kinds

are

the

long-drawn-out

goods

greater need.

confronting

effort

there will be

us,

where

cases

programs

complement
effectively. But there

restraints

impose

another

one

other

the

cases

maximum

these

and

production

relax

necessary

—

ones—where

hard

controls at

particular points and thereby run
the risk of price increases. There
is

rule

one

the

which

alternatives in all
uation

two

Each sit-*

handled

But it

the risk of

run

these

cases.

must

matically.

reveal

will

desirable

prag¬

may' be safer

minor effect

specific prices than to err on the
side
of
smothering
or
handi¬
capping our productive genius. In
the

final

depends

analysis, our security
how rapidly we

more on

our armed
strength and
productive power than on whether
all inflationary forces are rigidly
contained over a given period of

time.

•

"This report is not the medium

+593

mitted

is held in abeyance
January reports trans¬
the Congress by the

"But

the

foregoing

discussion

points

worthy desire to be vigor¬
should look where we are

the

to this conclusion now:

(34)

Tests (33)

+ 1,034

308

—

726

837

+ 1,223
—

323

900

998

And

should

not

too

rapidly

sacrifice on the altar of
conformity the dynamic
which thus
far
have
qualities

automatic

industrial system al¬
productive as those of all
the rest of the world."
made

our

most as

+628

381

—

Appoints New
-j.
Hempstead Managers

372

45-3

766

years._

308

—

+
—

• "•

+236

458

Dear Group

(B)

Total number of

new

904
301

Fulton Avenue, are announced by
Parrish & Co., members of the

603

other leading stock and commod¬

assistant manager of
Hempstead, L. I., office, 243

Cheap Group

York

Stock

Exchange

and

ity exchanges. Raymond W. Oakes
named Manager and Clarence

was

did 5% (or more,)
was

than Dow-Jones Average—40

lar to Dow-Jones Average

manager and

its
—247

appointments

626

simi¬

(remaining tests)—

Weekes Campbell was named As¬
sistant
Manager of the office.
Both

men

ated

with

Bank
.

Mr.

tests—;_____—j—

102

were

the

Trust

Oakes

Trust

Total number of tests

the

cutbacks of

even

goods

other

should

expedite production and programs

and

Three-Year

+ 483

„

Number of tests in which % movement
14

facilitate

going.

better than Dow-Jones Average.42
poorer

ous, we

Two-Year

+ 351

Number of tests in which group
23

lines of pro¬

some

President.

Percentage Pluses and Minuses

—277

years.

Actually,

the

suggestions.

—249

Grand Total
'

applied with great care.
important to reconcile the
imposition of controls with rapid

effort

Number of tests in which group did 5% (or more)

xxivic;

in¬
they

may

production

That

computations,

the

and

vice

—

plus years.

with

until

Benjamin Graham for his ad¬

Mr.

___

Grand Total

must

not

are

New

Total

—

+239
—

to be

are

particular, controls

terfere

Mr.

Dow-Jones Industrial Average:
._

years_______.

goals

controls

geared to the programming of re¬
quirements and supply. This will
help to indicate clearly the new
pattern of resource use which the
defense emergency dictates.
The
nation will then be able to shape
the controls more accurately to
fulfill their appropriate tasks.
5

The
._

the

Parrish

+330

____.

the

Rose,

and

Bernard Werner for their

—

+250
—

achieved,

'''■+

Dear Group:

Total

clear that

discussing the details and ef¬
would fectiveness of various
controls.

paper

Mr.

thank

%
—

for

Cheap Group:
—

point expand

accordance

results

indicated

preferable

explored.

fully

useful

are

results

they may in
some degree interfere with them.
The
outcome
depends on :how
wisely they are used. Thus, it is

+"+'/

the conclusion

venture

these

program,

achieve

Conclusion
We

se¬

defense

will

25%

Average

Tests (85)

promoting

will

Tests (15)

Total

"In

Aggregate

Dear Group

eco¬

in the dis¬
services.

equity

tribution of goods and
"But while controls

which

Pluses & Minuses

Cheap Group

promote

can

promote

can

71%

Dec. 31, 1936 and
1948).

Dec. 31,

One-Year

+ 754

controls

nomic stability by restraining ex¬
cessive demand; and third, controls

(b) 1936-1947 (Dow-Jones Aver¬

(A)

+ 570

And Consumer Controls
ond,

now

Three-Year

—

+374

30%

—

page

Urge More Production

some

+191%

Dow-Jones

that

than

Our method

1914-1931.

from

duction, because

Dear Group

dupli¬

likely to be

31, 1932).

Summary of Results (1914-1948)

+425

years

1917 and

31,

Dec.

sound

Continued

duction and with the maintenance

■

one

tion.

far.

Percentage Pluses and Minuses

One-Year

was

Cheap Group

gen¬

the

Aggregate

lecting "Cheap Stocks"—or some¬
thing similar thereto — might
therefore prove to offer both an

Onl.y

presented.

are

accel¬

from

trend

Pluses ^Minuses

outperformed
theftlste " This bias

(2) New Deal Results (1932-1948)

Total

those years the

peared

(remaining tests)__

secular

(a) 1914-1931 (Dow-Jones Aver¬
age

through the great de¬
pression culminating in 1932. In

cated

simi¬

tests

year

signif¬

change—thus excluding

comparisons.

our

would conclude that the
performance in the 1932-1948 pe¬

net

factor

continued

riod

than Dow-Jones Average.—

Number of tests in which % movement

Cheap Group:

the

already

rest

one,

Number of tests in which group did 5% (or more)

icant

erating

5% (or more)

Dow-Jones Average

lar to Dow-Jones Average

1920s.

two pe¬

cover

price level did not show

erously vis-a-vis the "lower qual¬ age
ity" issues. This bias in favor of 177

on
.

poorer

some

riods in which the general stock-

stocks

common

figures which

some

—meaning particularly those with
favorable
earnings trends — be¬

+ 193

Dow-Jones Industrial Average:

better than

two-and-

involves

tipliers

the

—

Number of tests in which group did

basis

dividend

the

Dear Group:

Grand

three-year

affair; its result was to
assumptions properly describe the favor the good stocks in the mar¬
Dow, Jones list as it has been con- ket year after year, even though

+464

minus

peculiarities of the arithmetic of

yields and earnings mul¬
for our large companies
and apparent long-term prospects,
were
rather homogenous; but as
but all possessing the character¬
time went on, the "good stocks"
their

variations

able

—254

plus years.x

feature

since the New Era bull

ever

-1-168

those

and

factors;

was

—198

time and trouble.

save

emphasized

Why did not this explanation
it conspicuously absent hold
good for the earlier, years?
in the 1914-1931 period?
We suggest the following as the
reason.
During
1914-1931
the
A Possible Explanation
market was gradually establish¬
The following is advanced as a
ing those wide quality-differen¬
tentative
explanation
of
these
tials which have been so promi¬
rather
perplexing market phe¬
why

plus years

Total

left

been

calculations

their unfavorable percentage
figures.
It
is
not
thus they would subse¬
necessary to go
into these, be¬
form more than 5% worse tnan quently advance more than the
cause
our
essential comparisons
the Average; while in no less than market as a whole. The relative
34 tests
it beat the Average by action of our Cheap Stocks and are based on the same number of
more than 5%.
Such consistently Dear Stocks between 1932 and
years'
holdings
for
the
cheap
favorable behavior could hardly 1948 would seem to conform to
group as against the dear group.
be the result of chance. Evidently this hypothesis.
It may be of interest to add
it
stems
from some
underlying
the fact

Total

basis

aggregate percentage results quent
years.
Similarly,
those
of the Cheap Group are now far that had lagged behind the mar¬
in the lead. More striking still is ket would prove to have
over¬

Cheap Group:
of

has

our

The

(A)

Total

income

Dividend

out of account in

exag¬

Thursday, January 4, 1951

Truman's Advisers

Observations

gerated response on the upside,
favorable performances and conversely for unfavorable It is almost certain that the Cheap
as against unfavorable ones.
The ones. In due course these exag¬ Stocks would return at least as
Cheap Group presents an almost gerations would be corrected. In
high a dividend yield as the dear
exactly reverse picture in com¬ the aggregate the issues that had
ones
over
any protracted period
parison
with
the
Dow,
Jones gone up more than the market as
years.
The relationship be¬
group as a whole. When we move a whole would be found to have of
on
into
the
second "period
the advanced too far, and they Would tween the results on a one-year

they
(1)

separate

sume

the advan¬
Dear

Additional

Some

favor¬

prospects

developments or
tend to receive

reason¬

pattern

that

means

in order to

istic of resiliency—i.e., the power
to recover from adversity.
As¬

figures.

stock selection.

similar to that of the market as a
whole—which

and

ably dependable key to successful

that the relative
of the individual

would

issues

extremely simple

It might be

1932).

then

behavior

price

since

expected

Officer

formerly associ¬
Second

Co.,

National

Hempstead,

Vice-President and
and

Mr." Campbell

Assistant Cashier.

Number 4974

[Volume 173

The Commercial and Financial Chronicle

...

(89)
•

■,

sumption,

Central States Investment Bankers Conduct

Chicago-Tour
^

time

business

Dr.

basic obstacle to

forecasting.
Like
too recognized

Williams,

financial district.

pact of

Exchange and

force

■

Pegging An Ironical Twist

in resuming pegging

says,

the labor

unemployment.

■

•

January "Bank Letter" of National City Bank of New York

demands

war

and

•

Return To Bond Price

near-

the unforeseeable but serious im¬

Finance Association Members visit Midwest
*

cited by Mr. Wood¬

was

ward

of government bond

authorities tacitly admit bank

The

shod

•

possibility
of
increasing
work
hours is just one of the many un¬

increases

prices, the

too rough¬
and cannot safely be allowed to become fully

weapon

reserve

effective.

are

certainties

affecting outlook for
the supply side of economic equa¬
tion.

international

The

ponderables
vided

hopelessly diexperts' convic-

the

about

the

desirability

price-wage controls. Are we moving too late and too hesitantly?
Could

direct

avoided

controls

z^ionKhPad
able before
°

tions?

mistake
James

Charles R. Perrigo

E. Day

Channer, Jr.

seemingly
conclusion

Thirty members of the Amer¬
ican
Finance \ Association,
in
Chicago last week attending the
Social

Allied

meetings,
tral

guests of the Cen¬
of the Invest¬

were

States

Group

Association

Bankers

ment

Association

Science

for

ing brokerage offices: Hornblower
&

even

this

Weeks;

Merrill Lynch, Pierce,
Fenner & Beane; and Paine, Web¬

ber,

Jackson

Curtis,

tively. The three groups united
again at the Union League Club
where

George

Impact
In

respec¬

Channer,

Jr.,

increased'

business

pictured

unbalancing element

Committee

Club, Thursday, Dec. 28. The tour
with

started

Stock

west

visit

the

Mid¬

where
James
E.
Day, President, dis¬
cussed the operations of the ex¬
change

Exchange

questions.

answered

and

The

guests then went on to the
floor of the exchange in small

under the guidance of staff

groups

the

Central

Group and Executive Vice-Presi¬
of Channer

dent

Securities Com¬

presided
at
meeting.
Charles

pany,

Chairman

the

then divided into
to visit the follow¬

The party was

three groups

luncheon
Perrigo,

States

Central

Group, extended a message of
greeting to the visiting professors,
and Erwin W, Boehmler, Educa¬
tional Director of the IBA, briefly
outlined the formal

members.

States

educational

and

informal

of the As¬

programs

Forest D.

dent

and

lates

for

psychological effects, in war¬

time.

Referring to the principles of for¬
eign trade laid down at his major
address on foreign economic pol¬

Williams readily agreed
that their validity is completely
dependent on the course of events
icy,

Dr.

because

the

rising

weaken¬

of the

of World War II,

early fumbling

without the off¬

freshness

advantages

Hart

Dr.

concluded

pervade

all

merely implied.

rare,

occasion of

ing

fifty

years'
service
as
the same New York

partners

investment

firm

week at the

Wall

Dominick,

marked this

was

offices, of Dominick &

Y°r,
5 y,' ^?en?
York Stock

Street,

New

impor-

—

very

lighting the distortion that stands
in the way of our coming-to-age
in

preparedness. "If the Ameri¬
strategy
of deterring
ag¬
gression succeeds," he asserted
■"the eventual plateau of readi¬

can

ness

tween
a

strain.

unbearable

any

that

and

without

maintained

can

But

be¬

plateau

lies

hump of effort to make up for
all

errors—for

thing

same

the

world

the

investment

hump of the Hichsian trade-cycle
model."
He
are

pointed

humps in

■

out that not only
sight in munition-

for civilian
protection, as affected by the
priority system.
Dr. Hart / ob¬
production, but

served

that

also

while

get
for tex¬

may

the difficulties soon

economic

great

will work

Business

both

hold

outlook

interventionism,

typically
expounded here by Donald Wood¬
ward,
leading
economist
and

ditions
ushered

tion

decline
in

and

actually

structions
iness

the

the way into a "read¬

economy."

These

weakening of savings

include
incen¬

and

will

tary situation.

"disequilibrium sys¬
tem" a very bad gamble at pres¬
ent, Dr. Hart cited several reasons
for difficulty of mobilization ob¬

Mutual

facing a
depression

by inventory liquida¬
decline
in investment,

metals

the

would

busines

the

Calling

Life Insurance Company. He feels
that whereas under normal con¬

wave

stretch out for several years.

were

Vice-President

from

may

by defense

needs and intensified government

experience

demand"

resulting

exigencies of the mili¬

the

men

well

are

financial

known

community and for

their outside activities.

former

member

decisions of the

the

Pentagon.

and

ment

Kremlin

and

The

necessity for
continuing * adjust¬

between

the

New

Trustee

uncertain

arma¬

ment produtcion needs and
the
potientially great civilian con-

Trustee of the

City of New York.

Barnard

genera/^redit
Seneial credlt sUuaUon^of1
situation of

the

country.'
"It

would

should

people

unfortunate

led

believe

bought serious depreciation. Neither pro-

requirements' and

serve

government bonds in huge gram goes to the heart of the matamounts at fixed prices and thus ter. There must be genuinely ef-

fective

measures

restrict

tho

requirements. It is worthy of note supply of money competing for
that, except for short-term

paper,

goods,

higher

taxes,

and

moro

the pegs in the present case are saving and less spending for nonhigher than those in force during essential purposes both by gov1948.
ernment and by the people."
pegging

"In

the

bond

market,

the authorities tacitly admit that

requirement increases are
roughshod a weapon and caii-

reserve

banks, where

be forced to cut back

their loans.

If their borrowers do

other

have

to them,

duced.

The

Wiesenberger Co.
'

th<e^N<ew York^Stock^Exchantoc

tirm °t Arthur Wiesenberger &
Co., 61 Broact-f
'
Rrnarf^

with

borrower

re-

line

cialists

„For most of the

eraj Reserve the

;:W(i d

me-

securb;jes will be sold with the Fed-

securi¬
ties,
as
o£
Jan."!.-

be ac-

COmplished with the greatest

in-<

com

pany

banks> doubt_

jess> tbe adjustment will

spe¬

vestment

local bank,

Ex¬

change,

casualty,

single

City,

the New York

small business

a
a

New

York

Stock

credit will be

most likely

way,

members

.facilities

credit

thus, is apt to be
credit in

Gould Partner in

security holdings to low

may

known

1 y

e
as

financial

|||

buyer. In effect,

banks wjR

sbjp

pal^

and

writer

Edson Gould

economist, Mr.

the

present

merly

a
directors

Museum

escape

from the principle, stated

by Governor Eccles
tt

™

the

Company.

surance

After

monev

Treasury

can-

^3rketf®r ™ek?re *u £
™*y ^ ™ onegry and credyit
restraints

are

under

gone

such

becomes simply an engine of in¬
flation.'

the

"The $2

billion

In¬

long

require¬
publicized as a

reserve

ment increase was

Life

Home

a year ago:

was

ment

Research

Director

Arthur Wiesenberger &

Co. early

quirements with one hand and«in 1948, he was associated with
supplying the cash with the other Smith,' Barney & Co. for moro
—is self-defeating.
There is no than three years, and previously

for¬
member of the board of step to tie

Moody's Investors Service

served

for more than 20 years.

Mr. Gould

continue to direct the ^research activities of the Wiesenwil1

berger organization and in addition will supervise the ftart> Advlsory an(* Investm*ent Se v

Hugoton Plains Notes
Placed Privately

An issue of $20,000,000 Hugoton
up about $12 billion of
'potential bank credit' because of Plains Gas and Oil Co. 4% first
'the repeated turnover of funds mortgage notes, due Jan. 1, 1966,

involved in bank credit transae- have
been
placed
privately
tions.' It is true that the larger through William R. Staats Co., L03
including action as captain during the proportion of their resources Angeles, Calif.
.
_
the Mexican border incident in banks must keep in cash the less
The Hugoton company has ac1916," he went overseas in the they will have to lend. But when quired leases in gas fields in the

service
old

first

with

Company of the
7th Regiment in New York,

World

moted out

War

Miirraif

and

____

was

pro-

the

Federal

Reserve

simultane-

ously puts pegs under the government security market, the poten-

major.

Oklahoma Panhandle and Kansas

Plains Natural Gas Co. for

rigidly maintained, invite
and all holders of marketable

Pegs,

Joins Shaskan
Announcement

dissolution of

made

Bittner

former stockholders

from

of the
about

tialities of credit expansion are $36,000,000, it was announced yesnot reduced, they are increased, terday (Jan. 3rd).

DIIIhaii

murray Bittner
Dinner

Co.

the
and

any

government
securities
to
turn
their
holdings
into
cash,
for

tx/uu

With Freehllllg, MeyertOtt
;

(Special to the financwe chronicle)

the association of Murray C. Bittner
with the
New York Stock

or lending, any time
CHICAGO, 111.—Kurt B.
they please. Those holdings, out- min has been added to the
side the Federal Reserve Banks of Freehling, Meyerhoff &

Exchange firm of Shaskan & Co.,

and Treasury investment accounts,

maintaining

Mr. Stout,

City of New York and

Crucially, the ex¬
tension of this demand, as to both
time and degree, will depend on
the

the statu-

price levels. This recalls the situa-. that price and wage controls, cr
tion prevailing in 1948 when the changes in bank reserve requireauthorities successively raised re- ments, will save the dollar from

iarge, the whole of the operation—increasing cash reserve re-

today.

Museum of the

The imponderables injected into
industrial

government

Mr.
the

the

under

pegs

hiVh

though

Imponderables

commerce and business and with

Gould
UUU1U has
liao had

company

tidal

chemicals, the hump in
and
building
materials

are

deal in that market

extensive experience in the field
0f economic and security research
and analysis. Prior to his appoint-

out."

tiles and

over

forecasting

ever,

for a
in the

0f their

their York Stock
Exchange, was until
form has changed.
We simply
recently a director of the Intercannot forecast accurately
how national
Nickel
Company
and
fast supplies will shrink or how
the American Bank Note Comfast incomes will rise; how much
pany, and Treasurer of St. Luke^s
people will insist on saving; how
Hospital.
He is at present a di¬
compliance with direct controls rector of the New York Air Brake

opinion—"The haz¬

Re-

thi firmaTn
wiL0* government securities to the FedJ+™!Y
loo/anH io9«f eral Reserve where they will get
iiTnipfhmiv
?
nnJtfnnc IS a credit °f idle' unusable cashrespectively, which positions they and

ahead, Professor Albert G. Hart,
of the faculty of political science
of Columbia University, spoke of
■"the Mobilization Hump"; high¬

requirement

reserve

s of j*1® New chanical facility. Government

Exchange and

that.:Federal

^application of their powers to

security market to maintain their

not

perhaps unique,
two men jointly arriv-

campaign

serve officers have waged

tory principles of 'accommodating
the

"As

levels,

and

iron¬

the

Letter"

states:

open

The

for

pegs

restoration of flexiblity
government bond market, and the

least some scattered

preparations

wisely in
ards

'.'Bank

Twist

re-

stated

taxation, the
our
coming

Elaborating. on the uncertain¬
ties
in
the period
immediately

Commenting
the

situation,

reServe

It does seem safe to expect that at

and

course

Both

<Mobilization Humps

'
-

qUirements.

the

recently ordered

bank casb

Ironical

ical twist, after the long and ardu¬
ous

offsetting

of the

jncrease jn

governl

Paeg81anng *

whether such interferenceis

of
war

intensity

pointed to the possibility of

recurrence

pegging

and

Jjb;ective

too

„

In Dominick Firm

and enthusiasm.

;

of the executive

use

promising to amplify the effects tant investment bankers. Andrew
of policy errors.
Y' 4?
a
Augustus Barnard
He

potential

ernment

ing of patriotic incentives; and
sliding-scale wage arrangements

setting

in the Far East.

restricted

Partners 50 Years

experience
have made much stronger than in
World War II; the greater experi¬
Reserve adviser's conviction that
ence
of
black-marketeers;
the
margin control over stock specu¬
likelihood of non-compliance with
lation is not important, excepting
controls

price

"The reinstatement of

government securities is

credit demands have reduced gov-

1942-'46

the

which

se?v^

Federal

discussion,

the motives to hoard commodities,

Incidentally, and of interest to
the investment community, is this

renewed

put the banks in funds to meet the

1945-'48 experience;

by the

criticises the

not safely be allowed to become
fully effective. What effect is left,
when pegs are put under the government bond market, is dubious.

tives

order.

armament

Cold-Hot War.

In-

hamstringing of business, he depicted the growing concept of the
"national emergency" that stimu-

Forecasting Sessions
of the

himself

And in the field of

International Crisis Pervades

ture

executive

top

finds

Comnanv

progressively smaller corral."
Continuing his comment on the

likely

determinant will be the tempera¬

counsel

sociation.

Continued from page 5

crucially

In the words

Harvester

the

business

from

interven-

Siefkin, Vice-Presi-

general

ternational

"Today

* Lrk

f N

under the government

market.

Letter,"

put

man-

^disturbance

government

Chairman of the Public Education
of

There

Business Management

field

agement also is
tionism

tion of pegs

no
overall consistent
increase was announced, there was
to
be
gleaned from
'evidence in the market that the
galaxy of authorities.
Federal Reserve Banks had again

tour

of the financial district and
luncheon at the Union League

controls

time?

any

the

direct

are

been

mobili-

Politically
palatNovember elec¬

the

have

industrial

real

credit, the January issue

-im-

have

even

Hons

scene's

extended review of recent

curbs

v-rv;

....

Exchange
City.

Place,

New

York

spending

run

to $130 billion.

This is the in-

flationary potential in

re-crea-

Kar-

stafl
Co.,

120 South La Salle Street, members of the New York and Midwest Stock Exchanges.

The Commercial and Financial Chronicle

(90)

have

Tomorrow's

isn't

sustained

do about all

T'vp
l
ve

I've

just been trying to
through previous col¬
umns to find phrases I could
throw at you to prove that I
knew all along that this mar¬
ket would go up. But after a
few hours of this I gave it up
comb

fact

The

the

caution.

with

started

last

nnp

answer

the

when

many.

profits
i

were
\

was

the

buyers

are

to convert

reason

is threatened
"excess
profits"

called

Twenty

tions.

ago,

years

the

union,

esses

and the
amicable

company

union

less

proc-

arrived at

I suggested the conditions and needs,
steels); oils and
That was before the creation of
utilities without specifying inWar Labor Board. We are
A
i
indebted to the War Labor Board
dividual issues. If you ve tol- £0r
inventi0n
of
so-called
lowed the market you know "national patterns" of wages, and
.

stocks

these the enforcement of them nation-

•

■,

wit^ all the Pow^r
of the
Federal Government.
The board
jg dead> but
As

its deed lives after it.
today we have

consequence,

situation where the little two-

pushed thro ugh their old with "accidents" from here stack steel mill is confronted by
mu«
an enormous international union,
highs, thereby confirming the on. The greater public pa t - wav|ng a wage scale which it has
Dow theory that a new bull ipation
m
the market the just wrung from a very large
market was in progress.
I'm greater are the possibilities of steel company, and demanding
_

Dow

catch

periods of time than follow¬
I'm also

- *

225; make

was

thousands

minded

there

The rail stop was

theory

sort

as some

group

Pacific Coast

77
I I.

[The
article

c+r.r.cj

it now 230. or defense time do not meet ci75; make it vilian demand, or if government
policies such as credit restric-

not

Chronicle.

expressed in this
necessarily at any
with

They

those

the

presented as
only.]

are

those of the author

and

market

decisions

sales

are

neces¬

except to determine how to
keep salesmen alive until they
are
again needed.
Recent years
sary,

Louis Mi Whitehead Is

have

rencies

and

With Nai'i Securities

sorts

the flow of international

trade

that freedom of decision

Securities

also

brought managed
restrictions

matters

such

greatly

re¬

examples could be mul¬

tiplied

Pacific Coast Exchanges

Schwabacher & Co,

his

areas

stricted,
indirect

first

both
effects

point.

decision

direct

Iti

executive

actions

has
re¬

and
the

Stock

York

Curb

Exchange

Francisco

San

government.

Exchange

Stock

(Associate)
Exchange

Chicago Board of Trade
14 Wall Street

COrtlandt

New York 5, N. Y.

7-4150

Teletype NY 1-928

Private Wires to Principal Offices
San

Ifrancisco—Santa

Louis H. Whitehead

Barbara

Monterey-—Oakland—Sacramento

National Securities & Research

Fresno—Santa Rosa

Corporation, 120 Broadway, New
York
H.

SPECIAL CALL OFFERINGS
•

Per 100 Shares Plus Tax

A. M. Byers.

@26*4 Mar.

•

$325.00

Hudson Mot.. @14

Mar. 19

312.50

H'mestk.Mng. @35

Mar. 19

237.50

Schenley Ind. @37% June
Elec.Auto Lite @ 42% Mar.
U. S. Steel.. @41% Mar.
Y'ngst'n Sheet@ 50% Mar.
Canadian Pac.@21% Mar.
Zenith Radio. @48
Mar.
Distil. S'grams

@28

475.00

450.00

that

announce

Louis

Whitehead, formerly proprie¬

tor

Louis

H. Whitehead Co.,
their organization as
Vice-President and member of the

joining

387.50
24

the

distribution

under the firm's

He will direct
mutual

funds

sponsorship and

management.

525.00

275.00

request

THOMAS, HAAB & BOTTS
Members Put & Calls Brokers & '
Dealers Assn., Inc.

If there

ties there would

Broadway, N. Y. 4, Tel. BO 9-8470

Thomas J. Welsh Joins
Boettcher in Chicago
(Special to The Financial Chronicle)

CHICAGO,

111.

—

Thomas

Boettcher
Salle
with

Street.

Paine,

Co.,
He

135

South

was

Webber,

formerly

Jackson

Curtis and Goodbody & Co.
I

executives.

and

confront

uncertainties
and

always had hip.

deal "with

economic

executive

for

need

has

addition, he faces

the

from

the
ex¬

expert advice at his command.

the

All

species

allow

with changed environment. Times

production

the

for

plant

new

will

find

that,

economy much of the time which

half way through, the government
has pre-empted all power-house

his

equipment?

cause

the

cost

wages

tied

production.
those

now

most

re-examining the basis

Will the eventual

index

proper

frequent.

tell?

can

re¬

Will

dollar?

S. F,

will it increase

the

lems,

not

continue

of new prob¬
much business or

group
so

economic

problems,

such

political problems
political prophecy.

FRANCISCO, Calif.—The

Societies,

com¬

President,
ett of

Blyth &
Vice-

C o.;

and

technological problems which

President,

cannot

W i 11 i

possibly

with

comprehend
aid of experts

the

(and perhaps not then)
must

decisions

deal in

but with
the

business.

over¬

Held

a m

Strauss &
5

e c r e

be, I do not speak of these bygone
days
with nostalgia or regret.
That

was

different

might have been

world.

better

t ary-

nately in making those decisions

John G. Eidell

he may

have at his call specialists
market analysts and sales

engineers, credit

and labor

men

gists and traffic experts, account¬
ants and

gineers,

John

Beckett

Shuman, Agnew & Co.
The officers

Board

members of the

are

which

Governors,
Charles

also

Clarke

Davis,

Skaggs
&
Co.;
Herbert
statisticians, product en¬ Drake, Assistant Vice-President of
process
engineers, time The Anglo California
National
engineers, psychologists, Bank of San Francisco; Philip J.
what

and

His. FitzGerald of Dean Witter &
Co.;

not.

problem is to see that they are so
assigned that all of their special
knowledges and skills

are

brought

one.

Co.;

Treasurer,

economists

may

Fortu¬

such

year:

John R. Beck¬

increasingly

surrounded by legalistic, economic

except

Analysts

officers
the

that

ed the follow¬

ing

"executive's natural habi¬
he

Financial

annual

for

(4) My fourth factor composing
is

Analysts

Federation

ing
new

will

meeting elect¬
•

involving

are

tat"

Who

Security Analysts of San-Fran¬
cisco, an affiliate of the National

its

has been trained to meet, as they

the

only, know

Elect New Officers
SAN

rate?

same

This

there

the dilution of the dollar

prob¬

Tomorrow?

be different.

will it

ment, in view of the depreciation
check

finance
true be¬

newer

weighted
to
bring
increases? If he faces

about wage

the

gave

That is

the

Statistics lems, the more
pressing problems,
index, as many the ones where the experts are
are,
he knows' the .least expert and the disagreements

heavily

are

living

of its index.

are

of Labor

Bureau

If his wages

predecessors

and

study

that

changes

steel

the

However

undergo

change and
men
change.
The
civilian senior executive of today finds
widgets and, if so, how much? himself devoting to labor relations
Dare he start construction of a and public relations and
political
government

liminary to the final slaughter of
animal.

shoot

In either case, the good

ecutive's

uncertainties of government con¬
trol over industry and business.
Will

has

can

Very often, the

success
is measured by
how good his judgment turns out
to be based on all the facts and

the

forces

technical progress.

But,

decision, and the ability to

studied at leisure.

uncertain¬

problems

in his

normal

are

were

or now

make correct decisions most of the
time. Sometimes

relations men, research metallur-- includes:

to bear on the kind of problems on
have been a worse one, de¬ which he needs help.
Some of
pending on your point of view. these specialists will be
assigned
But
one
thing is certain—the to short range projects aimed at
changes have been many and the solution of an immediate
prob-.
radical.
"
lem.
Others, as in engineering
(2) A second impressive factor research, will be employed, to see-

may

the

modern

executive's

roundings is exhortation.
restrictions

Welsh has become associated with

for

this was
necessary for the protection
of
the public or competitors against
the horns. Some say it is pre¬

sur¬

his

that
of

Oddly enough, along with these

250.00

business—50 years ago

—always requires two things: the
willingness to take responsibility

Carl
6

Rasmussen

Schwabacher

Co.; Willsie W. Wood, Assistant

Vice-President

the

Bank

America, N. T. & S. A.; and the
outgoing President,, Richard W.
Lambourne, partner of Dodge

Cox.

Policy Committee.

325.00

Mar. 26

Explanatory pamphlet

City,

Some say

If he is right a lot more

success.

trust

you

before with political un¬

Uncertainties
life.

all

business

Members

York

hero¬

which

had

New

the

don't

certainties.

illustrate
the

paid for; takes his

in the consequences.
If he is right
after oftener than his competitors he is

The executive is confronted

never

by
reference
to
other
fields, but these are sufficient to
that

New

(3)
as

all

Fail

guess based on his own expe¬
rience and judgment, and awaits

cur¬

stricted.

These

Orders Executed

the

narrow

exclude many persons who would
otherwise buy the point may be
reached at which no managerial

Experts

does what he is

tions

views

coincide

time

religion. When this

now,

market-

people who consider

the Dow
of

that

x1q+

OY._

are

the

scene

where,

kicked

own

restricted, managerial decisions a heavy investment in machine
go into here) are flat stops.,..are alsQ restricted,
over
.Jt supplies of tools, what provision should he
Last week the industrial stop certain civilian goods in wartime make for their future replace¬

profits

however,

has

"Nellie—why

sult be

larger

the

When

me?"

only insurance I know
(C) in the field of the market
who showed that of (besides puts and calls — No matter how it comes about,
catch-can methods which are too complicated to when the customer right of choice

ing the Dow theory.
aware,

else,"

"or

The

brought

villain

Bureau

theory.

searchers

the

one

melodrama

ine, dispossessed her parents, kid¬ he is a business genius.
napped her fiancee, and tied her
For with all the books and all
in front of the buzz saw, he leans the
charts and all the expert coun¬
over her and whispers:
sel, the top level administration

that it constitutes a na¬
tional pattern for all steel mills.

grounds

I've; also read
reports of the various re¬

the

acceptance

of the fallacies in the "accidents"

aware

old

which he has made

What does the top executive do
then? You know what he does—he

responsibility."

reminds

the

agreement on

Weeks ago
metals (e. g.

the

III

to be told that satisfactory
achievement of some new ideal is

"industry's

questions which he has

raised and

sees.

He
is
Wash¬

summoned

answers on

ever-

employment.

frequently

wage rates.
They were locally
negotiated and they fitted local

have gone to. As the
6a
*
'fi
❖
' ■;
strength acquires new followAs this is being written the ers the advance will get new
industrial averages have momentum.
I'm
concerned
'

the company produced pig iron in a
substantial which sm?h
*own' and had a

into actual cash profits,

maintain

and

Thursday, January 4, 1951

swers
as parts of the
solution to
problems which he sees or /fore¬

cases

groups

■'

from retained earnings.

come

new

many

another

create

assignments for long or short du¬
ration, because he needs the' an¬

most added capital ington

^^ses.

highs taxes and by the recurring
I suggested a gradual lighten- schemes for taxation of undistributed profits.
ing of positions, though not a
Labor Relations
complete abandonment. My
reasoning was that I prefer to
(b) In the field of labor rela-

....

initial dive.

corporations,

many

And this source, too,

market reached for

though the answer is that if
hadn't bought stocks up
to
last
week, you'd
have
found little in my recent col¬
umn to lead you to take the where
you

the shares less desirable in

made

column.

week's

to paper

words

casg

one answer, or hgg
series of answers in

qualify

can

choice

some

matter

week

last

warn

rather

the television sell

set instead.

crivpn

given

page

rate of income taxation has increasing

By WALTER WHYTE =

and turned

this.
^

jrom

Governmental Sabotaging
Of Business Executives

important

Whyte
*

Continued

being.

Now what to

prices.

not the effect will

for the time

Says—

that

bound

effect

Whether

Markets

Walter

action

its

acts

action,

the

executive finds himself subject to
more
exhortation than ever be¬

the

business

trends

and

does

not

can

The

top executive,
does two things with the informa¬
tion

which

In Wood, Stmthers

make

long-range mistakes that

avoided.

Middendorf Partner

is kept abreast,

asks

from

Wood,
nounce

these,

Struthers

Co.

an¬

that Henry S. Middendorf

has been admitted to general part¬
specialists (or which they offer to
him to keep him advised): (1) He nership in the firm.
He will be
tion
high, his profits too big, his taxes synthesizes all of such information the resident partner in the firm's
in
too small, his labor policies be¬
arriving at his decisions; (2) Boston
office, 19 Congress Street.
nighted.
At the same time he is He may resolve disagreements be¬

fore.

told

for

He is told that his produc¬
is too low, his prices too

that

it is up

industry—to
perity for other

to him—acting
provide
pros¬

nations,

the armies of half the

equip

globe, and

Mr.

tween the experts.

Thus, the executive's problem is
to know how to direct the experts
work which should
bring him

Middendorf's

the firm
in

the

Dec. 7.

was

admission

previously reported

"Financial

Chronicle"

Volume 173

Number 4974

The Commercial and Financial Chronicle

(91)

Continued

from

page

disinvestment. The system
valuation, however, affects how

upon

this

Valuation of Security Holdings
Of Life Insurance Companies
~t

value, is to give them higher than

permanent

reasonable

the

In the

that

maximum

are

the

fixed

values.

income

Un¬

form

crease

immediate

dividend

the form of
vestment

the

income

increase

ture.

that

for

values

And

the

decades

stock

common

has

to the extent of
year.

which

base for fu¬

many

long-run trend
market

in¬

dividends. Thus

common

find

his

business,

in turn increases the

in¬

been

upward

few percent per

ignore

can

the

quite unusual extent of the 1929
peak and the 1932 trough, we find

*■'

probably better
any other class.

However,
value

value

{of

market

income securities

tends

understatement

the

reduced.

rated

because they were
the top four rating

among

grades, must

be reported

now

stocks

short

time

the

risk

class has been

as a

than

rather

long

secular

Thus

depreciation.

would not be

firm

values

stock

common

times

it not for another

were

That

fact

that

which

the

same

market

requires

use

market

such

and

non-defaulted

bonds
to

capital

losses

That this

capital

indicated

sort

investment

transferred.

unfair,

The

because

unearned

method

allocates

income

the

income

four

market

write-downs

period

losses

actually

occurs

upon
application of the present
system to life insurance company
holdings is evident from data re¬

ported for 52 life insurance

com¬

panies, that account for 82.7% of
the assets of all United States

legal
reserve
companies.
The peak of
their write-offs required by the
present system came between 1940
and

tion

non-defaulted
fixed

totaled

$640,000,000.

mon

sell

double

for

two

three

in prosperity
require that

J ; written

as
a

times

much

in depression. To
common stock be

to market value in a

time of

stock

common

prosperity is to impose the
of
a
greater write-

down in the next depression. Such
valuation system manufactures

income

actual

securities

losses

taled

The

write-downs

faulted

securities

values

depression

cushion

not

sues

market

value

time

without allowance for

the write-downs required upon a

cyclical

downturn

amounts

| substantial overvaluation.
Undervaluation in Times of De¬

pression.

The
present valuation
system tends to undervalue com¬
stocks

mon

curities

and fixed

case

that

stocks, the

torical evidence is
conclusive

income

depression.

common

his-

obvious and

se¬

the

without

may

pause turn our attention to fixed
income securities.

which

reductions
bonds

the
on

the is¬

actually default. The
ratings which add

the

non-de¬

legitimate write-downs

use

the

$319,000,000.

hard

prosperity

for

sales of securities plus write-down
of defaulted issues to market to¬

and magnifies capital losses. It is
the view that the

was

entire period from the end of 1928

escape

de¬

This

and

to the end of 1948 when losses

likelihood

the

policyholder

toward

the

prosperity

depression,

who

end

withdraws

period
have received

may

realized income and

in
not

are

policyholder
through the subsequent period of
depression may find his capital
impaired or at least his dividends

who

be difficult to say that one or the

for

overpayments to the policyholder

other of these values

of overstatement

1942, when write-offs re¬
quired" for the combined popula¬

is wrong, it

shall

already

may

market

value

cate¬

the

result

the

withdrew.

The

present

overstates

system

income

not

income

have defaulted

securities

are

that

required to be

reported at market value. Such

Overstatement

Income

years because of artificial and un¬
fair additions; but also because it
fails to require certain subtrac¬

tions.

Why does the promised
on corporate bonds exceed

yield
that

corporate

The

bond?

answer

is,

of course, well understood by pro¬
fessional
investors
and
is
well
established

the

The

field.3

example,
$25,000,000,000 of

almost

porate
hands

bonds
of

For

all

outstanding
investors

out
cor¬

the

Jan.

'1928, about $3,525,000,000 had de¬
faulted by 1940. The market value

l<jf these

two

rise

quotations
realized

securities

income

(1)

ways:

market

represented

the

insurance

(2) It fails to require
systematic retention from current
company.

interest

and

dividend

receipts in

aggregated
only $674,000,000 which was $2,-

prosperity of amounts to cushion

851,000,000 less than face. Within

years

four years the aggregate recovery

imum

these

that

bonds

date

had

reduced

the

deficiency

from face to $1,782,000,000. This was a substantial recovery

^ there

from the lower values, but
was still substantial defi-

the

inevitable

yield

premiums

are

offered

induce investors to absorb risk of

Let
of

look

doubtless

2 The

substantial

The
(see
ance

the

ments
statistics

this

and

the

Corporate

Bond
Research
Project
holdings of life insur¬
companies—The Life Insurance As¬

Note

1).

sociation of

America.

this
agree

income

cannot

follow-

ing two paragraphs are from the follow¬
ing sources:
On all corporate bonds—

first

difference

that in
from

between

the

reserved
ure

are

then

Some portion must first be

against the eventual fail¬

fraction

them .to

pay

and

also the

dividend

payments

amount of cash

but

received

about
at

fifth

were

actually retiiea

A second

preference to

That they are likely to have an
effect
upon
investment

adverse

ex¬

policy follows from the fact that

actly the valuation of the liabili¬
ties. It is not known when a man

life

will

exhibiting a decline in their sur¬
plus accounts. Their investment

die.

Even the

ability is merely

prob¬

average

estimate from

systematic accrual of

reserve

liabilities.
The third

the

decline?

inconsistency is with
of
long-term op¬

life

such

assets

rarely known in advance and the

not

amount

dis¬

their

The

These

they

position

will bring in
problematical.

The risk

rate

duce the

policy

petition

for

overstate

probably

understate somewhat

interest

year's share of the ultimate
depreciation. This fact does not

ther. Such

deter

accountants

the

from

recognizing that

the

courts

assets

are
thereby
more
ac¬
curately stated by deducting esti¬
mated
depreciation than if no
provision were made.5

But

life

are

insurance

investments

compa¬

long-term

op¬

erating assets? The liabilities of
life

insurance

end

consist

year

mainly of policy re¬
carried at less than the face

serves
or

company

ultimate

liability of the policies

the funds that cash will be avail¬

able

the future

amounts
come

off the
will
ulti¬

pay

that

due. This

must

company

that

means

life insurance

regarded

long-term assets and

operating

field

concern"

found

for

basis

interesting fact is that the
•present system does to a certain
extent observe the

difference

between

and

cost

maturity value of bonds down to
Baa in

The
tion

quality grade be amortized.
application of the amortiza¬

principle

policy of protecting

current

balance

valuation

But the system fails to pro¬

vide

for

amortization

the

and below

prosperity market

quo¬

faults.

needed

financing of
long-term
capital needs.

business

Another

of attempting to.
impact of
declining
quotations would be to
way

the

avoid
market

sell bonds during a decline in the
market. Such a process involves

taking

immediate

real

reason

bond

years
are

maturity

definite

and

for
example, Dewing,
Arthur
Stone, Financial Policy of Corporations,
1926 Ed., 1174-1180, particularly 1179.
See,

capital

loss in order to avoid the greater
book capital loss that would be
suffered
the
a

upor^ further decline in
Quotations.' Not only may such

policy

sets,

involved impair the

as¬

it would

but

probably also
reduction in future earning

mean

for

power,

have

reinvestment

made

would

and

higher
grade assets. Not only would such
a policy affect the assets and earn¬
ing power of the insurance com¬
panies, but it would also con¬

securities

instability of the
The dumping of
declining market

would accentuate and further that
decline

the

approved by
Deposit Insurance

eral

and

which

Corpora¬

been in

have

Harmful Effects
Balance.

Fed¬

the

use

Surplus

The

present valuation
subjects the surplus bal¬

system

downs

danger

ment

policy. By surplus,
here

mean

the

surplus

shall
assets

liabilities,

with the assets
valued according to ^present re¬
quirements, with no allowance for
over

reduce

values.

the

The

apparent

.;,'i \

There is

have

invest¬

and

out.

unnecessarily wide fluc¬
tuations and these are likely to
on

market

such securities for ultimate work-

adverse effect

solvency of those life insurance
companies that elected to hold

ance

some

the

tendency on the part
people to minimize the
to the surplus balances
a

impact of write-downs to

market

value

sion. For

sheets

they

time

see

the

depres¬

the balance

companies

only

small amount of securities of the

write-downs.
(It
corre¬
sponds to "unassigned funds" plus

types currently exposed to market

"below

that many bonds now rated high

future

plus
to

the

line"

defined

exceed

liabilities

a
—

reserves.)
not

certain
the

permitted

ratio

York

New

Sur¬
the

state

limit, for example, is 10%. Within
this narrow limit, the surplus bal¬
ance
may fluctuate widely from
year to year merely from the im¬
pact of the valuation system. It is
required to bear the full impact
4

Corporate

Note

Bond Research Project (see

1).

5 "The

very

'reasonable

words

allowance'

estimates and averages

than

demonstrated

Rose,

the
statute,
indicate that

are

in view rather

actualities."

Grant

(1929), Aff'd.
39F. 2d 340 (C. C. A. 5th 1930), appeal
dismissed 283 U. S. 867, 51 S. Ci. 657
32

of
.

812,

6 See

Annual

Report for 1946 of the
Federal
Deposit Insurance Corooration,
pp. 71-77.
Also for Evolution of thought
on
this
subject in the banking
field,
see
Severson, Harry L., Going Co**-e*n
Value in
Bank Examination, and
Valu¬
ation of Bank Assets, in "Commercial &
Financial Chronicle," Aug. 24, 194*. a id
April 7, 1949, respectively; and A Surrey
of

the

Debts

Economics
on

Loans

valuations. We must

enough

Allowances

Held

for

Bai

Commercial

Banks,
"University
of
Cincinnati
Law
Review," January, 1950. And Prochiow,
Herbert V., Bank Liquidity and the Pew
Doctrine
of
Anticipated
Income,
"The
Journal of Finance," December, 1949.

for

amortized

sion

present

lower

system
at

in depres¬

ratings

in¬

and

would

market.

require

Also,

the

that the amount of securi¬

ties vulnerable
tential

would

the category for which the

valuation
reason

keep in mind

valuation

basis

have

crease

market

current

po¬

valuation is small

for many companies is partly be¬
cause the valuation requirements

thus

discourage their acquisition.
Many investment officers of life
insurance companies have told me

that

814

(1931).

number

date

not

lower quotations thus engendered
would increase the
book write¬

the

depreciation below maturity value

require¬

would

banks,

is merely too lim¬

ited.

valuation.

the

"going

com¬

limited

ments for assets of mutual savings

since about 1946.6

such

pro¬

and

their

only endanger the future solvency
of the policy contracts, but would
deprive
the economy
of much

and

income

nies

required to
reserves

supply
would reduce the yield still fur¬

each

and

avoided

earning assets, but for
secondary
cash
reserves.
yield much less than the

regular annual deduction from in¬

therefore,

can

for

come

will,

manage¬

aversion to

the

erating assets in other businesses.
exact

company

strong

through confining investments to
highest
grade
short-term
bonds, the type bought by banks,

valuation

The

have

decisions, therefore, are likely to
be colored by attempts to avoid
a short-term
surplus decline. How
can they
through investment pol¬
icy avoid a short-term surplus

tainties do not prevent the gradual
and

insurance

ments

which the actual average perform¬
ance
will
depart. These uncer¬

various years

involved in

"liquida¬

tion" basis.

inconsistency is witbm

the insurance business—more

avoiding them by the use of
"going concern" basis of valua¬

tion

maturity.4

tion

receipts consist not only of inter¬
est

extinguished between
Jan. 1, 1900, and Jan. 1,
1944, only

out.
Only then is the income
equitably
distributed
over
the

the

The

and

toward

years

un¬

issued

market.

good

basis.

are

search that of the corporate bonds

capital

come.

market

necessary is evident from the fact
that most other businesses succeed

tribute

in¬

vested and the cash received.

assets. There is precedence in the

the

long

invest¬

valued

required

practically all these

financial

cash

the

con¬

would

That

receipts of
not all in¬

than

problem

write-ups

securities

The higher

Possibly the

matter

All

the

and

non-defaulted

dividend

and

coupon

for the fail¬
ure to extend the use of this prin¬
ciple is uncertainty over the exact
amount of depreciation that will
be suffered and the exact timing
of it. After all, the difference be¬
tween cost and maturity value and

the

market appreciation.

cerned

know

by
of

write-downs

investment mortality.

realized because of occasional de¬

market and amortized bases.

of the write-down to market value
of defaulted bonds, but also of the

Project
the
National Bureau of Economic Re¬

the investments of

valuations the
system has required on both the

prosperity

run

future

record

gathered

tations that is almost certain to be

ciency from face value. Because of
of

One

Bond

max¬

the

likelihood

decline

of the assets from the

data

literature

treats

default.3

performance.

the

Corporate

differentials

the

their

The present system of
valuation contributes to the over¬

from

higher
mately

the

Prosperity.

position.

States
Govern¬ represented. However, the finan¬
corresponding maturity cial problem of the company is not
Why does the yield offered merely to have assets equal to or
in excess of the present valuation
on the ^average^preferred stock ex¬
ceed that offered on the average of the liabilities! It is so to invest

prosperity

inappropriate. There
evidence of a tendency

their

inconsist¬

statement of income in periods of

is'not

some

bond

the

reason,

United

ments

for the market quotations to undervalue securities at the time of

basis

the

three

dates?

principle of re¬
systematic
adjustments
quiring
annually
for
eventual
capital
change. The system requires that

ii" is.

inconsistency with the

only

prosperous

in¬
gory and the declines in market
vestment.
Only then is equity
prices of non-defaulted issues both
preserved between policyholders
come, like the actual defaults, in
of
different
times.
By
valuing
the depression.
The understate¬ securities in
prosperity at maxi¬
ment of aggregate asset values by
mum
values and
not
providing
the present system in depression
for retention of assets to replace
comes mainly from
requiring the the
probable eventual deprecia¬
write-down of non-defaulted is¬
tion
from
this
maximum,
the
sues along with the defaulted ones.
present system allows and even
The non-defaulted pay out, thus
encourages
the disbursement of
invalidating the depression mar¬
capital as income and fails to pre¬
ket value. The defaulted probably
serve equity between ptiilicyholdretain much of the impairment in
•ers.
by the de¬
pression market quotations.

the

this

overlook

value that is indicated

Fixed

encies

be
It then requires losses

overstated.

this

periods

prosperity, in which,
see,

must

diminished

faulted

which

clear that they both
right. It is not uncom-

al¬

$1,782,000,000

cannot

have

$5,099,000,000

later.

years

cor-

would

is certainly

-i

bonds

most three times the

of
on

not

can

one
security are offset
by an
equally high price for other secu¬

rities

exact.

authors

sense

generally take advantage of gen¬
eral market appreciation in prices.
The gains from disinvestment in

amounted

Historically,

un¬

system which will already be burdened by
been applied to all of the
Thus
corpo¬ real losses from defaults.
Had

...

*'•

the

quotations in
time of depression. While it might

porated

the

artificial

and

keep invested and hence

taken

amortizable

artificial

the
later

and

values in prosperity also requires

both

that life insurance companies must

the

even

system

method

For

security holdings this latter

many

a market
basis, because their rat¬
ings have dropped below the limit

admittance

fluc¬

tuations in market quotations.

dividends amounts which

prosperity

factor such

faulted

fact.

many

income

market quotations as standards of

;

that

means

unsystematically and

dividend

ground in questioning the use of

;

business

formerly classed

amortizable,

affected

unevenly by

than

long

This

bonds

many

time risk, a risk of cyclical rather:

their

earnings decline in depression, the
investment ratings on many bonds
are

allow the distribution to

can

investment.

outstanding on Jan. 1,
1940, the write-down required on
the combined
population of de¬

sub¬

companies

investments.

run

toward

years

Or it

fair.

fixed

the

given

rate

common

use

for

at¬

dis¬

merely by the values attained in
the
prosperity
phases
of
later
cycles but also by the increase in

cycles.

use

the

default

stantial

its

all

over

can

even

classification.

by the height-of
depression
quotations

for

not

than

involved

value,

spread

years.

systematic and

tribution

of market value in depres¬
for
defaulted
securities
is

that the prosperity values in each
cycle have
been
validated
not

cases

impairment

will

the intervening

tempt

use

sion

securities,

stockholder either in

common

the

prosperity

increase in earnings accrues to

the

;

stocks it

common

clear

values

case

not

values.

income

they

corporate
stocks

avoid

medium

bonds

that

would

and

grade

preferred

otherwise

satisfactory
for
their
purposes
only because of the possible im¬
pact of market valuation

their

surplus balances.
Impermanence of the System.
is

quite

insurance

possible

that

the

commissioners

state

appre¬

ciate the weakness of the present
valuation
system under depres¬

sion circumstances.
What, then,
might explain their complacency?
Continued on page 40

(92)

Continued

from

page

much

Security Holdings
Of Life Insurance Companies
only explanation that has oc¬

licly

have

pared to change the system under
stress of circumstances, but see no

point' in

abandoning the system
as
circumstances
are

ways

long

favorable.
is

There

circumstantial

some

evidence in favor of this explana¬

first

the

tion.

laws

generally give the commis¬

place, the state

sioners discretion
of

ard

value they

impose. In the

the

commissioners
machinery by

second

place,

in turn have set up

which

to the stand¬

their

committee

valuation

depart from the system they
have set up in their
valuation
resolutions. This is found in the
can

paragraph starting at the bottom
of page iii of the June 30, 1950, re¬

lease of the

Committee, mentioned
"Resolved, that in order
to meet any unforeseen conditions
which may arise, the Committee

above,

Valuation

have

full

amend the
resolutions regarding market and
to

amortized values which have been

this

adopted

meeting.

Such

become

effec¬

amendments shall
tive

immediately

their

upon

ap¬

proval by the Executive Commit¬
tee of the Association." In the

not

two

controversial.

for

cost

some

quotations for others. An impor¬
tant difference would be the sup¬

plementation of these values with
for possible depreciation

reserves

them. It would also involve

from

the

recognition that interest and
receipts are not all in¬

dividend

at least not until provision
capital losses.

come,

is made for future

Outline

All fixed

System.

income securities on the asset side

bonds
preferred
stocks in
good
standing, would be valued at cost
or
amortized cost. (For such se¬
curities already on the books at
the time of starting the system,
of the balance sheet,

such

and

book

value"

"Association

There

But

ideas

throw

One

might

they

be defined

that

in¬
to

promise. The omission of such
words as principal and sinking
deliberate.

are

Committee

should

word "failure" in

literal

The

interpret
What

sense.

say

NAIC

the

realistic rather

the

that

ascer¬

tainment of default may be more
matter

financial

than

analysis. To illustrate: let

that

pose

insurance

legal

sup¬

company

holds the entire issues of X Com¬

pany's

Bonds

pany's

Bonds.

and

Com¬

insurance

The

consents upon request
rewriting the old terms, sub¬

company

stituting in each

case

for

rate.

the

old

rate

Are

these

the

point that it would have had ob¬
vious difficulty in paying the old
rate, then the Committee should

Company

ferred stocks,

apply only to the statements
the current year; they are

for

complete in the
not

rest

upon

provisions

and in fact each

resolutions

succeeding year's

line" 7

from

differed

those of the preceding year in at
least

minor respect.

some

Let

suppose we are

stocks. These

common

curities

are

all

se¬

currently

vulnerable,

year-end market.
Offsetting the above asset valu¬
ations would be two "above the

Tpne, for possible
capital losses on fixed income se¬
curities; and the other, for fluctu¬
ations in the value of variable in¬
reserves:

suddenly
In a year of depression, with busi¬
ness earnings falling off rapidly,
followed by some reductions in
bond
ratings, and a movement
downward in prices of medium
grade bonds, preferred stocks, and
us

potentially,

to market valuation.
Should a company sell its longterm investments at already re¬
duced market prices because of

securities.

come

limits of the fixed income

The

ous

classes

curities.

Bond

Project

insurance
This

market

valuation

requirements.
changes will the commis¬

"What

sioners make to alleviate the sit¬
uation?

Will they

make them in
time?
How
many
companies
choosing not to disinvest their in¬

producing securities will
needlessly be declared insolvent
come

before

nize

the

that

prices
"fair

commissioners
the

too

are

value"?

way

and

loss

current

low
How

income

securities to avoid
further

represent

much

unnecessary

recog¬

market

capital
from

the

market decline

the

loss

sale

impact of
will

take

place before the Committee real¬
izes the need for action? The fact

that

during prosperity

system
is adhered to which does nothing
to

build

cushion

for

the

vicissitudes of depression is little
assurance that changes in depres¬
sion

will

be made in time.

The

time is now.

easily possible to outline
system of valuation that will be
more appropriate for the life in¬
a

surable business.

suggest
serves

That is

can

system which; (1) pre¬

better, or at least disturbs

would

limits

for

themselves.
be

securities

the

sort

with

reserve,

higher
that

in¬

high risk and low limits for
those involving little risk.
limit

The

the

fluctuations

for

reserve

the

vari¬

able income securities would like¬

wise

the

set

light of past
experience. Offhand, I should say
that a limit of 50% of the market
value

all times

refinance

and

the

market by the sale of a new issue
at

lower

rate.

that

the

case

change in contract resulted from
strength instead of weakness and
the

insurance

nothing

company

the

gave

voluntary

that would not have been

would

When

fixed

resumed

losses

whenever

the

incurred

are

income

default,

from

cost

securities

has

serve

the

would

against the

either

reserve.

been

depreciation
be
charged
Until the re¬

built

limit, gains from sale

its

redemp¬

tion above book should be credited
to the

reserve.

the

case

common

stocks

and defaulted

securities, their re¬
serve would be charged with all
write-downs to year-end market
values

and

all

losses

reserve

sale.

is below its

limit,

it would also be credited
with all write-ups and gains from
sale.

When the

reserves

are

insuffi¬

cient to absorb write-downs, the
remaining impact would be on

surplus,
7 That

before.

is, not

joined

Building.

duced

that

assets

income

equity between
different

that

system

does

also

and

future

Joins Westheimer Co.
(Special to The Financial Chronicle)

CINCINNATI, Ohio —Ervin A.
Zern is now affiliated with West¬

Company, 322 Walnut

Street, members of the New York

Cincinnati

Stock

With F. S.

con¬

The
to
be

Exchanges,

have

changed in depression; and, since

Moseley Co.

(Special to The Financial Chronicle)

solvency.

not

improves

policyholders

times

tributes

pro¬

staff

,..

and

the

some

the

Incorporated, Tower

BOSTON, Mass. — George A.
Benway is with F. S. Moseley &

reserves,

Co., 50 Congress Street, members

of pros¬
perity. The elimination of most of
the
unrealized
gains and losses
from income and the graduation
of
the
deductions
for
capital

of the New York and Boston Stock

there

limit

also

losses

years

loss

With

less

the

sur¬

the

better

holding

sur¬

over

worry

investment

and

Merrill

CHARLOTTE, N. C.—Wylie H.
Arnold

Merrill

wiih

Lynch,

Pierce, Fenner & Beane, Liberty
Life Building.

the

Joins Merrill Lynch

officers
the

long-term investment. The

Co.

(Special to The Financial Chronicle)

Ohio

CANTON,

securi¬

Lynch Adds

(Special to The Financial Chronicle)

the

real

fluctuations

concentrate

Exchanges.

qualifies the

nearly

selection

with

that the resulting

short-term

ties for

the

accordance

risk

earnings
plus.

fair

Freeman

—

Richard

with

associated

now

assets in good years are more con¬

Merrill

servatively valued, from Aaa

Beane, St. Francis Hotel Building.

porates down

Lynch, Pierce, Fenner &

formerly

stocks,

was

of under-

Co.

v.K-v^

common

and there is less danger

cor-

with Bache &

;'"V

shift

accom¬

plished at greater expense by both
parties through a public refunding
operation. To take another illus¬

held all of the bonded

company

debt of Q
a

Company and to avoid

default by

funds.
then

The

Q, loaned additional

Commissioners
to

seem

would

realistic

Securities Salesman's Corner
By JOHN DUTTON
If

sending out a monthly, or a semi-monthly
such as compilations of various
groups of stocks, investment suggestions, etc., you can use this
material to obtain new prospects for your sales force.
The next
time you have an interesting piece of mail, or something that is

"surplus"

are

now

connected

classed

of each person on your

defaults,

even

though

the flow of interest payments had
not been interrupted.

Alternative Bases for the Graded
Reserve.

The other observation is

with respect to the graded reserve
for the fixed income securities.
There

mailing list. This letter should be divided
by a vertical line. On the left side of it you can
leave spaces for the recipient to fill in the names of his friends.
Also, include a return envelope which will require no postage. On
the left side of the letter a message something like the following
would be satisfactory.
Dear

that

attaching
limits

each

for

grade

down

avoid

a certain frac¬
income of any secur¬
certain basic rate be
reserve

for the life

the

security or for so many
years, whichever was the shorter.
Forces of competition in the capi¬
tal
market
tend
to
make
for

included

list of 50

"Review and Out¬
You will also note

common

Due

income

current

the

thought that

return,

that

fact

you

like to read

also
copy

dresses

above

have

6%, based

had

few friends that would

will be pleased

use

prospect's

basic
"risk-

less"

rate, as say the rate of yield
government bonds of
most
similar maturity. Under either of

methods

would be necessary

distinctions

between -real

name.

the referral later

greetings of the season,

remain,
:

the material. Omit the source
an opportunity

This gives the salesman
on

when he makes

call in person.

leads.

should be used by the salesmen in following up these
If he goes out and says, "Mr. Prospect, my name is Tom

Jones of Blank & Co. and your good friend and ours, Bill Smith,

thought

you

might want to do

pretty sure that Bill Smith
should not be any difficulty
Bill Smith, who I understand
several weeks ago that we

Care

The basic rate could

so-called

to mail them

the opposite

A short note should accompany
of the

re¬

Blank & Co.

memoranda

possibility,

number of

Very truly yours,

qualify income and
build up the reserves
according to
the probable use of the reserves.

rate, would be

upon

will kindly designate their names and ad¬
side of this page. With kindest

you
on

might have
it.

personal regards and

would tend to

be the rate
at which the company is required
to
increase
its policy reserves.

stocks that

quests for this material from many interested persons, we

higher yields on the riskier se¬
curities, so that such a method

Another

our

the

credited to the
of

present market prices, and dividend rates.

with risk, it would be possible to

over

copy

paid dividends for the past 25 years, and which all

afford

difficulties
of
classification and still get accum¬
ulations substantially correlated

ity

enclosing

have

Customer:

are

letter for the next six months.

look"

securities. One way is by
classification of the securities into

Aaa, Aa, etc. and
different
rates
and

Mr.

riskier

grades such

of the day, you can include a letter
will be pleased to send copies to five friends

the events
you

down the middle

various ways of arriv¬

are

with

suggesting that

ing at the goal of building up the
reserve to higher amounts for the

these
reserve.

you

letter to clients, or some other data

grounds in finding that both the
old
and
new
issues should
be

through sale at less than cost or
require merely that
through write-down to market tion of the
upon

has

appear

fell below its limit.

reserve

ble

Yantis & Co.,

heimer and

perhaps the highest for preferred
to be about right.
stocks.
Some
securities already
The reserves would be built up bear
ratings, but many others,
as
at a regular rate out of each year's such
mortgages,
privately
income until the limit is reached. placed bonds, purchase-and-leaseback
Thereafter,
the
same
process
arrangements, do not.

Whenever the

Suggestions for Improvement

Corporate
the
National

companies

reserve

gamble that the commis¬
sioners will change their valua¬
tion requirements? To the uncer¬
added the uncertainties

data

the

the investment records of the life

volve

are

se¬

Bureau of Economic Research and

through the holding of such se¬
curities at a substantially lower
level of prices?
Or should the

tainties of the future market there

income

wealth

from

graduated

company

fixed

available

demption

ELGIN, 111.—Josephine S. Gam¬

tration: suppose that the insurance

security reserve would be set ac¬
cording to findings from research
on the past capital losses in vari¬

the possibility that-its surplus may
become drastically impaired

future

would be valued on

the asset side of the balance sheet
at

have

de¬

and

defaulted pre¬

bonds and

faulted

that they do
or
refer to the
preceding year;

sense

stocks

common

With F. S. Yantis Co.

ceipts of good years against the
eventual impairment in bad years

market,

and

All

by summariz¬
ing briefly the ways in which the
suggested scheme would be more
appropriate for the business. The
reserving of a portion of the re¬

can

analysis

for

(Special to The Financial Chronicle)

conclude

default.

would show that it is able to pay

such

Conclusion
Let

change in that bond
Perhaps fi¬

basis

reserve

this suggests
investment mortality as

for

one

mortality:

well.

the current

differ¬
acquisition of
the security. There are arguments
for each, which will not be taken
up here.

constitutes

the old rate very comfortably, and
is able to call the' bonds for re¬

of original

should

have

ready
human

ential at the time of

find that the

acquisition cost.)
variable income securities,

whether it

plus

financially

that time would be used in place

place,

be¬

taken, the
should
designate

Committee

deteriorated

nancial

and

preferred stocks and bonds.

relative

securities;

Whichever basic rate is

defaults? If financial analysis in¬
dicates
that
Company
X
had

the
commissioners
pretense that their
requirements are other than tem¬
porary.
The resolutions as
to
valuation are passed each year

third

have made

tween

de¬

simply

failure to pay the amount of
terest or dividend according

fund

quoted

differential in yield or the

here.

because

fault should

trying

securities and end of year market-

that

points,

involve, like the present system,
amortized

have

of Default.

for

should

than

would

above

space

ultimate solvency; and (4) is
applicable to depression as well
as to prosperity conditions.
Conceptually
such
a
system
could
be quite simple. It could

shall

Securities

power

and

to,

cost

and

forth

set

many

explored and compared.

the rest of the
economy; (3) produces values that
measure more accurately, and give
more
substantial encouragement
companies

And

alternative
of arriving at the ends in¬

dicated

equity
between
different
generations of policyholders; (2)
encourages
investment
policies
that are healthier for both the

mortgages and "securities";
privately placed and pub¬

tem.

defended.

less,

estate

between

Definition
The

curred to me is that they are pre¬

nature

suggestion for a better sys¬
To be complete, many details

would

Valuation of

basic

the

for

of the

some business with us," you can be
is not going to like it. But there
if he says something like this, "Mr.
is a friend of yours, suggested to us
send you a copy of an interesting

regarding the outlook for business, which I think
firm mailed to you. Of course, he didn't send me around to see
you, but my firm did want me to call upon you and make your
acquaintance. We would like to send you other material that may
of value

investments
our

to
we

you

from time to time.

Also, if

you

own

some

would be pleased to give you an invitation to use

facilities for advice and research at any time you may wish to

so, without any obligation or cost to you in any way."
should open up the door without antagonizing anyone.

This

If you use

something worthwhile and really interesting as a
mailing piece, this should bring in some good prospects. Don't try
it unless you have something exceptional which people will
read,
and afterward feel like they are doing their friends a favor to
.have them obtain

copy,.

tVolume 173

Number 4974

;

The Commercial and Financial Chronicle

41 ^

(93)j

The following statistical tabulations

Indications of Current
Business Activity
AMERICAN

IRON

Indicated

STEEL

steel operations

ingots

AMERICAN
Crude

INSTITUTE:

(percent

Gas,

runs

stills

output

Jan.

daily

—

average

*•'

(bbls.)

cases

1,963,400

1,930,600

92.9

BUILDING

CONSTRUCTION—U.

1,938,400

1,771,600

Total

new

5,763,310

15,723,320

5,887,870

4,995,450

Additions

116,159,000

6,238,000

5,482,000

Nonliousekeeping

20,075,000

5,925,000
*20,254,000

and in

19,847,000

18,045,000

2,600,000

2,267,000

2,386,000

Dec. 23

2,525,000

9,436,000

8,864,000

8,591,000

Dec. 23

7,335,000

8,715,000

8,567,000

8,470,000

8,046,000

„

pipe lines—
Dec. 23

112,631,000
21,819,000

Dec. 23
at

Dec. 23

73,273,000

Dec. 23

39,914,000

Latest

Year

Month

Ago

DEPT. OF

(in millions):

and

1,48*

1,110

*1,232

837

1,020

*1,130

750

*84

Commercial

Warehouses, office and loft buildings.
Stores, restaurants, and garages

110,164,000

28,291,000

20,894,000

Religious

76,913,000

86,768,000

78,662,000

Educational

41,598,000

45,566,000

61,647,000

Social

Other

nonresidential

building—

recreational

146

135

Hospital

ASSOCIATION OF AMERICAN RAILROADS:
of

cars)

Dec. 23

747,204

772,902

701,421

623,257

Farm

Dec!

689,776

680,044

642,159

566,626

Public

ENGINEERING CONSTRUCTION

ENGINEERING

—

RECORD:
Total

Private

Other

construction

Dec. 28

construction

Public

rZZZZZlDec!
"IIIDec!

construction

State

and

municipal

$692,041,000

$260,346,000

$66,858,000

48,457,000

112,439,000

127,681,000

30,933,000

62,736,000

579,602,000

59,772,000

70,304,000

2,964,000

509,298,000

Z_Z_Dec!

OUTPUT

Bituminous

$111,193,000

Dec

Federal

COAL

Telephone

NEWS-

(U.

coal

35,925,000

101,250,000

29,421,000

37,415,000

6,504,000

other

114

TEM—1935-39

12;--

87-

277

295

Hospital
Dec. 23

"I""Dec.
II__Dec!

10,960,000

*12,005,000

9,050,000

9,390,000

910,000

853,000

692,000

616,000

139,300

*158,500

132,400

19,200

INDEX—FEDERAL

RESERVE

output

FAILURES

]

Dec. 23

636

*638

319

541

and

OOo

kwh.)

(COMMERCIAL

Dec. 30

AND

other

6,479,302

7,032,740

6,716,273

5,492,674

INDUSTRIAL)

—

DUN

BRAD-

Wholesale

Dec. 28

125

174

160

109

Retail

Straits
Lead

ton)

gross

4.131c

3.837c

3.836c

ZZZZZZZZI'Dec!

$52.69

I.Dec.

$49.69

$45.88

$45.13

$40.75

$26.58

(E.

York)

York) at
(St. Louis) at

(East

St.

.Z—-i

Louis)

—Z_-

•*,

24.200c

Dec. 27

24.425c

Dec. 27

150.000c

154.000c

.—.Dec. 27

17.000c

(New

Lead

Zinc

Dec. 27

ZDec.
III Dec.

16.800C1

17.500c

24.200c

18.200c

24.425c

18.425c

131.000c

78.000c

17.000c

12.000c

'16.800C

"TL 6.800c

11.800c

17.500c

9.750c

Total

BOND

PRICES

Government

Average

DAILY

AVERAGES:

Bonds

Jan.

corporate

—_

—

Railroad
Public

Total

MERCE—RUNNING
Lint—Consumed

118.20

118.80

118.60

116.22

115.04

114.85

110.70
104.14

jan.

109.60

109.06

Jan.

112.19

111.62

107.09

jan.

116.02

115.32

115.63

112.75

COMMODITY

-I.;

119.20

119.00

116.61

Jan.

2.40

Jan.

2.87

2.88

_„Jan.

2,66

2.66

2.67

2.40

PAPERBOARD

Orders

(tons)
(tons)

Dec.

PAINT

AND

2.72

2.84

(in

2.90

2.91

3.13

3.19

3.22

3.50

Winter

Jan.

3.05

3.08

3.33

All

Jan.

2.85

2.86

2.87

3.02

Jan.

2.69

2.70

2.82

508.9

511.6

485.5

347.5

171,484
241,058

Dec. 23

iDec.

204,724

239,164

181,234

228,706

153,405
200,595

105

100

598,431

681,676

671,985

327,641

REPORTER

PRICE

Dec. 29

147.7

146.5

EXCHANGE—SECURITIES
Odd-lot sales by dealers
Number of orders-:
of

EXCHANGE

(customers'

124.8

Other

shares—Customers'

value

Customers'

Number

total

sales

other

____

other

34,021

198,326

935,447

876,698

$41,167,123

$41,324,077

$34,525,262

38,339

31,742

310

319

31,998

31,053
348

28.415

38,412
200

38,029

31,423

30,705

Dec

38,212

1,138,749

945,517

914,278

Dec

1,075,662

DeZ

12,217

11,716

13,046

7,708

I_Dec!

1,126,532
$42,405,513

933,801

901,232

$36,398,654

$36,312,668

1,067,954
$36,658,497

sales
_

Dec. 16

sales

392,430

Dec. 16

'. Other sales

Dec. 16

36,232

1,117,986
$45,655,819

-Dec. 16

_^____

Dollar value

Short

Dec. 16

I Dae.

Round-lot sales by dealers—
Number of shares—Total sales

Round-lot purchases
by dealers—

PRICES

NEW

SERIES—U.

1926=100:

291,120

279,210

427,730

291,120

""279I210

427,730

392,430

DEPT.

389,046

396,690

366,980

241,460

CROP

LABOR—

products

Textile

Fuel

other than faim and foods..

products

and

lighting materials

Dec. 26

176.0

174.7

171.7

151.2

.Dec. 26

191.7

*188.5

185.7

155.7

Dec. 26

184.6

184.7

figure.

fllncludes 569,000 barrels of
foreign crude ri)ns.'

172.6

Dec. 26

244.1

231.3

222.1

Dec. 26

182.3

*180.8

178.2

71'.

159.8
188.2

155.3

707

835

$5,949,000

$8,419,000

1,749,000

1,598,000

2,808,000

4,235,000

4,683.000

5,929,000

2,726,000

2,410,000

1,742,000

2,009,000

4,362,000
1,281,000

$18,864,000

$16,649,000

$22,799,000

835,155
1,489,660

772,216
1,457,072

6,995,538
118,461
261,001

6,375,051

10,568,091

128,940

117,013

110,115

132,339
248,319
42,913

20,751,000

20,758,000

20,315,000

1,832,015

208,963

14,775,691

3,379,436

3,105,436

3,131,003

1,141,188

1,010,069
740,537

(bushels)

1,026,7515

246,087

269,532

38,817

33,457

—

(bushels)

750,66(5
276,089
36,064

207,270

236,075

240,025

1,329,473

1,483,975

1,465,13*

299,954

301,009
4,749
39,263

40.74 7

38,022

37,971

152,630

196,344

6,541

______

237,45(3,
7,360

Rice

(100

pound bag)
Popcorn
(pound)
Sorghum grein (bushels)
Sorghum
l'orage
(bushels)

—

silage

lint

—

(bushels)—:

4,414

(bale).—

clover

seed

clover

seed

picked

(bushels)

and

threshed

Sugar
Maple

beets

(ton)—

sugar

sirup

(pound)
(gallon)

i__

Apricots

—

(bushels)
■____

—

(ton)

states)

(ton)___.

253.1

243.1

203.8

162.8

145.6

Grapefruit

*170.2

166.2

138.3

Dec. 26

136.0

Lemons,

136.0

Dec. 26

184.1

*184.3

180.6

168.3

Pecans

Dec. 26

222.0

221.8

219.1

191.0

Tung

139.6

*138.6

136.6

115.0

1,771,320

2,038,423

430,591

439,509

55,368

59,491

58,729

1,972,359

2,013,165

states)

(ton)—

states)

413

6,383

6,226

7,078

7,260

10,830

9,795

13,383

13,549

2,035,915
i

6,013

6,553
11,929

10,197
292

.VZ

1,61*
43

58,336

58,288

50,790

120,499

52,573

52,407

133,743
74,818

31,263

30,804

36,40*

2,641

2,539

2,663

242

231

259

202

198

—

(ton)

198
90

83
148

______

161
129

ZZZZZZ

111,290

108,535

130.7

states)

Calif,

Cranberries

states)

(pound)

nuts

(boxes)

(bushels)

—

(barrels)

48,520

36,509

12,500

11,639

—

f
—

states),(pound)

*Revised figure.

■____

980

112,503
39

2,982

411,565

——

Prunes, dried (3 states) (ton)——
Prunes, other than dried (3 states) (ton)—
Oranges (5 states)
(boxes)

*165.2

287,010

262

(ton)

(12

170.4

281,133

1,968

(pound)

165.7

230,897

1,875,825

„

2,979

337

Maple

Plums

16,843

2,902

(pound).—__

Sorgo sirup (gallon)
—___________
Sugarcane for sugar and seed (ton)________
Sugarcane sirup (gallon)

Cherries

1,607
16,419

3,032

(bushels)
(pound)

total

163,120

793

(tons)

Grapes,

315

1,40*

______

3,256

——

Swcetpotatoes

Hops

1,879
2,638

21,377
—

(bushels)

Tobacco

12.509

1,319
943

—

Potatoes

106.819

12,657

1,997

248,300

seed (bushels)
dry edible (100 pound bag)
dry field (bag)
Soybeans for beans (bushels)—
for peas

4,005
107,870

(bushels)

Beans,

Peanuts

-9,88*

267

(pound)

Timothy

Velvetbeans

5,415

9,945

99,536

(bushels)

Peas,

Cowpeas

—

•

12,296

(bushels)

seed

22,977

6,559

(bushels)

seed

•>
,

243,025

16,128

(ton)

all (ton)——
wild (ton)

Hay,

22.509

159,291

—

256.8

figure.

395

4,740

Dec. 26

tCorrected

197

63
339

35,224

Dec. 16

135.4

150

310

5,203

Dec. 26

♦Revised

*17

*76

REPORTING

—

All commodities

15
68

______

Apples, commercial crop
Peaches, total (bushels)
Pears, total (bushels)

commodities

Farm

■

if*

51 r

18,739

Broomcorn

Dec. 16

All

COMMERCE):

_________________

Number of shares

WHOLESALE

of linters) prior to

(bushels)

Lespedeza

Dec. 16

Dec

sales

;

18*

43,946

Red

Dec. 16

shares—Customers' total sales
short sales______

Customers'

290

DEPARTMENT OF AGRI¬
report issued Dec.
18

spring

Sweetclover

Customers'
'

17
225

Flaxseed

Alsike

.__

Odd-lot purchases by dealers
(customers' sales)—
Number of orders—Customers'
total sales________
Customers' short sales

11
83

Barley
(Dushels)
Rye (bushels)
Buckwheat (bushels)

Alfalfa

purchases)—

of Nov. 30

(bushels)

Hay,

COMMISSION:

;

November

(bushels)

Cottonseed

140.6

—

(bushels)

Durum

Cotton,

INDEX—1926-36

(DEPT.

(exclusive

spring

Oats

Dec. 23

DRUG

Corn, all (bushels)
Wheat, all (bushels)

2.90

TRANSACTIONS FOR THE ODD-LOT
ACCOUNT OF ODDLOT
DEALERS
AND
SPECIALISTS ON THE N. Y. STOCK

Dollar

*39

173

thousands):

3.19

8TOCK

Number

*114

9,199,668

BOARD

Dec. 23

AVERAGE=100

112

3d'

':Z

•

CULTURE— Final

ASSOCIATION:

month

PRODUCTION

Sorghum

OIL,

*227
*31

1,008,872

Jan.

received

Percentage of activity
Unfilled orders (tons)

2.71

3.06

2.75

INDEX

NATIONAL

2.71

2.43
v

GINNING

Running bales

jan.

■

November

of Nov. 30
active as of Nov. 30

spindles

COTTON

CROP

Utilities

•,;v.

Cotton

119.61

118.80
115.04

Group

Production

COM¬

consuming establishments as of Nov. 30
public storage as of Nov. 30

public storage

Jan.

MOODY'S

*30

BALES:

month

consuming establishments

Zjan.

■.•',!•

DEPT.

Group

z;.

—

corporate

LINTERS

AND

112.00

Group
Industrials Group

liabilities

COTTON

100.99

liabilities.

101.37

Baa

Public

service

115.43

—

Railroad

liabilities

101.31

____

Aaa

$8,412,000

115.63

liabilities

119.82

MOODY'S BOND YIELD DAILY
AVERAGES:
U. S. Government
Bonds____:

Average

7
560

115.63

Group

Utilities

7
*728

683

119.82

——Jan.' 2

Industrials Group

number

—

■

_____

Baa

■

214;

639

150

Jan.

Aa
■

service

Linters—Consumed

101.29

____:

.Jan.
—

2040

BRADSTREET,

number

Wholesale

Aaa
.

283'
,

November:

number

Manufacturing

MOODY'S

number

Commercial

refinery at
refinery at
(New

enterprises—

development

number

Construction

QUOTATIONS):

copper—

tin

and

number

Commercial
Dec. 26

Domestic

Export

226

public

INC.—Month

Detail

Electrolytic

public-service

Conservation

Manufacturing

COMPOSITE PRICES:
Finished steel (per lb.)
Pig iron (per gross ton.)

PRICES

209

—

facilities

BUSINESS FAILURES—DUN

IRON AGE

METAL

INSTITUTE:

(in

Scrap steel (per

naval

water

Construction

•;

institutional

Highways
Miscellaneous

SYS¬

STREET INC.

and

Other nonresidential

Military

28
40

218

—

Educational

AVERAGE=1W0

ELECTRIC

Electric

building

Industrial

All

EDISON

building

private

construction-—

Sewer

SALES

telegraph

utilities

Nonresidential

BUREAU OF MINES):

STORE

public

Residential

and

lignite (tons)
Pennsylvania anthracite (tons)
Beehive coke (tons)

DEPARTMENT

132,665,000
•

All

Public

and

132

Railroad

CIVIL

utilities

69
89

construction

270;

135

Miscellaneous

freight loaded (number of cars)
freight received from connections (number

Revenue

institutional

and

15
•

301

•

111

73' ''

378

„

and

118

106,424,000

23,152,000

399

Industrial

110,943,000

$2,04*

*2,000

(nonfarm)

1,867

alterations—

Nonresidential building
..

; *$2,728

$2,506

Revenue

of that date:

are as

building (nonfarm)
dwelling units
;

Dec. 23

Dec!

either for the

are

construction-

New

(bbls.)

fuel

construction

Dec. 23
Dec. 23

output

quotations,

Ago

100.5

ZZ
oil

Kerosene <bbls.)
at
Gas, oil, and distillate fuel oil
(bbls.)
Residual fuel oil (bbls.) at

(bbls.

average

(bbls.)

and

or,

Year

Ago

100.1

that date,

Residential

oil output (bbls.)
refineries, at bulk terminals, in transit
Finished and unfinished gasoline
(bbls.) at

Stocks

Week

101.8

Dates shown in first column

Private

output (bbls.)
distillate fuel

oil,

Residual

tons)

each)

Kerosene

(net

Month

production and other figures for the

cover

LABOR—Month of November

INSTITUTE:
condensate output —daily

and

gallons
Crude

castings

Jan.

month available.

month ended

Week

capacity)

PETROLEUM

oil

Gasoline

and

week

Latest

AND

Equivalent to—
Steel

latest week

968

849

110,688

128,17*
88

i r*

The Commercial and Financial Chronicle

(94)

Continued

This is learned
"Evening News"
of Dec. 20 which reports that Mr.

post as Treasurer.

from page 15

from the Newark

Goldham

News About Banks and Bankeis
/vV'.

Dec.

Sept. 30, '50

Dec. 31, '50

Sept. 30, '50

31, '50

$
Total

Cash

-7-w
due

and

U. S. Govt,

Loans

Undivided

743,860,414

662,977,764

profs.

29,936,866

36,452,372

Undivided

TRUST

Sept. 30, '50

"50

1,533,839,422
1,552,289,582 1,377,983,667

1,714,391,242

Loans

475,474,046

378,773,423

433,228,132

432,702,298

Undivided

7:77"V.^-a'V
535,862,281

NEW

COMPANY,

Dec. 31,

AND

Deposits

Fi¬

the

American Retail

u1v1-

Board

and

Trustees

Trustee

the

Federation, 1949,
of

the

National

other

discts—

1,651,881

1,535*933

profits—

720,003

890,542

made

Assistant

Controllers,

William L. Hoffman

and

made

was

Assistant Manager. I. Roger

Stev¬

Assistant Trust OfficerSecretary,
became
a
Trust
Officer, and Douglas C.
Wright and Elliott W. Sparkes

The Montana National

Jr.,

ens

Assistant Trust Offi¬

named

The

directors

Trust

Company

have

elected

the

Officer, Hoyt Mitchell and G. H.
Zimmer, Assistant Trust Officers,
and
E.
L.
Johnson,
Secretary,
Frank H. Schmidt, President, an¬
nounces.
Mr. Eckert, a member
of the company's staff since last
April, was elected Assistant Trust
Officer in May.
He was engaged
trust business in Beverly Hills'
from 1939 to 1945.
Mr. Mitchell
in

was

formerly Trust Officer with

The

Whittier National

California

Los Angeles
Eckert Trust

and

Trust

Savings Bank of Whittier, Calif.,,
where he had
ber

since

staff

was

Officer

Trust

bank

Officer

1932

mem¬

elected
the

and

Trust

last

January.
Formerly
Secretary, Mr. Zimmer

Assistant

elected

was

been

1922;

Assistant
Whittier

Bank of

Billings, Mont., reports a capital
of
$275,000 as of Nov. 24, in¬
creased from $225,000
through the
sale of $50,000 of new stock.

Assistant

Trust

the

Sbuth

Rock-

Company

N.
Y.,
and
The
Franklin National Bank of Frank¬

TRUST

Centre,

lin Square, Nassau* County, N. Y.,

Sept. 30, '50

under the charter and title of The

Franklin

1,769,855,115 1,562,484,722
1,616,865,824 1,409,518,387

Total resources-

apy cXXCl

Consumers
Council.
A
promotions were Retail
made:
Robert
W.
Bruce
Jr., leader in civic affairs, Mr. Marcus
Charles C. Crissy Jr., and Ben¬ is a past President of the Dallas
jamin F. Leonard, Assistant Sec¬ Symphony Society, and an active
retaries-Assistant Treasurers, and member of the Civic Federation
George
Zabriskie Jr., Assistant of Dallas, Greater Dallas Planning
Controller, were named Second Council, Better Business Bureau
Vice-Presidents;
William
F. of Dallas, Dallas Chamber of Com¬
Krumwiede,
Assistant Manager, merce, and other activities.
became
Assistant
7'/',7
*
ft
ft
' 7-,;
'77
Secretary-As¬ "77

Shore

YORK

'50

and

20,213,327

The consolidation

-15,919,950

ville

BANK

d 11

Thursday, January 4, 1951

that

post

De¬

cember, 1947. His association with
the

trust

company
dates from
May, 1945. Mr. Johnson, formerly
Assistant
Secretary, joined the^
trust company's staff in February,
1946.

cers-Assistant Secretaries.

HANOVER

CENTRAL

12,627,488

18,843,658

Several

were

611,027,408

prof9^ 16,799,990

15,180,991
—

security

and

Undivided

bills

and

discounted

Cash

Loans

secu¬

rity holdings-

from

banks
U. S. Govt,

holdings

banks—

from

U. S. Govt,

due

41,407,211

44,594,287

Cash and

due

and

Dec. 31, '49

$54,150,995 $51,186,129

resources

Deposits

the

From
likewise quote:
1919.

sistant-Treasurer; Frank W. Heimall and Myron H. Bennett were

COMPANY,

Dec. 31, '50

with

been

ivicUldgCi

TRUST

BROOKLYN, N. Y.

CO.,
Total

Dec. 31,

Deposits

jjs

COUNTY

YORK

NEW

Total resources-

profits-

KINGS

BANK

CHEMICAL

289,534,176 280,472,827
discts.- 261,691,616 250,814,189
13,322,812
13,019,873

—_

and

Loans

—

Cash

224,369,971 195,769,585

—

holdings

864,942,694

bills

and

discounted

due from

U, S. Govt, security

secu-

holdings. 1,030,956,549

rity

—

and

banks

619,939,730

818,188,457

745,399,580
718,557,649 668,186,127
797,468,803

resources

Deposits
Cash

banks__

from

Total

2,772,539,261 2.320,044,595
2,581,949,234 2,135,910,161

resources..

Deposits

"News"

COMPANY,

YORK

NEW

YORK

NEW

TRUST

YORK

NEW

THE

TRUST COMPANY,

MANUFACTURERS

has

since

delity

uibc

sions, 1929; Executive Vice-Presi¬
dent, 1935.
He was Chairman of

...

National

effective

due

tion

with

Bank

became

connec¬

15.

Dec.

the

consolidation,
a
established at Rock-

Urges Unfettered Agricultural Program

Frederick W. Shelley, President
for the past 12 years of

the Morris
County Savings Bank of Morristown, N. J., has become Chairman
of

the

Dr. E. L.

Purdue

President, he is
Ralph B. Welsh,

Board;

succeeded

heretofore

Executive

Butz, Head of Dept. of Agricultural Economics of
University, says policy should be for full production,

without allocations
;

Vice-Presi¬

;

price supports, and with emphasis

efficiency in farm operations.

dent, who assumed his new post
Speaking at the Third National industry leaving the individual
Jan. 1. According to the New¬
Credit Conference, ? sponsored by farmer relatively free. ; r <
>v
ark
"Evening
News,"
Mr.
Shelley
Loans and bills
Shore Office.
The initial capital
the American Bankers Association
"It appears that we are engaged*
started with Morris County Sav¬
discounted
547,060,337
520,547,548
of the consolidated bank will be
in Chicago on Dec. 14, Dr. E. L. in at least a 10-year conflict with
Surp. & undivd.
'-7.vings in 1902. He became an officer
the
Communist world,
in shares of 125,000
Butz, head of;
whether,
profits —115,159,680
113,769,108 $1,250,000,
in 1922 and in 1932 was made
common stock, par $10 each.
the Depart¬
The
ft
ft
ft
complete war comes or not/' pr.
Secretary
and
Treasurer.
Two
initial surplus will be $3,000,000,
ment of Agri¬
Butz asserted. "Agriculture's job
BAKK OF THE MANHATTAN COMPANY,
years later he was elected a mem¬
and initial undivided profits not
cultural
EcoNEW YORK
is clear. We must increase -oun
ber of the board, and in 1938 suc¬
less
than
Dec. 31,'50
total output still farther, and do
nomics; of
Sept. 30,'50
$750,000. An item bear¬
ceeded the late Philander B. Pier$
$
it with fewer farm workers.
We
Purdue
Uni¬
ing on the consolidation appeared
Total resources. 1,320,605,360 1,209,120,087
son as President. He was the first
in our issue of Nov. 23, page 2000.
must
be careful, however, not to*
versity, La¬
Deposits
1,212,071,132 1,102,807,978
President of the Morris Chapter,
ft
ft
ft
Cash
and
due
stress current production so much
fayette, Ind.,
American Institute of
Banking,
from banks—
385,377,437
332,315,176
that we sacrifice total production
stated
that
Effective Dec. 5, the capital of
banks—

from

v.'

U. S. Govt,

530,225,048

411,363,312

605,050,557

526,930,236

branch

secu-

holdings-

rity

was

ville Centre to be known as South

—

U. S. Govt,
i

rity

292,312,414

holdings-

Loans

the

288,276,360

bills

and

discounted

and

secu-

466,677,007

531,836,448

—

Undivided profs.

of Syracuse,

by the sale of
*

EXCHANGE

CORN

Dec.

244,151,013 227,588,047

holdings

counted

112,109,409

Senior

Vice-President

90,078,003

Borden

Manager
he

sucn

436,463,943 441,792,953

Loans and bills dis'

Walter

eral

U. S. Govt, security
-

meeting of the Executive

mut Bank of Boston, held Dec.

due from
—

'•*

-**

will

26,
appointed

was

the

serve

and

Gen¬

bank.

Chief

Ex¬

492,859,737 471.514,164

and

since 1924.

U. S. Govt, security

holdings

123,270,950 103,251,250

counted

Undivided profits—

8,611,726

Cuba;

has

234,313,765 243,485,537

31, '50
■:

presently

Total resources—

Deposits
Cash
•

due

banks

holdings

security

34,593,678

—

41,879,927

43,931,184

32,256,917

27,157,344

4,912,999

4,838,127

Loans and bills dis¬
counted

undivd.

CLINTON TRUST COMPANY, NEW YORK
Dec.

31,'50

Sept. 30,'50

Total resources— $28,117,188 $27,322,177
Deposits
26,079,125
25,300,754
—_

Cash

and due from

banks

6,287,327

10,987,219

12,305,936

U, S. Govt, security
——

Loans and bills dis¬
counted

Surp.

7,910,795.

••

—

and

undivid.'

IRVING

954,248
*

—

and

Sept. 30, '50

U. S. Govt,
and

406,990,516

1 310,751,144

369,389,749

342,544,894

discounted

—.

company.

Shawmut

since

Vice-President.

Senior

TRUST

member

Association

Savings Banks.
THE

Mutual

of
.

NATIONAL

PHILADELPHIA

PHILADELPHIA,

837,430,025

resources

779,159,477

765,583,170 708,682,154

Deposits
Cash and

due

banks

from

274,339,840 231,290,929

____

U. S. Govt, security

holdings

250,905,753 255,959,310

———-

Loans and bills dis¬
counted

——

Undivided

profits—
*

The

216,474,266

183,973,649

12,659,866

12,238,165

;l:

National

Bank

South

Dakota, at Sioux Falls, S. D., has

lture.

must

that

duction;

It
one

Earl L. Butz

pro¬

one.

that somehow

lets

the

individual

farmer manage

his farm according
principles of good farm
management, and lets him be ef¬
ficient; one that doesn't place re¬
straints upon his output; one that
doesn't come along with a 20%
cutback in corn production, and
to

must

tinue

encour¬

full

ages

Sept. 30, '50

$
Total

BANK,

PA.

Dec. 31, '50

c u

the

cutback in this and in that.

invest

have

7.7'':/;7v 77:.',7

done before.

ever

the

est ratio of debt to

the

20th

should

capital values
during

have experienced

available.

gram.

in those farm im¬

present time, agricul¬
ture
is
financially sound," Dr.
Butz said. "We now have the low-,
"At

perity in America—is a full level
of production. We must pursue a
program that encourages that, and
we must pull for a flexible pro¬

program

10-year

our

agriculture in the present fight

than

that

keep

provements which will increase
production.
4
1
"To get the desired increase in
agricultural
production
in the
decade ahead, we must strive con¬
stantly to increase our yield petf
man as well as our yield per acre.
This means that we must apply
more
research and more science

that doesn't lead
us
blindly into a policy of cur¬
tailed output, because never can
any sector of industry prosper and
be prosperous unless it produces
fully. The essence of wealth and
well being—the essence of pros¬

need

entire

the

over

must
promote
the
general wel¬
fare
of agri-

century. Farm earnings
invested in improve¬

of the farm and its produc¬

ment

tive capacity,

rather than be used
other farmers
supply of land

bidding against

in
for

the

scarce

"American

agriculture also faces
sociological challenge in the
decade ahead," Dr. Butz, stated.
"Our rural areas have been chron¬
a

COMPANY,

NEW

been

JERSEY

effective
to

Nov. 30,
$500,000 by a

"Now is the time to re-examine

the basic

;

Vice-President
indicated

519,323,848

12,600,284
*

486,150,266
14,764,650

the

Dec. 21

ident David J. Connolly.

company

Leichter

was

First

National

■

Bank

port programs in an environment
free from the pressure of declin¬

Joplin, Mo., has been enlarged to

Mr. Ger¬

the extent of $100,000, or from ing prices. We must examine such
$100,000 to $200,000, through a issues as the level of price sup¬
stock dividend of $100,000.
The ports we desire, whether we want
new capital
was increased as of to live under a philosophy of re¬

1928, according to the Newark
"Evening News," which reported
other promotions as follows:
E.

The

by Pres¬

main joined the Federal Trust in

made

Nov. 24.

stricted
ft

Assistant Vice-President; John F.
Fay Jr. and George V. Gilmartin
were
named Trust Officers.
All

'•

Stanley Marcus, Executive VicePresident of Neiman-Marcus, Dal¬
las, was elected a director of the

agricultural output

full

output, whether we want to have
a two-price system or a one-price

wages. However, in the long-run,
both agriculture and the nation
will be better off if a part of our

underemployed

population

American farms can be relocated
in American

Joins

industry."

Memil Lynch

(Special to The Financial Chronicle)

had been Assistant Trust Officers.

system, whether we want to es¬
pouse
the- philosophy of cheap
food
for
American
Republic National Bank of Dallas, subsidized

Bascom T.
Baynes, Jr. is now With Merrill
Lynch, Pierce, Fenner & Beane,

Edmund J.

Texas,

302 South Salisbury

Mahoney and John J.
Mooney were made Assistant Sec¬
retary-Assistant Treasurers.
*

bills

Undivided profs.

Mr. Welsh is also

tion.

Associa¬

State

period.
agricultural,
plant financially sound and con¬

farm

ically plagued with excess popu¬
lation and underemployment on
principles that we want
777'
Even today, about
to undergird our farm programs," many farms.
Total resources— $18,183,833 $18,016,000 stock dividend of
$250,000.
half of our farms produce 90%
Dr. Butz continued, "The recur¬
Deposits
16,879,478
16,752,000
of our commercial farm products.
Cash and due from
An increase of $50,000 in the rence of a war economy with its
banks
2,290,663
2,904,000
We should be careful not to throw
capital of the First National Bank increased demands may alleviate,
U. S. Govt, security
road blocks in front of opportun¬
of North Platte, Neb., raising it temporarily at least, the pressure
holdings
10,000,488
10.224,000
Loans and discts.ities for the excess farm popula¬
3,056,655
1,369,000 from
$150,000 to $200,000, has re¬ for price support programs which
Undivided profits—
185,902
142,000
tion to migrate to urban employ¬
sulted from the sale of $25,000 of are unworkable in a peacetime
ft
:J:
*
ment where they
can
be more
new stock,
and a stock dividend economy from the longer time
Announcement
that
John
J. of
$25,000, the enlarged capital point-of-view. The next year or productive in the national defense.
Germain, Assistant Vice-President having been made operative on two: will afford a much needed This may mean a little tighter
of the Federal Trust Company of
labor supply in some rural com¬
Dec. 7.
v7.7'
"
opportunity for the agriculture
munities and perhaps higher farm
*
*
*
Newark, N. J., has been made a
community to study its price sup¬

secu¬

rity holdingsLoans

1,360,469,826 1,207,324,358
1,218,560,042 1,060,832,938

due

banks—

and

Leo

from

TRUST COMPANY, NEW YORK

Total resourcesCash

945,365

Dec. 31, '50

Deposits

6,866,727

profits———
*

the

enlarged
from $250,000
Dec. 31, '50 Dec. 31, '49

was

6,812,744

—

holdings

Executive

the

"Our

program

—

———

Surp. and
profits

with

—

37,664,892

—

U. s. Govt,

that

PALISADES

;

from

Assistant Gen¬

was

ENGLEWOOD,

124,392,436 117,647,648
104,638,094 101,838,127

———

and

Committee

■A

Sept. 30, '50

been

ident
GRACE NATIONAL BANK OF NEW YORK
Dec.

Co.,

Summit, in 1927, when Jie re¬
signed to join MorrisTlounty Sav¬
ings.
He served two terms as
President of the Savings Banks
Association of New Jersey.
He

1928, serving successively as As¬
sistant Vice-President, Vice-Pres¬

8,324,088

Trust

National

Treasurer

Loans and bills dis¬

director and

was a

Citizens

Walter S.

eral Manager of the company un¬
til 1928, and is now President and

141,939,132 125,739,966

He
of

of the Executive Committee of the

due from

banks

;

State

Savings Banks in
1937-1938.
Mr. Welsh, says
the
"News,"
has
been
in
banking

Cash

the

ecutive Officer of the bank under

Bucklin, President. Mr.
Undivided profits— ;;
7,773,639
7,658,428
Borden, who was graduated from
*
*
*
Goldsboro, N. C., High School and
the U. S. Naval Academy, Class
THE PUBLIC NATIONAL BANK AND
TRUST COMPANY, NEW YORK
of 1916,
served with the U. S.
Navy from 1912 to 1920. Follow¬
Dec. 31, '50
Sept. 30, '50
S
$
I'1; ing his naval career, he built the
Total resources-— 534,747,521 513.358,225
Caribbean Sugar Company plant
Deposits

President

was

Association

Treasurer

Committee of the National Shaw-

778,684,575 745,405,655

—

and

banks

was

stock, raising

new

Sept. 30, '50

N. Y.,

$750,000 to $1,000,000.

At the

829,337,258 795,925,689

resources

Deposits
Cash

TRUST*

YORK

31, '50

:'-77;
Total

it from

BANK

COMPANY, NEW

Bank

increased to the extent of $250,000

15,418,411*

15,652,845

National

Merchants

Trust Co.

The

directors

the

Fidelity

on Dec. 22, it is announced
by Fred F. Florence, President of

consumers, whether we want to
impose limitations on the size of
affiliation/ production units on American
with Neiman-Marcus began fol¬ farms, whether we want to ration
lowing his graduation from the 'production rights' among farmers,

the bank.

Mr. Marcus'

have

Union Trust Co. of Newark, N. J.,
elected .John
Goldham
a

Harvard Business School in 1926.
He became Secretary, Treasurer,

the individual farmer or

Vice-President, in addition to his

and

overall control of the agricultural

director in

1928; Merchan-

and

whether

want to

control

exercise

RALEIGH, N. C.

—

Street.

T. J. Pringle Opens

SHREVEPORT, La.—Towner J.
Pringle is engaging in a securities
business from offices at 440 Mon¬
rovia

Place.

Volume 173

Number 4974

..The Commercial and Financial

Chronicle

INDICATES

Securities Now in Registration
Inc., Boston, Mass.
notification) 34,099 shares of 4% cumu¬
lative preferred stock to be offered to stockholders only.
Price—At par ($l.per share). Underwriter—None.
ceeds—For working capital. Office—215 Sidney St.,

Pro¬
Bos-

ton, Mass.
Aeronca

Mfg. Corp., Middletown, Ohio

Oct. 2 (letter of notification) $50,000 of 4% convertible
promissory notes and 50,000 shares of common stock
(latter to be reserved for conversion of notes on basis of 1
share for each $1 unit of notes). Price—$2.12V2 per $1
unit Of notes. Underwriter—Greene & Ladd, Dayton, O.
Proceeds—For working

Office—Municipal Air¬

capital.

port, Middletown, O.
Alabama Life & Casualty Insurance Co.
Dec.

10,000 shares of capital
Underwriter—None. Pro¬
Office — 718-720 Empire

(letter of notification)

stock.

Price—$20 per share.
ceeds—For working capital.
Bldg,. Birmingham, Ala.

Alhambra Gold Mines Corp., Hollywood, Calif.
1 filed 80,000 shares of common stock. Price—At
par ($1 per share). Underwriter—None." Proceeds—For
further development of mine and for working capital.
v

;

Nov.

Ampal-American Palestine Trading Corp., N. Y.
Dec. 8 filed $5,000,000 of 15-year 4% sinking fund bonds,
series A, due 1966. Underwriter—None.
Proceeds—To
develop and expand agricultural, industrial and commer¬
cial enterprises in Israel.
; Arga Oil Corp., Denver, Colo.
Dec. 18 (letter of notification) 5,750

shares of capital
stock (par $5).
Price—At the market (approximately
$17.37Vz per share). Underwriter—Carl H. Pforzheimer
& Co., New York. Proceeds—To A. E. Johnson, Presi¬
dent, the selling stockholder. Office—1100 First National
Bank Building, Denver, Colo.
<

City Stores Co., Philadelphia, Pa. (1/10-15)
22 filed-60,000 shares of cumul. conv. pfd. stock

Aeolian-Skinner Organ Co.,

Dec. 11 (letter of

Atlantic

Nov.

Oil

Corp., Tulsa, Okla.

(letter of notification)

48,046 shares of capital

stock.

Price—At par ($5 per share). Underwriter—Con¬
tinental Corp., Tulsa, Okla.
Proceeds—To purchase oil
.and gas

properties.

Automatic

Baseball

Equipment Corp.
Dec. 7 (letter of notification) 300,000' shares of common
stock (par 25 cents), of which 275,000 shares are to be
sold for the account of the company and 25?000 shares
-for the account of the underwriter. Price—$1 per share.
Underwriter—Mitchell-Hoffman & Co., Inc., Baltimore,
;Md. Proceeds—To promote sale of Foster pitching arms
-with automatic feeds for use in baseball batting ranges.

Dec.

Price—To be supplied by amendment.

(par $100).

Un¬

Brothers, New York and A. G.
Becker & Co., Chicago.
Proceeds—From sale of stock,
together with funds to be received from a long-term
loan of $15,000,000, to be used to refund outstanding ob¬
ligations and to provide funds for additional working
capital and other corporate purposes.
Clark Controller Co.

Birmingham

(Ala.) Fire Insurance Co.
(letter of notification) 10,000 shares of common
stock to be offered to present common stockholders.
Price—At par ($10 per share). Underwriter—None. Pro¬
ceeds—To enlarge insurance business.
Office—221 No.
,21st St., Birmingham, Ala.
;

Boston

-Dec.

Herald-Traveler Corp.,

Boston, Mass.

(letter of notification) 1,300 shares of common
(no par). Price—At market (approximately $14

stock

share).
Underwriter — Paine, Webber, Jackson &
-Curtis, Boston, Mass. Proceeds—To selling stockholder.
-per

(1/16)

(par $30).

Price—To be filed by amendment. Under¬
writers—Goldman, Sachs & Co., New York, and Fulton,
Reid & Co., Cleveland, O. Proceeds—To retire notes and
for purchase and remodeling of factory building. Busi¬
ness—Manufacturer of industrial electric controls.
Colonial

Acceptance Corp.
Nov. 20 filed $1,500,000 junior subordinated sinking fund
debentures due Dec. 1, 1958, and 30,000 shares of com¬
mon stock (par
$1), to be offered in units of $500 of de¬
bentures

and

shares of stock.

Price—$500

unit.
Blosser; and Sills, Fairman &
Harris; both of Chicago, 111. Proceeds—To reduce bank
per

Underwriters—Straus &

loans.

about

aggregate
letter

Dec.

sum

28, 1949 and Aug. 1, 1950 for the
$22,080 without qualification under

notification

and

are

now

reoffered.

Price—

For
;
A

3,050

Edison

Co.

(1/9)

reoffered shares,
5,000 shares, $3.80

Underwriter—None. Pro¬
working capital. Office — 915 No. Front
Street, Philadelphia, Pa.
per

share.

ceeds— For

Capital Plastics, Inc. (1/5)
^Dec. 26 (letter of notification) 131,025 shares of capital

;

stock to be offered to

stockholders of Rochester

common

Button Co. of record Dec. 18 early in January on a sharefor-share basis; rights to expire about 15 days after

'mailing.

Price—At

par

($1

share).

per

Underwriter—

None.

Proceeds—To pay off five-year note to Rochester
Button Co. and for working capital and general cor¬

porate

purposes.

Office—300

State

Street,

Rochester,

New York.

Central

Illinois

Public

Service

.Dec. 26 filed 267,600 shares of
to
of

be
one

Corp.

stock (par $10)
stockholders at rate
share for each 10 shares held. Price—To be sup¬

offered

initially to

common

April 1, 2001. Underwriters—To be determined by com¬
petitive bidding.
Probable bidders: Halsey, Stuart &
Co. Inc.; The First Boston Corp.; Glore, Forgan & Co.;
Morgan Stanley & Co. Proceeds—Toward cost of $370,000,000 four year construction program.
Bids—To be
received

to 10:30

a.m.

(CST)

Jan. 9 at office of

company.
•

Consolidated Gas Electric Light & Power Co. of
Baltimore

Dec.

filed $25,000,000 of first refunding mortgage
bonds, series X, due Jan. 1, 1986. Underwriters—To be
determined by competitive bidding.
Probable bidders:
Halsey, Stuart & Co. Inc.; The First Boston Corp. and
White, Weld & Co. (jointly); Harriman Ripley & Co.
Inc. and Alex. Brown & Sons (jointly); Kuhn, Loeb &
Co.
Proceeds—To repay funds borrowed from banks
for the redemption of $3,566,000 series Q and R 2%%
bonds on Jan. 3, 1951, and the remainder to finance, in
part, the company's large construction program.
Bids—
Expected to be invited during the latter part of this

program.

Offering—Tentatively expected mid-January.

V
Chicago Bridge & Iron Co., Chicago, III.
Dec. 12 (letter of notification) 8,746 shares of common
stock (par $20). Price—$34.30 per share. Underwriter—
None.

Proceeds—For working

105th St.,

Chicago 43, 111.

capital. Office—1305 West
'

Circle Wire & Cable Corp.
Nov. 27 filed 200,000 shares of common stock
(par $5).
Price—$15 per share. Underwriter—Van Alstyne Noel

Corp., New York. Proceeds—To four selling stockholders.

Price—$10

ceeds—Tio

share.

per

held

Underwriter—None.

fund.

Pro¬

Office—51

El Paso Electric

Co., El Paso, Tex. (1/16)
$4,500,000 of first mortgage bonds due Dec.
1, 1980. Underwriters—To be determined by competitive
bidding. Probable bidders: Halsey, Stuart & Co. Inc.;

Dec. 19 filed

Stone & Webster Securities Corp.; Merrill Lynch,

Pierce,

Hutzler; Kidder, Peabody & Co.; White, Weld & Co., and Shields & Co. (joint¬
ly); Equitable Securities Corp.
Proceeds—To redeem
$1,000,000 of 3y2% bonds due 1978, to repay bank loans
and

reimburse

Bids—To
16 at
•

for

treasury

received

before

construction

11:30

expenses.

(EST)
90 Broad Street, New York 4, N. Y. ;

Emerson Electric

a.m.

Jan.

Manufacturing Co., St. Louis,

(1/18)

filed 57,846 shares of
cumulative preferred
series A (par $50), convertible into common
prior to Jan. 1, 1961, to be offered initially for
subscription by common stockholders at rate of one
share of preferred for each eight shares held, about

stock,
stock

Jan.

18.
Rights to expire about Feb. 1. Price—To be
supplied by amendment.
Underwriters—Smith, Bar¬
ney & Co. and Van Alstyne Noel Corp., of New York;
and Newhard, Cook & Co., St. Louis, Mo.
Proceeds—
$1,015,565 to be used to retire presently outstanding 7%
preferred stock; $450,000 to cover the cost of a new
plant in Bedford, Ind.; approximately $350,000 to reim¬
burse the company's treasury for cash funds used in the
purchase of its St. Louis plant from the U. S. Govern¬
in

ment

September, 1950; and the balance
working capital.

provide

additional

Eureka Telephone
Nov.

Co., Corydon, Ind.
(letter of notification) 1,700 shares of common
company's telephone subscribers.

stock to be offered to

Price—At par ($25 per share).
ceeds—For cash

Electrification

equity to

Underwriter—None. Pro¬
loan allocation by Rural

secure

Administration.

month.
•

•

Consolidated

Dec.

filed

Textile Co., Inc., New York
of 500,000 shares of capital

maximum

Continental

Engineering

Co.,

Carrizozo,

490,000 shares of common
stock. Price—At par (50 cents per share). Underwriter
—None. Proceeds—For working capital. Address—P. O.
Box

Underwriter—None.

Proceeds—To pur¬

chase debentures of Statler Dallas Co.,

Inc., which com¬

will construct Dallas hotel. Business—A non-profit
corporation under sponsorship of Dallas Chamber of

pany

Commerce to secure construction of hotel.

Culver

Corp., Chicago,

HI.

stock (par $5),
to stockholders
and 127,364 shares to public. Price — To stockholders at
$5 per share and to public at $6.25 per share. Under¬
writer—None.
Dansker

Realty & Securities Corp., N. Y. City
shares of 6% cumulative convertible
preferred stock (par $5) and 300,000 shares of class B
common stock
(par 35 cents) to be offered in units of
one preferred and one class B share "on a best-efforts
basis." An additional 25,000 shares of each class of stock
to be issued to underwriters

additional compensa¬

tion for resale to public.

There will be reserved for con¬
version of the preferred stock 1,300,000 shares of class B
common stock. Price—$6 per unit. Underwriter—Dansker
Bros. & Co., Inc., New York. Proceeds — For working
capital.
*

Proceeds—To

indebtedness

repay

the balance to develop

RFC,

and

and produce facsimile transmis¬

sion

equipment and for materials.

month.

Offering—Expected

Fedders-Quigan Corp.

of series A cumulative con¬
vertible preferred stock (par $50) to be offered to com¬
mon
stockholders on basis of one preferred share for
June 21 filed 103,402 shares

12 shares held.

Price—To be filed by amendment

along with dividend rate. Underwriter—Smith, Barney
& Co., New York.
Proceeds—To pay promissory note,
to complete purchase of a new plant at El Monte, Calif.,
and for additional working capital.
Statement may be
withdrawn.
It was reported on Oct. 5 that company
has completed

purchase of El Monte plant.

Felters Co., Boston, Mass.
Nov. 14 (letter of notification) 1,750

shares of common
At market (estimated at not
Underwriter — H. C. Wainwright & Co., Boston, Mass. Proceeds—To two selling
stockholders. Office—210 South St., Boston, Mass.
more

•

(par $10).

Price

—

than $10 per share).

First

Proceeds—For investments.

Nov. 20 filed 300,000

are

York.

stock

filed 132,182 shares of common
of which 4,818 shares are to be offered
Oct.

Electronics Corp.,

Passaic, N. J.
(par $1) to
be offered publicly "as a speculation." Price—$2.50 per
share, with an underwriting commission of 50 cents per
share.
Underwriter—Graham, Ross & Co., Inc., New

each

56, Carrizozo. N. M.

Cosmopolitan Hotel Co. of Dallas, Tex.
Dec. 13 filed $1,500,000 of 2% debentures due 1965. Price
—At face value.

Facsimile &

Dec. 29 filed 400,000 shares of class A stock

Nov. 29 (letter of notification)

National

Home

Builders Corp.,

Boston,

Massachusetts
Dec. 20

stock

(letter of notification) 20,000 shares of common

and

10,000

Both at par
ceeds—To

stock.
Price —
Underwriter—None. Pro¬
Office—18 Tremont Street,

of preferred

($10 per share).

purchase

land.

Boston, Mass.

•

Fair Stores,

37,807 outstanding shares of $2.50

cumulative preferred

$53 per share.

stock (par $15) at

Continued

Douglas & Lomason Co., Detroit, Mich.
6 (letter of notification)
6,000 shares of common
stock (par $2). Price—$14.25 per share.
Underwriter—
None. Proceeds—To Thomas S. Hough, the selling stock¬
holder. Office—5836 Lincoln, Detroit 8, Mich.

page

Dow Chemical Co.
Nov. 10 filed 200,000 shares of common
of

which

common

stock (par $15),
shares are offered to
stockholders of record Dec. 21, 1950 at rate of 1
a

maximum

125,000

share for each 50 shares held, the remaining 75,000 shares
to be offered for

subscription by employees up to 10% oi
on a payroll deduction plan.
Both
offerings will terminate on Jan. 29, 1951 and are expected
to be made on Jan. 3, 1951. Price—$57.50 per share. Un¬
derwriter—None. Proceeds—For working captial. State¬
their

annual

wages

ment—Effective Dec. 15.

Duggan's Distillers Products Corp.
Oct. 27 (letter of notification) 340,000 shares of com¬
mon stock (par 10c).
Price—75 cents per share. Under¬

Inc. (1/16-17)
Dec. 22 filed 80,000 shares of $4 cumulative preferred
stock (par $15). Price—To be filed by amendment. Un¬
derwriter—Eastman, Dillon & Co. Proceeds—To redeem
Food

Dec.

common

plied by amendment. Underwriters—The First Boston
'Corp. and Blyth & Co., Inc. Proceeds—For construction

subsidiaries, beginning Jan. 10,

1951.

Dec.

Dec. 13 filed $49,000,000 of sinking fund debentures due

reoffered

shares, $3.60 per share; for 3,000
$3.70 per share; and for remaining

Association, West Orange, N. J.

28 (letter of
notification) up to 3,500 shares of
class B special stock to be offered
employees of Thomas
A. Edison, Inc. and its

Missouri

Commonwealth

Dec. 26

E-l Mutual

Dec.

Fenner & Beane; Salomon Bros. &

• :

Bryant Air Conditioning Corp. (1/15/25)
(letter of notification) 11,050 shares of common
■stock (par $1), of which 6,050 shares were sold between

•

Dec. 20 filed 50,000 shares of convertible preferred stock

stock (par 10 cents), to be offered in exchange for an
unspecified number of shares of common stock of Bates
Building & Equipment Corp. of America
Co.
(Consolidated now owns 51,400
'Dec. 22 (letter of notification) 8,000 shares of common; •.Manufacturing
'stock (par $3). Price—-Around current market. Under- / shares, or approximately 13% of the 391,500 outstanding
Bates
shares).
Exchange Rate — To be supplied by
'writer—Scherck, Richter Co., St. Louis, Mo. Proceeds—
amendment. Underwriter—None.
To selling stockholders.
.

writer—Olds & Co., Jersey City, N. J. Proceeds—To pay
balance of purchase price for
building ($20,000) and for
working capital.

redemption
Lakeside Avenue, West Orange, N. J.

Bank

Oct.

ADDITIONS

SINCE PREVIOUS ISSUE

derwriters—Lehman

Office—2439 N. Charles St., Baltimore 18, Md.
•

(95)'

New York

Boston

Philadelphia

Chicago

Pittsburgh

San Francisco

Private JVires to all

offices

Cleveland
v

y'y/y^yf Vy->''y.iy, yy

(96)

Continued
•

from

General

for

23,

rights

1951;

I'rice—To
Hirsch

four

each

•

supplied

Co., New York.,
,

Glenmore

the

held

will expire

facilities.,.

filed

amendment.

Proceeds

—

NEW ISSUE CALENDAR

Feb.

10:30

Pacific

Greenwich Gas Co., Greenwich, Conn.
Sept. 1 (letter of notification) 8,000 shares of $1.50 pre¬
ferred stock (no par) and 9,777 shares of common stock

Texas & Pacific

ceeds—To

retire

Putnam

bank

stated

Clark

Controller

Insurance

Co., Philadelphia
(letter of notification) 64,000 shares of capital
tftock (par $5).
Price—$4.50 per share. Underwriter—
Jenks, Kirkland & Co., Philadelphia, Pa. Proceeds—To

Food

Fair

Macmillan

liability

insurance,
coverage.

including automobile casualty
Financing may be abandoned.

Glenmore

and

San

Mass.

by amendment. Under¬
into dealer agree¬

enter

subscriptions will be
stabilized.

may

and
for

solicited

Dealer-Managers

Business—Closed-end investment company.

Preferred

Ramie Products Corp.
Sept. 21 (letter of notification) 25,000 shares of common
stock
(par $1).
Price—$3 per share.
UnderwriterSmith, Talbott & Sharpe, Pittsburgh, Pa.
Proceeds—

Common

Diego Gas & Electric Co

For

Preferred

purchase of additional machinery and equipment and
capital.
Office—507 Liberty Avenue, Pitts¬
" '
' 4
•

working

Hammond Lumber Co., San Francisco, Calif.
Nov. 17 (letter of notification) 7,000 shares of capital

January 18, 1951
Emerson Electric

fctock (par $20).

Price—$42.50 per share. Underwriter—
None. Proceeds — For working capital. Office — 417
Montgomery St., San Francisco, Calif.
Hearn

financing were Stone & Webster Securities Corp.|
& Co.; The First Boston Corp.; Kidder, Peabody & Co. and Tucker, Anthony & Co. Proceeds—To
redeem $1,000,000 of outstanding collateral trust 3V2%
bonds, 12th series, and for additional capital investment.

Bonds

(EST)

Stores, Inc

Distilleries

Estabrook

January 17, 1951

Increase capital and surplus in order to offer additional

v -y;

latest

..Preferred
a.m.

be filed

expects

which

under

transactions

Common

Co., 11:30

Price—To

writer—Company
ments

January 16, 1951

new

El Paso Electric

Fire

share basis.

Corp

Railway & Light Securities Co., Boston,

(EST)__Equip. Tr. Ctfs.

noon

y-yy

Power Co.,

Dec. 22 filed 252,552 shares of common stock (par $10)
to be offered to common stockholders on, a snare-for-

January 15, 1951

lines

Ry.,

Bryant Air Conditioning

to stockholders.

Hamilton

IPreferred
..Equip. Trust Ctfs.

(EST)

Price—Of

financing plan is being prepared and will be submitted

Oct.

Ctfs.

..Equip. Trust

January 11, 1951

per share.
Co., Boston, Mass. Pro¬
and
for working capital.

company

Debentures

City Stores Co

loan

Co.

January 10, 1951

Erie RR., noon

Financing Postponed—On Dec. 1

Edison

(CST)

<par $1). Price — To be filed by amendment. Under¬
writer—Glore, Forgan & Co., New York. Proceeds—
For working capital and general corporate
purposes.

Office—15 Exchange Place, Jersey City

Fergus Falls, Minn.
Dec. 5 (letter of notification) 4,990 shares of common
stock (par $5). Price—At approximately market (about
$18.75 per share).
Underwriters—Kalman^ &, Co.,;1 Stf
Paul, Minn.; Glore, Forgan & Co., Chicago,. 111.;."and 1
W.
R. Olson Co., Fergus Falls, Minn.., Proceeds—To,
Thomas C. and Cyrus G. Wright, executors of the will v
of Grace Clark Wright (deceased), y
•/; y
.

stock

common

(no par), to be offered first to stockholders.
preferred, $25 per share, and common $10

cjf*

a.m.

cent).

one

Otter Tail

January 9, 1951

Louisville, Ky.
class

...Common

Underwriter—

To expand plant

Missouri

Underwriter—F.

Thursday, January 4, 1951

2, N. J.

Wilcox-Gay Corp.

Commonwealth

Co.,

(par

working capital.

January 5, 1951

Distilleries

159,142

Price—15 cents per share.
Underwriter—Tellier & Co., New York.
Proceeds—For:

one

about

rate

stock

mon

(1/17)
Dec.

Nevada-Tungsten Corp., Jersey City, N.J. (2/l)j
7 (letter of notification) 2,000,000 shares of' com-

stockholders

common

Dec.

Elizabeth, N. J.
filed 221,715 shares of common stock (par $1) to

Jan. 2

Commercial and Financial Chronicle

\ The

•

page

Instrument Corp.,

Ue offered to
Jan.

y .\.'y-<, .v.y-.•.

burgh 22, Pa.

Manufacturing Co

Airlines, Inc., Pinehurst, N. C.
Dec. 18 (letter of notification) 5,500,000 shares of com¬

January 20, 1951
Reading Co.———

January 23, 1951

preferred stock being offered for subscription by com¬
stockholders on the basis of one preferred share for
•each seven shares of common stock held on Dec. 18,
1950;
rights to expire Jan.
10.
Price
At
par
<$25 per share). Underwriter—None. Proceeds
From

Southern Natural Gas Co., 11 a.m.

offered stockholders of record

Dec.

Management, Inc.,
principal stockholder to acquire 3,000,000 shares; rights
expire Jan. 15.
Price—At par (10 cents per share).
a

Department Stores, Inc., N. Y. City

Nov. 17 filed 40,000 shares of 5% cumulative convertible

stock

mon

...Equip, Trust Ctfs.

•

(

Resort

Common

(EST)___-Bonds

Underwriter

with Fiduciary

basis,

rata

pro

Proceeds

None.

—

cancellation

For

mon

—

notes, to purchase aircraft and related equipment and to

February 1, 1951

reduce

Nevada-Tungsten Corp.

Common

capital

working

Field,

Office—Resort

deficit.

Pinehurst, N. C.

—

<!his offering, plus a $2,000,000 term bank loan, to be used
to repay bank loans, for improvements to
properties and

.Xor working capital.

Rossville

February 6, 1951
Carolina Power & Light

Co.,

lative

Statement—Effective Dec. 15.

Holeproof Hosiery Co.,

ital

(letter of notification) 20,000 shares of common
stock (par $5). Price—$14 per share.
Underwriter—None.
^Proceeds—For working capital. Office—404 West Fowler

York.

New

•

Hooper Telephone Co., Hooper, Neb.
18

due

(letter of notification)

1970.

Price—In

Wachob Bender

excess

$30,000
102%.

Corp., Omaha, Neb.

of 3%% bonds
Underwriter—

Proceeds—To retire

Dec.

Household Service, Inc.
26 (letter of
notification)

stock

748 shares of common
offered to stockholders of record Jan.
3, 1951,
share for each 10 shares

now

at rate

pire Jan.

one

10.

writer—None.

Price—At

par

($10

per

held; rights ex¬
share). Under¬

Proceeds—To repay bank loans and

.plant expansion.

for

Office—Dwight Avenue, Clinton, N. Y.

Infra Roast,
•Nov. 3 (letter of
fitock to be

•

Inc., Boston, Mass.
notification) 207,000 shares of common
initially offered to stockholders; unsubscribed

-Jiares to public. Price—At par
($1 per share). Under¬
writer—None. Proceeds—To finance the
purchase of 100
automatic coffee-roasting
machines.
Office—84 State.
St., Boston, Mass.
Insulite Corp.,
Phoenix, Ariz.
Dec. 19 (letter of
notification) 113,840 shares of capital
fitock (par $1). Price —
$1.25 per share. Underwriter
None., Proceeds—For corporate
purposes.
Office—2243
North 16th Street, Phoenix, Ariz.

Kaye-Halbert Corp.
iQct. 6 by amendment filed
120,000 shares of class

vertible

common stock (par $1). Price—$5 per share.
Underwriter—Sills, Fairman & Harris, Inc., Chicago, 111.,
and

Da vies

To pay off

Mejia, San Francisco, Calif. Proceeds—
promissory notes and for working capital.

•

Kingfisher Water Co., Kingfisher, Okla.
Dec. 27 (letter of
notification) 250 shares of 5% cumujmative preferred
stock., Price—At par ($100 per share),
underwriter

None.

Proceeds—For

Lincoln Service Corp.,
Dec. 12
¥.

stock

new

construction.

Washington, D. C.

filed 80,000 shares of
$1.50 cumulative preferred
(no par—with stated value of
$22.50

With warrants attached

per

share)

entitling the holder

to purchase
common stock at
$12 per share in the ratio of two com-

,es for each five Preferred shares held. Of said
60,000 shares, 46,950 shares are to be offered in ex¬
change for outstanding 7% prior preferred stock
(par
$50) and 6% participating preferred stock
(par $25) on
the following basis: (1) For each
7% prior preferred
chare two new preferred
shares; and (2) For each 6%
participating preferred share one share of new
pre¬
ferred stock—plus in each case accrued and
unpaid div¬
idends and redemption

premiums, in cash. The remain¬
ing 33,050 shares are to be publicly offered.
Price—$25per share.
Underwriter—Johnston, Lemon & Co., Wash¬
ington, D. C.t Proceeds—For working capital and to
redeem unexchanged old
preferred stocks Expected this
month.
•

Macmillan Co., New York
Dec. 27 filed 171,971 shares of

JPrice-To.be

supplied

(1/16-17)
common

amendment.

stock

(par $1).

Underwriter—

common

—To

cisco.

Proceeds—For

corporate

Corp.

San

Middlesex Water Co.,
9

stock offered

common

one-for-five

Underwriters—Ward and

share.

shares not subscribed for by stock¬
Mcintosh of New York will under¬
remaining unsubscribed shares on
"best efforts'" basis.
Proceeds'for construction and

working

any

Business

capital.

products.

Fran¬

—

Manufacture

hygienic

,,;.r:'y.•>,' y

..y.

....

Shipley Wholesale Drug Co.
15 (letter of notification) 2,900 shares of 4% cumu¬
lative preferred stock.
Price—At par ($100 per share).
Underwriter—None.
Proceeds—To retire $250,000 8%
Dec.

shares
at

$50

preferred

common

per

(par $100)

stock

and to retire sales credits.
Pittsburgh 13, Pa.

Office—4724 Baum Boulevard,

basis.

Proceeds—To pay

capital.

5,200

stockholders

basis of three shares for each 10 shares

Augus D.

take to dispose

Newark, N. J.

(letter of notification)

Price—At $6 per

holders.

Montgomery Street, San Francisco, Calif.

Feb.

of the 50,000

50%

Office—333

purposes.

expansion

Co.; Investing Securities, Inc., and James C. Kennedy,
Jr., of New York who have agreed to buy 20,000 shares
each of the remaining 60,000 shares (preemptive rights
to which have been waived "by the stockholders)
and

(letter of notification) 5,000 shares of first pre¬
stock, 5% series. Price—At par ($20 per share).
Securities

for

and

J-.•

stockholders

Mercantile Acceptance Corp. of California

Underwriter—Guardian

loans

Products Corp., Taneytown, Md.
Dec. 18 filed 110,000 shares of common stock (par $1),
of which 50,000 shares are to
be initially; offered to
held.

ferred

bank

$3,200,000

repay

Sanitary

Mines, Inc., Kellogg, Ida.
Oct. 27 (letter of notification). 400,000 shares of capital
stock. Price—37 Vz cents per share. Underwriter—Stand¬
ard Securities Corp., Spokane, Wash. Proceeds—To pur¬
chase controlling interest in Pine Creek Lead-Zinc Min¬
ing Co., for development costs and working capital.

Dec.. 4

pre¬

(par
$20).
Price—To be
supplied by
Underwriter—Blyth & Co., Inc. Proceeds

stock

program.

Price—To be
the day pre¬

Mascot

Co.
con¬

4,000 shares of

$5 less than the bid price for the stock on
ceding the offering date, or between $20 and $24 per
share. Purpose—For corporate purposes. Office—Morris
Plains, N. J.

(letter of notification)

share).

filed

amendment.

(par $1) offered to employees of company and its

subsidiaries, with rights expiring Jan. 18.

—

•

Dec.
stock

per

Office—Arthur

Diego Gas & Electric Co. (1/17)
325,000 shares of 4.40% cumulative

ferred

Maltine Co.

($100

Road, Staten Island 13, N. Y.
San

Dec.

St., Milwaukee, Wis.

par

Proceeds—To pay debt and for cap¬

improvements and working capital.

Kill

Hemphill, Noyes, Graham, Parsons & Co.,
Proceeds—To three selling stockholders.

Price—At

preferred stock.

Underwriter—None.

Milwaukee, Wis.

.Dec. 7

Aug.

Dyestuff Corp.

(letter of notification) 1,000 shares of 6% cumu¬

Dec. 14

(EST)___Bonds

noon

Underwriter—Clark, Dodge &
notes and for additional working

Skiatron

Dec.

Indefinitely postponed.

& Television

Corp.

shares of common
share. Underwriter-

Price—$3 per
New York.
Proceeds—To complete
tests, to purchase equipment and
general overhead.
10C).

(par

Leslie

Midwestern Insurance Co., Oklahoma City, Okla.

Electronics

(letter of notification) 40,000

stock

d'Avigdor,

"Subscriber-Vision"

Dec. 6

(letter of notification) 1,250 shares of $5 cumula¬
preferred stock (par $1), redeemable at $100 per
share.
Price—$100 per share Underwriter—None. Pro¬
ceeds—For working capital. Office—212N. W. Fifth

for

tive

South
Nov.

St., Oklahoma City, Okla.

par

($1

Uranium

State

30 filed

Mines

(Canada)

Ltd.

560,000 shares of capital stock.

Price—At

share). Underwriter-Optionee—Robert Irwin
Proceeds—For commissions, explora¬

per

Martin of Toronto.

Mission Appliance Corp.,
Hawthorne, Calif.
July 24 filed 50,000 shares of 6% cumulative convertible
preferred stock. Price—At par ($20 per share). Under¬

Nov. 27

Box Co.,

Keokuk,

ordinated instalment debenture bonds.

Price—To be sold

in multiples of $100 plus accrued interest. Underwriter
Proceeds—For corrugated machine.

proposed new plant to be located east of the Rocky
Mountains. Business—Manufacturer of gas and electric
a

water and space

West

Iowa
(letter of notification) $200 000 10-year 6% sub¬

South

writer—Lester & Co., Los Angeles, Calif. Proceeds—To
retire bank loans and install machinery and equipment
in

working capital.

tion and development expenses, and

—None.

Southeastern

heaters.

Telephone Co.,

Tallahassee,

Fla«

Nov. 20

•

Moore Drop

Bee.

(letter of notification) 10,000 shares of common
stock (par $10). Price—$11.25 per share. Underwriter-

Forging Co., Springfield, Mass.

stock

(letter of notification) 5,000 shares of common
(par $1).
Price—Approximately $10 per share.

Underwriters—G.
Blunt
Alfred

Ellis
H.

Walker

Co.,

New

York,

Simmons, Chicago, 111. Proceeds — To
Chapin, Chairman of the Board, the selling

Muntz Car

Co., Evanston, III.

Southern

operating capital, and to complete purchase of tools, dies
and inventory from
Kurtis-Kraft, Inc. Office—1000 Grey
Ave., Evanston, 111. ,♦
...
...s'.
-yy.
L; y „> '■ •
..y: \y
r,
•, tr
-i-x. ,
.

.1."

;

Discount Co.,

Atlanta, Ga.

Sept. 18 (letter of notification) $191,500 of 5% subordin¬
ated debentures, series E. Price—At par. Underwriter—
For $100,000 of debentures, Allen & Co., Lakeland, Fla.
Proceeds—To reduce bank loans and for working capi¬
tal.

Nov. 29 (letter of notification) 300,000 shares of common
stock (no par) to be sold to a group of 20 individuals.
Price—$1 per share. Underwriter—None. Proceeds—For

Proceeds—Fo?

Wagner, Reid & Ebinger, Louisville, Ky.
construction and improvement.

and

stockholder.

Office—220
Southern

Nov.

stock.
None.

Healey Bldg., Atlanta, Ga.

Insurance, Inc., Atlanta, Ga.

(letter of notification)
Price—At

Marine

Insurance

Co.

($10
and

Ponce De Leon Ave., N. E>,
"»

■

•*).

30,000 shares of common

share). Underwriter—
purchase stock in Southern Fire &

par

Proceeds—To

per

reduce

debt.

Office—79

Atlanta^ Ga..;y,(yy,y
!

y1,

yy.y.
;

Number 4974 ;The Commercial and Financial Chronicle

Volume 173

Natural

Southern

Co.

Gas

•

(1/23)

first mortgage pipeline bonds
due Dec. 1, 1970. Underwriter — To be determined by
competitive bidding. Probable bidders: Halsey, Stuart &
Co. Inc.; Blyth & Co., Inc. and Kidder, Peaoody & Co.
(jointly); The First Boston Corp.; Equitable Securities
Corp.; Kuhn,t Loeb & Co.
Proceeds—To repay bank
loans and for expansion program.
Bids—Expected to

Dec. 18 filed $17,500,000 of

(EST)

be opened at 11 a.m.
^

;

Natural

Southern

Gas

Jan. 23.

Co.

Dec. 18 filed 155,546 shares of common stock (par $7.50)
to be offered for subscription by common stockholders
share for each

the basis of

oversubscription privilege.
loans

expansion

for

and

Price

Underwrtier—Nohe.

amendment.

bank

one

shares held, with

To be filed by

—

Proceeds

—

pected latter part of January.

stock (par

$100 each,
issued

for each

10 cents), the bonds to be offered in units

in multiples thereof, with the stock to
at

bonus

the

rate

$1 of bonds purchased.

one

Price

—

of stock

At principal
Bowler,

amount for the bonds. Underwriter—Richard W.

Spokane, Wash. Proceeds—To purchase building. Office
Bldg., Spokane, Wash.

•—214 Paulsen
•

Sun

Oil

Dec. 28 filed

Co., Philadelphia, Pa.
191,762 shares of common stock

(no par).
(approximately $63 per
share); Underwriter-—None, but will be sold through
brokerage firms. Proceeds—To 12 selling stockholders.
Price—At

Sunshine

Dec.

market

prevailing

Packing Corp. of Pennsylvania

(letter of notification) 2,950 shares of 5% pre¬
ferred stock.
Price—At par ($100 per share).
Under¬
writer—None.

Proceeds—For additional operating capi¬

tal.

Office—Smedley Street, North East, Pa. Business—
Processes and cans frozen fruits and fruit juices.

Marion

ders:

Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler.
Bids—Expected this month.
Clinton

12, it was announced stockholders on Jan. 15 will
vote on increasing the authorized common stock
(par
$1) from 1,500,000 to 2,000,000 shares the increase to
provide "substantial funds for capital additions and

working capital," and "to provide for the conversion of
100,000 shares of unissued and unreserved 4V2% cumu¬
lative

Merrill

Colorado
Dec. 15 it

to be effected in February 1951.
Proceeds—The net proceeds from the sale of the
stock,
together with proceeds from a proposed term loan of
ap¬
proximately $2,500,000 with banks and an insurance com¬
pany, will be used to refund $1,175,000 bank

$12,000,000 to finance construction of

Columbia

•

natural

loan

Vulcan

Extension,

Inc., Wallace,

Idaho

(letter of notification) 250,000 shares of capital

stock

(par 20 cents). Price—31 cents per share. Under¬
writer—J. A. Hogle & Co., Spokane, Wash. Proceeds—

Gas

For initial working capital for ore development.

Walker Vitamin Products, Inc., Mt.
Dec.

stock

common

cents)

(par 25

of class A and class B
basis of

Vernon, N.Y.

(letter of notification) 48,000 shares of Class B

share of

one

either

being offered to holders

common
new

stock of record Nov. 30

class B stock for each eight

of stock held;

class

rights expire Jan.

Price—$5.35 per share.
Underwriter—None.
Proceeds—For working capital.
Office—17 So. Colum¬
bus Avenue, Mt. Vernon, N. Y.
12,

1951.

the

planning

program

increase

Detroit

pro¬

additional

bonds

the

issuance

and

sale

$12,000,000

and

$3,000,000 of additional common
(latter to American Natural Gas Co., the parent),
debt financing was placed
privately. If com¬
petitive probable bidders may include The First Boston
Corp.; Harriman Ripley & Co., Inc.; Glore, Forgan & Co.,
stock

Minnesota

Power & Light Co.
Clay C,; Boswell, President, announced that the
company expects to raise about $10,000,000 through the

Dec. 6,

sale of

Inc.; Salomon Bros
(Inc.).
'

securities

within the next year or

so.

The

be either in the form of bonds or preferred
stock. The proceeds will be used for the
company's ex¬
pansion program. Probable bidders for bonds
may in¬

Halsey, Stuart &
& Hutzler; Harris, Hall & Co.

Co.

new

financing

Probable bidders:

may

clude

Halsey, Stuart & Co. Inc.; Shields & Co.; The Firs£
Glore, Forgan & Co. (jointly); Otis &
Co.; White, Weld & Co.; Lehman Brothers and Drexel &

Boston Corp. and

Nov. 20 company said it may sell during 1951 some addi¬
tional common stock following proposed 200% stock dis¬
March

received SEC authority to borrow noD

will include

gram

equipment trust certificates to mature in 20 equal semi¬
instalments.

company

than $20,000,000 from banks.

A permanent financ¬
program provides for the elimination of these bankloans prior to their maturity,
July 1, 1951, and such

1951.

Estabrook &

Co., New York.

•

Corp.

Traditional

Co.
&

(jointly); Union Securities Corp.; Kidder, Peabodv

Co.; Coffin & Burr, Inc.

underwriter:

Mississippi River Fuel Corp., St. Louis, Mo.

Address

—c/o H. J. Hull & Sons, Wallace, Idaho.

construction

ing

(1/10)

line

deliveries

Michigan-Wisconsin Pipe Line Co.
July 25

Bids will be received by the company up to noon (EST)
on
Jan. 10 for the purchase from it of $5,400,000 of

tribution

pipe

gas

has

Foote Mineral Co.

Nov. 27

Co.

(Mich.) area by
150,000,000 cubic feet a day next winter. The present line
a
daily capacity of 325,000,000 cubic feet a day.

pipeline from

reported

was

Erie RR.

annual

Michigan Consolidated Gas

Jan. 3, it was disclosed that the
company is

System, Inc.
that corporation may issue and
sell $35,000,000 of new securities in the Spring or early
summer.
Probable bidders for debentures: Halsey, Stuart
& Co. Inc.; Morgan, Stanley & Co.; Kuhn, Loeb & Co.;
Salomon Bros. & Hutzler; Lehman Brothers; Merrill
Lynch, Pierce, Fenner & Beane and White, Weld & Co.
(jointly). Probable bidders for common stock, in event
of competitive bidding: Morgan Stanley & Co.; Goldman,
Sachs & Co. and Union Securities Corp. (jointly); Mer¬
rill Lynch, Pierce, Fenner & Beane; Lehman Brothers;
Shields & Co. and R. W. Pressprich & Co.
(jointly).
Proceeds will be used for expansion program.
it

pay¬

preferred dividend arrearages of $1,501,500, and
the balance for working
capital.

$8,000,000

plans to obtain

company

loans,

ment of

Texas to Colorado.

Dec.

approximately

preferred stock."
Probable Under¬
Lynch, Pierce, Fenner & Beane.

reported

Co.

$500,000 to equity capital, such shares to be first offered
to present common
stockholders on a pro rata basis'.

Interstate Gas Co.

was

Shovel

Dec. 8, the company announced it
plans the sale of addi¬
tional common stock (par $5) so as to add

convertible

writers:

Power

Registration—Expected

Foods, Inc.

Dec.

Spokane Warehouse & Storage Co.
Dec. 4 (letter of notification) $270,000 of first mortgage
6% bonds due Dec. 31, 1960, and 270,000 shares of com¬
mon

Chesapeake & Ohio Ry.

Jan. 3 company applied to the ICC for authority to issue
$8,550,000 of equipment trust certificates. Probable bid¬

repay

Offering—Ex¬

program.

(97)

Oct. 4 it

Gulf Oil

was announced that
plans to finance the install
of additional compressor units on the
company^
pipeline system in Arkansas and Missouri will be
supplued later. The estimated cost of the new facilities in

lation

Jan. 2 the company, together with four other companies,
filed plans with Petroleum Defense Authorities in Wash¬

ington for the construction of a 26-inch crude oil pipe
line extending from the West Texas producing area to
refineries

the Gulf Coast.

$5,500,000. Previous bond financing was arranged foi1
privately through Union Securities Corp., who also acted

Associated with Gulf, are

underwriter for

Cities Service

Co., Pure Oil Co., Sun Oil Co..and Stand¬
Construction is contemplated to be¬
gin in late summer or early fall of this year with com¬
pletion early in 1952.

common stock

issue in April of thifl

year.

■

ard Oil Co. of Ohio.

Missouri Pacific RR.

(1/9)

reported company plans to issue and sell

Bids will be received until Jan. 9 for the
purchase from
the company of $7,080,000
equipment trust certificates,
series PP, to be dated Feb.
1, 1*951 and to mature in

first mortgage bonds. Underwriters
—To be determined by competitive bidding.
Probable

Co., Inc.; Salomon Bros. & Hutzler; Harris, Hall & Co.

1950, of which total 4,434 shares will be subscribed for
by New England Telephone & Telegraph Co. Price—At
par ($25 per share). Underwriter—None. Proceeds—For

bidders: Halsey, Stuart & Co. Inc.; Dillon, Read & Co.
Inc.; Kidder, Peabody & Co.; Equitable Securities Corp.;
Union Securities Corp.; Harriman Ripley & Co. Inc.;

Automatic Telephone Co.
(letter of notification) 7,000 shares of common

Westerly
Dec.

stock

(R. I.)

offered

stockholders

general corporate purposes.

Dec.

record

Office—38 Main St., Wes¬

terly, Rhode Island.

Wilcox-Gay Corp., Charlotte, Mich. (1/5)
shares of common stock (par $1).
Price—$1.62Vz per share. Underwriters—Gearhart, Kinnard & Otis, Inc., New York, N. Y., and White & Co.,

Louis,

Mo.

pay obligations
Statement effective Dec. 19.

Proceeds—To

unsecured creditors.

all

Proceeds—For construction
Offering—Expected in January or February.

Algonquin Gas Transmission Co.
was of the opinion that certain

Nov. 8 the FPC said it

markets should be served by this
showing that it has an adequate amount
gas.-Necessary financing, probably about $40,000,000, likely to be 75% bonds and 25% stock, with com¬
company, upon

mon

stock to be offered first to stockholders.

underwriter: Dillon, Read &

Probable

Co. Inc.

_■

Nov. 22 it

was

announced stockholders will vote Dec. 18

creating a new issue of 40,000 shares of 5% cumula¬
tive preferred stock (par $100), to be issued in series. Of

this

issue, it is proposed to place privately with a group
companies 16,500 shares of series A pre¬
ferred, the proceeds to be used to redeem all of the pres¬
ently outstanding 16,336 shares of 5% cumulative pre¬
of

insurance

ferred stock.
Carolina
Dec. 22 it

000,000

Power &

was

new

Light Co. (2/6)
reported company plans issuance of $15,-

first mortgage bonds due 1981. Underwrit¬
competitive bidding. Probable

ers—To be determined by

bidders: Halsey, Stuart & Co. Inc.;
and First Boston Corp.
(jointly);

W. C. Langley & Co.

Kidder, Peabody &
Co. and Merrill Lynch, Pierce, Fenner & Beane (jointly);
Lehman Brothers; Equitable Securities Corp.;
Smith,
Barney & Co.
Proceeds —For construction program.
Registration—Expected on Jan. 4. Bids—Expected to be
received up to nopn

(EST) on Feb. 6.

stockholders

voted

increase the

authorized

stock, par $5, from 500,000 shares to 1,000,000
shares (there are presently 396,000 shares outstanding).
The management has no present plans to issue any addi¬
tional common stock.
Traditional underwriters: F. S.
common

Moseley & Co.; White, Weld & Co.; Hemphill, Noyes,
Graham, Parsons & Co., and H. M. Byllesby & Co., Inc.

196,580

pro¬

of common stock
stockholders at not less

one-for-six basis).

on a

Union

Securities Corp.; W. C. Langley & Co.,
White, Weld & Co. (jointly); Lehman
Goldman, Sachs & Co. (jointly); Wertheim

Brothers and
&

Proceeds—For construction program.

Co.

Offering—

Tentatively expected in early part of February.
Iowa Power &

Light Co.
expects to issue additional

19 it was said company

Dec.

securities
which

1951

finance

its

construction

program

expected to cost between $6,500,000 to $7,500,will depend on market condi¬

Form of financing
tions at the time.
r

000.

I
Natural

Kansas-Nebraska

Gas

;

Co.

two-for-one

basis.

any

new

financing,

Dec.

1 it was announced company plans issuance and
sale of $10,000,000 of new bonds. Underwriters — To
be
determined by competitive bidding.
Probable bidders

bidders:

Shields & Co. and

approved

Monongahela Power Co.

Underwriters

bonds, to be determined by competitive bidding.

Halsey, Stuart & Co. Inc.; Blyth &
Co., Inc.; W. C. Langley & Co., Shields & Co. and White,
Weld & Co. (jointly); Lehman Brothers, Goldman Sachs
& Co. and First Boston Corp. (jointly); Union Securities
Corp.; Equitable Securities Corp.; Hemphill, Noyes, Gra¬
ham, Parsons & Co. and Drexel & Co. (jointly). Prob¬
able bidders for common stock:-Otis & Co.; Blyth & Co.,
Inc.;

stockholders

probable underwriters will include F. Eberstadt &
Co.,
Inc., of New York, and Prescott, Hawley, Shepard & Co.,
Inc., of Cleveland, Ohio,

than $25 per

Halsey, Stuart & Co. Inc.; Equitable Securities Corp.; W,
C. Langley & Co. and The First Boston
Corp. (jointly)'j
Union Securities Corp.; Salomon Bros. &
Hutzler; Left*
man Brothers; Kidder,
Peabody & Co. and White, Weld
& Co. (jointly); Merrill
Lynch, Pierce; Fenner & Beane*
Glore, Forgan & Co.
•

Proceeds—For expansion program,

Offering—Expected in March, 1951.•
Montana-Dakota

Utilities

Co.

;

Oct. 11 company asked FPC for authority to issue
$2,800,000 of 2%% promissory notes to banks to provide
•funds for its expansion program. These notes, together
with

$3,000,000 of notes authorized by FPC last May, are
refunded by permanent financing before
April 1,
Traditional underwriters are Blyth &
Co., Inc. and
Merrill Lynch, Pierce, Fenner & Beane.
Stockholders oii
to

1951.

Nov.

will

vote on increasing authorized
preferred
100,000 to 150,000 shares and common stock
from 1,500,000 to 2,500,000 shares.
R. M. Heskett, Presi¬
stock from

Nov. 24 company

dent, stated that about $10,000,000 will be raised within

increase

the next six months.

applied to the FPC for permission to
capacity from 146,000,000 cubic feet to 164,200,000 cubic feet daily at an estimated cost of $5,201,331,
to be financed by bonds, preferred and common stocks.
Bonds may be placed privately through Central Republic
Co., Chicago. Probable underwriters for the stocks are
Cruttenden & Co., Chicago, and First Trust Co. of Lin¬
coln, Neb.
Lone

Star Steel

Corp.

Nov. 12, it was reported

that company

additional securities should it receive
sent

the

may

issue and sell

government con¬

plant. Probable under¬
& Blosser; Estabrook & Co., and Dallas

building of

writers: Straus

Carpenter Steel Co.
Oct.

and

common

American Bosch Corp.

1981

due

plan to increase the
authorized common stock from 250,000 shares to
750,000
shares and to split up the present
210,000 outstanding

authority to issue and sell $6,000,000 of first mortgage
(latter to be offered to

Halsey, Stuart &

Monarch Machine Tool Co.

Dec.

Indianapolis Power & Light Co.
Indiana P. S. Commission for

bonds

Probable bidders:

(Inc.)

Dec. 11 company applied to

Probable

cf the New England

annual instalments.

new

Smith, Barney & Co.

—For

Lighting & Power Co.

was

$15,000,000 of

gram.

Oct. 25 filed 500,000

St.

Houston
Dec. 19 it

new

Rupee & Son.
MacMillan
Dec. 18 it

was

Co.,

New York

reported early registration is expected of

approximately 170,000 shares of common stock. Under¬
writers—Hemphill, Noyes, Graham, Parsons & Co., New
Proceeds—To
selling
stockholders.
Expected

York.

about Jan.

16.

•

Mountain

Dec.
up

States

Power

Co.

applied to FPC for authority to split
the present common stock on a three-for-one basis
company

help facilitate the sale of

in the

near

future

additional common stock
to enable the company to
carry

out its construction program for 1951.
Merrill Lynch,
Pierce, Fenner & Beane, New York, was the principal
underwriter of a common stock offering in April, 1949.
Stockholders will vote Jan. 30 on issuing 900,000 shares
of $7.25 par value common stock in exchange for
300,000 shares of no par value common stock.

Nevada
Nov.

Natural

Gas Pipe

Line Co.

asked FPC to authorize construction
and operation of a 114-mile pipeline for the transporta¬
tion of natural gas, which, it is estimated, will cosS
$2,331,350.
Continued on page 46
company

The Commercial and Financial Chronicle

(98)

New

for $7,000,000 of debentures which company had
planned to issue earlier this year were: Halsey, Stuart

ders

Continued from page

Inc.; Blyth & Co., Inc. and Smith, Barney & Co.
(jointly); The First Boston Corp.; Lehman Brothers;
Kidder, Peabody & Co.; Harris, Hall & Co. (Inc.). This
latter plan was abandoned last August.

York, Chicago & St. Louis RR.

L. White, Chairman, announced that the
company plans to offer 33,770 shares of common stock
at the rate of one new share for each ten common shares
held subject to the approval of the ICC. The offering
8 Lynne

Dec

will be below the market price
prevailing at time of offering. Underwriters—None.
Ltd. (Canada)

announced thatdhis company, a subsidiary
Gas Co., plans to build a pipe line in
Canada to export from Tennessee Gas Transmission Co.
Texas natural gas by way of the Niagara border. The
total cost of the project is estimated at $6,000,000, of
which $2,000,000 will be represented by 400,000 shares
of capital stock, par $5, and $4,000,000 to be raised by the

order to take

Dec.

care

Kuhn, Loeb & Co.; The First

Boston Corp.

Transmission Co.

Gas

Northeastern

England with natural gas, and authorized Tennessee Gas
Co., parent, to carry out a $118,645,545

Transmission

expansion program, part of which will supply some of
Northeastern's gas needs. Of the total financing, 75%
will be in the form of first mortgage bonds to be placed

privately with a group of life insurance companies. The
remaining 25% would be obtained through the sale of
equity securities. Traditional underwriters for Tennes¬
see White, Weld & Co.; Stone & Webster Securities Corp.
Oklahoma Gas

Kennedy, President, said company

is con¬

5%-% cumu¬
equal amount
lower dividend rate and may

sidering refunding outstanding $6,500,000
lative preferred stock (par $100) with an

preferred stock with a
issue additional common stock (par $10) provided mar¬
ket conditions warrant such action, to finance construc¬
of

Probable underwriters: Lehman Brothers;

Ripley & Co. Inc.

Smith, Barney & Co.; Harriman

Lighting Corp.

$24,000,000 will have to be raised through the sale of
securities next year to finance its 1951 construction pro¬

Blyth &: Co., Inc.

Traditional underwriter:

gram.

offer stockholders the right to
shares of common stock
10 common and/or pre¬
ferred shares held.
Price —At par ($100 per share).
Parent—American Telephone & Telegraph Co. owns ap¬
Dec. 8 directors voted to

subscribe for 569,946 additional
basis of one share for each

proximately 89% of Pacific's stocks.

Electric

Co.; Merrill Lynch, Pierce, Fenner & Beane; Union Se¬
curities Corp. and White, Weld & Co. (jointly); Equit¬
able Securities Corp.; The First Boston Corp.; Kuhn,

Harriman Ripley & Co., Inc. Proceeds are
be used to finance construction program.
Pennsylvania Power & Light Co.

Nov.

E. Oakes, President, stated the

Chas.

company

about $34,900,000 of new capital over the
next four years through the sale of securities.
It is re¬

ported that not over 75,000 shares of series preferred
stock may be sold late this year or early

Underwriters—The

First

Boston

and

Corp.

Drexel

Jan.

18, 1951, for purpose of increasing au¬
stock from
350,000 shares (209,221

Co.

Brewing

authorizing indebtedness up to $6,000,000 for future

if necessary.

requirements,

additional for

$3,500,000

mostly in 1951.
Potomac

Dec.

Company plans to expend

additions

received
office

the

....

was

announced
new

bonds.

that

(jointly);

Brown & Sons

plans to issue

Probable bidders: Halsey,

Kidder,

and The First

Peabody & Co. and Alex.

bidders:

program.

Corp.

(jointly).

Proceeds

—

Offering—Expected in April

Public

For

expansion

May, 1951.

Service Co. of Colorado

purposes

Dec.

raise additional funds for construction

in the second quarter of 1951.

needed is estimated at about $7,000,000."

The amount
Probable bid¬

" '

ex¬

program

area

and in

would increase

the

system to
-

;

...

Appalachian
capacity of

over

900,000,000
£

Pacific

Ry.

(1/11)

;

applied to ICC for authority to issue
and sell $4,000,000 equipment trust
certificates, series I,
to be dated Feb. 1, 1951, and to mature in l-to-10 years.
Probable bidders:
Halsey, Stuart & Co* Inc.; Salomon
Bros. & Hutzler; Harris, Hall & Co. (Inc.); Lee Higginson Corp.; R. ,W. Pressprich & Co.; Harriman Ripley 8c
Co. Inc. and Lehman Brothers (jointly); Blair, Rollins 8c
Co. Inc. Bids expected at noon (EST) on Jan. 11.

company

Farr Gallagher
United

5, N. Y., for the

Dec.

18 it

Electric

was

Rys. Co.

reported the New England Electric Sys¬

tem will receive bids Dec. 31

for the sale of its 99.143%

interest in the 82,507 outstanding shares of United Elec¬
tric Rys. capital stock (par $100).
Probable bidders;

Halsey, Stuart & Co. Inc.; Salomon Bros.

Blyth & Co., Inc. and Lehman Brothers

(jointly); Mer?
Lynch, Pierce, Fenner & Beane, Kidder, Peabody
& Co. and White, Weld & Co. (jointly); Harriman Rip¬

rill

South Atlantic Gas Co.
11 Company sought Georgia P. S. Commission for
authority to issue $3,000,000 new first mortgage bonds.
May be placed privately. The proceeds will be used to
repay bank loans and for expansion program.

ley & Co. Inc. and Goldman, Sachs & Co.-(jointly).
United Gas Corp.
Nov. 16,
to

advisory report submitted to SEC provides
holdings of United Corp. in the stock
of South Jersey Gas Co. (154,231.8 shares, par $5 each.)
Probable bidders:
Lehman Brothers and Bear, Stearns
& Co. (jointly).

Nov. 20

Southeastern

Michigan Gas Co.

bidding, probable bidders may include Lehman Brothers^
United

Michigan

privately, with no public offering expected for at least
E. Holley Poe and Paul Ryan, of 70 Pine St.,
New York, N. Y., are the principal officers of the cor¬
poration.
r•
two years.

this

Utah

Telephone Co.

company,

$32,000,000 (from $25,000,000 in the original
application), according to John A. McGuire, President,
and the length of the proposed transmission increased
from 325 miles to 469 miles.

Utah

program.

Sept. 27, W. C. Mullendore, President, announced that
company will have to raise $50,000,000 in new capital
months to finance

Total financing

City, Utah, area,

Valley Gas Pipe Line Co., Inc., Houston, Tex.

may

June 27 company

bonds.

Southern

Indiana

Gas

Texas to markets in Indiana, Ohio and Michigan.

Com¬

is now in process of completing negotiations for
its major financing requirements.

pany

Electric Co.

West

first mortgage bonds. Underwriters—May be deter¬
mined by competitive bidding.
Probable bidders: Hal¬
sey, Stuart & Co. Inc.; Kidder, Peabody & Co.; First
Carl M.

sought FPC authorization to construct

$144,500,000 pipeline project to carry natural gas from
Gulf Coast and off-shore fields in Louisiana and

the

Nov. 6, the company applied to the Indiana P. S. Com¬
mission for authority to issue and sell $3,000,000 of 30-

Boston

applied to FPC for authority to build
Aztec, N. Mex. to the Salt Lake
at an estimated cost of $22,000,000.

392-mile pipeline from

its 1951 construc¬

involve $55,000,000
Probable bidders: Halsey, Stuart & Co.
Inc.; Blyth & Co., Inc.; The First Boston Corp. and
Harris, Hall & Co. (Inc.) (jointly); Shields & Co.
program.

new

Pipe Line Co., Dallas, Tex.

14 company

Dec.

Southern California Edison Co.

creased

Co., notified the SEC that it proposes to offer
10,000 shares of common stock (par $10). Price—$11.25
per share. Underwriter—Wagner, Reid & Ebinger, Louis¬
ville, Ky. Proceeds—For construction and improvement

tion

The estimated cost of the project was in¬

in that State.

subsidiary of Central Electric

Gas

Gas Co.

Natural

Nov. 21, the company applied to the Utah P. S. Commis¬
sion for permission to extend the proposed natural gas
line from northeastern Utah to include additional areas

area.

(Del.)

build, own and operate a petroleum product®
pipeline from the Texas Gulf Coast to St. Louis, Chicago
and other midwest markets to operate as a "common
carrier."
The initial financing has been arranged for

$400,000 of common stock, subject to the approval of the
Michigan P. S. Commission. The FPC authorized the
company to construct natural gas pipeline facilities to
the southeastern

Pipe Line Co.

formed to

(Mich.)

nancing of the proposed pipeline, the acquisition of dis¬
tribution facilities and the conversion of the system to
the company proposes to issue $3,300,000 of
first mortgage bonds, $500,000 of 5% prior preferred
stock, $200,000 of 6% cumulative preferred stock and

serve

States

Sept. 25, it was announced that this company had beep

announced that in connection with the fi¬

was

dispose of its holdings of 2,870,653 shares (26;95%) of
stock. In event of competitive

United Gas Corp. common

for sale of entire

Dec. 1 it

the Division of Public Utilities of the SEC has

recommended that SEC order Electric Bond & Share Co*

South Jersey Gas Co

Penn

Electric Co.

Dec.

may

be sold at straight competitive bidding. Probable
Lehman Brothers and Goldman, Sachs & Co.

reported company plans to sell $7,000,000
of new common stock, either to the stockholders or
through underwriting. If through underwriters, stock

Corp.; Equitable Securities Corp.; Otis & Co.;
Loeb, Rhoades & Co.; Salomon Bros. & Hutzler.

was

bidders:

Proceeds—For expansion program.

(jointly); Morgan Stanley & Co.; W. C. Langley & Co.
First Boston Corp. (jointly); Harriman Ripley
Inc. Proceeds—For expansion program. Offering

and The

Southern
Oct. 20 it

Union

was

Gas

Co.

& Co.

reported company plans to raise between

ities next Spring.

Underwriter

—

first

mortgage

new

year of

$18,000,000

2%% bonds and $3,000,000 of 4%%

preferred stock (par $100).

Proceeds—To repay $3,000,-

000 of bank loans and for construction

expenditures.

Southwestern Public Service Co.
Nov.
that

15, the
over

securities

$17,500,000
in

will

the fiscal year
new

raised

sale

to end Aug. 31, 1951.

It is

preferred stock and

portion of the cash requirements will be derived

from the
and

the

senior securities to be sold will

consist of first mortgage bonds and

that

from

sale

additional

preferred stock

may

common

stock.

—Expected early in 1951.
Westcoast
Nov.

The

be placed privately. The

bonds
com¬

10, it

was

Transmission

Co., Ltd.

announced that Westcoast Transmission

Co., Inc., its American affiliate, has filed an application
authorization to construct approx¬
imately 615 miles of pipeline for the transportation of
natural gas in the States of Washington and Oregon (this
project is estimated to cost $25,690,000). Both companies

with the FPC seeking

sponsored by Pacific Petroleums, Ltd., of Calgary,

are

announced that it is anticipated

company

secur¬

Blair, Rollins & Co.,

\Inc., handled the financing early this

expected that the

1, J. E. Loiseau, President, announced that "it will

be necessary to

The

Texas &

Harris, Hall & Co. (Inc.).

& Hutzler;

(jointly); Glore, Forgan & Co.; Salomon

Hutzler; Harriman Ripley & Co., Inc., and Union

Securities

Nov.

company

Underwriters—To be deter¬

Co. Inc.; W. C. Langley & Co.

Boston Corp.

(EST)

noon

Owen

$7,000,000 and $8,000,000 through the sale of

mined by competitive bidding.
Stuart &

o'clock

to 12

of Willkie

& Walton, 15 Broad Street, New York

improvements,

Edison Co.

$10,000,000 of

Bros. &

and

Proceeds—For

Corp.

mid-Western service

own

purchase from the company of $4,920,000 equipment
trust certificates, series I, to be dated Feb. 1, 1951 and
to mature serially in 15 equal annual instalments. Prob¬
able

Gas Transmission

Texas-to-Ohio pipe line
cubic feet per day.
v

year

Dec. 12 it was announced stockholders will vote Jan. 16

the

Seaboard Air Line RR.

Bids will

struction program.

Pittsburgh

special meeting of stock¬

1951. Traditional

in part, the company's con¬

Proceeds—To finance,

Co.

that the company intends to
estimated $20,000,000 of equity securities
preferred stock). Traditional Underwriter-^

Texas

outstanding)

within the next

will require

announced

was

markets.

to 1,000,000 shares and to effect a
split-up. The stockholders would then have
preemptive rights in 531,558 of the unissued new shares
while 50,000 shares would be reserved for future sale to
employees and for other corporate purposes. Traditional
underwriter: Hayden, Miller & Co.
shares

Loeb & Co.;

Engineering Co.

2-for-l stock

Nov.

reported to be planning the issuance

early next year of about $10,000,000 new bonds. Probable
bidders: Halsey, Stuart & Co. Inc.; Kidder, Peabody &

Underwriter—None.

Pennsylvania Electric Co.

f.■'

;

„

common

Southeastern

Oct. 4 company was

v 1

Transmission Corp.

$42,300,000 construction program, which will include the
building of 580 miles of pipe line to supply natural gas

natural gas,

Telegraph Co.

Pacific Telephone &

thorized

approximately

that

estimated

corporation

Nov.

•

Dec.

& Electric Co.

Jan. 3 company asked FPC permission for
approval of a

Harris, Hall & Co. (Inc.).

& Hutzler;

holders for Jan.

•

to supply part of New

Nov. 8 FPC authorized company

Transmission Co.

(probably
Dillon, Read & Co. Inc., New York.
pansion program.

plans issuance and sale

company

Nov. 22 directors voted to call a

will

mortgage bonds due Oct. 1, 1980. Probable bidders for
bonds: Halsey, Stuart & Co. Inc.; Morgan Stanley

Pacific

Eastern

issue in 1951

$8,000,000 equipment trust certificates.
bidders: Halsey, Stuart & Co. Inc.; Salomon

Probable
Bros.

require not more than $35,000,000 of additional debt or
equity financing in connection with its 1951 construction
which is expected to cost $52,328,000. This amount is in
addition to the sale on Oct. 31 of $40,000,000 general

tion program.

Dec.

in its

new

Gas

Texas

Reliance

Dec. 20 D'. S.

Tennessee

Inc.

of its construction program.

stated

was

month

this

Niagara Mohawk Power Corp.

estimated that, through 1951, it

be offered first toNcommon
underwritten by Dillon, Read & Co.

Reading Co. ,(1/20)

issue of bonds.

Oct. 24 the company

probably

and

Proceeds—To be used for expansion
program.

See accompanying item on Northeastern Gas Transmis¬
sion Co.
/•

estimated that, in addition to the $40,000,000 bank credit arranged with eight banks, it may be
required, during the period prior to Dec. 31, 1953, to
obtain additional funds of approximately $40,000,000 in

Consumers'

& Co.;

Oct. 31, company

Oct. 20, it was

will

Thursday, January 4, 1951

■

Public Service Co/of Indiana,

price to be fixed later,

Niagara Gas Transmission

stock

mon

stockholders
Inc.

Co.

Sunray

Oil

Corp.

and

other members of

the "Pacific

Group" engaged in active oil and gas exploration and

development in Western Canada.
both
to

The completed lihe of

companies, to be about 1,400 miles, will, according

estimates,

cost

$175,000,000,

about

financed

75% by bonds and the remainder by preferred and com¬
mon

stock.

Underwriters—Eastman, Dillon & Co. and

The First Boston Corp.

; \

•

Volume 173

Number 4974

The Commercial and Financial Chronicle

(99)

ening

the

working period.
In
1950, the average work

October,

NSTA

Notes

We turned the
pages

And the story

they told

Cheered
SECURITY TRADERS ASSOCIATION OF NEW YORK

And

The

Security Traders Association of New York
Bowling League standings as of Dec; 29 are as follows:

(STANY)

TEAM

Of love
For

Won Lost

Bean

(Capt.), Kaiser, Growney, Gronick, Rappa
Leone (Capt.), Krasowich,
Nieman, Pollack, Gavin
Krisam (Capt.), Bradley, Montanyne, Weissman, Gannon
Burian (Capt.), Manson, King, Voccoli, G. Montanyne__
Serlen (Capt.), Gersten, Gold, Krumholz, Young
H. Meyer (Capt.), Smith, Farrell, A. Frankel, La Pato__
Hunter
(Capt.), Lytle, Reid, Kruge, Swenson
Mewing (Capt.), Klein, Flanagan, Manney, Ghegan
Goodman
(Capt.), Casper, Valentine, M. Meyer,
H.

Frankel

many a

ones

there

passed

are

(Capt.),

O'Connor,

Demaye,

Whiting,

Forever and

Kumm
.

(Capt.), Weseman, Tisch, Strauss, Jacobs___„_
Greenberg (Capt.), Sullivan, Stein, Wechsler, Siegel____

Casper

Harry

after

nicely

speedy

Wm.

and

Bean

Reveals

Mackie)

Bean

(Geyer

Co.)

and

race

and

Hank

have their teams hot and both

Co.)

the

make

very

Serlen

(Josephthree games to

won

interesting.

The

original

issue
the

one

companies

ance

took

down

And

the

remaining

bigger insur¬

stepped
entire

the

case

numerous

other issues which had

final

take-downs

lift

such

and

amount.

lagged, the
sufficient

were

offerings

out

the

"talked-about" stage.
Insurance

Co.

Recapitulation
ance

in underwriting cir¬

Consensus

cles is that

couple of weeks will

elapse before anything in the way
of formidable new offerings be¬

the

institutional

and

come
once

look

are

new

investors

material

to
without

worrying
about
bookkeeping
changes that might have been
necessary
a
week or two back
where
new
purchases or sales
made.

were

But

now,

it is argued,
to hold

disposition

what

the

may

outlook

continued

Prospective

the

new

accounted

for

almost

months ahead.
would rather
up

ahead and then be forced to make

subsequent adjustments.

military

Bonds

industrial companies
just under 20% of the
aggregate
while
purchases
of
absorbed

strain

vere

resources,

American

full

effect

boost

Board's

Aside

from

few

investment

new

The

only

quence

Reserve
reserve

railway

was

material.

issue

new

conse¬

any

block

Funds

used

The

board

Export-Import
on

Basically

The waning days

of 1950, how¬
ever, brought about considerable
betterment in the general posi¬
tion of the underwriting industry.
There was substantial whittling
away

backlogs

dealers'

shelves and to that extent the sit¬
uation

was

greatly improved from

early fall.
Among the larger issues which

birth

Dec. 26 the authorization of

additional credit of $35 million to

10 to 19

only

ing

required for further¬

agricultural

Israel.

materials

equipment,

This

development

credit

the

will

bear

3lk%

per

annum

and is to be amortized

over

period of

allocated

15 years. It will be
to
projects
including

riod,

fertilizer production, regional irri¬

proportionately

number of
labor

women

market

be the 32
age
now

and

civilian

are

essential

There is also

those

of age and
increased by 27%, bringing
total in
this group to
11.4
years

millions The

aggregate

number

in these two groups—
and the old—was 41

persons

the young
million
and

accounted, for

27%

burden

growing

the

pro-

distri¬

the

mili¬

segments

view
the

heavy demand
in the armed forces

industries, it will be
not only to divert a

war

effective

resources.

which

these

our

The

ci-

nA0/

the

last

United

the

are

not

women

available

behind-the-lines
as

facili¬

food, clothing, shelter,
and

weapons,

accomplish

the time at
fnr

+ho

objective in

our

our disposal will call

„

cooperation of all
groups toward maximum productiveness, for the bitter and perhaps long struggle that lies ahead
will

potential

workers

The

deter-

AMERICAN

among

proportion

while
this

present

proportion

44%

CAN
COMMON
On

December 26,

of 0ne Dollar

that of the last war, the
force would be increased

labor

by al-

could

million

since there Jg
our

add

definjte Um,t tQ

EDMUND

JOHN

MORRELL

expan-

'mlJfee

•

many of our schools
business
firms
are
doing

commendable

training

work

for

providing

defense

De¬

of Twelve

One-Half

Cents

($0,125) per share
capital stock

purposes,

the

Morrell

John
he

will

Co.

paid

January 30, 1951, to
stockholders of record January 10,
1951, as shown on the hooks of the
Company.
Ottunwa, Iowa

George A. Morrell, V. P. & Treat.

meet

the

exde-

urgent

for skilled workers.

mand

Productivity
,

dividend

and

acuities should be greatly
panded

CO.

While

and

DIVIDEND NO.

accompanied by intensive utiliza....

the

working

NATIONAL DISTILLERS

increased by length-

PRODUCTS

SITUATIONS WANTED

CORPORATION

has estimated what the allocation
manpower

ments

civilian-military
would be if full use were

economy

made

current

our

potential

Based

upon

mil¬

this technique,

there would be 12.5 million in the
armed forces and

3 million

ex¬

pansion

industries, but

6.6

in "war"
curtailment of

estimates based
of

the

DIVIDEND

our

labor force estimated at 69.1

lion.

Trader

to the various seg¬

last

million

listed
man

experience, unlisted and

yrs.

securities.

town

manage

Competent
trade for

Contacts,

knowledge of business.

Box

thorough
Now

Salary, commission

S 14,

out

limi¬

clared

con¬

force

under

the

conditions

50c per

of record

1951, to
on

The transfer books will not close.

THOS. A. CLARK
December 28, 1950.

25 Park

Place, New York 8, N. Y.

OTIS
ELEVATOR

COMPANY

addition

is women.

million,

and

from

25%

3-3% at the wartime peak,

pared

Treasurer

indi¬

their

proportion to the total labor force
increased

stockholders

January 11, 1951.

Chronicle

Representative Available

the last war, women workers in¬

de¬

Common Stock, payable on Feb¬

Wholesaler & Dealer Contact
potential

largest

the labor force

creased

has

quarterly dividend of
share on the outstanding

pointed

cated.
The

Directors

out by the
Department of Labor, they may
give a rough indication of the
possible distribution of the labor
as

NOTICE

both.

Commercial & Financial

the experience

their

Board

ruary

firm.

nected.

wire

While these

have

war

The
16

with

30%

1940

as com¬

present.

Knows

dealers

and

able

travel.

Will

relocate

Box

1026, Commercial and

Financial

Place,

necessary.

Chronicle, 25 Park

New

York

Common Dividend No. 174
A
on

throughout

the United States and Canada.

Willing

the

HOFFMAN, Secretary

esti-'

resources,
,abor force

the

workers,

new

manp0wer

sion

quarterly dividend

books will remain open. Checks will be mailed.

500,000 workers.
Another
marginal group is the physically
handicapped that with proper rehabilitation

1950

share was declared

per

^ $£££

most'

mated

COMPANY

STOCK

ridsed.

again

were

develop-

States

DIVIDEND NOTICES

partment of Labor, by using the
peak of the last war as a pattern,
of

sup-

over
65
years
of age at
increased from 45% in 1940
50% during the war period,

resources

will

international

The

man-

extent

manpower

mobilized

use

power

will

there

in overalls to

provide

work

the

vilian pursuits, but also to expand
our
labor force and to make the
most

uniform

ties, such

smaller

man

about two

^10n thr°ugn education and train-

ductive workers of the country.

every

transportation,

enter

group 20 to 64 who
in the labor force,

while

will

than

million

males

Approximately one-third of all
gation, establishment of farm set¬
oent
Western
Pacific
offering, tlements, and further promotion females 14 years of age and over
Here with only about $2,500,000 of citrus fruit culture.
are now employed, and of
those
cleared away entirely was the re-

forth.

the labor force nearly 90%
are keeping house.
Owing to the
high birth rate of the war pe-

the

oldsters.

over

the

in¬

terest

rate

ply

nancing the purchase in the United
States

and services

about 300,000.

Israel to assist in fi¬

the State of

Manpower

baby crop in the last war :
period, the number of children
under 10 years of age increased
by 8.4 million for the 10-year pe-*
riod ending 1950, a gain of 40%,

tations,

the

manpower

both

must

large

ments.

well-balanced

increased

mined

announced

week

Beyond

security requires that

tary

for

On the other hand, because of the

16,500

directors

Bank

work

hours.

declined by 1.9 million during the last decade, while those in
the age group 19 to 26 years has

40,000

purchase

fact

years

cultural development.

ketwise.

Better

the

number in the age group

equipment and materials for agri¬

requirements - express itself mar-

Picture

The situation

"civilian" industries.

More¬

of the

manpower

large portion of workers from

equipment
trust
issues
and
a
scattering of municipal offerings,
this week held little promise of

banks'

necessary

Bosch

the

maxi¬

that, war.
Nevertheless, in case of
ali tlie
a consequence of the emergency, the largest reservoir enerSy and ingenuity at our cornrate in the 1930s, the for recruitment of workers would"mand.
V

and

there is some disposition to

let the

booming

our

for manpower

pecting too much of the weeks
immediately ahead as far as new
concerned.

the First National

Bank of Boston.

accounted for only about 5.4%.

Granted to Israel

are

says

bonds of public utility companies

$35 Million Credit

over,

program

huge not

38% of the approximate $225,000,population in 1950 as
000 .placed
by
some
40
major against 23% in 1930.
The sharp
firms. Some 28% of the total went relative increase in the proportion
into U. S. government issues
of children and the aged imposes

Meanwhile, with defense prep¬ shares of cumulative 5% preferred
arations taking a bigger part in $100 par stock of American Bosch
the general economic scheme, in¬
Corp.
This stock was sold privately
dustry naturally will be inclined
to insurance firms with the pro¬
to tread slowly until it becomes
clearer just what is expected of ceeds being used to redeem 16,the various segments.
Quite as 396 shares of outstanding 5% pre¬
important so far as expansion ferred.
plans are concerned is the need
to know just what will be avail¬
able in the way of materials for
such undertakings.
So, bankers are not given to ex¬

emissions

of our total

taxes

buyers

slowly and set

strongly toward urban

there is

their port¬
folio programs to conform with
such prospects rather than to rush
go

insur¬

mortgages.

off and see

for

life

company investments during
third week of December re¬

These

position

veals that the trend of such funds

gins to take definite shape.
True, the turn of the year has

Funds

that

achieves

efficiency in

bution

Garfield Lightbowne.

civilian economy will cause a se-

low
the

superimposing

largely
of

estimated

person

National

Impact of Defense

aggravated

unsold,

friends,

First National Bank of Boston points out low birth rate in 30's,
combined with increase of persons in high age brackets, has
created tight manpower situation.

& Co.) is coming along very
appendectomy. We all wish him a
early return.

Hoy
Meyer
will bowl off their tie game Jan. 4, 1951.

Krisam

Wilbur

thai

been

hours, efficiency drops rapidly.
there

Program

O'Kane

(Singer,

(Gruntal & Co.)
'

roughly be the equivalent

average

old

add nearly

hours worked and

man

million additional workers.

has

hours, it would

in„1944

would

mum

away,

peak

for
military
victory.
While there is no fixed
ratio, it is roughly estimated that

emergency

recovery

Julie

(J.

song,

41.4

was

extended

were

of 1.4
It

day.

Work-

meister

lilting

this

wartime

10% to the

happy evening,

friends

Donadio

of 45.2

spoke with tender yearning

manufacturing
If

the

equal

long,

was

hours.

of memory

Graced with many a

week

No Friends Like Old Friends

dividend
the

$1.00

par

value

per

Stock has been declared,

January 27, 1951,
of record
on

Common

payable

stockholders

the close of business

January 5, 1951.

Checks will be mailed.
Bruce H. Wallace, Treasurer
New York,

December 27, 1950.

The Commercial and Financial Chronicle

(100)

job.

g~M

i/VMy

xJL I

fhl m

official

the

and

President

How¬
if the Kremlin inspires one

ever,

which

another

after

move

ILL

upset

plans about as fast as the
government can make them, this
will tend to keep the 82nd Con¬

like the lame duck session
punch drunk and hesi¬
tant to express its true feelings.

gress,

of the 81st,

the
rule

Members

this

happens then the basic
disagreements may smoke and
tanoulder without flaming up.
If
the fire does break out, then it is
not
,

<*/•' ' \

the

for

become

disagreements

severe

to lead to

President.

Mr. Truman's personal and pri¬
vate prestige with the great ma¬

jority

lower.

The

Congress

was

situation

never

different

"from

1948, when Mr. Truman's
vote-getting power as well as his
personal capabilities were held in
low esteem by most of the Con¬
gress. It is also different from two

in that Mr. Truman
dill has the following of the ar¬

-years

ago,

dent

left

wing, which then

was

willing to ditch him for any prom¬
ising candidate, even a conserva¬

tive who would

run

Demo¬

With

great

Congress, the

members of

many

President is

toler¬

ated because of the office he holds,

because nothing can be done about

shortening his tenure in the White

House,

because

and

which

demands

the

war,

than

per¬

functory efforts at attempting to
cooperate with

the

White

House.

Hence the members tend to keep
their real feelings about Mr. Tru¬

private.

man

The attitude toward the present

occupant

only in

relatively small

the

White

House

propor¬

tion the customary attitude of op¬
•**. >■

position, rooted in hopes that may¬
be come 1952, there will be a
chance for

idental

some

of the other pres-

aspirants.

than usual of

There

less

purely political

mo¬

tivation in the current feeling.
On the contrary there is a grimand

ness

deadly seriousness in the

attitude of most of the Congress,
j It is not that Congressmen by and

large

notoriously imbued with
a long-range sense of responsibil¬
ity. They will cheerfully start a
are

new

often,

program,

which

what subor¬
up

shown themselves to be constant¬

and

wartime

alert for opportunities to slip
phases of their reforms,
whenever Congressional eyes are
turned the other way—such as to¬

ment,

have

ward

the

Instead

fully

the

basic

had

with

cope

the

reports which

most part

come

indicate

that

in
for

course

foreign

policy.

Millions of people are afraid that

the
far

United

they
for
of

States

than it

cause—such

promised

deliver; that

the

they

are

some

not

interested.

the former

advocates

are

some

"One

Even

World"

coming to

now

redefinition

say

must

made

of the basic strategic
jectives of U. S;. policy.

ob¬

word, there is little doubt

but that the most substantial ele¬
within

ments

Acheson

has

far

too

there

Congress feel
taken

Mr.

the

over

must

that

Truman

horizon;

that

re-examination

foreign policy and the defini¬
tion of strategic objectives to a
basis that will make

sense

to most

people.
there

Then

cover as

the

mobilizing labor

question

resources for

of
the

will

the

problem to solve, and

become

difficult

any

reckoning is,

say,

some

five

double

time, and

of the work week and
The current Congressional atti¬

tude, however, is
that

great

one

of thinking

mistakes

are

made

this

year
by the government of
the U. S., the grave consequences

of these mistakes will be felt rela¬

tively

soon,

certainly by the time

of the next election.
bers

privately

are

So the

probably

mem¬

serious in their approach to public

problems

than

observers

known them to be in
i

,v.i

This

basic

have

generation.

week—adopted
work

used by some Republicans
the
Acheson-removal

expected to ad¬
smallest part of his

social program is in any way un¬
desirable.

the

against

mitee

■

must

act,

parents who

Junior

eat

the

where

would

have amassed

file

touch

Congress

that

again this

judgment on all
things is infallible, and to have
contempt toward those who dare
to disagree with him. Just a week
ago, all that Mr. Truman could
about

achieving

the

was

Chairman

Fulbright (D., Ark.) of

RFC

subcommittee

when

member

the historic

cut of $7.6 billion in

CLEVELAND, Ohio
D.

Gray is

the

merce

House, is

United

Building.

Merrill Lynch Adds
(Special to The Financial Chronicle)

ZANESVILLE,
A.

Hay

"Fulbright resolution" with

to V the

ner

has

Merrill
&

Edward

—

connected

Lynch, Pierce, FenMasonic

Temple

Building.

idea.
•

one

budget than the President.

the

erals."

the

President

for

being bull-headed.
ing for the second

the

Ohio

become

Beane,

Nations

Another
member
the budget. Most members'
who
talked
Congress would rate the Vir¬ with the President was Senator
Paul
H.
ginia Senator as having many
Douglas, Illinois Demo¬
times more comprehension of the crat,
aggressive, scholarly, and
about

report

with

Hornblower & Weeks, Union Com¬

the

which early in the war committed

Congress

Sheldon

—

associated

now

to re¬

With Hornblower & Weeks
/^Special to The Financial Chronicle)

Banking Committee.
Mr.
Fulbright is one of the staunchest
supporters of Mr. Truman's for¬
eign commitments, and the author,

expenditures, was that,
in the opinion
of Mr. Truman,
Senator Byrd didn't know much

the

sake

After

decid¬

the

President

some

information upon which they

The

was

liness

his

notorious

left-wing

friend¬

projects.

deciding for the second
time to reject the whole slate of
RFC nominees, the trio, on behalf
the

latter

plan

Banking
to

the

submit

which

Committee,

President
a

the

would

establish

the positions of the present board

offer

(common)

STOCK

producer of

fast-growing

cement

Southern

California.

Analysis
a

review

try

this Company

of the

available

and

Cement Indus¬

request.

Selling about

$11.00

LERNER & CO.
Investment

single administrator for RFC. This
plan would automatically abolish

effect

leading

reorganization

nominees,

CLASS B
A

pro¬

that

based their opposition to the RFC

and

SUGGEST

RIVERSIDE CEMENT CO.
in

After

posed

Senator

shire, a Republican who just bare¬
ly escaped with his political life
because

For

Large Appreciation Potential

convincing "lib¬

third

Charles W. Tobey of New Hamp¬

Securities

10 Post Office Square, Boston

;

9, Mass.

Tel. HUbbard 2-1990

spread-theHAnover

2-0050

ize

that it is one of the toughest
political problems of adjusting to
war, as well as an extremely dif¬

Teletype—NY 1-971
Firm Trading Markets

Basically, however, the greatest
of

all,

seen

FOREIGN SECURITIES
All Issues

was

typified by tne argument

Garlock

Packing

Jessop Steel
Permutit

Company

rAM. MASKS & C.O. 1KC;
FOREIGN SECURITIES

by1

Congressmen, is the Presi¬
dent's personal inability to com¬
promise upon anything. This atti¬

Allied Electric Products

Gisholt Machine Co.

ficult economic problem.
*

SPECIALISTS

Hill, Thompson & Co., Inc.
Trading

50 Broad Street

the

SenMe

Senate

non-war

Mr.

them

or may not coincide with
"Chronicle's" own viewsJ

the

considerable

None

Their spokesman

the

Senator

men.

members

J. William

proposal

submit

(This column is intended

Truman opponent.

Harry Byrd's
that the White
House cooperate with Congress in
serious

nominees,

going flect the "behind the scene" inter¬
months pretation from the nation's Capital

Banking committee who privately
yj pleaded with the President to
ap drop the nominees is an inherent

say

these

three

refused to

year

RFC

would

re¬

Banking Com-

time, he said.

com¬

the

his

con¬

Congress had

If the

the

(to

Commerce

been

ject at the moment, but they real¬

tude

within

re¬

RFC

in great detail for
and may
background of the nominees,

they
spinach, for
say

shocked at the complete extenrto
which the President has come to
think

have

and

never

over

generous

impasse.

the

stuff.

Members

the

Investigators

never

them

Junior will

were,
let

must

overhear

Junior

want

then

third

President

promise

resolution,

Naturally Congressmen are say¬
ing little about this ticklish sub¬

disagreement in the

not

during the depres¬
sion—with straight time.

most

said

that he

measure

President

one

of extra

Mr* Truman's Secretary of
Labor
has
violently
opposed
lengthening of the 40-hour work

problem

that

use

shifts.

making is not, of course, over the
"Fair
Deal,"
even
though the
mit

other

premium time for the lengthening

hence.

years

I used to do—does

Truman

one-half,

much

salary?"

vastly-expanding war economy.
This
RFC
business, however,
This, in the light of the present
provides an almost ultimate il¬
intensely
tight labor situation,
lustration of the sheer obstinacy
may prove to be the most difficult
conversion

scorn¬

ago

that

it.

confirm

security

remote country—in which

some

that

has

can

going to be asked to fight

are

I don't

but

jected

■

country is not
enthusiastically
to
the
over-reaching globalism of the realizes it

reacting

RFC

trol)
"Of

that it would just make the Presi¬
dent
more
stubborn.
Congress

the

idea.

plan

Department

:::Vy

Washington

not

subject to potential political

abroad; the basis of the disagree¬
ment is that although Congress¬
think there must be changes
they are aware of the utter im¬
probability
of
persuading
Mr.
Truman to change his mind in
All

govern¬

offered the Congress one

place

dangers from

respect..

him,

interests

President

week

organization

men

the

disagreement is grounded

for

the

should

rejected the

querulously

reaching changes in U. S. policy
on foreign affairs and on the or¬
ganization of the American econ¬

"mess"

the belief that there must be far-

any

this

structure

omy

unity and respect for

Instead,

foreign danger.
❖

dished

aired.

novice

smearing, that perhaps he
had

left-wingers

time, as re¬
proportion as manpower is divert¬
could
predict
ported herein previously, to turn
ed to the Armed Forces.
10, or 20 years to
So far about all the Adminis¬ down the entire slate of Truman
come,
create nearly insuperable,
problems, such as "social secur¬ tration has to offer is to reward nominees for the RFC, three Sen¬
ity." They will do that so long as labor with the customary time and ators went to the White House to

political

(would

that

dinates

The

ture.

Truman-Acheson

crat.

felt, it

group

didn't know himself

bling of the present social struc¬

for the impeachment of the

move

this

reported,

perhaps in¬

beyond the imaginable possi¬

bilities

reliably

evitable

across

lend¬

the
President should be spared a
pub¬
lic investigation and

nib¬

substantial

some

the

through RFC.

was

Deal," however, do not

out

with

money

reaching RFC reforms which the
Committee has in mind.

ruling out major advances of
"Fair

order

cause

them.

for

the

also rated as generous be¬
the Executive Order would
preclude
action
on
other
far-

SALESMEN/ COVER \

the

ultimately.

highest

ing of public

part out for the duration, certain¬

ly Federal aid to education, com¬
pulsory "health insurance," com¬
new
social
and
economic
Congress
which
convened pulsory
equality for all groups, and so on.
Wednesday.
This dissension may or may not Congress simply will spend little
time with these projects, even if
(become publicly apparent, but it
Mr. Truman cries long and hard
probably will
between

record

by investi¬
gators about the nominees, as well
as about
political interference of

The "Fair Deal" is for the most

committee

information gathered

COMPANY

the

WASHINGTON, D. C.—There
every prospect for prolonged,
fundamental, and bitter dissension
V

ings on the qualifications of the
nominees submitted by the Presi¬
dent, with the publication on the

INVESTMENT

(LMj
;

put them out of

The generosity of the offer was
it would avoid public hear¬

COAST TO COAST
Capital

and

;

that

on.

from the Nation's

Thursday, January 4, 1951

members

BUSINESS BUZZ

Behind-the-Scene Interpretations

New York 4, N. Y.

Department

70 WALL STREET, N. Y. 5
Tel. WHitehall 4-4540

Full text of Commercial and Financial Chronicle : January 4, 1951, Vol. 173, No. 4974

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