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15 1949
JUL
Bt&
ESTABLISHED 1S39
LIBRARY
In 2 Sections
Section 1
—
Reg:. U. S. Pat. Office
"Volume 170
Taft
»
New
Number 4820
Says Atlantic
•
»
•
/
-
:
«
-
'
•
»
-
■
.
By JAMES D. CALDERWOOD
Assistant Professor of Economics, Ohio State University
on floor of Sen¬
Republican " Party
Of the two aims of the European Recovery Program, viz;
(1) in¬
European production; and (2) restoration of multilater- j
alism, Professor Calderwood points out that the latter is most
important and least likely to be accomplished. Says multilateral j
trade is essential to maintenance of U. S. prosperity and urges
firm stand by ECA for restoration of currency transferability and •
crease
| leader opposes ratification
[
ground it is inextric¬
on
ably linked with Euro¬
j
pean arms program,
Senator Robert A. Taft of Ohio,
prominent Republican leader and
I
•
-
head
-
•
the
of
Senate
Repufc;Policy
Committee, in
a
speech de¬
lican
livered in the
-
United
/
'4 \/Z>'
'
1
States
.
v
V'"
convertibility.:
'•f'
'
lem
that
,
of
>by 1952 an iri-.tegratedmultilateral world
trading
sys¬
the
North Atlantic
emerged from
the
present
Pact,
Robert A. Taft
ure
of
a
meas¬
reconstruction
which has
received
period or
the
whether
support of leading Democratic and
Republican members of the Sen¬
ate Foreign Policy Committee.
(Continued
on page
stead
James D. Calderwood
of
a
in¬
system
controlled
bilateral and discriminatory trad¬
35)
relationships will have been
In the final analysis
ing
consolidated.
the
Photographs taken at
Convention
of Canada,
the
issue,
of
Invest¬
Association
appearing in the
section
second
are
of
Dealers'
ment
the
of
today's
the
"Chronicle,"
by courtesy of the Ca¬
nadian
National
Railways.
measure
not
I.D.A.C. PICTURES
so
of ECA's
is
general, and Britain in
particular, away from the latter
type of trading system and in the
in
direction of the former.
:;
When
his
Secretary Marshall made
now-famous speech at Har¬
two
he empha¬
sized that any further American
aid to Europe would have to be a
cure rather than a palliative.
Ob¬
viously, as long as the United
States is ready to pump dollars
vard
years
(Continued
State &
success
much its ability to revive
European production—for this has
been largely achieved already—
but rather its ability to push Eu¬
rope
ago,
on page
20)
Dollar Shortage Soothing Syrup
*
;
"X.,
~
*
Britain has for all
:
World War I debt.
practical purposes repudiated a huge
She has been the recipient of a stagger¬
ing:; amount of aid of an infinite variety since Dunkirk—
and no one is asking a penny for it.* She has "hired" money
in huge amounts since the close of the war—and the lenders
are
quite foolish if they expect repayment, certainly in the
lifetime of this generation, She has enjoyed for some years
past several other economic considerations of substantial
size.
The great rank and file in that country have been
given—yes, the word is given—many of the good things
of life, some of which in the good old days of economic
sanity they knew they could not afford, indeed could not
have. All these "gains of labor" are, according to the Gov¬
ernment in that strange land of contradictions and muddlement, quite untouchable. That is to say the Government
will not "permit" men and women to do without these things
even if it talks of "austerity" and the like.
And so,
the British are suffering from a "shortage
of dollars." Indeed, according to the apologists within
her borders the whole world is short of dollars—and so
presumably, it is
them.
Situation
no
;
Midyear
1949," pre¬
pared for himby the Count¬
ed of Econom-
Advisers.
ic
The* full
dent's
and
Report,
excerpts
from
the
Council's
Truman
President
foilow:
MIDYEAR
REPORT
ECONOMIC
OF THE PRESIDENT
To
the
Congress
The
United
r.
States
the
world
have
has
the
ever
™
,
is
productive
economy
the strongest and most
we
United
the
of
'
States:
known—and
the
and
resources
skills to make it still stronger and
more
productive.
In recent months
the
abatement
of
tionary forces.
we
We
(Continued
have
postwar
are
on page
seen
infla¬
now
in a
22),
disgrace for Britain to be short of
being taken
To what strange
quite seriously in many quarters.
continued
on page
no-
27)
State and
^
550 Branches
Franklin Custodian
Funds,
text
Presi¬
the
of
And all this tommyrot is apparently
Municipal
Bonds
Mid-
At
tem will have
cation
j
"The Econom-
Euro¬
of
.
Con¬
-i
ic
ratifi¬
the
'
,
This is whether
favor
in
]'
-
•
:
pean recovery.
.
wouhTTiot
vote
-».;
■..
r
falling employment
production trends. Opposes major increase in taxes, wants ?
liberalization of corporate loss carryover provisions, while asking ;
rise in estate and gift taxes. Recommends improved program of !
farm supports; rise and broadening of minimum wage; increase ;
in unemployment, old-age, and veterans payments; enlarged invest- ;
ment abroad; and restoration of Reciprocal Trade Agreements Act.
■■■
"
he
r •
Government programs, to reverse
and
,
Advisers urge expansion of consumer markets.
Anglo.-Argentine bilateral trade agreement,
followed by the statement of ECA Administrator Paul G. Hoffman
V
President Harry S. Truman transmitted to the
that he will use "every pressure" to prevent this agreement from go¬
ing into effect, finally brings into the open a matter which constitutes gress on Monday, July 11, his legislatively-prescribed
|<$>y ear Eco; \
in the opinion^ h
^
v
:
; >—-———-—-i2881
notnic Report '
of many economists the core EDITORIAL
together with
In' <
the Report,
of
the
prob¬
The conclusion of the
July 11, defi¬
nitely an¬
nounced
"essential"
in
oh
Senate
Uj *,
■
President transmits to Congress his and Council's Midyear Reports.
Calls for private and public "positive action," and carrying-forward
'
In speech
ate,
Copy
a
ERP and Mnltilateral Trade
PactWillPromote War
'
Price 30 Cents
York, N. Y., Thursday, July 14,-1949
Municipal
Canada
across
Bonds
inc.
Monthly Commercial Letter
Mutual
A
.
upon request
COMMON STOCK FUND
THE
'
PREFERRED STOCK FUND
BOND FUND
White,Weld&Co.
Members New York Stock
40 Wall
Boston
"Exchange
FRANKLIN
64 Wall
Amsterdam
DISTRIBUTORS, Inc.
CANADIAN BANK
OF NEW YORK
OF COMMERCE
*
Bond Dept.
to
the
Government
PACIFIC
Head
26, Bishopsgate.
London, E. C.
Distributors of
Zanzibar
Corporate Securities
£2,000,000
Reserve
The
Bank
Capital
Fund
conducts
description
banking and exchange business
Trusteeships and Executorships
also undertaken
CANADIAN
New
-
Established
1899
(Incorporated)
of
CLEVELAND
New York
Cincinnati
Chicago
Denver
Columbus Toledo Buffalo
England
Public Service Co.
Analysis
;
Members
Los
14
Siock Exchange
Stock Exchange
Yortc
Francisco
Stock
Angeles
WALL
BArclay
San
New
Honolulu
OTIS & CO.
£2,500,000
every
San Francisco Los Angeles
upon
request
Dean Witter a Co.,
Ban
£4,000,000
Paid-Up
Agency: 20 Exchange Pl.
Portland, Ore.
Municipal
and
India, Burma, Ceylon, Kenya
Colony, Kericho, Kenya, and Aden
THE CITY OF NEW YORK
OF
New York
bonds & stocks
Office:
and
NATIONAL BANK
Head Office: Toronto
SECURITIES
Underwriters and
In
Subscribed Capital
THE CHASE
COAST
in
Kenya Colony and Uganda
Branches
■
Seattle
of INDIA, LIMITED
Bankers
Teletype: NY 1-708
Street, New York 5
NATIONAL BANK
Band Department
THE NATIONAL CITY BANK
UTILITIES FUND
INCOME (BALANCED) FUND
.•
Philadelphia Providence
London
;
Prospectus on request
Street, New York 5
Chicago
r
STREET,
7-4300
Francisco
Seattle
'
Exchange
Stock Exchange
NEW
CORPORATION
YORK
Teletype NY 1-579
Los Angeles
Honolulu
Direct Wires
Dominion Securities
40 Elxchange Place, New
York 5, N. Y.
IRA HAUPT & CO.
Members New York Stock Exchange
and other Principed
111
WOrth
Teletype NY 1 -702-3
WHitehall 4-8161
4-8000
Boston
Exchanges
Broadway, N. Y. 6
Teletype NY 1-2708
Telephone: Enterprise lffM
THE
(158)
2
COMMERCIAL
& 'FINANCIAL
CHRONICLE
Thursday;; July .14, 1949
Long-Term Market Trend Is Upward
United Corporation
By HEINZ H. BIEL
'--V
Commonwealth & Southern
(
«
Laird, Bissell & Meeds
-
Alabama &
-
Stock market
analyst cites constructive external factors, as smooth readjustment from sellers' to buyers'
market and lower prices; the voluble advance "advertising" of depression; large number of
wage-earn¬
ers; and high level of personal savings and incom s. Concludes market liquidation is past, and longrange investor should prepare for major advance.
South Carolina Elec. & Gas
*
*
■
>■
Bought, Sold, Quoted at Net
Prices
'
New York Hanseatic
Corporation
120 Broadway, New
Teletype NY 1-583
BArclay 7-5660
opportunity to discuss th* outlook for the stock market, especially at
About 15 months ago, when the impressive 1948 Spring rally was in full
swing,
pleasure of participating in a forum dealing with the investment outlook in gen¬
this time.
eral and the stock market in par-'i>———
ticular.
to
At that time I was asked
"bear" argument,
not particularly pop¬
the
present
which
v/as
i-1—
—
——:
steadily,, the
number : of
wage
earners is amazingly high.
While
..
certain
industries have
been
Rights & Scrip
Since 1917
—"
Harold Cook
on
-
<*.
*
Members New York Stock Exchange
'
25 Broad St., New York
4, N. Y.
HAnover 2-C700
Of IMclair
*
«.
.
Steiner, Rouse & Co
Board
cur¬
Savings
then, but I presented it with tailing production and laying off
relish
and
industries have
complete conviction; workers, other
Harold H. Cook has been elected
Today, however, I am not a rep¬ been going full blast. Now, when to
the Board of Managers of The
the automobile industry is finally
resentative of the "bear" side.". It
Montclair Savings Bank. The an¬
seems to me that we are approach-! approaching
the turning point,
nouncement was made July 12 by
ing an important turning point, other industries—textiles, for ex¬
T. Philip Reitthe first change in the major trend ample—may
Verge- on incipient
inger
: Presi-i
in more than three years. I believe that unem¬
*
5 recovery.
dent.
Conditions have changed mate-; ployment figures will increase in
Mr. Cook is
the
months
ahead, possibly to
rially during the past year or so,
a
partner in
about 6,000,000, but may not reach
ular
Specialists in
Bought—Sold—Quoted
I welcome this
I had the
York 5
Louisiana Securities
"
NY 1-1557
New Orleans, La. -
Birmingham, Ala.
Mobile, Ala.
Direct wires
"
-
to
branch offices
our
Established
1856
''
.
.
*
r
»
„
Our
frjC PONNELL & TO.
Members
New
York
Stock
Exchange
New
York
Curb
Exchange
BROADWAY, NEW YORK 5
120
Tel. REctor 2-7815
economy
from
market,
NEW YORK 5, N.
Y.
Personal
abun¬
to
incomes
will
be
&
There
is
always
danger
grave
economic
inevitable
the
of
re¬
the
prices.
It
is
due
be premature to
rule out this danger entirely, even
may
to
in
Mr.
entered
H.
i
■-
;/!
v.:
,.
Management Realistic
C.
r
;
.
of the
Corporate
Board
•
Inc.
1
Trade
of
Exchange
And, other Exchanges
N. Y, Cotton
Young
W.
NEW
CHICAGO
& Co. In 1935 he became the Man¬
ager
Exchange
Exchange,
New Orleans Cotton
the Utility
Department of
Cook
Exchange
'
.
In 1933
he left to head
.
r
-
& Co.
Harold
Curb
Cotton
York
Chicago
1926,
Spencer Trask
to
Exchange
Commodity
College
.
Stock
York
New
Cook
satisfac-
seems
York
New
gradua^
.
reductions
New
liams
lower
response
members
.
tion from Wil4
Physical volume of sales
remains high and the
price
adjustment may develop into a
business depression of serious pro¬ tory.
portions.
decline
New
f
On
competition. The stered not only by relatively high
employment at high wages, but
still under way, and the process also by accumulated savings and
of. readjustment is not yet com¬ by generous unemployment bene¬
pleted, but we have made good fits. Although retail sales are off
progress.
The results achieved from last year's high levels, much
encouraging.
Co.,
York.
bol¬
keen
are
H. Hentz & Co.
Spencer Trask
transition to lower price levels is
that
STREET
scarcity
from
dance and
LAMBORN & CO., Inc.
WALL
whole has
proportions such as to undermine
- transition
to a buyers; buying power seriously.
the
sellers' market
a
thus far
99
a
as
completed
nearly
Bond
Exchange Bldg.
YORK 4,
DETROIT
N. Y.
PITTSBURGH
GENEVA, SWITZERLAND
De¬
partment of Reynolds & Co. and
Here is another favorable
point:
Yet, the rapid and generally
in 1937 was appointed assistant to
Management is approaching the
progress of
the current
the President of Reynolds Metals
problem
realisti¬
economic readjustment seems to readjustment
cally.
Prices have been slashed Co., later becoming Secretary of
justify a more hopeful attitude.
the company.
He served in this
and
production
curtailed
with
reasonable promptness. Ample re¬ post until 1941 when he returned
Stock Market's Warning Helpful
now.
SUGAR
smooth
Raw—Refined—Liquid
Exports—Imports—Futures
It has been said that
omists
DIgby 4-2727
into
is
of
lot
But it may
nonsense.
well be that the warning
American Air
Filter Co.
Common
Black Star Coal Corp.
Common
Kentucky Stone Co.
5
Preferred
%
Wall
of
bears
talking this country
depression. That, of course,
were
a
a
the
and
Street
some econ¬
implied
that these warnings were heeded.
American
in
business
general
well
prepared for the ap¬
proaching end of the sellers' mar¬
ket. Adequate liquidity has been
BANKERS BOND E
let
Floor, Kentucky Home Life Bldg.
2, KENTUCKY
LOUISVILLE
Long Distance 238-9
maintained. Inventories were gen¬
erally
Incorporated
Bell Tele. LS 186
tic action.
It is
hoped that the Ad¬
in
interfere
Washington
with
the
will
present
had
control.
under
set
been
absorb
to
up
Reserves
most
of the shock that results from the
duce
expenditures
reduced
tax
need
no
in
line
with
There
revenues.
is
yet for "pump prim¬
ing" and deficit financing.
Dis¬
tribution
of
$2
billion of G.I.
insurance
dividends
early next
as
will
year
in, itself
important
power., :
represent
addition to
was
He
is
Chairman
and
a
ter
of
College Chapi¬
Delta Phi.. He is
Alpha
of
The
Lunch
/
■
■■
'
Trading Markets
American Furniture Co.
business
concerns/
Nor
is
there
great danger of calamity how.
Moore-Handley Hdwe. Co.
This
not
does
won't be red
Dan River Mills
ing income
that there
mean
figures in forthcom¬
and more
statements
dividend cuts and omissions. After
Scott, Horner &
Mason, Inc.
Lynchburg, Va.
Tele. LY 83
LD 33
illlllllllllilllllillllllllKIIIIIIIIIIIIIIIh
gll, that is to be expected, and this
logical expectation has been the
basis
of
bear
our
market.
>
The
He resides at 259 South
tain
It
is
hardly necessary to men¬
that
there
is
credit
no
Board
Reserve
to
prevent
structure
it.
will
Our
is
sound.
encouraging
employment
though
entire
eminently
wife and two daughters.
b
»
*
«
ft.#
a
not
succeed
we
severe
know
and
Al¬
part-
N.
Y.
a
talk by Mr. Biel
Society of Security
Burlington Gardens, W. 1
64 New Bond Street, W. 1
TOTAL ASSETS
£155,175,898
—mtmimm
inn
Mr
unn.i
Associated
Banks:
Clyn Mills &
Williams
Deacon's
Co.
Bank,
Ltd.
:
jgigjgi5J5f5jS5Ef5i5f5iSJ5JSJ51SI5EI51SI5I3B
Mr.
Company
announce
them
of
Nelson
the
Harry
was
a
full year's
association
subscription' to the Monday
J.
and
Nelson.
formerly associ¬
Thursday issues of the
"Chronicle"
will
give
ated with the First Securities Co.
of
Chicago
Vice-President.
as
ideas
galore and
dividends.
pay
•
-
yon
libera]
-
-
With Miller, Kenower
whether
within
$35
INVESTED in
stock
the
next
(Special
to The
Jones is
ler,
now
Financial
Chronicle)
MICH.
DETROIT,
—
Kenower &
n
Carlisle
connected with MiN
Co., Ford Bldg.,
Commercial & Financial Chronicld
25 Park Place
-
three months.
New York 8,
N. ,Y.
But, for the longer- members of the Detroit Stock Ex¬
REctor 2-9570 ;
range investor, this question is of
change.
BI5J5J5I5I5J5I5J5J5IBf5f5I515ISI5l5J51515I5®3
comparatively minor importance.
;
The
significant
fact
is
that
the
time for broad liquidation is past.
Firm Trading Markets
The decline in equity prices since
1946
has
The
been
decline
good
the
part
time
to
its
even
though
start from
level.
a
in
Over-the-Counter
COLOMBIA
Quotation Services
BOLIVIA
for 36 Years
re¬
readjustment
it
has
course.
for
and
been
business
prepare
programs
vance
may
of
and
long
has
The
inevitable
was
employment has been rising ment
♦Abstract of
Smithfield, E. C. 1
Charing Cross, S. W. 1
Moun¬
depression
The latter may be wit¬
possibly
adjustment.
is
change,
with
country.-
recognition of broad
factor
situation.
unemployment
Analysts, July 13, 1949.
*
do
con¬
Encouraging
before
e.,
own
if
*
Another
time
*1.
-.1
steep.
the
.
our
early
SECURITIES
Members St. Louis Stock Exchange
preventing
in
nessed,
Employment Situation
St. Louis l,Mof
in
to come.
banking
STREET
depression
undermine confidence and involve
tinue
OLIVC
adjust¬
In any case, there will
be less danger of a Western Eu¬
ropean
Bishopsgate, E. C. 2
Es¬
Avenue, Montclair, with his
ours.
panic.
Federal
509
to be in
seem
49
County Country Club of West
Orange. New Jersey.
J.
the British economy as the thou¬
sands of relatively free American
ing
3
8 West
sex
'r1.
businessmen
LONDON OFFICES:
.
purchasing
'
not fear any
tion-
INVESTMENT
the
and
1
an
point is that we need prices have reached bottom or
major insolvencies to whether a final shake-out is yet
important
stringency, and the policy of the
Stix & Co.
Club
OFFICE—Edinburgh
the
trustee of the
Delmer &
iiiiiiiiiiiiiimiiiiiiiiiiiiiimiiiimiii
of
Alumni Fund of Williams College
lower
to
HEAD
Branches throughout Scotland
born in New York
The British dollar
crisis may
price levels,
Its solution
Timely efforts had been made to come to a head soon.
would remove another
reduce
costs, increase operating
uncertainty
efficiency and to wake up sales now hanging over our stock mar¬
CHICAGO, ILL.—Detmer & Co.,
ket.
It remains
to be
seen
departments.
As a result, there
105 South La Salle Street, mem¬
have been, .so far, no important whether the Socialist Government
casualties among well-established can be as flexible in readjusting bers of the Chicago Stock Ex¬
step-down
Incorporated by Royal Charter 1727
Spencer Trask & Co,
Mr. Cook
City.
to be
ministration
not
to
Chairman of the Trustees of Col¬
Any at¬
by the cautious action of the stock readjustment process.
market
has
served
its purpose tempt to get the boom back to the legiate School of New York City
well by reminding the managers boiling point would be not only and President of The Kimberley
of
American
business
that
the costly, but undesirable.
As far as School in Montclair.
trees of the postwar boom would government fiscal policy is con¬
Mr. Cook is Secretary of the
not grow into the sky. It appears cerned, we should attempt to re¬ New York Bond Club, a member
was
m
and a good balance sheet
position make possible such dras¬
serves
Royal Bank of Scotland
our
a
run
Now
a
is
New
Issues
study
on
request
National Quotation Bureau
invest¬
major
the
All
ad¬
uptrend
somewhat lower
Incorporated
ZIPPIN & COMPANY
Established
208
South La Salle St., Chicago 4
46 Front Street
Tele.
RAndolph 6-4696
CHICAGO
Tel. CG 451
1913
New York 4, N.
Y.
BAN FRANCISCO
Volume
170
Number 4820
THE
COMMERCIAL
INDEX
Articles and News
.
ERP and Multilateral Trade—James D.
tainment
2
...
1
j
y
.
___
Investors and Managers—Forgotten Men—Emil Schram
6
7
___
Economic Health Depends on Profits—Arthur K. Atkinson
When
or
Director of the NASD,
Cover
increasing « misconception of what the
Philosophy' of the Board of Governors actu¬
it's
on
-
5% Yardstick (Editorial)
3
_______
Mutual Funds Form New National Institute
13
a_.
13
W. Harnischfeger Offers Recommendations for Europ'n
Policy
14
Robert Nathan Says Business Can Afford Higher Wages______
17
U. S. Must Remain Economically Strong, Says James F. Byrnes
18
-his
rule
dubbed
was
an
-
Telephone: WHitehall 4-6551
and
BOSTON & MAINE R. R
"interpretation," and the NASD
Our experience with those who
,
earn
Walter J.
Ontario.
not
In
addition, there
pictures taken during the
Convention, all of which were made available
of the
course
are many
Budgetary Policy and Economic Trends
Hon. Douglas Abbott
in the first
In
"In such
10
13
14
*.
Outlook for International Investments—P. C. Bonvoisin______
15
The Retail Securities Market Is Still Here!—D. Bruce Shaw__
16
Importance of Greater Profit Margins to Dealers
As
We
See It
Business
Cover
Bookshelf
Man's
which
14
Coming Events in Investment Field
1
From Washington Ahead of the
News—Carlisle Bargeron
Indications of Business Activity
,
15
4—
6
28
—
12
__.
•NSTA Notes
News About Banks and Bankers,
ll
j
Observations—A. Wilfred May—
4___4—5y
_
Our Reporter's Report
35
Our Reporter on Governments
49
Prospective Security Offerings—
Sir-
Public Utility Securities—™.
Railroad
Securities
——
Securities Now in Registration
32
—__________
The State of Trade and Industry—-——
Tomorrow's Market (Walter Whyte
Washington and You
Published
Twice
Weekly
_.
._
36
—
Drapers' Gardens, London,
c/o Edwards & Smith.
E.
C.,
Teletype SU 464
Salt Lake City 1
Whether It's Hot
these
a
customer in relation to the then
security."
Or Gold
cur¬
Y
j
guides emphasize: "current market," how
"yV
y
.
;"y ."".y
" '
:
*y
sure
to
Reporter's
umn
read
"Our
Report"
:
;
those
col¬
week in the
every
"Chronicle"
y-.
..
Be
•
determine the current market
price of a security
is dealt in over-the-counter? * What is the
NASD
one
see
how
issues
new
are
to
going.
y;; Shall the published quotations of the NASD Quotations
as a
guide in determining the current
market price of an over-the-counter
security?. Here there
Committee be used
clear
parallel. Such quotations are not based upon actual
circulating medium is a membership organization
—the NASD, in which
membership is controlled and super¬
a
The
vised.
Besides
that the
26
—
i
j
5
Says)
Bell
Hallgarten v. Lee that these
quotation sheets do not reflect current market prices either
among dealers or between the dealer and the public.
r
sales.
21
;
—___
*
160 S. Main St.
Shall the National Quotation sheets be used? But these
do not record sales;
only "wants" and "offerings" are listed
therein.
The number of listings permissible
depends upon
the price paid, and applications for
membership in the sheets
may be black-balled by current subscribers. Besides the Dis¬
is
20
—
Securities Salesman's Corner.,
~
18 '
—
———
&
COMPANY
Established 1899
trict Court of the United States for the Southern
District of
New York has held in the case of
8
J—
■
j
8
Einzig—"Britain's Gold Drain"
price paid to
answer?'
9
Dealer-Broker—Investment Recommendations
Mutual Funds
does
9
—
EDWARD L. BURTON
It then cautions
justifica¬
Since
7
Canadian Securities
yard
security
a
as a guide to the dealer and to the Business Conduct
Committees of the Association in
determining the
rent market in that
Bank and Insurance Stocks,.
sale of
again
r
(Editorial)
:
to which this
by a dealer
policy is applicable
tion of
Regular Features
request
on
It also includes the
purchase of a security
a customer in which
instance, "the
17
—
analysis
the
case
from
J
:
partial explanation.
a
New
policy is applicable and has bearing only
as a
guide, both to the dealer and to the Association's Busi
ness
Conduct Committees,
hrdetermining how much of £
mark-up above the then current market is justified."
12
___
Significance of Alberta Oil to Canadians—C. O. Nickle
—Alan H. Williamson
attempt
applicable the NASD includes the
inventory by a dealer to a customer.
from
8
-----
Increasing Ontario's Power Facilities—Robert H. Saunders
Canada's Role in Europe's Problems—Alfred Pose______.
us
listing the types of transactions
stick is
Canadian Pacific Railway—Master Work of Private Enterprise
W. A. Mather
Investment in Canada Expands—Gerald G. Ryan_____
Let
v
6
i__
Teletype-BS 128
have
been sound
4
Consumer's Interest Comes First—Edgar G. Burton
Connolly & Co.
HUbbard 2-3790
policy to have furnished more careful definitior
instance, and to have submitted to NASD mem
bership for approval this doctrine which they were directed
to the "Chronicle"
through the courtesy of the Canadian Na¬ to apply?
Certainly it cannot be charged that the present
tional Railways. The articles in this Second Section are as
admitted lack of
understanding is in any wise due to the
follows:
mental limitations of those who are
..:;'yVyy ^
subjected to this rule,
Canadian
tion.
there
is
medium
same
•
the
additional
NEW ISSUES
f.
objection
grave
circulates, for publication, prices
(Continued
Eng-
on
page
21)
.
■'
r
..
4
<
•
•
,
Investors all
as
standards for the nonobservance of which its Business Cony
reach national market
•
•
'
"
*
the country
over
-
read The New York Times. .-.in
11,000
.
i
.
.
'
communities in
all the..
and,
The
and
COMMERCIAL
FINANCIAL
CHRONICLE
Copyright 1949 by William B.
Company
y
Reentered
U.
Reg.
WILLIAM
*
25
B.
Park
S.
Place,
REctor
HERBERT
Office
Partent
DANA
New
Subscription
Subscriptions
Possessions,
WILLIAM
DANA
D.
SEIBERT,
RIGGS,
President
Business
Manager
Thursday, July 14, 1949
Other
•tate
corporation
and
Ot*er
Chicago
city
news,
Offices:
3,
111.
news,
bank clearings,
etc.).
135
8
La
(Telephone:
Salle
State
St.,
0613);
and
*
States^JU.
$35.00
of
Canada,
Countries, $42.00
•
Thursday
(general news and ad¬
vertising Issue) and every Monday (com¬
plete statistical issue — market quotation
records,
Union
Members
.
$38.00
per
per
Record—Monthly,
per year.
(Foreign postage extra.)
Monthly Earnings Record — Monthly,
$25.00 per -year.
(Foreign postage extra.f
-
Note—On
account
of
the
made
in
New
York
25
New
Broad
York
Stock
funds.
Exchange '
covers
2-4300
50
,
Congress Street, Boston
Hubbard 2-8200
■
Teletype—NY 1-5
Alh*«v
-
CM"?>ro
-
Glens
community
<■
•
security buyers, and in¬
dividual investors.
Members New York Curb Exchange
Street, Ne-w York 4'
HAncver
fluctuations In
the rate of exchange, remittances for for¬
eign subscriptions and advertisements must
be
Spencer Trask & Co.
Members
financial
banking officials, corporation
tutional
Publications
Quotation
whole
executives, professional andinsti-
year.
year.
$25.00
the
of
PREFERRED STOCKS
8
of
year:' in
per
District of.
why financial
March
Rates
and
and "the
advertising in The Times
New
at
of
»
-
United
Dominion
Other
Bank
Every
in
Territories
Pan-American
WILLIAM
Act
,
states
Columbia. That's
We.are interested in offerings of
Febru¬
'
9576
SEIBERT, Editor & Publisher
D.
office
post
the
8, 1879.
York 8, N. Y.
to
25, 1942, at the
York, ' N. Y.,* under
48
Dana
second-class matter
ary
COMPANY, Publishers
2-9570
as
I
30 FEDERAL STREET, BOSTON 10
ment Dealers' Association of Canada held at Minaki
for this issue and the various addresses made at the Conven¬
■
INCORPORATED. 1923
their livelihood ir
of the 33rd Annual Convention of the Invest¬ the securities field is that
they are of sound intelligence and
Lodge, if after this lapse of time the "5%
Philosophy" is misunder¬
Included therein are articles
especially prepared stood we wonder where the fault lies. Would
it
coverage
Dept.
STREET, NEW YORK
TEXTILES
.
today's issue of the "Chronicle" is devoted J
them
NEW ENGLAND
membership by-passed at the time of its promulgation. Now
:he NASD is engaged in
interpreting the interpretation and
.his promises to be a
continuing process.
^
Additional Articles in Today's Second Section
dump
Obsolete Securities
WALL
99
explain this "Philosophy"
summary headed "General Re¬
NASD Mark-Up
Policy."
interpret the application of the NASD Mark-Up Policy."
i
If after approximately six years of existence there
ap¬
pears to be an increasing misconception of the 5% yardstick
which requires clarification, we can
readily understand why
13
Four St. Louis Firms Oppose Exchange Merger
to
us.
ana
States Aims of Auto Workers
RETURN"
time
The current issue of the NASD "News" informs
us that
"The Board of Governors voted at the
May meeting to have
prepared and distributed a statement which would
clarify
____Cover
have
"POINT OF
NO
an
'
stocks
your
reached the
Mr. Fulton then proceeded to
and to distribute a
10-page
17
Taft Says Atlantic Pact Will Promote War
to
Ascer¬
f
Truman Prescribes for Prosperity
Section 2 of
be
to
ally is."
view of
Walter Reuther
in the rule.
market
current
Wallace H. Fulton, Executive
.
;5% Policy
8
___
The Budget, the Business Cycle and Russia
—David McCord Wright.
a
NASD of "5% phi¬
a recent address before
a
gathering of the New York
Securities Dealers Association with this
introduction: "There
appears
The Perennial
of
"clarification" by
Misunderstanding inherent
started
4
.
Impediments to Free Flow of Risk Capital—Hal H. Dewar_
(159)
4
™
Problems of Canadian Pulp and Paper Industry
—R. M. Fowier
CHRONICLE
price in over-the-counter securities,
Administrative regimentation leading to planned economy.
j
:
_
for belated
causes
losophy" outlined.
A Rate Structure for the Securities Business
,'—Francis Adams Truslow
Some
Cover
Long-Term Market Trend Is Upward—Heinz H. Biel
FINANCIAL
The Perennial 5 % Yardstick
Page
Calderwood
&
Fe'Is
-
8
N
Sljg jNrto fark Sime?
"All the News That's Fit to Print"
,
Scheneeta^y-
-
Worcester
|
u
.1
.
CHRONICLE
& FINANCIAL
THE COMMERCIAL
(160)
mi i
.
Thursday, July 14,1949
f
I
;r '•
A Hale Structare ior the Securities Business
Ji:
:
By FRANCIS ADAMS TRUSLOW*
;;; /;
&Hr'M
.President, New York Curb Exchange
.
'
\
-
'■
„
v'
V
-
|
-
dwindling stock exchange transactions, discusses influence of brokers'
this development. Concludes commission rates may be inadequate and therefore
commission rates
on
;
,
"
-
j
Mr. Truslow, after reviewing
By R. m. fowler--.v-•-
j
{
i
ing industry
!
provide sufficient incentive; to reach increasingly scattered sources of business. Sees access, to
principal securities markets also inadequate,, and advocates expanding commission schedules to include
participation by non-members and large traders. Outlines scheme of "retail" and "wholesale'' commisdo not
President, Canadian Pulp and Paper Association51 \
Mr. Fowler points notproduction of pulp and paper, Canada's leadaffected
;,
.
and mainstay of its exports, has been adversely'
by worldwide foreign exchange difficulties, but expresses /
*
sion rates.
confidence it
,
can
meet situation and fulfill its
1
For the third time in three years you are committed to the task of hearing me speak. I
am honored and you are the victims.
Fortunately, you do not yet realize how dull this
particular speech wil oe. The fact of the matter is. that my subject is so technical anc
|
"
approach
my
tcr it is so per¬
that
sonal
/have
office
my
Pres¬
as
C u r
of
this address.
institu¬
The
the
have
high
|
;
such
regard
the
Taxes the Impediment
that
motives
popularity
prompt
either
Association I tried
the detne ae
tails of the day-to-day happeninffs in the securities business
to
d^scribe the hieh Dath our count^ wiU follow the trade of the
world and to portray the foundations of our nation's confidence.
With
Kipling,
I ■ attempted to
this
esteemed
rafcemTwoTdsabove
fn
"splash at
0JMv
-
a
comets hair."
Two Unhealthy
/ ;
•
j
difference >' to
,-discovei
risen
have
to
counter
the
business.
at the
ists
We must, I
think, look
great difference which ex¬
between
the
of
rates
sales
compensation in our business anc
in
others.
these
sions collected
about
resent
value
of
by members of the
Exchange rep¬
1% of the market
Curb
York
New
commis¬
Gross
securities
bought
anc
the Exchange. By contrast,
sold
on
the
sales
vestment
charge
trust
mutual in¬
issues
is about
on
8%%
of
the
price
sales
Trends
I ask you to be my Wat¬
while I get down on my
at home.
Suppose you had the choice of
setting up in one of three lines
of business. In each the objective
-
print industry is still running above rated capacity.
(
,
An elder Canadian statesman said recently that the present time
Js
one of those mysterious periods of transition in world affairs when
we
are bewildered by mists "of uncertainty, and
everywhere there
are clouds on the horizon. It is true that we are in a testing time pf
woria
We'
aiiairs.
-
are
times. Z Strength
con-.
hi any
and
size
create
responsibilities. And by
properly shouldering these re¬
sponsibilities the industry wiU
continue to prosper, and fill the
greater
-
needs of men everywhere for its
products.
/ 1.
>:>•,
The future of the Canadian pulp
and paper industry in the long run
vexa-
v
Sious p r o bin
eftls
v a
k e.
its
And
depends
,
the careful manage¬
on
ment and maintenance of Canada
diffi-,
grave
s
fulties particand harass in-
woodlands, whence flows, inci-,
dentally* one-third of all the
Pri¬
mary wealth and production of
t
our
ilarly
beset
rnational
e
country.
;,;.-V'• ■',>
trading.
j In
R.
common/
M.
Policy, for Perpetual Yield from. '
Fowler
Woodlands
with other in-
/ ■ v ;
dustries, the Canadian pulp and
industry must meet the problems
difficulties
and
occasioned
by
world unrest and postwar adjust¬
ments. /As Canada's leading
ex¬
porter, it is acutely aware -of the
problem of foreign exchange.
Some
of" its
short
of
have
ments
best
dollars.
customers
Their
are
govern¬
imposed import
con¬
trols,
quotas, and other restric¬
tions in an effort to husband their
,
V Today
son,
Rates.
of the
shares and on insurance policies
dollar
or
^bout 12.7% of the premiums col¬
priated to the support of socialy • ' ,y /.
abroad and a Welfare Deal lected..--,*
_ten-league _canvas
/with brushes of
■
trend in the rest of the securities
untfl
l*16S
XVtop treat!ng
exhaustible r.sorviir,Wete ?" !?"
a:xaaus;1i)ie reservoir of funds.
Y-uId be £0 change their expect inveS£0rsunreasonable to cash
int KhareQ
hiiJLJ** * e r c??n
V? snares m business ownership
wl«i eagerness while their profits
Zlw rt toS EhM*
ficiai vaiues £fn Sjl? f
fncoLlS anjfnnf^
mtn <ufhsidiliW th
f ?W;
selected few « a
price
otherwise expro¬
to raise my words aoove
to
'
my
sales
Business"
i
y
why insurance and mutual 4rusv
iL-
elaimer, I urge anyone to leave
who wishes to do so.
At the past two conventions of
In
another
will fill the next hour
anH
wul
in
rise
same
opinion, we must look
beyond this element of safety to
tirinatinn" in ~uB
-'Ui " * «r
nnp-half while T talk
I ll"pauon ln «s ownership. We
wnne i ta k. this dis- of th t T wboi]y Soive I "fa<?p
w1jj never
With this warning and
r"ve the u-
A
the
mutual trusts,
of Commission
Influence
-
for business and for par-
climate
boreaom
fancy which
as
this
spending and the weight and dis¬
criminatory character of the taxes
that result make an -unhealthy
responsi¬
ble for
-
The
snould not be
held
stocks,
individual
of
exhibited
not
tion for which
11
values
j
they can remain anonymous, and rise and fall with the general fronted by op¬
It is also obvious thai
voting for them when, the roll is market.
posing
ideals
called, does not encourage us to diversified investment may be ob¬
pf govern¬
hope that the merry-go-round of tained through fixed investment ment.
The
^pending and taxation will soon trusts and other investment pro¬ yvarThas left
grams. But such fixed trusts have
slow down.
change for the
duration
————
greater and greater spending pro¬ of our money. We all know the
and high taxes, and the importance of the diversity of in¬
threat of higher taxes, to pay for vestment afforded by mutual in¬
them. The spectacle of some of vestment trust shares, but we are
well aware that their values, like
our representatives valiantly op¬
posing these Treasury raids, when
the
York
b
Ex¬
of
ident
■New
"
grams
I
decided
resign
;to
"
responsibilities. Says
future of industry will depend on careful management and maintenance of Canada's woodlands—a factor requiring increased investment and therefore higher production costs. Reveals Canadian news-
i
dollar
Thus
resources.
the
mar¬
kets for Canadian pulp and paper
outside
of
North
America
are
steadily closing in because of the
lack of dollars.
;
/ •!
,
More than three years ago, thej
industry
adopted a. forest
po^cy :
perpetual yield of the.
woodlands. This was no pious and
platitudinous pronouncement. It
aimed
at
was
serious
_
a
declaration
tent.
'
of
in¬
/
"On their limits, many companies
already have wood in perpetuity.
Others are moving to attain that
position. To attain it, sound forest
management
policies,
requiring
huge expenditures are involved.
(
Proper management of the for¬
requires protection services be
against fire, insects
and disease. The industry spends
large sums annually in battling
these ravagers of the forests which,
take each year half as much again
of the forest crop as does the in¬
dustry. Management too requires
a network of roads throughout the
forests to facilitate cutting
and
fire production.
Such roads can
cost as much as $10,000 a mile. In
est
established
Securities Business Role in
and go snoop¬
! On this continent too,, we in
Problem
is to advise customers wisely and
ing around looking for little clues..
Canada are facing trade difficul¬
But there is considerable evi- persuade them ultimately to con¬
among the details of the securities j
inr„,
Q£
ties with the United States be¬
business — little
indications
dence lying around which indi- vert their surplus cash into cer¬
what may be adversely affecting .categ that the problem of lack of tificates representing a direct or cause of our shortage of American
The importance of the
the business and what mig
interest jn s£0cks js not exclu- indirect participation in American dollars.
done about it.
I want to araw sively theresult 'of • disturbing business.- The rate structure of pulp and paper trade in this situ¬
ation cannot be over-emphasized.
some deductions from those,c
A
would .assure
you
government policies and high and business
Canadian
exports of -pulp- and
and then let you ^raw
J?^ +.
badly based taxes. At least a part $87.50 gross : income ; from each
paper account for more than 35%
conclusions about my deductions
Qf the problem and its solution $1,000 raised.
In the case of busi¬
the interests of sound forest man¬
of all her exports to the United
For several years the business - ^ be within the control of the ness B
your £foss return would
agement, the industry annually
States.
The maintenance of this
of private
be $127 and in business" C your
fiance in
securities business itself.
spends vast sums in guarding and
trade is naturally of special im?
has been exhibiting at least tw
j
.
vears
while stock gross return would be $10.' Which
ensuring future crops from the
portance to Canada; it is also of
unhealthy trends. The rates; of
curing
vears while agg business would you pick and at
forest wealth of Canada.
Many
and knees
hands
...
11
t-Jinn +
-
_
,
turnover
of stocks
'exchanges
and the percentage
^ed
our stock manseit,transactions nave curvea
decreasing •
new capital and annuity policies ana saies 01
on
been
have
of
through the sale
securities has been
Whether we are
'ed
as
&
•I*
directly interest-
participants in the securi-
business,
based
fallmg. tnrough mutual investment
only indirectly
or
eufwena
priva
on
of
n
nation
f ownership
industrial production
\tn0lf M strength
threat to the strength
we
of
cannot
and to
a id °
th!
gainful deterioration of an important business.
{. A Sherlock Holmes is not need¬
detect arsenic or malnutri¬
habits of the
Securities business. But it may
tgke the technique of an enquir¬
ing Holmes and the bold deduc¬
tions of many Holmeses to solve
the
case
and explain what is
ed to
tion in the dietary
\
happening.
of course, certain
environmental conditions which
have tended to dry up stock trans¬
actions and encourage the raising
of new capital by borrowing from
Creditors instead of by selling
■;
There
are,
have
Jiue J?
™
would
which
I
not
do
further
ence
trusts
for the
work hardest?
we
need
look
important differ¬
which has contributed to the
rising
dant health of these similar, and ing
up of the stock markets. Buthere may be some who will doubt
somewhat eompetitive fields of
*>nance ^rUrancT Pave
° without
that
a
higher rate of sales com¬
pensation produces a more ener¬
getic business.
I do not need tc
point out to them the high cost
of advertising or the obvious in¬
flux of able young men into the
break from
the
world
she
can
U.
for
S.
goods.
And
remain the best customer
of the
investment trusts and to the dry- •
found in the reasons for the abun-
importance to the United States
for Canada is the best customer in
only by maintaining her U. S.
business of'
export trade which provides her
companies and mutual1
success
insurance
aimcuities may be
you
believe
with the dollars to purchase U. S.
goods.
}
world
a
Annual Conven-
£'on of the National Association
ft S
e cu r
Hi
e s
Adm in4 strators,
Richmond, Va., July 13, 1949.
have tens of, mil¬
has
played
no
whic^x
small part in mak¬
ing the cost of wood more than
twice and often thrice that of ten
years ago.
;Y
The increased investment of the
industry in its woodlands has, or
<
beset by-exchange
course,
been made to ensure ade¬
quate and continuous supplies or
pulp and paper to consumers at
trading problems, the Cana¬ home and abroad. But the extent
pulp and paper industry is_ of these expenditures is farnaturally, not immune from dif¬ greater than ever before for today
ily from $53,000,000 risen
in 1941 to insurance and mutual trust field: ficulties; What "industry would in Canada there are, by and large,
$274,000,000 in 1948? Why, then, but I would like to call their at¬ progress if it did not have its no longer large tracts of accessible
has the dollars volume of sales tention to three small corrobora¬ problems to test, the ingenuity and forests available to produce low
skills of those engaged in it, Yet
on all
exchanges fallen from $23 tive clues::
cost wood for the mills. In short,
,
this industry is a strong one. It the
billion in 1936 to $13 billion in
increasing investment in
First:^ For many years exchanges
is Canada's leading industry being
1948 and even approached $4 bil¬
proper forest management repre¬
have permitted so-called "Special
first in employment, first in total
lion in 1942?
sents a permanent increase in the
j.V;.
;
Offerings" on our floors or "Sec¬
s
wages paid, first in export values,
cost of producing pulp and paper.
Certainly one important differ¬ ondary Distributions" of the floor
first in value of
soared
a
$12,000,000,000 in 1936, to $24,000,-
stead
of mutual trust shares
of
lies in the apparent stability
insurance policies and mutual
trust
shares
ment
when
as
media
compared
of
glance.
gen¬
Yet
scrutiny this difference
not be
reason
invest¬
with
eral investments in stocks.
closer
on
may
of securities dealt in on our mar¬
kets.
These offerings carry "con¬
equal to an average of
about 3% which are paid to mem¬
cessions"
bers who place the
shares. Thes*-
easily grasp the
offerings are only permitted
where the normal market is too
inactive to absorb the blocks be¬
why annuity policies were
ing offered. A market which majr
as
real
We
as
can
it
dian
.
.
ence
and
seems
at first
first
in
capital
production, and
invested. It pro¬
duces three out of five newspaper
published throughout the
world.
The
industry
produces
pages
1,000
types
of
pulp,
paper,
and
paperboard. Some 75% of its total
output is exported. The one-quar-^
ter of its production sold in Can¬
ada would alone make the indus¬
equity shares to new partners. sold in 1936 by advertisements
(Government by .pressure group which carried the then attractive normally absorb only a few hun¬ try a major element in Canadian
demands has led the country into question: "Do you want to retire dred shares a day is found able trade and commerce. In short the
Canadian pulp and paper industry
to take quickly several thousand
on $100 a month?" and are today
I *An address by Mr. Truslow sold with the question: "Do you shares in "Special" or "Secondary" is one of the major industrial en¬
before the 32nd
now
lions of dollars of capital invested
in their woodlands. All of
;■
Industry Not Immune from
"... Difficulties : Z
-
j In
companies
want to retire
Even
on
insurance
$250
a
cannot
month?"
protect
against the changing buying power
offerings. The sales that
a
normal
'/commission^ is too small to pro-
continued
on page
29)
terprises in the world.
It is not through strength alone
Application of Newer Scientific
Knowledge
'
Aside
altogether from employ¬
ment
of
silvicultural
methods,
wood is being increasingly con¬
served by the application of newer
scientific knowledge in our
ufacturing processes.
One mill
now uses twenty species of wood
including the branches and bark.
Another has developed a method
of
treating
substantial
pulp
which
increase
of
gives a
chemical
pulp per cord of wood. Through¬
out the industry progress is
slower
industry will success¬ being made towards a greater util—
(Continued on page 19)
fully meet the challenges of the
tbatr~this"
C
y
Volume .178 -Number 48207
f
THE COMMERCIAL
1
&: FINANCIAL. CHRONICLE
(iei)
- 5
I
i:
3
Steel Production
M WaRer Ofit With
Electric
'
Carloadings
Sidla, Sintns, Roberts
:.
Output
*
u
'
Retail Trade
State of Trade
Commodity PVice - Index
S
Food Price Index
Auto Production
j.
and
Industry
7
«t
By A. WILFRED MAY
V>
Investment
Business Failures
Companies—The New^InduMry^^
j ust-issued : 1949' edition v of •: "Investment Companies" 1>y
Arthur Wiesenberger ('Arthurs Wiesen berger
€04 New York City*
The
;
is particularly important now because of the activity
in the mutual funds area of Wall
Street.
This singular dynamism, in contrast tj
falling off in the week past and it continued to be somewhat under the. long-continued depression elsewhere in fi¬
the high level of the corresponding period one year ago. -•*;
nance, is significant, not only quantitatively be- ,
'
'
Unemployment in the week! ended June 25 gained ground with cause of the quadrupling since pre-War of the
companies' assets ahd shareholders, 1
total claims for unemployment insurance reported 4% higher. It con¬ open-end
tinued to be substantially above the low point of the* like period but even more so qualitatively because of the
sorely-needed new community Of middle-income
..of 1948.'
;
j
investors which is thereby being introduced into Employment in the steel industry declined during May, but re¬
securities-ownership.
I.
mained slightly higher than in May, 1948, according to the American
The book is valuable in enlarging the pub¬
Iron and Steel Institute. The total employment figure was estimated
lic's as well as the experts' opportunities for
Walter E. Olin
; Jerry C. Vasconcells
at 637,400 in May, compared with 646,600 in April, a reduction of 1.4%.
the long-term investment opera¬
The,estimated total payroll for the industry in the first five scrutinizing
i"
DENVER, COLO.—Jerry C. Vasmonths of 1949 exceeded $979,000,000, an increase of nearly $105,000,- tions, techniques, and results of skilled and ob7
concells
has
become
associated
jective practitioners; Also in both its approach
000 over the corresponding part of 1948.
7 with Sidlo, Simons, Roberts & Co.,
and general running commentary the work re-j *
First
National
Bank
Building, 7 , The average hourly earnings of wage earners was $1,697 in May, fleets the investment community's
ever-increas-j
compared With $1,688 in April and $1,577 in
336 pp.,
With several plants closed forthe July Fourth week-end, total
industrial production for the country as a whole reflected a moderate
-
which
$15)
uniquely, occurring
is;
1
.
•
„
•
t
the
of
members
Chicago
Stock
Exchange, as Manager of the trading department.
Walter E. Olin
-
has
also
i
the
firm
-
Mr.
associated
become
with
May, 1948. Wage
earners
hours of employment per week in May was 37 hours, com¬
pared with 38.5 in April and 38 hours in May, 1948.
The threatened strike in the steel industry, now more than just
average
subject for speculation, is serving to intensify uncertainty in the
markets, says "Steel," the magazine of the metal producing and
metal working industries. Walkout of the steel workers looms men¬
acingly as a result of the deadlocking of collective bargaining confer¬
ences between U. S. Steel subsidiaries and the United
Steelworkers
a
representative.
was
formerly
sales
as
Vasconcells
'
President of
7
associated
been
•
Vasconcells, Hicks &
Co., with which Mr. Olin had also
since
that
firm's
organization in 1931.
is
It
i
that
understood
Vascon-
cells, Hicks will become inactive
-
but will continue in existence.
Edmund
Whiting With;
Edmund A.
of America
(CIO).- In event a strike is called 189 companies and over
500,000 workmen will be involved immediately.- The number will in¬
as contracts with other companies expireP
v/ -
crease
Whiting has become
detail toward explaining the broad aspects of
Whether there will be actual work stoppage in the mills over the
week or so still is uncertain. The union's future course will be
A. WUfrd Mar
investment companies
-—their
origin, history, growth, and various uses by investors;
systematic methods of investing through employing investment com¬
pany issues; technical angles as leverage, use
b.y fiduciaries^ ap¬
praisal of management, tax aspects and Government* regulation., A
special section is devoted to the 1948 year-end portfolio holdings :of
56
;
of the leading funds.
In
various
elements
edition
berger's 1949
surpass
7."''
'
"
V.
size, does Wiesenhis previous issues.
It is a complete
other
"
next
Walston, Hoffman Firm
I.
steel
ing yearning for escapism from investing worry
and the desire for defensive situations.
7
This study devotes considerable space and
than
enlarged
manual, whose re-writing includes all of the
determined on Tuesday of this week when its Wage Policy Commit¬ past year's developments and their significance.
Furthermore, " it
tee meets.
However, under its contract with the steel companies it contains charts and graphs of greatly improved clarily and general
can call a strike in event there is no agreement on the issues raised
quality..
'
,
revision
of
the
1948
,
by July 16, "Steel"
Consequently, since U. S. Steel has turned
says.
down the union's demands a strike would seem to be in the cards.
The
;
CIO
Union
Steelworkers
has
mentioned
20
cents
hour
an
As it stands, the work represents both a most useful hand-book
for the use of dealers, ^nd for the public at the consumer level a
guide as to whether they should embrace this medium and subse¬
possible fourth-round wage raise. This figure is not a formal
quently for selection between the various funds.
7 '
demand, since the steelworkers in asking for higher wages have an¬
nounced no specific amount.
'
.
'
Selecting from Past Performance
f
members
of
Should a strike be called, the hope is held out that President
New
7 ."For the benefit of both these groups the "past-performance"
York
Truman may step-in, effect a meeting between, industry and union
Stock
Ex¬
demonstrations have been pointed up.
As a matter of fact, the
representatives aimed at extending present collective bargaining con¬
dependence of the entire industry on the demonstrated record of
change, in
ferences for 60 .or 90 days during which time the strike would be held
the i r- New
comparative results—down to the last percentage point—seems to
in abeyance.
(According to reports, President Truman sought on be
York office at
greatly overdone. * Of course the justification "if not this, what
Tuesday of this week to prevent; a steel strike through an agreement else is there.to use?" is
35 Wall St., as
unanswerable, but this does not supply
by both sides to continue operations 60 days. But the United States
a
logic or practicality in correlating management quality with past
registered
Steel Corporation quickly rejected the proposal because it did not use
speculative performance, or of—a la horse-race doping—projecting
representative the
procedure of the Taft-Hartley Act.) In view of deteriorating eco¬
past performance into the future. If one believes, as does this col¬
specializing in nomic conditions over recent' months it is believed
by some trade
West
Coast
umnist, that the attainment of capital gains in the market is to a
authorities the union would be i agreeable to such postponement of
securities.
large extent fortuitous, then past performance cannot ordinarily be
action.
•
:
•''■■■<. 7 V",V.
extended to the future. Moreover, breakdown of past records shows
Mr. Whiting
war
great variations in the comparative performances in accordance With
formerly
There was a revival in buying of several major metals last week
the different time intervals that could have been used.
Then too,
in the trading
resulting in the price of copper advancing to 17 cents, an increase changes in management personnel and investing techniques can
department of
of I cent, and leaving lead in an equally strong position, despite no
render past results obsolete.
Edmund A. whiting
This is [ recognized by Wiesenberger
New York ofprice hike, according to the weekly market report of the "Engineer¬ in omitting the records of some trusts on this ground stated as fol¬
v
rv
>
fice of Kaiser
ing and Mining Journal," McGraw Hill publication.
;
rlows:
"As a result of changes in management and/or investment
& Co. and prior thereto was trad¬
"Large copper producers continued to hold aloof, leaving-the policy during the period, long-term results for this company lack
ing manager for Peter Morgan &
associated with
Walston, Hoffman
&
Goodwin,
as
a
.
-
.
-
■
-
..
market
Co.
Halsey, Siuart Group
Offers G. & Q. Equips,
Halsey, Stuart
associates
were
& Co. Inc.
and
light.;
of the custom smelters and
less in the hands
or
July 12
and Ohio
Railway third equipment trust of
1949 2%% serial equipment trust
■''■v--'"'
-
■'
*
some
Fund
constituted."
currently
as
(Continued
is cast in steel for
The die
We
pleased
are
31)
on page
i
;
2.55%, according to maturity. As-
"
sociated
;
;
We
the
in
offering
were
pleased to
are
&
Co.
Inc.;
Gregory
&
-
effective July 1,1949
!.
Members New York StocJc Exchange
DIRECT
PRIVATE
WIRE
to continue
7 to
R.
-7 s."
george a. Mcdowell & co.
W. Pressprich & Co.; A. G. Becker
announce
duPONT, HOMSEY & COMPANY
the installation of a
announce
to
the formation of
1964,
were
7.
34)
long fight and if the steelworkers
a
(Continued
inclusive, Tssued under
plan, the certif¬
immediately reoffered
subject to authorization by the
Interstate Commerce Commission,
at prices to yield from 1.10% to
1,
icates
on page
less
validity
been
SCHEDULED TO
don't strike late this week they may walk out later unless some sort
the Philadelphia
have
must
27.1% ABOVE PRECEDING PERIOD
RISE
certificates,
maturing
$133,000
semi-annually Feb. 1, 1950 to Aug.
•
There
■:777"v..
■"■■■
■
indication of the performance of
significance and are not a valid
the
drastic management changes in additional trusts where the
*
STEEL OPERATIONS FOR CURRENT WEEK
awarded
Chesapeake
$3,990,000
.
more
producers," says the article. "Though lead was equally as strong
as copper, the price was unchanged all week at 12 cents, New York."
Because of the increase in buying in the other major metals, the
sentiment toward zinc was a little better, even though buying was
small
Member* Detroit Stock Exchange
Son,
BUHL BUILDING
\;
.
"
;
7'
"7
.
the general investment business
of 7, • ,7.. 7
'
77'"-
;
duPONT, HOMSEY COMPANY (a corporation)
7
Inc.; L. F. Rothschild & Co.; Freer
&
man
Co.;. Mullaney,
DETROIT
Wells &
.«
'
\
-
r
•
;
I
-V
1
■
....
26, MICH.
7
.
ANTON E. HOMSEY (Boston) Exchange Member
; Co.; and Wm. E. Pollock & Co.
,
Inc.
SAMUEL E. HOMSEY (Wilmington; oei) Limited Partner
■
•%
; Clarence N. Myers
'
;
■
<
'•>*
..
:
r
,
-
*»
'
*
> > '
z.
>-^
\
"*
Jt
V
■
-■
r
t
't
" "u "• 1
*
- r*.
*•
■
■
-
7
-*-'77
EDWARD'F. HORMEL (Boston).Genera! /arlner7
•7.7. 7;
\
-
:
-
BROKERS * DEALERS
•
*'
jr.
and other leading exchanges *
UNDERWRITERS
(Special to The Financial Chronicle)."'"'
HUTTON
1
ESTABLISHED Em>
Members New York Stock Exchange
7
7
,
E.
'
*
'
With
[First of Michigan Corp.
—
F.
.7.777.7777777-7'.-"(
t
VICTORINE duPONf HOMSEY (W/fm.nsLh; Del.) Limited Partner
"
31 Milk Street^ Eoston.9x
77
7;;:.
r7Telephoni—HAncocK 6-i>2G(/
s.\
'
;
"^
77 r 95 State Street, Spnnf«reldr3i'-Masn^-C
7
f
J 1
*
*
-
N.
ILL.—Clarence
CHICAGO,
T«i«phon« 2-.4-J
NEW YORK
;
Myers has become associated with
First of Michigan Corp., 135 South
■*.
'
La
-
Salle
formerlj'
Street.
a
Mr.
Myers
principal - of
Brophy & Co.
.
was
F;
J.
-V
CINCINNATI
-
Private Wires tot
*
•
■
-
'
.
Baltimore
Easton, Pa.
Louisville, Ky.
•
,
r
,
Boston
Lexington, Ky.
Philadelphia
[
'
Ix>* Angeles
r
*
Teletypewriter;
*"-*■ 7
Dayton
Chicago - "
•
^
Portland, Me.
"
Lewis ton, Me.
San Francisco
LS424
•
f
^
■
•-
r
Private wire to New York
:
.r
r
CAna.e-;tOO
6
(162)
COMMERCIAL
THE
InveJcrs and
&
FINANCIAL
CHRONICLE
Managers—Forgotten Men,
|
By EMIL SCHRAM*
\
.
Thursday, July 14, 1949
From
•
Washington
President, New York Stock Exchange
Ahead
Mr. Schram, in calling attention to government publications
extolling American living standards,v de¬
plores neglect to mention part played by investors and managers. Says it is popular delusion that busi¬
prohts and individual incomes must be siphoned off in taxes, and contends present tax structure,
designed to narrow rewards of risk taking. Points' out functions of capital markets in treating
jobs, and advocates eliminating unjust taxation on dividends and lowering of capital gains levies.
ness
4
of the News
By CARLISLE BARGERON
seems
<s>-
to
This statement recalls the signifi¬
cance of your
meeting today. At
hope
that your in¬
say,
we
stitution
of
to
ican
and
i t
point, I pay
inspirational
the
s
serv¬
great
Amer¬
career
ice
this
will
continue
rence
business
the
long,
over
over
-iere
Amer¬
ments
ture
Mart,
housing so
mine,
com¬
and
petitive prod¬
ucts, is typi-
Schram
*
cally American.
It would be in¬
totalitarian state.
a
than
markets
Why have competition in the
making and selling of home fur¬
nishings, of refrigerators, washers,
toasters, radios, and television sets
when a committee, a bureau or a
board could decide which of these
of
and
in
ican
the
for
freezing
ice cubes.
for
her.
icans
to
and
It
preparation
shops make
cried:
She
"You
products is most suitable for the
right.
committee,
the bureau,
would establish
board
system
and,
prevent the
ing
presumably,
consumer
mistake.
a
The
the
or
a
of
not
ing,
seem
a
liberal,
adults
think
can
for
themselves.1
They must have the right to be
wrong.
There is a line beyond
which the community cannot step,
The individual must be permitted
to
exercise choice.
Otherwise
will
he
lapse into the status of
pawn in the hands of the state.
Undoubtedly
tices
of
items
you
have
a
we
were
in
phlet/ It.
seen
no-
for
more
industry in
a
without/the central char¬
industry .has
"The
Gift
subtitle
is
under
that
popular delu¬
profits and
a
business
individual
incomes
must/ be
siphoned off, the quest for secur¬
ity is accentuated. The most es¬
sential
difference
between
our
generation, that is, those who
member
of
and
"A
world
those- who
note
Study of the Economic and Social
Status of Wage Earners in the
the
followed,
confidence
of
of
sence
before
despair
period.' r *
the
is
the
the
and
in
re¬
1914
ab¬
earlier
■'7-*.
*
United States."
The study deThe reasons for the search for
scribes the working people of
security are varied. The need ii
America, living standards, distrito counteract the tendency..
In¬
bution of the working force, so©f button shoes.
There is waste cial security and labor organiza- stead,, all of the forces of gov¬
ernment and labor seem to
b'
in not enjoining such
activities, tions, and throughout emphasizes,
lined up to narrow the rewards
but the waste is as nothing com¬ above
all, our basic* civil rights.
of
risk-taking.
The end ; result
pared with the atrophy of inquiry, Much space is given graphically
adventure, and experimentation to the food, clothing, and appli¬ may be more security, perhaps
where
are,
efforts
on
and
di¬
ances
rected and controlled. Even where
home
beginnings are. made with good
intentions and there is no thought
worker
of
centrally
are
encroaching
liberties
on
of
furnishings
the
average
what he
and
terms of
or
human
-
but
in
the
American
can
trying to square
to change the fig¬
ure
of speech, to have a perfect
defensive team, but without the
the
Evidently the pamphlet will be
dignity, the chain of re¬
actions leads to the kind of thing
used
portrayed with graphic and almost
shows the rise in real
wages and
reduction
in
hours
of
factor^
terrifying penetration in George
Orwell's
new
devastating
book,
"1984,"
a
indictment
of
the
servile state.
It is
so-called
a
accident that
"utopias"
democracies.
elite,
no
are
never
Always there is
an
group set above the ordi¬
nary man and woman, which acts
as
a central
intelligence agency.
It
is they who will
decide what
is best,
what products should be
produced,.. expanded,
curtailed,
in translation and is
distributed
broadly.
A
to
;
...
workers
could
factory
buy
worker
twice
Reference
is
made
in
who
Tax
are
or,
and
can
speedy
score
and
most
has the
dustrial plant in the world.''
in¬
Un¬
der
runs.
on
Capital
structure's
mirrored
in
effects
the
are
capital
";.-i ''
It is quite clear that the capital
markets
not
are
functioning
the maintenance
well
today as
o>
dynamic
economy
demands
against 192-3, a year
which economists regard as a time
of balance in the general econ¬
Measured
"high levels of productivity,*'
introduced, or suppressed, in ad¬ one significant sentence
may be
dition to determining the ethics
found: "Thus, it may be said that omy, activity in each of the past
two years has been less than oneand religion, always in the best
the most imoortant factor in the
interests
of
their
question to which
wards.
•
The
satisfactory
answer
is ever
given is, "Who
selects the elite, or, when society
plays the hangman, who is the
hangman's hangman?"
no
expansion of production has been
the increase in output
per manhour which
improvement
improvement of old products
of
the
American
Investment
a
of
of
the
American
Furniture Mart, Chicago, 111., July
12, 1949.
~
stocks,
and
e£forthatoeexplairtordoubters 'and
misinformed
at
home
omits—any
business
and
tribute
and
to
American
businessmen.
which
1926.
Dealings in
not
only
reflects
volume
of
trading,
but
share
prices, have since 1931 failed to
equal the 40% of national income
which
and
*An address by Mr. Schram at abroad the
gift of freedom. I take
dinner
commemorating
25th exception
only'to what the study
Anniversary
fifth of that of
they represented in the
reasonably
normal
year
1926.
Current
stocks
the
;
expansion
Managers
Forgotten
i
are
scene.
and
the facilities for production."
New products and the constant
symbols
has accompanied the
American
investors
This oversight
that the report of the
high
are
yields
another
on
common
indication
of
tor
of
Hickenlooper has performed
"incredible mismanagement"
cal exaggeration./,
public service and that his charges
were no more than the usual politi¬
a
'
v
j">//
v-v
■" ////,!-.}
appraisal of the Left-wing and Liberal col¬
umnists. From almost the outset they have been chorusing that the
Senator's charges were a dud and that his political career is virtually
at an ond, that he will be defeated when he runs for reflection next
year. -One Leftist cartoonist>in a highly influential- Metropolitan
/.'
But this is not the
portrayed
Hickenlooper's
Republican
quite
inspired articles in the Eastern Metro¬
under Iowa date lines saying that the Iowa voters are
press
over Hickenlooper and that the Republicans of this
Republican State may evenr deny him the nomination
normally
next year.
Not having been out in the State where the Tall Corn Grows
sometime, I cannot refute these articles. But it strikes me as
amazing that with all the problems they have out there, the daily
business of making a living, worry about the Cold War and high
taxes, the weather and strikes, that any considerable number of
people would be wrought up about their Senator's charges against
,
for
Mr.
Lilienthal.
The
latter
is
not
to
dividends
1932.
has
been
equal
to
occurring between 1929 and
Examination
(Continued
of
data
on page
30)
over
-
.
Iowa
an
boy who
East and
came
made good and in whom there might be a lot of State pride.
Some-;
how, it is tremendously difficult for me to visualize those good Iowa
citizens, preoccupied as we. all are/with matters far more pressing,
gathering in their various assemblies, or shouting to each other
across the fence, about what a terrible thing their Senator has done
down in Washington.
,
.
Yet I
have
doubt
that
by the time his campaign comes up,
this will be about all the voters of Iowa will hear. Undoubtedly it
will overshadow the Brannan farm plan, the housing program, sub¬
sidized
right
no
medicine.
The
Senator's
attitude on these may have been
But he will have committed the unpar¬
the Iowan's alley.
up
sin.
donable
He
challenged Lilienthal.
)
The fact is that he not
only challenged the atomic chairman. He
brought the operations of this hush-hush agency into the open.
He has just about developed, in fact, that there is little about the
agency that should be secret, that Mr. Lilienthal and his colleagues,
-
has
themselves,
have
not been worried about secrecy except to the
The mystery of the great atomic bomb is fastly
American taxpayers.
is
It
powerful
than
a
tremendously devastating instrument
war.
blockbuster,1 of
as
were
One atomic bomb is far
more
but the bunk about the
atomic bomb blotting out whole civilizations has been
fairly well
dissipated.
In fact, in the course of the Lilienthal-Hickenlooper
hearing,
one
ing again with
none
decided
A
on
the
hysteria in which
come to
already has been
the
on
were
predicted.
Senator's part
has
;
been
•
the
the part of Mr. Lilienthal in the matter of
He has
decrying the hush-hushness and deprecating
contemplate the bomb.
we
responsible for this
Certainly the
hush-hushness
for
or
their
hysteria.
near
I
can
appeared
recall
in
only
the
a
relatively few
rotagravure
sections
guards emptying the waste baskets.
required to look
and there
Iowa
this
Senator,
handsome
in the
,
to
intense
They
don't
built
contracting firms
No
ably suspected
one
"incredible"
as
much.
when
the
atomic
was
fees
from
have
the
learned,
spending
and
larger
sold
on
turned
than, it
as
energy
waste
baskets
reason
a
/
thanks
to
high, wide
their
/ j
the
and
management
costs
to
run
any
they pleased—no check
to question their
only
pictures
that they did this.
we
cities
was
The
ago
direction
they bought and
appropriation.
constitute
at
months
depicting
The guards, we were told, were
see
secrecy,
the commission
basis.
them anywhere.
annual
opposite
other guards to
were
Behind
on
way
of the lasting effects which
secrecy.
public hasn't been
a
Hiroshima is also reported to be flourish¬
accomplishment
complete turn-around
near
course,
Army expert has testified that
an
comparable city;
that
running
as
1
annoyed
over
decline of the past
in the ratio of price
colleagues
;■'L;;:V"
There have been several
*
politan
apathy in the capital markets
The
years
]
.
These things taken into consideration, it would seem that Sena-'
three
sharp
com¬
a
Appropriations Committee has already taken steps towards bringing
the agency's expenditures under a closer view of Congress.
V •/f
ac
a
to become
up
Chairman guilty of any
time it will contain quite a few recommendations
designed to prevent
the Commission from
continuing to run hog wild. Indeed, the Senate
found to treat the victims.
)'■
shaped
"verdict" in fact, will not find the;
"incredible mismanagement," but at the same
wearing off.
markets/'
i
efficient
tax
vivdly
one-
place
runners
Markets
in
week.*'
base
Structure's Effect
The
1947
or
mittee, not
the blockbusters used in the last
"The
as
one
the fact that America
"largest
batters
chart
in
much
as
1909 and he had 11 hours
fifth more
leisure each
to
be
we
circle,
1909-1947, and below the
chart appears this sentence:
average,
a grave cost
in economic
social
improvement.
I arr
afraid
buy in
hour's work.
an
was
"trial" before the Joint Energy
a
It is understood
Carlisle Bargeron
at
and
of
with
from him in embarrassment.'
Today,
>
?
most
the
charges
The "trial" is now nearing its end and the
committee will in due time render its "verdict.", j
paper
sion
his
and
-
Hickenlooper in the role of
prosecutor and Lilienthal in that of defendant* }
made
under the im-
called
less of
or
Commission
of
their face,1
products of no utility—devices for
manufacturing ice in the Arctic
regions, or for better buttoning
which
of think¬
than' a
way
money and was willing to accept
the risk of failure.
appears?
The
dis¬
.American
acter.
ultimate values
the
is
out
reference to
Hamlet
print of the Bureau of Labor Statistics of the United States Department of Labor. The 142-page
pamphlet
new
critics
mismanagement" resolved tne issue
between him and the Chairman. Rather
one
more
for¬
study of the worker's position is
equivalent to a performance of
of human freedom and dignityM
Recently the government published a,.most interesting parri-
Freedom."
applications
patent
thought
the
be
the
my
man¬
point if they
necessarily less
interested
We say, in
democratic
society,
To
leave
to
and
number
ference
ways.
to
under
men
casual
of people missed the
our
citizens
the prod¬
are
investors
seem
pensation.
ways
desire for bet¬
greater
consumer, would know best,
That is the essence of the dif-
in
in
possible the high standard
living which the worker en¬
joys only because someone was
willing to back up his ideas with
our
a
who
gotten
refrigerators., are used' in "this
country than in the" rest of the
respect to
ter. things for
these
agers
old."
I suppose she is
The fact remairis that more
mak-1 with
bureau,
the
of
uct
rating .world combined..I know also that
would those who are apt to be scornful
from
the average
really awake. These
centuries
purchaser's purposes and has the
greatest
esthetic
appeal?, The
in
Amer¬
always thinking of
make yesterday's product
are
foodstuffs
the
unusually, the matter
recovery
other countries rub their eyes
amazement to see if they are
of
just too much
was
of
array
of
was
"incredible
into
The marvels in every fiveand-ten-cent store and a bewil¬
storage
compartments
the
aggressive
tries.
families—ingenious
arrangements,
to
way
question of his confirmation
man¬
higher standard of livinggoods at lower prices, a con¬
cept entirely alien in many coun¬
the refrigerator was al¬
universal use by Amer¬
most
the
the
sends
Britain
a
Britain dering
to
world.
when
before the Senate several months
ago.
But Hickenlooper developed to be
more
of
i'
;
..
.
thal
envied aL.
parties of workers and
executives
more
words
any
the
and
to study our methods.
In
Italy, Americans find it desper¬
ately hard to explain to Italian
your
story
admired
agers
accomplish¬
A
-act that
conceivable in
free
of
.
j
the
young * lady f from
:ould not quite get used
.
Emit
tell
Whiting's
eloquently
at
ago
years
would
General
Furni¬
many
25
and
jpening
The
General Lau¬
Whiting, who for 25
Senator Vandenberg was quoted as having ex¬
pressed regret that he went to the bat for Lilien¬
business
production and distribution
are
H.
has been at the helm of the
A description of
merchandise offered for sale
the
a
time.
ican
that
institution,
-
American
Energy Commission. .As a matter of fact, the Senator has r.ot been
die only critic of the atomic energy chairman.
There was quite a
flare-up severaUweeks ago when Lilienthal de¬
fended the Commission's action in granting fel¬
lowships to three Communists. ' At that time, even
created the organization meth-
eds-of
respects to
leader of this
my
years
long
revealing.
has
Furniture Mart.
con¬
for
sumer
is
Leftist propaganda is the tilt be¬
Hickenlooper and Chairman Lilienthal of the Atomic
tween Senator
The citadel of capitalism, as the New York Stock
Exchange is sometimes called—and I
hope a compliment is implied—congratulates the citadel of the home furnishing and home
appliance industries, the American furniture Mart, on 25 exciting useful and fruitful years,
needless
fine example of organized
A
the
near
billion dollar
Senator's
mismanagement is
because
revelations
we
prob¬
Volume
170
Number 4820
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
Impediments
Bank and Insurance Stocks
(163)
to Free Flow of Risk
Capital
By HAL H. DEWAR*
By H. E. JOHNSON
This Week—Insurance Stocks
Although 1948
\
tory
of
fire
was
of the
one
insurance
most
profitable
IBA
in the his¬
years
v
However,
the
President, asserting need of revitalizing capital markets
operations,
so that risk
capital may again move freely at
unrest and over-emphasis on economic security at expense
importance of sound economic
education, and deplores unfriendly attitude of Ad¬
toward business as
defeating role of risk capital Says Securities Acts should be liberal¬
ized to promote
capital flow and urges better stockholder
relationships.
I
ministration
as a result of the recent
changes in the price situation
generally, the nature of the earnings
is likely to be changed
considerably."
declines
this year
President, Investment Bankers Association of
America
Partner, Dewar, Robertson &
Pancoast, San Antonio, Texas
% freedom. ^sc""es impediments to world
fIr jrice*
of
Stresses
present prospects are favorable
and results for the current
period should be equally satisfactory.;
and
in
business
As is generally known insurance
company earnings are com¬
posed of three principal elements: (1)
statutory underwriting profit;
(2) increase or decrease(in the equity of the unearned
premium re¬
„
^ should like to
Y? ?r^
I/r
iy •
add that these
,,
Unn
That
unearned
premium
earnings and reported
is
reserve
added
the
to
adjusted earnings.
as
reported
.
.
j
thoco
rl
m
"Under
The
a
Equity in
Adjust.
'.
banking
Under-
Net
Net
writing
Earnings
Invest.
Before
Income
Income
Taxes
Profit
Aetna
"
Fire
Continental
Fireman's
Great
Ins.
$3.82
' ;u
Fund-
>
•
1.26'
2.43
:4.67
Am.
$6.28
3.21
> ;
2.71 U a
4.37
■-
2.41
$1.04
5.12
6.09
$8.66
1.11
26.99
7.06
7.49
16.10
20.90
;•
Earnings
8.60 *
-
4.17
t
9.04
Hal H.
,
Operating
Taxes
-
S9.70
.4.13
;/
8.30
2.09
6.88
$3.42
-
4.47
1
/ 5.87
/ 14.02,
Co. of No.
$2.46
'*
:
American—/.';;f. fd.62 >
Hartford
Ins.
Reserve
12.47
1.61
"4.58
5.57
21.42
2.52
-
10.86
0.54
i
13.58
This
reserve.
-Since the end of last
reserves,
r.
;
'-■!' -7"-' '////./V'';"
-
business and prices have hoon declin¬
ing. This will affect insurance operations in two ways. First of
all,
losses will be settled, at lower
prices; which in turn should benefit
underwriting operations. Second the premium volume should tend to
r
year
level off and may possibly show declines in
some
reflect lower valuations
well
of
s
//:X;v^//
prices.
and
inventories
as
cases.
This would
the
lower level
as
/K /'•
:/.
r
reser-
'
' sound
So
Thus the leveling off of premium volume would mean no further
increase in unearned premium reserves. Consequently there would
nbt be the adjustment to
satutory earnings from this source as there
has been in the past several
years.
However,
favorable underwriting conditions and the
Dewar
free
a
the full effect of the
unrest.
that
'
.
higher tax liability will arise from
going to
talk
to
you
though
as
you
of
our
hands
problems
of
the
hands
of
is partly
in the
business,
mostly in the
government.
I
and am thankful that the
and
is made for taxes
not
necessarily
increase
an
in
under¬
this amount, the earnings might be considered
to be overstated to the extent of the tax on the unearned
premium
the
Contrariwise, when premium volume is declining,
liability is greater than adjusted earnings would warrant.
tax
This factor
ance
should
companies.
be
realized
':'//•.
when
computing earnings
v//
■
of insur¬
//>/
;
■
tax
a
as
ing about
Most of these pamphlets are
and most of these
diffusion.
Here
The
;
is
what
should
in
are
by world
hand
with
the social
words
this
and
ideas could produce
a
psychological factor,
panies
years
the
the
in
gain
statutory
realize
attitude
steeply graduated in¬ operation. -But the need is very
way of bring¬ great, and the leaders of industry
and finance should
social State.
type of economy which total
of
see
it.
consider their
dividend
policies.: Whereas,
in
ourselves to this forum
an
is
of
one
problem is
war
so
tied up with sound
economic security. - Economic se¬ public education effective.
Tied
curity has an important function in with this is the great need for
in a free
economy, but when se¬ the various elements in our indus¬
and
curity is placed above freedom trial
financial
greatest weaknesses. You are
influential segment of both the
public and government itself, and
so
I should like to pose our
prob¬
and ask your cooperation in
v.
i
■
/■'
■
grade.
Capital Markets Need
"
*A
talk
security.
this
Annual
tional
Convention
Association
Administrators,
of
the
industry
Na¬
Richmond,
timewise,
finance
and
to
educate
There
are
The next is
way.
public along sound economic
are
thousands of such
hearing
the fact
of
authorship.,/Scarcely
that some pamphlet
passes
our
and
tax
not
specialize in and offer
reserve
has
accounted
substantial portion of the adjusted earnings, this year
Any
structure is
(Continued
child
knows
on page
pressure
conservative
creased in
a
for
for the purchase and sale of
a
With the
INSURANCE STOCKS
capital funds relieved and investment earnings steady,
on
payments of the past several years should be in¬
number of instances.
Our annual
Joins Ames, Emerich Staff
(Special
to
Financial
The
CHICAGO,
Watling, Lerchen Adds
Chronicle)
;
ILL.— Sterling
4
A copy
(Special to The Financial Chronicle)
W.
with
Chicago Stock Exchange.
■«————
Ford
Two With Bache in Chicago
)
(Special
to
The
Financial-
CHICAGO,
ILL.
Crawford and
have
Street.
Thomas
H.
associated
'
Detroit
"
Stock
Ex¬
with
was
1
Gross, Rogers & Co.
(Special
;LOS
to
The
Financial
■
Chronicle)
ANGELES, CALIF.—Stan¬
ley M. Briggs has joined the staff
Rogers & Co., 458 South
Ames, Spring
Street, members of the
Los Angeles Stock
Exchange.
previously
with Cruttenden & Co. and
Emerich & Co.
With
.
will be
group,
now
of the
available.
sent to you upon request.
Blyth & Co., Inc.
,
B.
135 South La Salle
Mr. McKee
and
changes.
McKee
a
Watling, Lerchen & Co.,
I^ldg., members of the New
York
Chronicle)
Edward
become
Bache & Co.,
—
comparative analysis of
country's leading insurance companies is
DETROIT,
MICH. —Hugh
A.
Pratt has been added to the staff D'Arcy,
Constantine
Eugenides,
of Ames. Emerich & Co.,
Inc., 105 George W. J. Linton and C. A.
South La Salle Street, members Smith, Jr., have become associated
of the
facilities
few
practically all
statutory gains.
as
our
of Gross.
New York
Boston
Detroit
•
San Francisco
Springfield
•
•
•
Minneapolis
Philadelphia
•
Houston
Fresno
•
•
Eureka
Chicago
•
*
Pittsburgh
Dallas
•
San
*
•
Portland
Jose
•
Los Angeles
•
Cleveland
•
•
Spokane
Pasadena
•
Indianapolis
•
Seattle
•
•
Sacramento
San Diego
you
economically
day'story of the killing of the
a
or some
any¬
subject
a
great deal about—
a
that
attempts, and that is the trouble. politically
is perhaps too much pride designed.
,Va.,
We
united
*
There
July 12, 1949.
com¬
past
a
a public education
Effect of Tax
Structure;
of herculean proportions
: I, shall mention
the other im¬
is indicated.
;
~
pediments to the flow of capital
; At this point, I should like to
briefly so as to keep this talk in
say a word about the attempts of its proper sphere
Securities
of
present
To tackle
problem,
the lines.
by Mr. Dewar at
and
program
the
;
The institutionalization of problems
savings with its dangerous social front in their social and political
trends and the corollary
emphasis endeavors. The fact that they have
on
debt
financing are on out¬ not done so is another source of
growth of this increasing desire great comfort to the enemies of
for economic
our system.
v
Revitalization
community
jointly to work out their internal
that free economy is on the down¬
lem
satutory underwriting earnings have been relatively small and
equity in the unearned premium
underwriting earnings will be reflected
the
the
,
government;is- conditioned by effort made necessary—has come public education that we will not
public opinion, and the fact that another basic
impediment.' I am have a solution before it is too
we
have not properly addressed
talking about the emphasis on late unless business can make its:
underwriting
could be of considerable importance when
year
are
co¬
one sure
the tax liability will increase substantially over that of
Adjusted earnings however, should be near those of last
year even after allowing for the increased tax liability on the gain
expected in statutory underwriting profits.
a
a-,
really effective- program, and the
ideas
few years,
last year.
As
done!
leading sponsors should in- ,1
an organized effort
to pool
projects.
Careful editing of
all
/// As premium volume will probably level off this year and earned
premiums will increase as a result of the large volume of the past
earnings this
be
I hope you will
Perhaps out of this feeling of
forgive this
world
unrest—certainly out of the digression, but the answer to our
on
portion.
reserve
ex¬
are
come
tal
from
engendered
Hand
called for
securities
and the remainder is
on
country.
system.
You well remember that racies and promotional
profits
Karl Marx, over a 100
years ago, very potent enemies of such
were
part of pur industry.. The solution
markets to the end that risk
higher total earnings.
The unearned premium reserve
adjustment is a method of esti¬ capital may again move freely
and at a fair price.
mating earnings used by statisticians and financial analysts. Inas¬
This means a
much as the equity in the unearned
premium reserve is not con¬ fair price for outstanding securi¬
ties as well as for new issues. Obsidered earnings for income tax purposes and because no
provision
earnings
this
taxes, which kill the
1 In its simplest terms, the prob¬
lem is a revitalization of our capi¬
The
appear
in
incentive to Perhaps such a suggestion is naive.
employ venture capital, are very I realize that pride of
authorship,
comforting to the enemies of our some trade association bureauc-,
I know that your group is
par¬
ticularly interested in the welfare
of our business; so I am
the favorable results of last year,
writing
desks
creeping in on us and net cost would be a great deal less
undermining our free institutions. even though the combined project
For
example, high
peacetime would be tremendous in scope.
its solution.
j
ecutives'.
First of all, and perhaps basic, itiate
world unrest
an
high volume of the past
statutory underwriting earn¬
ings. These earnings-are expected to be sufficient, in most cases, to
provide for a higher tax liability and maintain per share results near
several years would be reflected in the
*
<
enterprise doesn't
over
is the fear
econ-
h/iT/:/:;..;:://''y omy/ and
our
I
.
for funds to support a new
movement to tell the story of free
familiar ground, to
enumerate them.
\
~
'
'and
s
'!
equity in the unearned premium
also true of the prior years when
premium volume
was
increasing resulting in larger
..
enterprises, and ad- request
of going
closely tied together.
year was composed of the increased
...
ahd I should like, eveh at
the risk
i
effective in¬
vestment banking mechanism are
As can be seen from the
foregoing a considerable portion of the
adjusted underwriting earnings as well as of total earnings for last
was
sys¬
enterprise.
Federal
Premium
.
good,
projects are
worthy; but they are not doing an
ate fnany impediments
confront¬ effective
job, and it is easy to un¬
ing the solution of this
problem, derstand why. There is too much
the welfare of
Unearn.
writing
i
proper
/reach
•
-•-
,
Under-
new
com-
.
-
>
••
is to start from
following breakdown of earnings for 1948 by Geyer & Co.
'
1
_
r
viously,'
tem if the flow
.
group of the leading companies illustrates this point:
x
„
v o
of
1 •
our
modern
considerable.
was
.
cl it ions to
old, which are needed
plex economy, 'to keep our
economy dynamic,
capital must cSniiot
be
financed
if
present
be
channeled equity securities are
selling far
through an in- uhder the replacement value of
vestment the assets they
represent.
There
statutory
1
increase in the equity of the stockholders in the
unearned premium
reserve.
In some cases the
statutory underwriting results showed
losses or only small profits. At the same time
equity of the stock; holder in the increase in the unearned
premium reserve as a result
larger volume of business
,
well.^—
During the period of rapidly rising prices and increasing pre¬
volume, a substantial portion of the adjusted underwriting
earnings of most fire insurance companies was made up of the
a
■v- are
e tt
.
o -n rfrivo
mium
of
speak to
you today in optimistic tones about the
investment business,
so many danSers uuiiiionxing it mat I cannot do so. I might;
ucuigeib confronting it that 1
1
mignt
°
dangers which immediately face our
industry stalk the private enterprise
system as
i
serve, and (3) investment earnings. As is the usual practice in
measuring insurance earnings a certain portion of this increase in
the
7
Louisvillb
•
Oakland
34)
the
goose
8
THE
(164)
Economic Health
COMMERCIAL
Depends
&
'
CHRONICLE
FINANCIAL
•
Thursday, July 14, 1949
Proiils
on
By ARTHUR K. ATKINSON*
NSTA Notes
President, Wabash Railroad Company
.
Railroad executive defends profit system as most
efficient and productive for public welfare, and attacks^
philosophy of the "Welfare State" as threat to American free enterprise system. Cites difficulty in secur- ;
iflg business capital and ascribes it to decline in margin of corporate profits, along with high taxes on
itttome. Points out our national defense depends primarily on sound internal domestic economy, and
denounces growing pressure of big government on business activities as discouraging economic expan¬
Outlines difficulties of railroads.
sion.
v'i
NATIONAL SECURITY TRADERS ASSOCIATION
at
When the
dered what
enjoyed
a
subject of this talk was announced some of you businessmen probably won¬
railroad man could possibly know about profit. The railroad industry has
busi-*
whose
The inflation
United States.
those in the
consist-
r.esses
basic
report stated further that the pro20 to mccivity of European labor in inthe dustry was only one-fourth, and
ently show returns of
30%
on
be
ter
than I
3.
K.
will
operate
"-v
or
business
what
cycle we
however,
as,
/ailed In
;al and
the
influence
in
as
economy.
Difficulty in Securing Capital
country
Most
who
The
New Deal
Philosophy
We know America
ural
as
resource
development,
more
manufactured
products,
more
nations
under
period
of
years,
as
by working together
go,
democratic constitution.
our
Our economy has constantly ex¬
panded through competitive free
enterprise.
Actually we are far from being
the biggest nation in the world.
Both Russia and China have more
lands, greater populations, and
reported
have
to
are
natural
more
Yet, their standard of
is frightfully below ours,
the four freedoms are un¬
resources.
living
end
known.
4
nation's
take
to
pansion.
to
of normal
care
ex¬
greater and greater centrals less
irge
zation
of
than
is
the
in.
taken
credit"
of
Certainly
the
United
authority and greater
ind greater dependence upon the
federal Treasury are really more
iangerous to our form of govern¬
even
ment than any external threat that
are now to be given their chance
under Communism. >:
statutory limit on the national
debt, there is a theoretical danger
Why is it then that some would
?an
have us believe that the profit
US."
system in America is evil, that
capitalism
American
imposed
people by a
the
upon
should
be
obvious
whether
must
be
one
operated
the
public
:eal
man
plain
horse
whether he be
corporation
harder and
motive
is
a
produce
profit.
that the coal miners
will
more
We
ior
or
if
his
knownnasythegE°oP °f' ec2nomi?ts
needs
for
the
the
mining center of the world.
championship golf course is located adjacent to the hotel. Also
available are both an indoor and outside swimming pool, ice skating
rink, bowling alleys, tennis courts, horseback riding, and many
attractive scenic trips.
While the Convention program is not as yet completed, it will
include
and
tremendous
of
reorganizing
executive branch of the
vast
eliminate
of
made
rigid Federal ownership
.
is
the
challenge
to
duplication
and
a
conscientious effort will be
a
to
streamline
departments and
December,
a
Senator
all
executive
bureaus
so
that
Con¬
the taxpayers' money can be more
headed
wisely spent and that eventually
Joint
Subcommittee
Flanders
the
billion
3
dollars
of
estimated
saving
testlfy were economists, labor
eaders'' accountants, and some of
th,e natlon's foremost businessmen,
Fhe in.vestigation record provides
:ame interestinS an<* contrasting
views on what causes our national
^bXTharged^
a°?epor"t ^
surance
the
own
atomic
in
Pact
armed
energy
Plan
and
addition
services
to
and
let
program,
place in office the best
able,
to
a^eSing mat big busi-
of the Marshall
Atlantic
our
our
for the postwar
»
outdoor Chuck Wagon
an
other
many
in
features
us
avail¬
men
evaluate the amount of
aid required to do the job and
to
administer the distribution and
spending thereof. Let us not for¬
get, however, that the strength of
is
♦An
address
by
before Downtown
St.
-
Mr.
with
Willi
Atkinson
Kiwanis
Club,
Louis, Mo., June 3u, 1949.
-'.V*
;
.
■
t
^
of
u-
building
insurance
future
i_
depression.
(leader offered
r
■'
'
huge
up
aSainst
a
an
reserves
as
inevitable
One
program to
the
to
usual
Convention
functions.
day in Denver, starting with the arrival of the special train from
the East in the morning and concluding with cocktails and dinner
labor
cure
enterprise
mill
to
from
the
the
local
great
filling
steel
The
special train will leave New York early Sunday evening,
on Monday afternoon, Oct. 3, from Chicago, arriving in
Tuesday morning, Oct. 4.
Trains will be parked at Union
Station for occupancy while in Denver and will leave for Colorado
Springs at noon, Wednesday, Oct. 5.
Hotel reservations must be made individually through the Asso¬
Oct. 2, and
Denver
ciation
and in order to be assured of accommodations, which are
necessarily limited, the application blank being sent all members
together with check for registration fee must be forwarded to the
Secretary.
The rates will be $14.00 per day for two in a twin bed¬
room
without meals, and a very limited number of single rooms >
will be available at $8.50 per day.
;
„
Dealer-Broker Investment
Recommendations and Literature
It is understood that the
v
send
to
firms mentioned will be pleased
the following literature'.
interested parties
Amott Baker Realty Bond Price
Averages
Baker
Tabulation
—
—
Amott
huge railroad system
to the ^or^er grocery store is not
(Continued
on page
30)
Corporation
York
Co., Incorporated, 150
Broadway, New York 7, N. Y. b
Over
Stock
'
Broadway, New
120
5, N. Y.
&
Bond Market—Discussion of ef¬
fect of revision of the Federal Re¬
Board's Open Market Policy
the bond market—Goodbody
& Co., 115 Broadway, New York
6, N. Y.
serve
upon
-
the
Index
-
Industrial
Counter
—
Booklet
recording
10-year performance of 35 indus¬
trial
stocks—National
Quotation
Bureau, Inc., 46 Front Street, New
York 4, N. Y.
Quo Yadis Mercator—An anal¬
ysis of the current market—P. de
Buy
Now
—
Ten
for
reasons
a
bullish
outlook—Bruns, Nordeman
&
Co., 60 Beaver Street, New
York 4, N. Y.
Rensis
&
Company,
10
Street, Boston 8, Mass.
Utility
State
Companies—
Operating
Analysis—Central Republic Com¬
Canada
letter
—
Monthly commercial
The
—
Canadian
Bank
of
209 South La Salle Street,
Chicago 4, 111.
pany,
Commerce, Toronto, Ont., Canada.
*
American
Canada—A New Frontier in Oil
—Extensive report
field
cent
thorough
following re¬
on
a
investigation
impressive oil discoveries in
Canada—Department C-13, Bache
& Co., 36 Wall Street, New York
5, N. Y.
tailed
y
.
;.y
*
*
,
Airlines,
Inc.
—
De¬
brochure—Kid¬
analytical
der, Peabody & Co.,
17
Street, New York 5, N. Y.
Wall
Manhattan
Co.—
of
Bank
The
Circular—J. Earle May & Co., 601
Bryant Street, Palo Alto, Calif.
Colombia-Bolivia
—
New
study
Central Soya
of economic and political
ments—Zippin
South
La
&
Salle
develop¬
Company, 208
Chicago
Street,
Company—Analy¬
Co., 209
Salle
Street, Chicago
sis—William
South
La
A. Fuller &
4, 111.
4, 111.
Comparative
Stock
Insurance
Prices—Comprehensive tabulation
—Geyer
&
Co., Inc., 63
Wall
Street, New York 5, N. Y.
Insurance Stocks—Annual
parative
analysis
of
com¬
of
the country's
leading insurance
companies—Blyth & Co., Inc., 14
Wall Street, New York 5, N. Y.
a
Cosden
Petroleum
—
dum—A. M. Kidder &
Street,
New
York
5,
Memoran¬
Co., 1 Wall
N. Y.
-
group
Helicopter Air
Kentucky—History of common¬
of Kentucky revenue and
Service, Inc.
—
Data—Cruttenden & Co., 231 South
La
Salle
Street, Chicago 4, 111.
International
Circular—Marx
Utilities
Corp.
&
Co., 44
Street, New York 5, N. Y.
—
Wall
wealth
2, Ky.
.
station
and from the
>
that evening.
revolutionary ness raised prices as high as the our national defense is nourished
holding company bonds — The
changes in the technique of pro-(traffic would bear with little re¬ entirely by our; internal domestic
Bankers
Bond
Co.,
Kentucky
duction, that is, capital equipment »ard for costs and for the
If American
business Home Life
purpose economy.
Building, Louisville
ana organization
comparable
winpaiauie
dinner, motor trip to Pikes Peak,
addition
not
to the President
purpose
Government
that
which pointed out that what Europ©
our
dare
predicted by the Hoover
Vermont, investigated the corjoration profit situation in this group will become a reality.
;
If the adequacy of our national
country. Among those invited to
defense depends on the costly in¬
j
Europe issued
that
Df
and railroad
capital.
with
we
present
trying to trade off waste pointed out by the Hoover
lays the golden eggs Committee's report. Let us hope
Republican
•vy
seen
even
broad powers
socialistic dead horse in the
a
Last
are
for
are
gressional
still primarily interegted in their own wages and
hav§ produced not more but even
less, under the labor government
than when employed by private
fioi)
to
me
which
no
wealth and productive capacity.
The recent granting by Congress
of
seems
above
venture
sys-
labor leaders in their
Although there is
point
enterprise
a
workers in England, though they
are. working for a
Socialist Government
gov¬
control.
jr
work
have
big
for
"iorm
any
laborer
executive
against
controlled economy
real threat to our
It
our
he goose that
It is
that
sense
of
members
and
thereby justify its existence.
just
icits.
higher wages and better
working • conditions
for
union
effi¬
interest
the
today.
;em
3ome
ciently and profitably if it is to
serve
is
a
American private
live#, in Socialist Britain, Com¬
munist
Russia,
or
democratic
United States that industrial' en¬
terprise
arrayed
is this drift toward
which
It
be
States will be impaired if we Were
to have successive peacetime def¬
,
ernment and
minority
of greedy businessmen?
group
possibly
It
is
the gold
■
Eisenhower
recently be reduced we must operate our
of Socialist ^aid, "the army of persons who Federal Government by spending
In 30 years
called America's most complete.
popular sport and entertainment
Here, at the foot of Pike's Peak, the Broadmoor is within
easy driving distance of the Garden of the Gods, Cheyenne Moun¬
They emphatically jus¬
record
profits
by
General >
organization, Russia has not
learned how to produce abundance
by force. The poor Chinese people
been
every
diversion.
their
showing the earnings of their
corporations over a period of years
security has become an el¬ as compared with their invested
ective political theme and many
capital. In most cases the ratio of
mthinking Americans would sac¬ profit to gross sales was clearly
rifice the Bill of Rights for some lower than in
prewar years, evi¬
jromised Utopia which, for want
dencing the efforts made to keep
>f a better name,'might be called
prices down by reducing profit
he "Welfare State." It would be ratios and
increasing volume and
oolish to condemn this desire for
efficiency.
a better way of life, as we are all
One of the most important fac¬
Pager for that security which in- tors consuming
business profits
lustrial progress can bring. It is and
retarding the natural flow of
;he means by which such goal venture
capital is our high taxes
might be reached that should be on both corporate and individual
luestioned, and the solution must earnings as well as on estates and
ae
based on sound judgment and
gifts. I think we all agree that if
practical thinking.
.;
the huge national debt is ever to
great wealth and high
Standard of living in a compara¬
short
year-round resort hotel, with
*rave
our
tively
services
the
of
protect the individual from every
:onceivable
danger.Cradle-to-
everything than any other coun¬
try In the world. We have built
UP
tified
more
some
corporations, pointed out
difficulty of securing suffi¬
cient capital from public issues of
stock
and
more
leaders
the
nish
nat¬
more
business
largest
starting with the depression in the
30s, that government must fur¬
land of
a
food,
more
the
of
testified, although they rep¬
resented
There has been a growing de¬
prise and how to cultivate it for a
mand by the
American people,
more abundant standard of living.
plenty, with
static portion of the national
which
could
be
taxed
a
away, if not distributed to stock¬
holders,
without
harming
the
which
retards the flow of private capital
;o industry.
present time. It is my purpose in
coining here today to point out a
few of
the advantages in
our
American system of private enter¬
-
On Tuesday, Oct. 4, the Bond Club of Denver will be hosts for'
income
the controlled
this
Broadmoor
Springs, Colo., from Wednesday through Sunday, Oct.;
The Broadmoor has often
;v
corporate profits
should be wary of any
we
that its
Hotel,-,
announces
at the
a
European econ¬
that
undistributed
an
Labor viewed
providing sufficient capi-
the
point of
are in at
at
the
corporations,
profits
excess
an
profits tax.
,
economies of Europe have utterly
a
prof¬
uusinesi
itably
of
and
tax
It should serve to remind
omy.
government spend¬
including
the
Europe,
condition
not
attempt to tell
you
how to
Atkinson
;
with
role
stop all
4. Higher taxes for
United States
of
profit in .as six time? more capital investour
present nent per person. There is nothing
new in this analysis of the critical
economy.
I
Increased
action
price increases.
ing for social welfare.
dis-jof capital investment. Compared
to
the
cuss
will be held
A
Immediate government
to
Colorado
5-9, 1949.
once
for labor.
2.
agriculture, only one-sixth of
productvity in the United
much bet- j States.
The main factor limiting
qualified production in Europe is the lack
four
Security Traders Association
Annual Convention
tain, Will Rogers Shrine of the Sun, Pikes Peak and Cripple Creek,
1. Higher wages
labor's
would
vested
involved
which
points:
in-;in
capital
Arthur
Perhaps many of you
little of that elusive substance during the past 20 years.
so
National
The
Sixteenth
New
York
Comparative
Bank
Interstate Engineering Corpora¬
tion
—
Card memorandum
—
Ben¬
nett, Spanier & Co., 105 South La
Salle Street, Chicago 3, 111.
Earnings—
tabulation
for
Lehman Corporation
first
half of 1949—New York Hanseatic
of
—
Analysis
portfolio changes—Ira Haupt &
Volume
170
Number 4820
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
(165)
Co., Ill Broadway, New York 6,
N.
Y.
of
' y
-
Also available
New Issues
brief reviews
are
Commonwealth
&
■
Southern,
Benguet Consolidated Mining, and
Sefvel.
;
$19,000,000
Louisville Gas & Electric Com¬
pany
—
Detailed
memorandum
Stein
Bros.
&
Boyce,
Building, Louisville 2, Ky.
available
Also
memorandum
is
Starks
/ y
Los
Standa<rd Gas &
on
JEIectric Company.
;
MeCord Corporation
—
City High School District
Analysis
Eastman, Dillon & Co., 15 Broad
Street, New York 5, N, Y.
-
J.
P.
Morgan
&
Company
California
In¬
corporated—An analytical study—
Paine, Webber, Jackson & Curtis,
25 Broad Street, New York 4, N. Y.
New
England
Public
.
214% Bonds
Service
Dated
Co.—Analysis—Ira Haupt & Co.,
Ill Broadway, New York 8, N. Y.
data—Lerner & Co., 18 Post
Francisco
bonds in denomination of $1,000
&
-
In the
Hickey, 49 Wall" Street,
5, N.Y.
•
i
New York
registerable only
as to
both principal and interest. '
;
:
Second
Mortgage Income 4Analysis—
Vilas
January 1, 1953-72,< incl.
*
■
Office
Square, Boston 9; Mass.
St Louis-San
Due
January 1, 1947
Principal and semi-annual"interest (January 1 and July 1) payable at the office of the Treasurer of Los Angeles County in Los Angeles,
California, or at any of the fiscal agencies of Los Angeles County in New York City, at the option of the holder. Coupon
Oregon Portland Cement—Late
.
.
Angeles City School District
detailed
a
:
.
—
'
opinion of counsel, interest payable by the Districts upon their bonds is exempt from all present Federal
of California Personal Income Taxes under existing statutes, regulations and court decisions.
-"and State
.
Seattle Gas Co.—Circular—Corn-
We believe these bonds will meet the
& Co., 231 South La Salle1
Street, Chicago 4, 111. - ?
stock
—Reynolds
&
N. Y.
-•
-
Co., New York 5,
•
</
? «
y.;..y"
*
July 27,1949 (Pittsburgh, Pa.)
Club
of
district and will be payable, both principal and interest, from ad valorem taxes which, under the laws
- V' now in force, may be levied without limitation as to rate or amount
upon all of the taxable '
y* •
j •
property, except certain personal property, in said issuing district,
j v
y V . *
~
-
-
•
•
,
AMOUNTS, RATES, MATURITIES, YIELDS AND PRICES
•
,
Pittsburgh Mid-
Picnic
Mill
at
\
Grove.
Park.
*'
-
✓
Pacific Northwest Group of the
Bankers
Association
Los
Investment
meeting
the
at
„
Gearhart
••
•v
y,
••
,
''y.:;;*'y
-''\:y-y
y-vi:
$6,000,000 '
Los Angeles City High School District 2T/4% Bonds
Due $300,000 each
January 1, 1954
year
January 1, 1953-72, incl.
$700,000 each year January 1, 1955-72, incl.
Bond Club of Pittsburgh Fall
Outing at Chartiers Country Club.
1949
y
y: 7y"~y.
■
-
Angeles City School District 2%% Bonds
yy
(Pittsburgh, Pa.)
(Accrued interest to be added)
h
~
yiyyy,■'
y
$13,000,000
-
Due $400,000
Hotel, Gearhart, Oregon.
Sept 9, 1949
-
'
■'
yy?^
Sept. 9-11, 1949 (Oregon)
Oct 5-9,
■■■
Investment Field
In
1949
deposits of public monies in California.
y.
EVENTS
Summer
legal investments for Savings Banks and Trust Funds in
comprise two separate issues of the two distinct districts. The
opinion of counsel, will constitute the legal and binding obligations of the Issu'ng 4
bonds of each issue, in the
••
-
;;
COMING
North
as
These bonds, to be issued for various school purposes*
H
Bond
requirements
York and California and will be eligible as security for
Co.—Circular
Electric
Sprague
J New
Priced to
yield 1.00% to
(Colorado Springs
dollar price of 9S^/2 according to maturity
a
Colo.)
National
sociation
Security
As¬
Traders
Convention
Annual
at
The above bonds
The Broadmoor Hotel.
are
Dec. 4-9, 1949 (Hollywood, Fla.)
Investment Bankers Association
offered when, as and if issued and received by us Mid subject to approval of legality by
Messrs. O'Melveny & Myers, Attorneys, Los Angeles,
California.
Annual Convention at the Holly¬
wood Beach Hotel.
New York
sociation
Security Dealers As¬
24th
Annual
Dinner
at
the Hotel Pierre Grand Ballroom.
•;: N.T. AS.A.
The First Boston
Bankers Trust
The National City Bank
Bank of America
Dec. 9, 1949 (New York City)
;;y
■
• .
of New York
•/
Corporation ;y
;
Chemical Bank 4 Trust Company
t;
Smith, Barney & Co.
Company
Blyth & Co., Inc.
<
C.J.Devine&Co.
Security-First National Bank
INC.
The Northern Trust Company~
j
Seattle-First National Bank
California Bank
of Los Angeles
y
R. H. Moullon 4 Company
1
HeCer, Bruce & Co.
'
Bear, Stearns & Co.
Harris,Hall 4 Company
.
1
Los
Angeles
J. Barth& Co.
Dean Witter & Co.
Eacon, Stevenson & Co.
i
(Incorporated)
Laidlaw 4 Co.
Francis I. duPont & Co.
/•,
Dominick & Dominick
■
Trust
Company of Georgia
^
*
,
.
Stroud & Company y -; Provident Savings Bank 4 Trust Company
Incorporated
Kean, Taylor & Co.
Roosevelt & Cross
'
,
Andrews 4 Wells, Inc.
Cincinnati, Ohio
.
Incorporated
F. S. Smithers 4 Co.
t
^
G.C.Haas 4 Co.
Constructive
of
Uses
—Harper and Brothers, New York
City—cloth—$3.00.
of Government
The—Solomon FaBureau
of
Trend
Rising
bricant
—
Economic
I
Research,
n c.,
1819
Chesley & Co. Adds
(Special
Bempsey-Tegeler & Co.
to The Financial
J. A. Hogle & Co.
.
;
Schwabacher & Co..
Men Collins 4 Company
Ginther 4 Company
R.H.Johnson & Co.
The First Cleveland Corp.
The Weil, Roth 4 Irving Co.
Raffensperger, Hughes 4 Co., Inc.
Northwestern National Bank of Minneapolis
The First National Bank of Saint Paul
Fahey, Clark 4 Co.
Edward Lowber Stokes Co.
Lawson,Levy 4 Williams
Ellis 4 Co.
Stone 4 Youngberg
affiliated with
South Adams
Street.
t
•
•
•'
1 r*
Seasongood 4 Mayer
' Stern, Frank 4
Company
Meyer
Newburger, Loeb 4 Co.
-
Magnus & Company
A. G. Edwards 4 Sons
Bohmer-Reinhart 4 Co.
Ryan, Sutherland 4 Co.
Doll 4 Ispkording, Inc.
Security Trust 4 Savings Bank
of San Diego
of Salt Lake City
Jr., has become
'* 11 ■' 1
/
The Continental National Bank and Trust
Chronicle)
Chesley & Co., 105
■
*
First National Bank of Minneapolis
CHICAGO, ILL.—J. Walter Nel¬
son,
Ira Haupt & Co.
National
Broadway, New York 23, N. Y.—
paper—50c.
.
.■
Atomic
Energy by Leaders in Atomic Re¬
search—Edited by S. C. Rothmann
Employment,
The First National Bank of Memphis
-
1
Kirby L. Vidrine & Company
juiy 13.1949.
Sheridan Bogan Paul & Co, Inc.
Slubbs, Smith & Lombardo, Inc.
Shelby Ctdlom Davis & Co.
"• ' y,.yy.
Hannaford & Talbot
9
10
Illinois Brevities
Common
July
North
Western
trust
ment
Ry.
equip¬
2%
trust
Hall
prices to yield 1.375% to 2.675%,
(Inc.); Julien Collins & Co.;
Davis & Co.; Farwell,
according to maturity. The same
Blair & Co.; Harris,
William
& Co.
Paul
V;.
at
1949,
of
Byllesby & Co. (Inc.).}
second
certificates,
equipment
(Inc.), Julien Collins & Co.,
Ketcham & Nongard and H. M.
&
bankers
H.
(as
offered
Chapman & Co.; The Illinois Co.;
Kebbon, McCormick & Co.; Straus
Ames, Emerich & Co.,
16,
$2,060,000
Burlington
Chicago,
Inc.; Blunt, Ellis & Simmons; H.
M. Byllesby & Co. (Inc.); Cruttenden & Co.; Dempsey & Co.; Sills,
Fairman & Harris, Inc.; F. S.?Yan-
Co.
to
offered publicly
on
June 27 at $14.50 per share.
The net proceeds will be used by
the utility firm to pay in part the
bank
A
Houston
$15,360,450
Stuart & Co.
June 29 publicly offered
on
debentures
in
of
no
bonds, series S, 3%,
June 1, 1983, at 100.639%
accrued interest.
The net
due
and
part
close
proceeds are to be used in
the
per
bank loans,
in
to retire $12,000,000
Ketcham
Co.;
&
Wells
laney,
O'Gara
&
Co.; Patterson, Cope-
&
Kendall,
Si
Inc.;
Inc.
;
■
#
*
syndicate
Stuart
&
:
.
*
headed by Halsey,
and including,
Included
Electric
&
Co.
of Clinton
tal stock
first
share
3% bonds, series due
June 1, 1979, at 101.99% and ac¬
crued interest.
The net proceeds
are to be used to pay in part the
expenditures of the utility firm
and
to
be
incurred
A.
the net
group
for
the
undertaken
was
with
Central
of in¬
on
line
bonds,
Co., Kebbon, McCormick & Co.
Mullaney, Wells & Co.
and
tric
Co.
value)
*
*
stock
common
at
$22
(no
par
share, the net
per
proceeds of which are to be used
construction program.
June
'
*
ment
trust
;// Straus & Blosser
McCormick
(Inc.),
&
Co/;'/'";/;////■/.*//*?///
A group
of underwriters, head¬
ed by Blyth & Co., Inc., and in¬
certificates,' series
on
according
to
Co.
at
$102%
per
Co.
Light
(par
and
share
accrued dividends.
.
to
$16,435,014, com¬
with sales of $140,060,707
profit of $9,659,282 for the
Temporary 25-year 2%% de- \
corresponding six months' period
bentures, due 1973, of Swift &
a year ago.
Sales continued at a
Co. may be exchanged for per¬
high level during the second quar¬
manent debentures at The First
come
I
*
taxes
pared
//
*
*
and net
trus-/
National Bank of Chicago,
ter of the
current fiscal year.
The
if
Jfc
mon
book
,
value, of the
com¬
shares of Peabody Coal Co.,
Chicago,
April 30, 1949
on
was
$9.86 a.
year
before. Current assets at
the close of the year just closed
$12.52,
compared
amounted
current
to
with
and
$11,726,658,
liabilities $5,197,019.
I
Marketed by Underwriting Croup
SI9,080,000 Los Angsles School District
Bond Issues
A
syndicate, leading members of which include the
nationwide
City Bank of New York, Bank of America National Trust
Savings Association, Bankers Trust Co., Smith, Barney & Co.,
&
Angeles, Calif., City School District and City High School District
21/4% bonds from a 1% yield basis to a dollar price of 98.50, accord¬
ing to maturity. The offering consisted of $13,000,000 City School
District bonds, due on Jan. 1 from 1954 to 1972, incl., and $6,000,00(1
June 21
on
ing of 242,785 shares of Illinois
Power Co. common stock
(no
par
a
few hours
and
entire
Power Co.
North
American
holdings of Illinois
common
dividends
from May
having
announced."*
sylvania and B. & O. Railroads te
Ata
value) at $28.9938 per share
Co.
managers
after the offering scale was
Halsey, Stuart Offers
stock.
Allyn & Co., Inc.; A. G. Becker &
Co.
Inc.;
Central Republic
Co.
!
Depot Bonds j
fered
Co. Inc. of-<
13 $2,000,000.
Passenger
Depot
Union
Akron
bonds, series
A, due July 1, 1974, at 100% and
first mortgage 4V2%
interest.
accrued
bonds
sale
was-
subject
of
the
will be
used
(Special to The Financial
Sears
Chronicle)
MASS. —Walter
BOSTON,
Hawkes
com¬
operation
for
Hawkes With Draper,
has
become
*
L.
affiliated"
-
and Boston Stock Exchanges.
to reim¬
acquisition of lands
be> made- for
interests
struction
It is expected
station will be
and ready
about Dec. 1, 1949.
With Barn es„ Bod el 1
the company's treasury for
capital expenditures made and to
and
time.
new
Commerce Commission.
Proceeds
burse
authorization
to
Interstate
present
that the
competitive with Draper, Sears & Co., 53 State
The sale is Street, members of the New York
at
won
bid of 98.10.
on a
the
of
Award
.
the
pleted
Stuart &
publicly July
Halsey,
"
ican
school loan. The offering proved
school issue and 101.45 for the high
exceedingly attractive to investors, the syndicate
in
thereon
and
lands
of
a
new
con¬
union
*
HAVEN,; CONN.—Harry
(Special to The Financial Chronicle)
j
N12W
W.
Confrances
Bodell
8t
is
with
Goodwin,
.
Barnes,
Inc.,
257
10, 1949. The net proceeds will be
Church Street.
passenger station in the city of
in part to pay an aggregate
(Inc.); * Bacon, Whipple - & * Co.; Akron, Ohio.'
^
of $21,000,000 principal amount of
William Blair & Co.; The Illinois
The bonds are guaranteed un-.
Kafflen Investment Co.
promissory notes evidencing bor¬ Co.; Kebbon, McCormick & Co.;
rowings from banks, and the bal¬ and Farwell, Chapman &' Co. The conditionally by endorsement as
SPOKANE,
WASH. —Karl
J.
to principal, interest and sinking
ance will be used to
Kafflen is now engaging in the
pay for ex¬ net proceeds, together with other
fund payments, jointly and severe
securities business under the name
pansion and to increase working funds, will be; used; to pay out¬
ally, by The Pennsylvania RR. of Kafflen Investment Co., Radio
capital. Caterpillar's manufactur¬ standing notes.
and The Baltimore & Ohio RR.
Central Building.
ing operations are largely concen¬
trated at a plant located on ap¬
Redemption prices for the new
Consolidated Grocers Corp.#
bonds otherwise than for sinking
proximately 405 acres of land
Chicago, has placed privately
Two With Robert C. Buell
owned in fee in Peoria.
fund
purposes
are
scaled from
through A. C. Allyn & Co., Inc.,;
'
/■>.
■ '
•'
'■
■
;
;
(Special to The Financial Chronicle)
•'
'
104% to 100%.
Sinking fund re¬
**
*
*
a $6,500,000 15-year
used
maturity;
June 23, $12,480,000 Southern
Pacific
accrued
&
stock
'
•
participated in the public offer-'
their
RR, at prices to yield 1.25% to
2.725%,
"
crued interest.
>:/!/W-/!'//:
bonds within
'
*
Light & Power Co., representing
and
Power
preferred
latter's announced the sale of all but $5,000,000 of the total of $19,000,000
the
part,
in
finance,
Illinois
equip¬
$100)
July 8 pub¬
shares
of
*
physical proper¬
$
*
payment of $3,cluding,
among
others,
Harris,
On June 29, a nationwide group
500,000 of short-term bank loans). Hall & Co.
(Inc.), A. C. Allyn & of 80 underwriters offered public¬
Co.,Inc., Central Republic Co. ly $50,000,000 25-year 3% deben¬
(Inc.) and Kebbon, McCormick & tures due June
1, 1974, of Joseph
Three other groups of under¬
Co;, on. June 7 publicly offered E. Seagram & Sons, Inc. at 99Vs%
writers, also headed by Halsey,
250,000 shares of 4.20% cumula¬ and accrued interest/ Included in
Stuart & Co. Inc., publicly of¬
tive preferred stock of Caterpillar
this
group
were
the following
fered the following equipment
Tractor Co. at par- ($100 per share) named
Illinois 1 bankers:
A.
C.
trust issues: On June 9, $7,500,2%%
4.28%
on
50,000
'/I//'/;//;/// City High School District bonds, maturing on Jan. 1 from 1953 to
1972; incl.
>
*
In addition Central Republic Co.
The bonds constitute obligations of. the respective issuing dis^
(Inc.) participated on June 21 in
tricts and were acquired by the underwriters via a competitive
the'piiblic offering of 251,033
shares of Portland General Elec¬ bidding sale on July 12. The group paid a price of 101.33 for the city
*"■'
Co. Inc.,
&
Co.l
Republic
o n#
offered
Delaware
June 22 public¬
■
#
for the account of North Amer¬
in
ties (including the
Ry.
licly
Blyth & Co., Inc., First Boston Corporation, and Chemical Bank &
Trust Co.,
made public offering on July 13 of $19,000,000 Los
pipe
Co.,
Blunt, Ellis & Simmons and The
K ebb
to the company's
Southern
•»
the
participating were Central Re¬
public Co. (Inc.), Harris, Hall &
Co.
(Inc.), Bacon, Whipple &
at $26.75 per
A. C. Allyn & Co.,
Becker
was
National
to
Industries, Inc. capi¬
G.
*
accrued interest. Illinois bankers
(par $1)
were:
Inc.,
1949 for additions and betterments
000
derwriters who
i
9 publicly offered 150,000 shares
mortgage
incurred
Of
*
the
*
,
included in the group of 16 un¬
Co., Inc.
*
on
•
3%
series due 1969, at 100%% and,
Co.
*
in
*
Farwell, Chapman & Co.
sinking fund debentures due June
*
%
«
*
1, 1964 were A. G. Becker & Co.
Consolidated sales of Deere &
Inc.;
Blunt, Ellis
&
Simmons;,
Co., Moline, and its subsidiaries,
Kebbon, McCormick' & Co.; and!
r
for the six months ended April 30,
Rogers & Tracy, Inc. The deben^ 1949
amounted
to
$187,716,847,
tures were priced at 100 and ac¬ and net income after Federal in¬
public offering on June 21 of a
new
issue
of
$50,000,000 first
mortgage
vestment bankers who
others, The Illinois Co. and
Mullaney, Wells & Co., on June 8
publicly offered $10,000,000 Okla¬
derwriters who
four
In¬
Wis.,
Included in the group of 34 un¬
Tennessee
Co.
11,
*
*
Collins &
banking
Co. Inc.,
Gas
July
on
the balance will be added to gen¬
eral funds.
among
homa
$40
proceeds, $20,000,000 will be used
to pay off bank loans due Sept. 10,
1950 in advance of maturity, and
,
investment
Another
V
*
at
The Illinois Co. and
Simmons,
*
year
the
■"
*
financing
expansion program
Gas Transmission
continuing
of
and
Julien
Robert
Showers; Sills, Fairman & Har¬
ris, Inc.; and F. S. Yantis & Co.,
land
Life
through A. C. Allyn &
i
with
Milwaukee,
for
tee, and at Irving Trust Co., New
*
*
*
Additional
and
par
Glore, Forgan & Co., Blunt, Ellis
Alfred
Co.;
&
at
refunding mortgage
2%% bonds, due June 1, 1979, at
101%% and accrued .inte rest:
gard; Mason, Moran & Co.; Mul-
Mutual
Co.,
sales
a
stock
deben¬
Public Service Electric & Gas Co.
first
Northwestern
privately
Retail
13.7%
or*
weeks
same
totaled
$13,136,090, a gain of 12.2% over
the same period in 1948.
The sales of National Tea Co.,
ticipated in the public offering of
40,000 shares of Staten Island Edi¬ Chicago# for the four weeks ended
son Corp. 4.90% series cumulative
June 18, 1949 amounted to $20,preferred stock (par $100)
at
663,361, compared with $20,411,511.
$103.25
per
share and accrued
for the corresponding period in
dividends.
'
*
" *'V • / '
following Chicago banking
on
June 8 participated in
the public offering of $75,000,000
Non-
&
The
stock
business
*
placed
On June 17, A. C. Allyn & Co.,
The
pating in this offering were: A.
C. Allyn & Co., Inc.; Julien Col¬
lins & Co.; Dempsey & Co.; Detmer
#
*
been
of the
weeks ended May 21, 1949
series
Inc. and William Blair & Co. par¬
houses
houses partici¬
mortgage
refunding
and
Interest.
Rights expired at the
share.
*'"
part, the utility company's con¬
struction
program.
Other Illi¬
investment
first
1949.
and the remainder to finance,
nois
,
offered
common
of
307,209
common
value.
were
1964,
30,
June
alternative,
its
par
tures
mortgage
Power Co.
issue of
an
convertible
2%%
due
the
of
shares
refunding
and
first
Co.
or,
Elec-
$80,000,000 Pacific Gas &
tric
&
Lighting &
group
headed by Halsey,
Inc.,
Allyn & Co;,
June
on
3%%
York, N. Y. ""
Stuart
to its stockholders of
banking
nationwide
at.-
2%% bonds, series G, due June
I, 1979, at 101.50% and accrued
borrowings and the balance
corporate purposes.
Co. Inc. in
addition participated in the un¬
derwriting
of an
offering by
'
-
£
l/'
*
*
❖
„
1
<
•
*
9 participated in
the public offering of $20,000,000
Virginia Electric & Power Co.
other
Halsey,
ties, principally its electric prop¬
erties.
1,
/:///":/•
;•!,
In addition A. C.
Inc.,
short-term
reduce
to
June
from
'
*
,
and improve¬
be made to its proper¬
to
ments
used
be
for
additions
of
cost
was
dividends
1949.
First Securities Co.
of Chicago; Carter H. Harrison &
publicly offered $4,000,000, first
Co.; Martin, Burns & Corbett, Inc.;
mortgage bonds, series E 3% due
Mason, Moran & Co.; and Mul1979, of Public Service Co. of New
laney, Wells & Co.
The unsub¬
Hampshire at 100.59% and ac¬
scribed
portion (211,149 shares,
crued interest, the net proceeds
not including 65,074 shares previ¬
ously sold)
cumulative preferred
($50 per share), plus
$2.50
accrued
bonds,
$13,312,949,
were
ago.
the public offer¬ ly ottered $10,000,060 Pacific
Western Oil Corp. 15-year 3M>%
of 80,000 shares
stock at par
Halsey, Stuart & Co. Inc, (as
sole underwriter) also on June 22
tis & Co., Inc.;
issue
an
1949
first
lic Service Co., Huron, S. D., has
■
•/■•
of Central Arizona Light & Power
*
*
of
ing
2.325%, according to maturity.
*
in
participated
Quincy
&
2% equipment trust certif¬
icates at prices to yield 1.20% to
RR.
& Blosser;
$700,000
(Inc.), A.
Co.
l,f ton, reported that its retail sales
in-; for the four weeks ended June 18,
due 1978, of Northwestern Pub¬
surance
C. Allyn. & Co., Inc. and Kebbon,
McCormick & Co. also on June 15
underwriters)
sole
June
on
of
*
% Central Republic
July
accrued
ahead
mortgage
,
;''///■'■ //
*
❖
due
and
S;S/"'.'],/,:issue
An
Co., John W. Clarke, Inc., Paul
Davis & Co., Harris, Hall &
Co.
debentures
101%%
at
VV,
H.
on
Chicago
$6,600,000
7,
and
fund
terest.
Co.
Moran & Co., Blunt, Ellis &
son,
1.40% to 2.70%,
maturity;
to
Republic
Inc., Central
Kebbon, McCormick & Co., Ma¬
certificates, series BB, at
according
1948, and $20,455,928 for the four
participated in the public of
of
$25,000,000
Michigan* weeks ended May 21, 1949.
Jewel Tea Co., Inc., BarringGas Co. 3%% sink-i
1967,
(Inc.), A, G. Becker & Co. Inc.,
14, 1949
fering
ing
Co.,
Thursday, July
Consolidated
short-
repay
term loans. The Illinois bankers
ing transactions of the year
prices to yield
to
participating are: A. C. Allyn &
1949 subscribed on or before June 23, 1949 for 169,777
shares of the 446,000 shares of common stock offered at $14V8 per
share. This offering, which marked one of the largest equity financ¬
trust
and
program
record June 9,
in the3>
utility field, was underwritten by
a group of
51 investment houses,
which included, among others, the
following Chicago bankers: Cen¬
tral
Republic Co. (Inc.); A, C.
Allyn & Co., Inc.; Bacon, Whipple
& Co.; A. G. Becker & Co. Inc.;
29
in- part
nance
Illinois Public Service Co. of
of Central
stockholders
CHRONICLE
provide funds to fi¬
its construction
will
firm
FINANCIAL
&
COMMERCIAL
THE
(166)
2%% equipment
.
Central Soya Company
i
-
Incorporated
••
•
Common Stock
r
■■
..
3%% prom-;
A
group
of 124
underwriters
issory
note due June 1, 1964,
institutional investor.
July 7 participated in the
public offering of 550,000 shares
of
Analysis in Preparation
with
part to retire on June 25 $3,985,-^
on
Kansas
common
William A.FuIler& Co.
Members of Chicago Stock Exchange
209 S. La Salle Street* Chicago 4
Tel. DEarborn 2-5600
Tele. CG 146-7
$26%
Gas
&
Electric
Co.
stock (no par value) at
per
share.
This
included
The
000
an
net
of
proceeds
were
used
ing capital.
was
The Depot company was organ¬
in
debentures at 102%, and
the balance
demption prices range from 102%
100%.
to
added to work¬
ized
of
under
Ohio
purpose,
the
on
laws
May 6,
among
of
the State
HARTFORD, CONN.—Violet M.
Mangone and Osmon N. Peterson
are now connected with Robert C.
Buell &
Co.# 36 Pearl Street.; "■■■/■
189lr for the;
other
things,
of!
With R. H. Johnson Co.
(Special to The Financial ChronicleI
maintaining a;
"
•*
*
t
the company and 450,000 shares
union passenger station in Akron.
BOSTON, MASS.—Rudolph G.
has
become
A. G. Becker & Co. Inc., and In due course, a station was com¬ Custeau
connected
representing the remaining hold¬
ings of American Power & Light
Harris, Hall & Co.- (Inc.)~ and pleted at Market Street in Akron- with R. H. Johnson & Co., 30 State
Co. The proceeds to the Kansas
Blunt, Ellis & Simmons on June and has been used by the Penn¬ Street.
100,000 shares for the account of
constructing
and
.
,
Volume
Number 4820
170
COMMERCIAL
THE
iwelT
.as
&
director
a
(President
of
Association
News About Banks
the
Bankers
and
new officers, etc.
Port
former
of
—
-
{Deposits
;Cas.i
•
At
meeting of the board of
on
July 11 Earl Bryan
a
Schwulst
Exchange Branch at 25 Broadway; iLoans and bills
discounted—
D. Ruhm, Jr., President j
'JndiV. profits^
elected President of of Bates Manufacturing Company,
-
was
The
Bowery Savings
New York,
which
Bank/of
to
payn,
of
$900
over
Mr.
be
HE
.
trative
Branch
-
aih
fi
e n r
•jans
v.'
1,291,193,008
And bills
*
.
194;
•
bers
of
1,325,879,66C
Urust
company
Mr.
1,334,139,329
•
1,382,631,244
"" ;C5.''68.?'"3
1,524,426,111
64,463;452
the
Johnson
he
continue
and
trom
Uj S.
1931,
but
mains
and
has
Earl
B.
Schwulst
New
re-
Chairman
as
Chief
Harris A.
Harvey D. Gibson, President of
Trust Company of
Manufacturers
Ex
ec u
of the Board
t i
Officer.
v e
Dunn remains
Chairman of the
Vice-
as
York
announces
that
John
Mar. 3l/4»
the
$
taken
a
ground floor
lease or
space for a branch
long-term
Quincy Adams, President; of The office in the new air-conditiohed
Refrigerating, Co., has 488 Madison Avenue Building now
been appointed to serve on the being erected on the blockfront
Advisory Board of the bank's of¬ between 51st and 52nd Streets by
fice
at
14th Street and Eighth Uris Brothers, it is announced by
Manhattan
-
Eastport
for the mergef of:
National
Bank
of
324,228,544
Easiport, N. Y., into * the Center 1
191,312,227
Moriches Bank of Center
•54,316,471
due
"56,645,319
Y., under the title - Southv; Bay;
Bank, was filed on June 30 withj
the ;New York State Banking De-"
-51,963,872
46,1091009
Cap. and surp.
13,965,284
Moriches, |
N.
se¬
51,666,819
.13,945,284
curity hldgs-.
partment, it was made; known Jn:
the July 1 bulletin of the Depart.
,
jneiit.
as
The New York Trust Company
has
®
An agreement
t
Loans and bills
UNITED; STATES
) Janager of the Real Estate De¬
partment.- /
.
■
; >/.:/;-■'/■i -;;
:
with
Irving Trust Company in
*
•
j /lanager of the Trust Adcount'ng
'department and Mp. O'Connell
He previ-
associated
been
)Mew York.
&
V' discouhtediJ"'
as
had
220,761,838
192,915,952;
banks a
Govt,
OF
7:'77
Tot.
'
,
'
_
•/
YORK
JUne 30/49
'
,*" $ r '/
,
At the same time it was,
also; announced that approval had;
been given to a certificate for the!
change in the name" of the Center,
TRUST-' COMPANY
NEW
: '
,
since
as a, Vice-Presi¬
First National Bankf
53,702,649?
resources
'
held
of service
of the
Jersey City, N/ J.
and the
'
Tot.
•
which
dent
*
.
June 30/49
"for several" years;
will
*
co.; new york
:
:
staff of - the
clerical
years
jthe Bank of Manhattan. Company
.[• '-..r
Assistant Secretaries
V/-,
Mr. Clarkson joins Title
Guarantee, and Trust after several
company;
The bank¬
brown brothers harriman
company.,- Messrs.- Johnson
O'Connell have been mem¬
bnd
the:;
asv ari(
of the*
busly
..Cash,
i,he
Assistant- Vice-President
New
'
Broadway, New Yqrk, an¬
on July
12 the'-appointhaent of John -Johnson and John J.
as
announces
opened by the bank.
1 '
John E. Bierwirth, President of
O'Connell
of New York,
pany
completely equipped branch office
55,422,823,
'
•100
y'-v
•
naiv. prcril__
Presidency of
The
Bowery,
&
*
v
of
in the Personal Trust Divisiorr of Deposits,'——*.
4,067,176,57C
4,233,944,130
_
discounted--.
the
e s
TIT
Mar. 31.
curity hldgs. 1,723,449,125
relin-
h
(TO, 1949
ie
banks,
*. S: Govt.. s>e- :
y
<JF
NEW YORK
.jun<?
d
and
from
.55,913,519
.
*
The
♦
Townsend, President of
(election of Lloyd Clarkson
by the Safe
Company, of
Barnard
Feb. 1, 1950, and will be the third
nounced
re£0uxces_$4 677,221,404 $4 461,430,548
/epoeits
s
Offi¬
Bruere
/
.
"
.
has appointed Paul
Assistant Secretary.
Title Guarantee and Trust Com*,
ing office will be opened around
\
,
570.009,752 tr
Com- The New York Trust Company, at
\
NA^TOVA*.
CHASE
7
ot.
Chief
Admini
s
j
Boat
the 45th Street
CITY OF
Schwulst
will
i
|
Hopkins,
Jay
Electric
of
committee.
million.
q u
John
and
com¬
Branch
and
o r s
assets
cer.
Street
42nd
President
500,000 depos¬
it
the
to
mittee,
has
than
mo re
v
taken
York Trust Company.
iJ. S. Govt, se"
} curity hldgs. -542,627^29485,730,622
Herman
be
11
an
*
!
52nd and MadhSbn
an additional 3,000 square
directly beneath the banking
Deposit
438,G'24/708
432,304,612
pompany
Spadoiie
of approximately 3,500
space
flboi* Will
due
banks.
In
agents.
Avenue,
1,416,974,20T .1,360,713-,914
_____
and
from
rental
square feet at
• •
30, 1949
.
trustees
•
Mar. 31,1949 feet
resources_$l,620,504,826* $1,559,658,563-
ITot.
I
Brothers'
New
COMPANY, NEW YORK
;June
*"•'
capitalizations
;
Uris
(167)
addition to the street-level bank¬
ing
v*
*
,
BANKERS TRUST
revised
tlie
of
and
Marketmen's
York.
i
consolidations
new. branches
FINANCIAL CHRONICLE
/
Mar. 31/49
J
' •-
Moriches Bank to the South Bay J
resources.163,054,281 160,300,043
130,095,775 127,620,088
Bank, and plans to increas;e(
[capital of the Center Moriches
Bank from $100,000, consisting of
IjOOO shares (par $100 each.) to-
Deposits
the
Cash and due from
banks
U. S. Govt,
holdings
27,294,961
27,111,631
65,960,493
....
76,613,949
security
-
-
•
$150,000, consisting of 1,500 shares,,
Loans and bills dis¬
counted
52,962,994
381702,894
1,735,358
$100' each. The July IE bul¬
of the Office of the- Comp-;
President of trolier of the Currency at Wash¬
Bierwirth, of the trust
ministrative Vice-President.
Mr. ident of the Union Terminal Cold company,- and by Robert Byrne, the United States Trust Company ington reported that the
Eastport1
Schwulst, who has been with The Storage Co., Inc., Jersey City/as Vice-President of Cross & Brown, of New York announced that the /
(Continued on page 16)
Bowery since 1936, was born in
Sherman, Texas. In the financial
Sparks
P.
Raymond
world
Board, Robert W.
Vice-President,
First
as
Haulenbeek
he has served
Assistant
J*.
to
P.
Ad¬
as
Avenue.
Mr. Adams is also Pres¬
to
the
and
the
This announcement is neither
par.
letin
Strong,
Bank
of
a solicitation of an offer to buy any of these
offer is made only by the Prospectus.
*
offer to sell nor
an
Debentures. The
.
.
Ecuadoi
Governor-General of the
Philippine Islands; Superintendent
of Banks in the Philippines anc
Adviser
the
to
ment.
Cuban
$150,000,000
Govern¬
American
With
Govern¬
mental agencies Mr. Schwulst ha;
been
Special
Assistant
to
the
Board
"
Research
as
Dallas; Financial Advisei
Central
Benjamin
1,814,351
Morgan & Co
Incorporated; -Loan
and
Credi,
Manager of the Federal Reserve
Bank of
President
Undivided profits/J
the
of
Reconstruction
Standard Oil Company
Fi¬
Corporation, Director of the
Commodity
Credit
Corporation
nance
{Incorporated in New Jersey)
and President and Director of the
RFC
Mortgage Company.
Amonj
other current activities he is
a
rector
Twenty-Five Year 2%% Debentures
York
of The
Greater
New
di¬
Fund, the Institutional Securities
Dated
Corp., the Regional Plan Associa¬
tion and
Insurance
tion.
and
Mr.
Annuity
Schwulst
President
of
ciation
Mutual
of
July 15,1949
the
*
Elliott V.
Associa¬
is
a
National
Interest
pas
of
;
Savings Banks.
*
*
Bell, New York State
of
Banks,
an¬
July 7 reappointment
DeCoursey Fales, President oi
Price 100V2% and Accrued Interest
on
The Bank for Savings in the
of New York,
of
City
and Harris A. Dunn.
Vice-Chairman
Trustees
payable January 15 and July 15 in New York City.
Asso
Superintendent
nounced
Due July15, 1974
>
trustee of the Teacher
a
of
the
Board
of
The
Bowery Savings
Bank, of New York, as trustees of
the Savings Banks Life Insurance
Copies of the prospectus may be obtained from only such of the undersigned as may legally offer
these Debentures in compliance with the securities laws of the respective States.
Fund for
four-year terms begin¬
ning July 1, 1949. Mr. Fales and
Mr.
Dunn
first
were
appointed
July 1.
1945. The Savings Banks Life In¬
the
of
trustees
Fund
on
Fund, which was organ¬
July 1, 1940, is managed
by a board of seven trustees ap¬
pointed by the Superintendent of
ized
*
'
V
.
on
with
Banks
Governor.
a
7
MORGAN STANLEY & CO.
surance
the
of
consent
The
the
cies icsued by
savings banks, pre¬
the standard forms of life
policies
and
annuity
SMITH, BARNEY & CO.
HARRIMAN
RIPLEY & CO.
Fund
provides
guaranty of life insurance poli¬
pares
THE FIRST BOSTON CORPORATION
KUHN, LOEB & CO.
-
•
•
•
,
•'.
Incorporated
-
,
„
LEHMAN BROTHERS
GOLDMAN, SACHS & CO.
BLYTH & CO., INC.
insurance
contracts,
determines
premium
rates and unifies the
mortality ex¬
perience of issuing banks. There
are now 39 issuing banks and 25
agency
banks for savings bank
life insurance.
Presidents
of
KIDDER, PEABODY & CO.
STONE & WEBSTER SECURITIES CORPORATION
DREXEL & CO.
SALOMON BROS. & HVTZLER
UNION SECURITIES CORPORATION
.
GLORE, FORGAN & CO.
three
important
corporations have been appointed
CO.
THALMANN &
LADENBURG,
LEE HIGGINSON CORPORATION
members of Chase National Bank,
New York Branch
Advisory Com¬
mittees.
Albert
dent
Moore-McCormick
of
Inc.,
was
ory
Committee
V.
FENNER & BEANE
Moore, Presi¬
Lines,
appointed to the Advis¬
for
MERRILL LYNCH, PIERCE,
the
Produce
July IS, 1949.
■■
'■'
■■ '
'
-
WERT
12
COMMERCIAL
THE
(168)
FINANCIAL
&
CHRONICLE
Fund for
your
investment dealer,
National
research
;
,
from
or
a
securities
Nine
corporation
investors in March
little
of '38,
One sold the market short; then there were
;
120 broadway, new york 5, n. y.
nine.
bought on margin; then there were
One
eight,
Eight little investors just arrived from Devon,
One
*A
played the horses; then there were seven.
Seven little investors in Florida
1, 1949.
/
.
'26,
"With present high living costs and taxes," Mr. Wilkins pointed
out, "people are finding they can't afford to let their surplus cash
stay idle or work for a rate of only 1 or 2%. Moreover, they don't
have the time, information and experience to select and watch indi¬
vidual securities to get a better income and are afraid of losing their
principal if they try to do this specialized job without professional
advice. As a result, people have been turning to mutual funds to
meet their needs for
One
bought
little investors, land's sake
Six
LOW PRICED
backed
One
Fire
SHARES
'
~
'
of
v
.
real estate; then there were six
some
little
an
and
was
Why Low Priced Stocks?
Because in the
plenty sore,
bought Kreuger, Toll; then there were four. •
He
Four little investors went on
v
■
One took
^
a
below shows to what a
'
spree,
a
The other's bonds defaulted; then
He
investment dealer or
The
Incorporated
and
York 5, N. Y.
\
bought
'
<
there '/was
some
Of
investment
Fundamental
Investors Inc.
VS.
LOW PRICED STOCKS
investors
considerable
K
/
HIGH PRICED STOCKS
200
mutual funds and now can really sleep.
Investment Company
r
f
;
-241%—i
one.
150
funds they enjoy greater investment peace of mind and actually do
sleep better.
■
The chart
•-
parody should not be taken too literally but more
are discovering today that through owning mutual
above
more
have always
group
250
'
vV One little investor, too scared to make a peep/
a PROSPECTUS ON REQUEST
a
rising market.
a
PERCENT ADVANCE TO SUBSEQUENT HIGHS
stew,
Two little investors, one about to run,
63 Wall Street, New
in
striking degree, on average, the difference in
performance has been.
One bought penny mining stocks; then there were two.
from your
past, low priced stocks as
flyer; then there were three.
Three little investors, all in
;;
a
AL.
alive!
shown the greatest percentage advance
Group Securities, inc.
Distributors Group,
higher yields, expert supervision of investments"
of investment risk."—Congratulations,
spread
oil well; then there were five.-
investors, one
in the nine months
-
.
Mr. Wilkins attributed the larger sales this year in the face of
declining stock prices and reduced stock market activity to the grow¬
ing public acceptance of mutual funds as a medium for savings, with
the small investor especially finding that there is no other way in'
which he can spread his savings over 200 different securities.
"Ten Little Investors"
Ten little investors, back in '29,
,
by the Fund.
the
of
institutional investors in the Fund increased 22%
By HENRY HUNT
;
the corresponding period of 1948
over
half-year, the number of shareholders was
approaching the 33,000-mark for a new high, while the number of!
to June
request from
close
At the
Mutual Funds
upon
increase of 75%
an
the largest six months' sales ever recorded
and
trospecfus
Thursday, July 14, 1949
interest
Index Inaugurated
toHrustmen
and
oiher
purchasers of
distinguishing between distribution of capital gains and pure income
and provide a five-year moving average on income and a monthly
figure indicating changes in principal value.1 These unique charac¬
teristics are designed to give a more complete picture than could be
obtained by emphasis on any one item in the performance record
"Trusts and Estates" will further explore the theory of mutual fund
investing through monthly articles by key figures in the investment
company and fiduciary fields.
Wellington Reports Record Sales
79%
73%
50
■
M
■I
«%-jgP
-36%
ill Mill 11
STOCKS 100 70
SELLING AND TO
AT
OVER 100
From
Record sales of Wellington Fund for June and the first half year
reported by A. J. Wilkins, Vice-President of W. L. Morgan &
invested by the public in the Fund in June amounted
$3,019,000 for an increase of 89% over the same month last year,
and represented the largest single month's sales in the Fund's 20-year
history.
\
In the six months ended June 30, 1949, Mr. Wilkins reported thai
94%-
100
shares is the "Henry Ansbacher Long Invest¬
ment Company Index," a new monthly feature published in "Trusts
and Estates" Magazine commencing in the July 15 issue.. Special
features of the Index emphasize historical as well as current data,
company
a
55
40
30
20
15
10
5
5
TO
TO
TO
TO
TO
TO
TO
OR
70
55
40
30
20
15
10
LESS
study by S. Van Strum, published by Barron's.
were
Co. New money
This chart is
a
record of all stocks listed on the New York Stock
to
Prospectus from your Investment Dealer or
'
HUGH W.LONG & CO.
the
public had invested
a
total of $14,444,000 in
new
money
in the
INian»0«A!tD
IB
01
WALL
STREET, NEW YORK
v,<The-chart shows that
advance
priced
groups
advanced
High-priced (over $50
Shares,
si
Prospectus
Low-priced (under $15
upon
.
There
Lord, Abbett & Co.
—
New Orleans
—
Los Angeles
Certificates of Participation in
it is
but
up a
264%
share) stocks advanced
$50
over
share advanced 129.5%.
per
Thirty
a
number of
reasons
why this
occurs
so
consistently,
chiefly due to the desire of the small buyer to own
a
A
Diversified Investment Company
who
and
,
sold.
up
priced stocks
are
attractive today—and at any time—only:
wants
better-than-aver age
should later
For their effect is to
and down.—From
a
seem
appreciation.
If
a
decline in
probable, such stocks should be
magnify stock market performance both
folder issued by Distributors Group.
STOCKS
(Series K1-K2)
EATON & HOWARD
(Series S1-S2-S3-S4)
EATON & HOWARD
BALANCED FUND
COMMON STOCKS
I
STOCK FUND
Pro*pectus from
frour local
investment dealer
PROSPECTUSES OF THESE TWO MANACED INVESTMENT FUNDS MAY
or
BE OBTAINED BY
r
Tke Keystone Company
"
'
of Boston
50
Congress Street
your
THE
REQUEST TO YOUR INVESTMENT DEALER OR TO
EATON
Prospectus
may
be obtained from
local investment dealer,
.
...
PARKER
or
CORPORATION
ONE COURT STREET, BOSTON 8, MASS.
&
HOWARD
INCORPORATED
INVESTMENT MANAGERS
BOSTON
Boston 9, Massachusetts '
£
full
to the investor who feels that the stock market is likely to advance
(Series B1-B2-B3-B4)
PREFERRED
per
V
are
market averages
BONDS
stocks advanced.— 43%
share)
per
large proportion of the total buying power.
Low
IN
>
101%:
trading unit of 100 shares. And small buyers, in the aggregate, make
INVESTMENT FUNDS
investing tkeir capital
,
shows that
representative stocks selling for less than $15 per share advanced
365%.
*'\
those in higher
increased 128.7%, 30 representative stocks selling (at the begin-'
age
INVESTMENT COMPANIES
Chicago
than
:
request
ning of the period) for
—»
more
'
1942-1946 advance when the Dow-Jones Industrial Aver-
In the
THE LORD-ABBETT
New York
j
50 most active—
The
WA
Funds
times
\ *
while the Dow-Jones Industrial Average advanced by
.\JW\Js
Custodian;
several
period of stock market-
1897 and 1932 stocks in the lower
somewhat similar study of the 1935-1937 advance
A
CM1C AGO
Keystone
average for each
on
in the 34 years between
priced groups.
S, N,Y
**■<(,.11 i
Exchange in each period of rising markets from 1897 to 1932.
Established i92k
24 Federal St.
BOSTON
'
333
Montgomery St.
SAN
FRANCISCO
Volume 170
Number 4820
THE
COMMERCIAL
Mutual Funds Form New National Institute
Paul
Bartholet heads
organization, which will direct
research and
program
public relations.
was announced July 13
a speech by its
newly-elected President, Paul Bartholet, before a
meeting of the National Association of Securities Administrators in
Richmond, Va. This Institute, according to Mr. Bartholet, is an organ-
of
open-end
in¬
com¬
panies
(now
known
tual
tripled," Mr. Bartho¬
let said, "but the tripling of our
assets has represented an actual
increase of only $1
mu¬
as
funds)
their
and
un¬
t i-
n s
Board of Gov¬
lars declined 41%,
in ad¬
ernors,
dition
Mr.
to
of
Paul Bartholet
&
have
York; S. L. Sholley,
President of Keystone Custodian
New
Funds, Inc., Boston; Henry J. Simonson, Jr., President of National
Securities
and
Research, Corp.,
York, and Joseph E.
New
Welch,
Executive Vice-President of
Wel¬
lington Fund, Inc., Philadelphia.
In his speech before the Secur¬
ities Administrators, Mr. Bartholet
objectives of the
the
that
stated
Institute would be:
new
than
of a com¬
(1) Re-establishment
meeting ground between the
various
securities commissioners
and Mutual Funds for the discus¬
sion and
solution of regulatory
mon
Mutual
Funds
attracted
not
C,
public education."
Bartholet said that the In-i
stitute proposes
Association
that the National
Securities
of
Admin¬
istrators and the Mutual Fund In¬
stitute conduct
with
vey
a
joint factual sur¬
respect
costs
to
and
methods of distribution of Mutual
Fund shares,
simplification of reg¬
the
de¬
our
venture
capital requirements
of the national egpnomy. The help
problems;
.1. ■ ■•' 3,. 'f"/; .
.r:"j " of regulatory commissions and- fi¬
(2) The development of a bet¬ nancial
organizations
will
be
ter public understanding and ac¬
sought in this survey, he said. •*/,.
ceptance of Mutual Funds, and j
The Mutual Fund Institute has
(3) Finding means, through re¬
search, whereby
Mutual Funds opened offices at 48 Wall Street,
New York City.
'
can
.
improve their service to
that
cause
our*
flected the basic needs of
of
mands
in Jan¬
union
these
There
a
day they
getting
older
ery
and
day
na¬
has
worsened.
developing.
spots
Walter P. Reuther
time
no
ev¬
the
rock
to
Labor
boat.
ought to demonstrate real states¬
inse¬
Withdraw
manship.
kind
let's
and
storm
your
laid
off
tney
ought to go this way.'
"It is
the
*
.
simple
are
and
we
those
whole.
Enlarging upon these objectives,
Bartholet stated that it will
be the firm
present
to
postponed.
compelling,
going to permit
be ignored or
to
We
are
going
and
of
various
Mutual
Funds'
views
the
of
segments
an
unbiased manner,
without regard
to the special in¬
in
business
or
particular company
except as they affect the
of
terest
any
group
business
as
a
whole.
*
First California Adds
•
Special
to The
Financial
public understanding and accept¬
ance of Mutual Funds," Mr. Bar¬
tholet
FRANCISCO, CALIF. —
California Co., 300 ' Mont¬
First
Street, has added John F.
Taylor to their staff.
J
gomery
the
(Special
UAW
to The
Speer Staff
Financial
Chronicle)
the
sible
wealth
these
said
that
that
and
other
great
with
industries. We
a
hospital
is
wanted
we
medical program financed on
plete
hospital
W&Asaid
gfrease
we
and
medical
wanted
a
re-establish
to
our
time
America
in
labor
ican
be
to
of
men
little
little courage.
This is the
time for labor to stand
u£&3SfiT%ay-
faith
or
(Special
for
people in the leadership of Amer¬
the
ST.,
to The
Financial
Wiiliam M. Bramlette is
sociated
Waddell
with
FLA.
ndw
&
Lewis
we
getting
are
America
in-
hasn't
real
have
in
because
trouble
*"
little
the
-in
guy
With Brainard-Judd & Co.
Jot'SYiough, and therefore,
(Special
to The
Financial
Chronicle) -;
#
Wage
w^s
was
back
position
to
where
he has
it
t&Sjht harder
to get
now
,.
in June of 1946 when OPA
what he is entitled to in order to
S.
destroyed.
avoid
&
"
This announcement is neither
going into a depression, and
CONN. —Karam
HARTFORD,
Jacobs
with
is
Brainard-Judd
Co., 75 Pearl Street.
an
offer to sell nor
a
solicitation of an offer to buy
The offer is made only by the Prospectus.
.(■
any
of these Sfiares.
,
.
f
.
Beaver
become
sociated with the firm in its
as¬
Insti¬
and
283,333 Shares
'
'
The Dayton
Department. Mr. Green
Mr. Stone formerly were with
■
*
.
Power and Light Company
Common Stock
Goodbody & Co.
($7 Par Value)
investors
John J. O'Brien Co.
what Mutual
Funds can hope to do for them,
but also what they cannot do and
and their shares will represent an
Russell
Rights, evidenced by subscription warrants, to subscribe for these
shares have been issued by the Company to its common stockholders,
Adds Russell Chandler
should know not only
M.
Time
—
Chandler
has
Eastern Daylight Saving
which rights will expire at 3 o'clock P.M.
John
J.
what the public must not expect O'Brien & Co., 231 South La Salle
Street, members of the New York
of them.
Exchange, announce that
"Mutual Funds are here to stay, Stock
ILL.
CHICAGO,
become
on
July 26, 1949,
more
as
fully set forth in the Prospectus.
Subscription Price to Warrant Holders
increasing portion of secur¬ associated with them in their Chi¬
ities sold.
At the present time cago office. Mr. Chandler will spe¬
they are the fastest-growing seg¬ cialize in the distribution of In¬
ever
ment
securities
the
of
business.
$26
a
Share
Shares.
Trust
vestment
The several underwriters may offer
Four St. Louis Firms
Oppose Exchange Merger
Along with other members of St. Louis Exchange, who
shares of
common
stock acquired
acquired by them either through purchase and exercise of
rights, or pursuant to the underwriting agreement, at prices deter¬
or
to be
voted against
mined
as
set forth in the Prospectus.
proposition to join with Chicago, they state they will not go into
the consolidation.
Copies of the Prospectus may be obtained from only such of the undersigned
as may legally offer these Shares in compliance with the
securities laws of the respective States.
7, four St. Louis stock brokerage firms, who are mem¬
bers of the St. Louis Stock Exchange, notified the Exchange authori¬
On July
ties that
they were opposed to a merger with other Mid-West
stock
exchanges and would refuse to go along with the plan of consolidation.
It is reported that these opposing^
firms are in addition to the six' stock becomes and continues to be
members who registered opposi¬ quite active, within a year's time
tion when a vote on the proposi¬ it may be delisted from the Ex¬
tion
was
taken
last May and ap¬
proved by a substantial majority.
objecting firms are Paul
The four
Edwards &
Sons, Edward D. Jones & Co. and
Brown
&
Co., A.
G.
I. M. Simon & Co.
The firms in
the
the
Louis
St.
question sent let¬
corporations listed
ters to
on
Exchange in which
they said: "We do not agree that
the
market
for
your
securities
would in any sense
be bettered by
change."
The
St.
your
HARRIMAN RIPLEY & CO.
Incorporated
THE FIRST BOSTON CORPORATION
BLYTH & CO., INC.
•>'
GOLDMAN, SACHS & CO.
therefore
They
urged
that
STONE &
all
toward dissolving the Ex¬
change and merging it with the
KIDDER, PEABODY & CO.
WHITE, WELD & CO.
Louis.
WEBSTER SECURITIES CORPORATION
steps
Chicago
Exchange
and denied the
to dissolve it.
in
SMITH, BARNEY & CO.
the
Exchange has functioned
has become a use¬
ful and integral part of the busi¬
ness
and financial community of
that
trading
that
St. Louis
af
the
stated
for 50 years and
moving to Chicago. It is our belief,
unless
also
W.E.HUTTON & CO.
MORGAN STANLEY & CO.
.
letter
the
of
UNION SECURITIES CORPORATION
be abandoned
right of
members
the
a
majority
exchange
as¬
•v
leading Exchanges, an¬
Stone
E.
—
Reed,
/'.'<•
Inc.
*
Chronicle)
PETERSBURG,
I————
care.
wage
the
not
A
that William P. Green and
(
With Waddell & Reed
getting into economic difficulty
growing unemployment. This
makes pos¬
Street, New York City, members
of the New York Stock Exchange
nounce
r
-
say
—
bill because the workers have crer
ated
we
the conviction
that
Institute
the
of
"it is
said,
60
Co.,
j
Chronicle)
SAN
;
tutional
development of a better
"In the
&
Hentz
H.
after
them in 1949."
to
CHICAGO.
ILL.
Robert ? W.
these people in industry, to the
Federal social security payments coupon clippers in Wall Street, Kohler has been added to the
in- order to be able to retire with that every reason that necessitated
staff of H. C. Speer & Sons Co.,
4
semblance
of
security
and our drafting our demands in Jan¬ 135 South La Salle Street.
human dignity in his old age. We
{
uary has been reemphasized and
said that industry had to pay the reinforced
by the fact that we are
Wm. Green & L. Stone
commissioners
the
to
needs
the
policy of the Institute
H. Henlz Go. Adds
#
and
not
are
demands
the
Mr.
■:
coming and get you going. J
"We say the needs of our work¬
ers
investing public and to the econ¬
omy as a
'You
system; they/get
good
a
Joins H. C.
in
say,
you
together.'
"And
inflation
demands
weather
of
in¬
more
the
when
should not do it now, because you
drafted
ample,
and
because
of
these
worsening economic factors, these
negative factors, the high priests
in Wall Street say to us, This is
pen¬
sion plan, that;
every
soft
are
our
we
create
will
Then
is leveling off and we are getting
into trouble because people are
re¬
Unemployment is developing in
serious proportions in many com¬
munities like Muskegon, for ex¬
industry
needed
Since
America
in
also
they
the economic pic¬
demands
ture
year," Reuther
our
and
tion's economy.
of this
uary
de¬
they reflected the basic needs of
workers
t
"Industry tells us when we are
a
period of inflation, that We
should not demand wage increases
when
prices are going up .be¬
because
them
drafted
ulatory requirements and methods
of
how- better
to
enable theserjfeMftso! 5% of pay-roll to give our
workers and their families com¬
Funds to contribute to the equity
and
drafted
economic
greater proportion of investment curity was clouding their future.
capital and surplus savings? That We said that when a worker, had
is the $64 question which the In^ worked 25 years and reached the
of 60 he was entitled to a
stitute hopes to solve through a.
constructive program of research-• minimum of $100 on top of the
Mr.
these
drafted
we
we
and
in
being
"When
mands
we
loud
that
say
'•
negotiations.
"When
to
clear.
13
;
..
flation.
a
and
have
we
Workers
Auto
July 10, Walter Reuther, head of the organization, announced his
demands to be presented to the automobile manufacturers in forth¬
coming
wage
were
"Why, in the face of these facts,
Co., Inc., New York; Karl D.
Pettit, President of Knickerbocker
Fund,
rose more
increased 65%.
stocks
such
W.Long, Pres¬
of Hugh
Long
invested
40%—and the dividend income on
ident
W.
are
while the value
stocks in which Mutual
common
Funds
Bartholet, in¬
cludes:
Hugh
of
on
stated, "we
riod, the purchasing power of life, said that the
insurance and savings bank dol¬
workers
in
initial
tute's
billion. Mean¬
life insurance companies
added $23 billion to their net re¬
serves;
savings
banks
deposits
rose
$28 billion. During this pe¬
while,
derwriters.
The I
Mutual
of
assets
Aims
(169)
In a lead-off speech at the 12th Annual Constitutional Conven¬
tion of the United Automobile
Workers-CIO, held in Milwaukee, Wis.
Funds have
mmonly
co
the
1940
Since
CHRONICLE
In opening speech at Annual UAW-C10 Constitutional Convention,
calls for health and pension benefits as well as higher wages in 1949
of
in
vestment
FINANCIAL
Reuther Stales
Formation of the Mutual Fund Institute
ization
&
July 8, 19f/9.
'
DREXEL & CO.
/
I
14
THE
(170)
COMMERCIAL
r? Thursday;; July 14, : 1949
CHRONICLE
FINANCIAL
&
establish,
and .-to
Industrial Executive Offers Recommendations
1"
European Policy
The anomalous situation of the
reports some
Dominion of Canada within the
have
repercussions
doubt,
•
-serious
very
some
certain
in
,
areas,
however I believe that such a re¬
need of change in allied
progress, but sees
•>V;/" policies.
economic
'/■
^
from extended tour of Central Europe,
W. Harnischfeger, on return
By WILLIAM J. McKAY
:
»
>
This will, no
foreign currencies.
For
1
.realistic
more
a
valu£-between the dollar and other
if we
is unavoidable
adjustment
r
hope to get back to some form of
sound international commerce."-
British Commonwealth of Nations is likely
%be thrown into sharp
As a result of observations made during a trip to Central Europe
Empire Conference/ ip London. Unlike the from August 28 to Oct. 12, 1948, which included Holland,, Belgium,
Mother Country and the other Dominions, Canada is outside the Ster¬
France, Switzerland and Germany, W. Harnischfeger, President of
ling area. Furthermore, whereas#
——
——
—— Harnischfeger Corporation, Milwaukee, Wis., reports that considerable
socialistic Britain, Australia, and of the British Labor Government
e c o n o m i c*>—
New
Zealand
are
firmly com¬ to devalue the pound to a realistic
progress nas whether Europe will remain un¬
relief during the current
Morgan Stanley Eroap
Underwrites
•
mitted
to
based
rigid
on
lateral
tem
Thus
currency
^•;
is
Canada
likely to have
consideration
serious
give
and
trade
convertibility.
the question whether it is now
time to m&ke
one
to
the
of the most vital
decisions in her history.
Either to
abandon her North American eco¬
nomic
and
retire
within the Crippsian curtain of
austerity and regimentation, or to
orient her economic policies still
conceptions
closely in line with those of
In view of the crit¬
more
this country.
ical nature of the British economic
situation it will be difficult to
rive at a
would
ar¬
satisfactory compromise.
In the absence of additional dollar
credits from this country or Cah-
tries,
any
be
level
Otherwise
as
a
Canada
and
tion,
par¬
will be faced with the em¬
barrassing
necessity of making
fundamental changes in economic
that
will
nothing
do
to
he
sees
.and
economic
was
d|
to-
c o m-
c
bond market :,and
/A sound peace treaty and a co¬
fairly
well main¬ ordination of the three Western
tained..
In
sympathy
with .a Zones is undoubtedly the founda¬
slightly higher level of free funds tion upon which the
economy
following the recent relapse, the must be restored is the opinion
section
of
prices
the
were
ada, which at the moment appear internals were likewise a shade
of Mr. Harnischfeger. "Our State,
.highly improbable, the strict
firmer; it would appear that the military and commercial, policies
influence
of
the
fairly
heavy indicate lack of coordination," he
tourist traffic is offsetting for the adds. "One can
readily appreciate
conditions can only lead to* the
moment the bearish factors con¬ the reason for some of
this, as
virtual segregation of the dollar
stituted
by the weak trend of there are undoubtedly many com¬
and sterling trading areas.
Such
sterling and the important Do¬ promises that are being made be¬
a
division however would leave
minion internal bond redemptions cause of our Allies.
As long as
tolerable
in
7
one
On
indefinite
an
postion,
camp
the
nor
other
and
in¬
of
.
October
and
November
next.
neither clearly Stocks continued their recent
gen¬
in the other, if eral advance with
the principal
hand
is
Canada
interest concentrated
we
are
insist
footing the bill,
and
should
clear-cut, con¬
policies." v
sound,
cn
structive
we
honest
the base-
on
Continuing, Mr. Harnischfegfr
prepared at the present time metals and the golds; market sen¬
drastic modification of her timent concerning the latter group says:
"The total export for the three
relationship with this country or is becoming increasingly favorable
with Britain which would cer¬ and it is
confidently expected that zones in Germany for the current
tainly provoke dire economic con¬ ultimate * currency
I un¬
devaluations year is 600,000 000 marks.
sequences.
Canadian
economic and lower industry costs will soon derstand that at present, consider¬
policies in the past have been lead to the
development of a full- ing prevailing expenses, it; will
based on the infallibility of the
take 1,800,000,000 marks to
put
fledged bull market.
not
for any
time-honored
U.
S.-British-Can¬
adian exchange and trade triangle.
Its virtual breakdown as a result
of, the non-convertibility of ster¬
ling unfortunately has not pro¬
duced
clear-cut
any
policy
successful
or
change
remedial
of
ac¬
the
Sfaaley 0. Eaton
with
The many
Eaton of
tion.
on a self-sustaining
personally question
can be accomplished
dismantling and admin¬
economy
basis.
I
whether this
friends of Stanley C.
Bendix, Luitweiler & Co.,
our
istration policies. In- summarizing
the conditions I found in my re¬
cent
trip to Germany
with
16
months
compared
as
ago,
I
J It is therefore in Canada's vital
opinion that there has been
interest
to
between
the
In
areas.
will
seek
prevent
a
solution
that
order
(EDT)
Net
ceeds
finance
and
as
treaties
of
and
which
These
agreements should be
rationalized
in
with
line
this it
inated.
The
adequately
people
clothed
convertibility
has
would
the
far
and
been
more
the
sounder
; "A
the
liberal
The
shock¬
are
It
..
52
GOVERNMENT
'
v
Wall
Stanley
Street,
C.
Eaton
New
York
members of the New York
City,
Stock
Exchange, will be glad to know
that he is back at his desk after
PROVINCIAL
Laryngectomy
away
MUNICIPAL
ons
we
have
which
since Feb. 8.
kept
The big unsolved prob¬
N. Y.
the rest of the European economy.
'
NY
1-1043
lation of
of
Russia
This
situation
than
talk
about
has
deteriorated
improved.
There
throughout
possibilities
•
expenses,
is of
Europe
with
Russia.
Personally, I hope and
pray this can be avoided. 11 do
believe a firm policy is essential.
of
war.
in
the
firm's
New
office, 52 Wall Street, New
course,
With Floyd A.
covery
reason
influence
that
the
funds
this
tion
in
the
is to
restore
industrial
the Ruhr and the
with
vert
the
sustained by paper currency.:
and
chemicals,
raw
this
Avenue.
Both
Anderson
Mr.
thereto
was
with Carter H. Carbrey & Co.
and
and
section
Fewel &
of
Co.
With Olson, Donnerberg
con¬
into
;
"
(Special
steel
the
is
Prior
Co;
in
A. Allen & Co., Inq.,
Grand
formerly with Paul R. Flynn
were
are
,
Floyd
650. South
produc¬
Rhine, and
materials
tions, often poorly conceived, ana
Ap¬
program
recovery
area
Morris
and
Anderson
F.
ence
more
which
\
Greenberg have become associated
re¬
will, be spent
Chronicle)
LOS ANGELES, CALIF.—Clar¬
,
where they will reduce the
maximum
if
the
abroad. This is all the
extended abroad
areas
on
Allen & Co*
-(Special to The Financial
.
including ECA. which,
will have somewhat of
retarding
a
estimated popu¬
an
approximately 809,000.
Anderson, Greenberg
drastically reduce all Government
relation
only
ST.
has
to The Financial
Chronicle) -v
LOUIS, MO.—Joel W. Pope
been
to
added
parently there are only two re¬ possible way that these people can
York City.
The firm's principal
At the Olson, Donnerberg
maining countries in Europe, get exchange for goods.
office
is
in
Chicago.
Mr.
de namely" Switzerland and Belgium, present time, we seem to be doing 418 Olive Street.
Bronkart came to the financial which have a budget approaching just the opposite; namely, that we
the
staff
Co.,
&
of
Inc.,
relatively free are continuing to dismantle plants.
Joins Kirchofer & Arnold
7 "With reference to the revalua¬
•_*
connected with several
^Special to The Financial Chrontle)
tion of currency, personally I be¬
"America
undoubtedly is the
New York firms in their
CHARLOTTE, N. C.—Richard
syndicate
lieve that the drastic readjustment
one country in the Western civili.
i
A. Burke has become associated
departments. He recently termi¬
zation that is in a position to ex- of currency is essential m order to
nated
an
eight-year association ercise sufficient influence to un- bring about more natural trading with Kirchofer & Arnold Assodistrict from
has
Chicago in 1926 and
been
balance and have
economy.
a
,
t
..
.
WORTH 4-2400
miles and has
ing program to manageable pro¬
portions.
It will be necessary to
the
Eugene
H.
de
Bronkart
has
"Furthermore, Europe, to a sub¬
joined Sills, Fairman & Harris, stantial extent, "is now operated
Inc., as Vice-President in charge as a large planned economy, being
of the syndicate and institutional controlled
by rules and regula¬
York
TWO WALL STREET
Dayton,
spend¬
to
is
mudh
department
NEW YORK 5,
this goal.
lem
-
Eugene de Bronkarl
With Sills, Fairman
INCORPORATED
principal cities served being
Sidney,
Xenia,
Troy,
Piqua,
Greenville, Urbana and
Washington C. H. The service area
covers approximately 6,041 square
the
and the atomic bomb. The lat¬
to reduce the Government's
a
him
CORPORATION
A. E. AMES & CO.
purchase, distribution and sale
gas.
Its business is
solely in Ohio, where service is
rendered in 24 adjacent counties,
natural
of
lars, mostly made by the U. S. A. I personally believe that our Gov¬
big problem will be how to ernment's fundamental
policyput each country in the European should be to put our own house in
area on a self-sustaining basis.
i7 order—the first step of which i
"In my opinion we are far from
incorporated
the
"The United States," Mr. Har¬
nischfeger concludes, "is the lasi
phase of western civilization and
to
was
production, transmission, distribu¬
tion and sale of electricity and in
six
of
resources
ter, if not controlled, will surely
annihilate civilization-
this im¬
grants of food, cloth¬
rather
CANADIAN STOCKS
the
company
1911, under the laws or Ohio.
is engaged principally in the
in
The
,w
the construction and
acquisition of certain
1948)
The poison gas of World War,I
has been replaced by robot weap¬
ing, relief and availability of dol¬
CANADIAN BONDS
1952.
hears about
one
"On the economic side
dissipated
more
provement is undoubtedly due
program
through
carry
electric yand
ing.
sub¬
approxi¬
substantial part of
its
of
construction
a
will
the
also
in Eu¬
powers
the atrocities in Russia
housing
reconstructed
to
used
were
portion
a
(including
present
I
bilateral agreements
Russia. The stories
mately 10%.
of
sterling.
This
possible only in
the
willingness on the part
be
to
gas
companies in
will
aggregate
approxi¬
mately $88,000,000, of which $47,rope and a sensible peace treaty
with
Germany • will
accomplish 689,700 had been expended up to
more
at
this time 'than
multi¬ April 30, 1949; an estimated $6,lateral agreements, many of them 752,200 will be spent during the
remainder of 1949 and approxi¬
socialistic in their implications.
mately $33,558,100 will be spent
;
""America, with a $250 billion in 1950, 1951 and 1952.
•<
7 '1
debt and $40 billion annual cost
On completion of the financing,
of Government, can no longer af¬
the company will have 1,983,333
ford to waste its substance.
Two
shares of Common Stock outstand¬
great wars have been fought and
ing. There will also be ou stand¬
I'm afraid, a third one is in the
ing 100,000 shares of 3.75% series
making. In the course of events
A,
cumulative preferred
stock;
1 believe that we have probably
75,000 shares of 3.75% series B,
contributed as much towards de¬
cumulative preferred stock; and
terioration and human suffering
$51,850,000 in three series of first
because of our partnership with
mortgage bonds.
believe
with
country.
are
I ; 7
used
be
The estimated cost of this program
day requirements and necessity.
to achieve
of
economy
which
from
in >1946;
agreements-
of them ill-advised.
treaties and
will
present
construction program, and to fi-.
nance a portion of this program
during the balance of 1949. The
company, to meet increasing de¬
mands lor electric energy, started
as
wherewithal
lot
Co.
jointly
July 26, 1949.
on
proceeds
battlefront,
Europe today,
many
July
&
Co.
&
the company's outs anding
$5,000,000 of bank loans, the pro¬
Starvatipn, which was the order of continents; resources that, if prop¬
the day 16 months ago, has to a erly ' conserved, could have sus¬
considerable
extent
been
elim¬ tained civilization for generations.
necessary to offer a solu¬
tion that will permit the resump¬
tion of multilateral trade and the
of
the
America is furnishing the
which is sustaining
we can and should
insist on restoring a sound Euro¬
pean economy., We have made >a
long
Hutton
repay
the
on
on
Stanley
purchase any unsubscribed
following termination of
subscription offer at 3 p.m.
As long
principal
the
was
which
power
tories
cf record
held
business
underwriting group which
an
brought about vic¬
America
as
par
shares
;
ficial
be
event
mess.
six
of
Morgan
>
E.
W.
will
we
opportunity to
our one
close
1949..
head
($7
stockholders
common
share at the rate of one
a
the
and
do not
we
rationally
definite
cleavage
dollar .and. sterling
a
miss
If
-
and
Washington is essential.
stantial improvement in the super¬
will
a
Russia.
$26
7,
ex¬
and
stock
common
share for each
.which German prison¬
in
of
at
Jj"A sound foreign policy out ol
of the
am
personal
many
straighten out the
fulfillment of Sir Stafford Cripps'
economic program under present
in
the
in
promptly
may
to be
Canada
at
to the
more
.
had
ers
are
Light
additional
Power
offering 283,333
value) to its
Germany,
in
masses
moment,
periences
act
plete European restoration is to be
7. ,
f
activity in the external accomplished.
there
week
the
; if
subs tantial
W. Harnischfeger
w a r
the
the
but that
Dayton
is
shares
There is not any question
course.
and
policies,
further
:
more
the
determine
undoubtedly
Co.
right than either in France or in
Britain.
The reason for this is
progress
During
will
The
Germany
of
at
remedy the world's current ills.
little
rehabilitation
Dayton '
Offering:
Power Com.
Policie:.-
East.
the
by
be
or
establish with reference
we
the
to
influence
Western
absorbed
which
changes in Allied
political found
ticular
policies
to
situa¬
the
important
world
in
res¬
der
need for some
pound.
democratic
the
whole
-
the
of
full
normal
safeguard
to
necessary
new
be¬
toration
willingness to consider
additional
assistance
that
the
coun¬
but
fore
abroad and
might
in
made
these
fob
a
find
would
been
decision Britain
readier
cooperation
such
lowing
in¬
more
once
and bi¬ spire universal confidence.
There is little doubt that
Canada's
served by a sys¬
are
which
level
inspired by the principles of
multilateral
to
controls
trade operations,
best interests
policy
economic
an
.
.
,
i
with
Amott, Baker & Co., Inc.
ravel the situation and determine
-
between
soft
currency
countries
•
-r-
V
J
■»«%
'
•*
,1*
_
7.
Volume
170
Number 4820
THE
While Weld Group
Offers 440,000 Shares
Public
shares
of
offering
Gas
of
each
on
unit
$50,000; $15.99
unit
per
million instead of £400 million
each
on
more.
organized June
operate as a spe¬
company,
16,
1949, will
cialty fund, investing in securities
;of companies identified with the
industry
gas
with
and
related
particular
natural gas.
special-
this field.
According to the prospectus, the
orable
of
fuel
and
The
energy.
such
cuts
would be
m.-
the
Even
reserve
to
hitherto
:
turned for the
"safety
But
rity
or
in¬
of
on
Dol¬
gold
1947
pensive
save
Dr.
Paul
dollars is
to
in
effort
an
The only way
ation
ex¬
to
costly device, for
a
raise
production.
the British cost
Even
a
the
temporary relief, for the process
which is at present making for
higher prices through bilateralism
Monetary Fund. So
after allow¬
would
soon
resume
The
only
way
its
working
wards
is
course.
in which
a
restoration
hours.
comforting
within
have
of
a
to
past
the
two
been
effort
fun¬
achieved would be through drastic
cuts
in the cost of production,
reasonable to
ments of the whole Sterling Area
it does not seem to be any too
either through reductions of wages
ment
single class of Its position is not determined, sole¬ plentiful.
>
>
V
•
common stock with a par value of
ly by the trade balance of the
In the circumstances the gov¬
United Kingdom, but by the trade ernment will have to make a su¬
$1 per share, of which 2,000,000
shares are presently authorized. balance ot all Sterling Area coun¬ preme effort in the near future
Upon completion of the initial tries. This is a fact which is not to check the drain on the gold re¬
offering
of
440,000
shares the adequately
realized:> in London. serve. This could be achieved by
While grave concern is felt over an increase of the export drive to
company will operate as an openend investment company.
r.he decline of British exports of the Dollar Area but in face of the
;
3;
"I The company has retained Colo¬ manufactures to the United States, growing difficulties in this re¬
nial
Management Associates
as
very little attention is paid to the spect it would be unduly optimis¬
investment adviser. The president much more important decline of tic to
expect any spectacular re¬
of the company is James H. Orr, Sterling Area exports of raw ma¬ sults in that direction. The alter¬
who is also a general partner of terials to the Dollar Area. Yet the native" is to
cut down. ruthlessly
Colonial Management Associates, Sterling Area Dollar Pool is fed British and
Sterling Area imports
president and director of Railway mainly by such exports. The fall from the Dollar Area. This
is what
and
Light
Securities
Co.. and m the prices of raw materials,
the government envisages; hence
president and trustee of The Bond and in the volume of American
tivity. The former is politically
.impossible. It is difficult enough,
chemicals.
*
The
'
1
consists of
pany
of
.
,
,
capitalization
the
com¬
riot tell
the
.,,
.
whole story. For the
that
British gold reserve is the reserve
of
the
Sterling Area
whole.
a
as
it has
to
only.
cover
or
a
.
.
amidst
full
a
many
gaged
Mr. Orr has been
years
in
investment
en¬
prevailing
:
that
the
Trades
Unions
reductions, unless and until there
be
increase
an
in
unem¬
ployment, and the government is
pledged to preventing this.
There
remains
'productivity.
•achieved,
the
This
through
{management
increase
*
the
full
gravity
situation
in the
assume
British
the
is
it
same
that the mo¬
public
of
the
certain
way as
Directors
clude
Mr.
of
the
Orr,
Mining Corp.; Henry
A.
Wood,
Jr., Boston trustee, and
Sherwin C. Badger, an officer of
New England Mutual Life Insur¬
W. E. Hutton & Co., 14 Wall
Street, New York City, members
of the New York Stock Exchange*
harder
to
George A. McDowell & Co.. in
Building, Detroit, Mich.,
the Buhl
it is announced.
imports of such materials, affects :the conference of Commonwealth ish industries is only making slow a member
gold outflow to a much larger Finance Minister' that will take headway, however, because even Exchange.
of
tne
Co.
ance
This announcement is under
offer to buy
on
any
The latter firm is,
Detroit Stock
the
X
"
!
Offers N. W. Equi, Issue
Halsey,
Stuart
associates
&
Co.
Inc.
means
or as an
offer to buy,
or as a
of the Prospectus. This is published in
as may
solicitation of
any
Stale
legally offer these securities in such State.
equipment
trust of 1949 2%% equipment trust
certificates, due $440,000 annually
Aug. 1, 1950 to 1964, inclusive.
under
in
the
offering are A.
Inc.; Hornblower
&
Weeks; Merrill Lynch,
Pierce, Fenner & Beane; Otis &
Co.; Paine, Webber, Jackson &
Curtis; Wm. E. Pollock & Co.,
G. Becker &
Common Stock
Co.
The
(without
par
value)
v yr ■>•:
-
y
Company is offering these shares for subscription to the holders of its outstanding Common Stock, to whom
Subscription Warrants
The
are to
be issued, and to its employees,
as
more*fully set forth inthe Prospectus.
Subscription Warrants expire at 3:00 P.M., Eastern Daylight Saving Time; 'August 1, 1949.
Subscription Price $20.
per
Share
During the subscription period, the several underwriters, including the undersigned,
Common Stock,
including shares acquired
tion Warrants, either firm
less any
or
or
subject to subscription, at prices not less than the Subscription Price set forth above
concession allowed to dealers, and not greater than either the last sale
York Stock
offer and sell shares of
may
to be acquired by them through the purchase and exercise of Subscrip¬
Exchange, whichever is higher, plus
an
or current
offering price
on
the New
amount equal to the Stock Exchange brokerage commission.
Freeman
Wells
& Co.; Mullaney;
Co.; and F. S. Yantis &
5
.
the
Philadelphia
plan, the certificates were
reoffered. subject to Interstate Com¬
merce
Commission authorization,
at prices to yield from 1.375% to
2.675%,
according to
maturity.
Associated
Philadelphia Electric!Company
and
July 6
and
North
Chicago
Ry.
second
Western
&
Copies of the Prospectus
may
Co., Inc.
be obtained in
as
Proceeds
tificates
from
will
be
sale
the
of
diesel
45
freight
locomotives;
electric
switching
two
diesel
electric
four diesel
locomotives
electric
La
.
1
Drexel & Co.
Blytii & Co., Inc.
The First Boston Corporation
to The Fnc'Kcui,
Chronicle)
ILL. —Robert
Salle Street.
Harriman Ripley & Co.
Incorporated
Smith, Barney & Co.
Kidder, Peabody & Co.
W. C. Langley & Co.
Parish is with Weeden &
South
-
Glore, Forgan & Co.
transfer
Merrill Lynch, Pierce, Fenner & Beane
'
Stone & Webster Securities Corporation
With Weeden & Co.
CHICAGO,
;
cer¬
locomotives.
(Special
State from only such of the several underwriters, including the undersigned,
legally offer these securities in such State.
used, to
provide
following new standardgauge
railroad
equipment,
es¬
timated
to
cost
approximately
$8,314,260:
any
may
the
and
offering of these securities for sale,
972,624 Shares
awarded
were
$6,600,000
for
as an
new issue
•
Inc.:
circumstances to be construed
behalf of only such of the several underwriters, including the undersigned,
Halsey, SfuarS Group
Issued
no
of these securities. The offer of these securities is made only by
;
L.
Co., 135
July 12, 1949
'
'
1
'
Wire to Geo. McDowell
in¬
Schneider,
mont
.1
W. E. Mutton Installs
company
Franz
present
respond
v.
research
•Executive Vice-President of New-
to
realizes
it did in 1931
1940.
and industrial management.
1
of the nar
So it seems
be have
installed
a
direct
private
efficient wire from their New York office
Mechanization of the Brit¬
work.
the freedom
could
more
through
or
of
happened in
ticm had to be saved.
of and
to prevent
It is quite
not put up with any wage
should
ain when
conditions
even
further rise of wages.
would
be
increase of produc¬
an
employment,
certain
.
Investment Trust of America. For
through
It
in 1940 during the Battle of Brit¬
Considering
the require¬
lar Area, does
striking instances
1931, when the British public made
an
effort to save the pound, and
£300,000,000
industry and related fields,
including oil, gas equipment and
gas
to¬
prewar
Nevertheless, it
remember that
20 years there
Britain.
in
damental
could
than
of
sudden increase of productive
external liabilities, must be about
improvement
rather
hours
a
working
devalua¬
tion of the pound would only bring
ing for this and other short-term
Einzig
markets
it tends
of
ob¬
1948 from
and
priority immediately
after the war.
purchases
diversion of purchases to more
facilities
dollar
the
increase of electric poyver pro¬
duction first
high-priced
the
tell
not
that
appear
the
considered
does
However deplorable
has
what
the net gold reserve
Britain's trade
•witn
trie
of
International
assets of the Fund may
the
of
below
been
limit"
tained in
the
deficit
crease
decline
well
story. For a large part of
the gold reserve-is earmarked, in
practice if not in law, as a secu¬
trade
the
the
extension of
an
curity instead of giving plans for
an
the gold drain
without causing
machinery by putting in harder
thereby a corresponding reduction
work. At present there is no sign
of the standard of living.
of any progress in that direction.
However, it is realized that the The
trend is still towards shorter
the
whole
tne size of the
adverse
to
etc.,
must
on
general
in which the situ¬
could
improve would be
markets, thii ha£ to be done to a
through inducing the workers^ to
large degree, in order to check
make better use of the existing
exports of textiles
automobiles,
through
and
in
should be diverted to
■,.
United States.
has
worse.
m
British
whisky,
in¬
to
1
it
rations
on
supplies
bilateralism.
degree than the fall in the volume
ed in all
be invest¬
types of securities in the
v.-
of
ciently unfav¬
.is founded
importance
of
':<£>
1
dicate that the
even
source
■
suffi¬
were
balance,
the increasing
natural gas as a
of
of the British gold reserve to around
figures for
April and May
-investment policy of the company
upon
by Sir Stafford Cripps.
drain, and points out
to check
£400,000,000 during the second quarter of 1949 provides some indi¬
cation of the setback that followed the
progress towards balanced
international accounts during the! second half of 1948.
v.Already the
traae
the ut¬
reluctance
consumers'
foreign
with
to
power, and any wholesale replace¬
only, as they ment of men by machines is im¬
mean the imposition of additional
possible until after an increase of
austerity
measures
which
are power generation. That,
howeve^
bound to be unpopular.
requires time. It is now widely
The only way in which it would realized
that it was a mistaken,
be possible to minimize the effect
policy to concentrate on social se¬
Britain will respond to situation.
on
It is the first invest¬
stated
as
effort must be made
cutting Industries have to put up with a
Any such curtailment of the use of electric
at
imports.
resorted
are
most
is drastic cut in production cost of British goods. Asserts
way
trend
emphasis
ment company formed to
Jze in
fields
supreme
•LONDON, ENG.—The decline
under
sale
The
Says
only
future, largely if the equipment were available
of co-ordinating there is not enough electric power.
aiming
dollar
down
15
near
purpose
measures
cuts
Einz.g reveals extent of Britain's dwindling gold and dollar
reserves, the net amount of which he estimates at around £300
is
Inc.
of $50,000 or more but
Jess than $100,000, and $15.82 per
•share oh each unit sale of $100,000
or
the
(171)
the
in
the
for
Dr.
sale
share
CHRONICLE
By PAUL EINZIG
being made today (July 14) by an
underwriting group headed
by
White, Weld & Co. The stock,
representing the initial public of¬
fering, is priced at $16.25 per
•share
FINANCIAL
place
440,000
Industries
&
Drain
Gas Industries Inc.
-
COMMERCIAL
Union Securities Corporation
an
IS
COMMERCIAL
THE
(172)
FINANCIAL
&
CHRONICLE
the
chased two
(Continued from page 11)
liquidation
voluntary
July
on
Willi its absorption by
1
the Center
Moriches Bank.
♦
*
The
86th
Bank
the
National
First
the
Trust
&
of
anniversary
of
fotmding
*
Company
of
New
observed by
the
bank on June 27, when it
featured an "open house" for the
Conn.,
Haven,
was
inspection by those interested in
its newly remodeled quarters. The
bank, of which the present Presi¬
dent is Dwight L. Chamberlain,
banks—an amalgamation, he became PresClif¬ ident of the Bloomfield Bank &
other Clifton
First National of Clifton and
Co.
Trust
along
that,
Paterson
previous
of
mergers,
a
National
from
charter
Bank
Washington, and it bears the des¬
ignation Charter No. 2. The First
National Bank of Philadelphia re¬
;
Allison
of
Bloomfield
the
Bank
June
Trust
&
Mar. 31/4G
$
Total
Cash
$
211,618,963
resources
196,586,711
due from
and
45,858,449
banks
45,029,713
U. S. Govt, security
Plans
of
Company of Passaic, N. J., and
Clifton National Bank
the
of Clifton,
N. 5., were voted by the directors
of feoth institutions on July 7 and
will
be
before the stock¬
placed
holders for approval. Special ad¬
vices from Passaic to the Newark
"News" of July
sard in part:
•
8, reporting this,
- ■
■
been
appointed
a
companies, and in 1898 he Trust Officer of the Pennsylvania
organized and was President of Company for Banking & Trusts, of
Jersey
which in
City,
other
with
1905
amalga¬
companies
mated with Burns Bros, under the
Becoming
name.
the
of
retired the fol¬
remaining as a di¬
lowing
rector
year,
Burns
of
serving
as
in
1926-27.
states
The
"News"
also
1890
he
instrumental
was
Coal
the
Co.
that
in
in
re¬
the Fairlie & Wilson
Newark, succeeding
organizing
of
Wilson
&
Fairlie
older
He had since served as
and since 1926
as
a
and
firm.
director,
National
Exchange
Trjist
Co.
of
Nelligan,
the
Safe
Assistant
Deposit
&
Trust Company of
Baltimore, Md.,
elected Cashier of the insti¬
was
tution, effective July 1, according
to
an
of July 2, by J. S. Armstrong, Fi¬
nancial Editor.
It is added that
Mr.
Nelligan is assuming the du¬
The two banks will Coal & Iron National
Bank, now
operate in the build¬
the Marine Midland Trust Co. He
ings they now occupy and no
was
Honorary Vice-President of
changes in staff will be made.
the Coal & Iron National from
•George Young Jr., President of
1909 to 1926, and served as. Chair¬
the
Passaic
bank, will
become
after
man
President of the consolidated unit.
of
the
Discount
retired
the
Latft
of
Clifton
of
the
month
First
National.
National
Bank & Trust Co. of Paterson pur¬
when the institution in
underwent
a
oompleting
service
name
that year
change due to
*
U.
Miller who
in
as
nearly
the
trust
was
Cashier after
50
years
of
department,
likewise was retired
in the service of
the company.
It is further stated
that
Eugene W. Mayhorne was
50
elected
Assistant
#
Auditor.
*
*
Harry Y. Wright, who has served
its
affiliate,
on
*
•
-
holdings
92,473,723
65,848,078
curity
Undivided
83,414,786
69,235,219
3,204,546
profits
,'i *
*
3,061,196
.
*
591,228,272
222,299,177
219,791,302
bills
discounted-,.
Undiv. profits-
8,458,037
8,923,107
*
*
ST.
IN
BANK
NATIONAL
FIRST
LOUIS,
ST. LOUIS, MO.
r
Apr. 11, '4*
June 30,'49
•
*'
•j
Total resources
American
Company
of the two
companies, succeeding
July 2.
*
*
U. S. Govt, security
holdings
BANK
Loans and bills dis¬
Undividend
"O-'.Pa:
as
-
*
Walter H. Hill
election of
President and Treasurer of the
St.
of
Louis,
St.
In his
new
Company
Trust
Louis
North
is
Mo.,
announced.
post, as President, Mr.
Hill, who had
Vice-President,
Executive
been
and
Secretary
from
President
and
Meckfessel
R.
Vice-
to
Secretary; Herbert
been
has
Assistant Secretary,
elected
and Frank L.
Stein, Assistant Treasurer.
*
of the First National
Bank of Odessa, Texas, has been
increased from $250,000 to $500,The capital
000, effective June 22. The Comp¬
of the Currency reports
CHICAGO,
April 11, 1949
$2,118,893,603
1,987,989,784
1,919,952,947
Deposits
Cash
due
and
banks- '•*
555,272,474
583,354,764
hldgs. 1,154,853,193
from
1,076,869,865
'
of new
\
-
Haywards at Hay-
wards, Cal., became the
office of the Anglo
July
of
Bank
tional
Hayward
California Na¬
San Francisco on
according to a joint an¬
A. Calkins,
Bank, and
2,
nouncement by Allard
Loans and bills
President of the Anglo
„
Crane, President of the
Haywards. The entire staff
of the last named bank will con¬
378,867,430
358,103,789
Temple
22,390,834
discounted
Undiv.
v
■;
The Bank of
ILL.'
June 30, 1949
.
stock.
19,839,942
Bank of
profits
0 >f
*
The purchase of 1,500 shares of
Charles Stewart Mott, President of
Charles Stewart Mott Foun¬
Mr.
Vice-President
of Anglo Bank and Manager of the
Hayward office.
H. Henningsen,
Tillie McCoy and C. F. Quigg, of¬
ficers of the former Bank of Hay¬
wards, and James M. Stark, pre¬
viously Assistant Manager of An¬
glo's Berkeley office, have been
appointed Assistant Managers.
tinue
with the
Anglo Bank.
Crane has become a
*
if
if
$1,000,-
marked the 35th anni¬
versary
of the Union Bank &
quote, and which also stated
Trust Co. of Los
Angeles.
Of¬
1
July
ficers, directors, and employees of
the institution joined forces for
personnel of the bank is involved, brief ceremonies and a celebration
Mr. Murphy said, adding that Mr.
to
commemorate
the
event.
A
Mott
purchased the stock as a half-hour broadcast observing the
straight investment.
anniversary was heard over Sta¬
View
stock
included
Mott
from
the
or
acquired for tion KNX
more
estate
than
of
500
Joseph
J. Budlong, a former President of
the
July 1, 1974
subject to authorization by the
:
opinion oj Counsel, the Bonds will be legal investments for Savings Banks organized under the laws
of the States of California, Illinois, Minnesota, New York and Rhode Island and for
savings banks organized under the general laws of Pennsylvania.
of
1
Fire
Hanover
Insurance
Illinois National Bank & Trust Co.
Vice-President,
stock,
of
the
but
a
now
Cicero
principal
State
Bank,
shares of Lake View
to
another
the
by
CBS
music
Orchestra and
Union Bank
Singers.
Mayor
to
at
$700
Maurice
State
Kaspare
Mr.
the
years,
His purchase of
share.
since the death of Mr. Cohn.
Gordon Graves & Co. Adds
prices ranging from $650
a
Coh'n and Milton E. Getz),
Meyer has been President of
Union Bank for the past 32
purchaser.
"Purchases of stock for Mr. Mott
were
1,500 shares represents 30% of the
5,000 shares of $100 par stock out¬
HALSEY, STUART & CO. Inc.
supplied
C. Sparling, , California
Superintendent of Banks,
Co., sold part of its holdings to assisted Union Bank President Ben
Mr. Mott, who also bought all the R. Meyer in signalizing the event
stock
held by W.
M. Higley, a before a birthday party audience
brother of Charles.
William T. of about one thousand. One of the
Bruckner,
former
Continental- original
founders
(along
with
at his death Presi¬
founder, and
dent
sold his 547
be obtained from the undersigned.
July 1 at 10:30 p.m.,
bank, who died in 1942. The Bowron, Chamber of Commerce
of Charles Higley, another President
Earl
V.
Grover
and
owner
Price 100% and accrued interest
on
featuring various stars, with
estate
guaranteed unconditionally by endorsement as to principal, interest and Sinking Fund payments,
jointly and. severally, by The Pennsylvania Railroad Company and The Baltimore and Ohio
Railroad Company, as provided in Guaranty Agreement to he dated July 1, 1949.
Interstate Cotnmerce Commission.
change in management
shares
To be
may
9,318,383
it
*
CO.A
TRUST
AND
OF
-
>
•
"Lake
To be due
July 1, 1949
Copies of the Offering Circular
170,878,655
8,888,163
profits.
in part:
4Yi% Bonds, Series A
are
155,276,888
counted
NATIONAL
resources_$2,188.780,892
Tot.
we
Passenger Depot
of these Bonds
160,567,336 151,098,484
—
brought about by the sale
*
ILLTV>"5
CONTrVPV'rAL
Mr.
The issuance, sale and guaranty
112,132,854 121,375,596
—_
that part of the addition to the
Senior Vice-President $250,000 capital was made through
of
the
Old
National
Bank
in a stock dividend of $175,000, while
Evansville, at Evansville, Ind., on the further addition of $75,000 was
dation, a philanthropic institution
of Flint, Mich., was reported by
David
Dillman
in
the
Chicago
"Journal of Commerce" of July 16.
The purchase was effected at a
Company
First Mortgage
due from
and
banks
The death is announced of Oscar
of
offer to sell or a solicitation of an offer to buy these securities.
offering is made only by the Offering Circular,
The Akron Union
408,816,501 424,752,799
Deposits
Casn
457,759,343
441,736,184
E. Lamble,
"No
(Special
to The Financial Chronicle)
j
MIAMI, FLA.—Robert A. Sherryis with
Gordon
Graves &
Co.,
Shoreland Arcade Building.
standing.
Peter Waldemar
The Marquette
592,281,143
troller
Baltimore, stock of the Lake View Trust &
Bank
of
Chicago
by
July 13 elected Treasurer Savings
Bonding
was
the
67,349,049
Loans & discts.__
Secretary of The Fidelity
$2,000,000
July 14, 1949
?20,161,474
se¬
hldgs.
Loans and
000, said the advices from which
:
Govt,
curity
*
Se-
Govt
S.
and Deposit Company of Maryland
and
216,542,487
cost somewhat in excess of
In the
1,157,531,32*
320,532,111
due
banks_
Irom
banks
U. S. Govt, se¬
since February 1948 as Comptrol¬
and
$237,115,297
60,371,130
due
bash &
curity
ler
April 11,1949
211,847,238
Deposits
J.
CO.,
$232,730,718
Resources-
years
not an
The
To be dated
S.
1,164,573,019
——
and
irom
OHIO
the
This announcement is
Cash
moted
TRUST
UNION
CINCINNATI,
Edgar H. Cromwell, Assistant
Bloomfield
"Directors
former Judge Trust Co. made him a member in
and State Senate President, will
1902 at its founding and he was
be Senior Vice-President, it was
elected President in 1917. He con¬
announced. Mr. Barbour now is
tinued as President until 1928, and
President
June 30
on
Committee.
Barbour,
of
The merger, it is stat¬
THIRD
FIFTH
THE
Treasurer,
continue to
of the
director
Commerce
of
Hamtramck, Ohio, was made
/
Chairman of the
became
Ohio,
Warren,
known in the Detroit "Free Press"
item in the Baltimore "Sun"
$7$00,000.
he
Bank
of June 28.
Total
*
ties of Roland L.
when
of
Bank
the
with
of the Com¬
consolidation
The
munity
June 30, 1949
J.
Maurice
Cashier
merger,
C.
Deposits
The
Bank
Philadelphia is
of
*yV;*
announcement,
John
.
MICH.
1949
April 11, 1949
Tot. resources_$l,233,078,566 $1,225,802,863
*
*
,
announced.
1927
Chairman of their
Committee
Executive
until
Bros,
eports. The People's National had
capital of $340,000.
*
Corn
com¬
Mr. Dodd
pany,
and
first "a
new
according to the board. As to his banking interests,
will give the in- the "News" said:
^tUbution more than $100,000,000 in
"Banking experience
in New
resources with capital of surplus
York for Mr. Dodd began in 1903
and undivided profits
of about
"The
DETROIT,
OF
BANK
June 30,
Treasurer,
ed, was effected through the pur¬ succeeds Charles W. Owen, who
chase of the assets of the Warren
has been elected Chairman of the
Philadelphia,
y
Vifrff
bank by the Bank of Commerce,
board. The St. Louis "Globe Dem¬
which recently increased its capi¬
ocrat" of June 25 further reports
The election of Edwin H. Krall
tal to $525,000.
that Fred H. Kruse has been pro¬
as
Assistant
Vice-President
of
the Hudson Coal Co. of New York
Vice-President
consolidation
the
for
*
DETROIT,
a
44,601,846
■
has
Hubbert
coal
and
the
Loans and bills dis¬
At the age
Parkersburg
*
59,190,342
holdings
18, having been absorbed by
National Bank,
Comptroller of the Currency
June
the
183,536,589 168,094,648
Deposits
financial and civic activities until
he became ill in 1947.
30,'49
voluntary liquidation effective
in
PA.
PHILADELPHIA,
Dodd, retired President
■■
the Passaic National Bank & Trust
NATIONAL
..
latter
ceived the first charter.
*
*
.
later became identified with other
The bank, it is stated, was the
first in New England to receive
to
of 50,000
-
■
West Haven."
linquished his post as Comptroller.
will
continue, however,
to
as Secretary
for both com¬
serve
the sale
$250,000 by
of new stock.
$200,000
He
the
counted 4
totaling more
65,756,994
66,401,739
of 17, Mr. Dodd began his busi¬ Undivided
5,234,462
5,179,933
profits...
than $68,000,000, it is New Haven's
ness career, starting with the Le¬
*
if
;vvy.y *
f.-V-P
largest commercial bank and has
He
It is announced that Roger L,
branches in both East Haven and high Coal & Navigation Co.
deposits
and
000
who
on
He became Chairman
panies.
Mr.
Wright joined the
bank's board of directors
F&D as clerk in its accounting de¬
boosted its assets to approximately in 1938 upon resigning as Presi¬
partment following his graduation
$125,000,000."
The last
named dent, to be succeeded by Cecil R. from Baltimore City College in
■V.'-/.• V
merger was referred to recently Berry."
1924.
He
was
elected Assistant
in these columns, one item ap¬
Mr. Dodd, among his other in
Treasurer in February
1945 and
peared in our June 9 issue, page terests, was a
director of the three years later was advanced to
2490, and the last one on page 72 American Insurance Co. and Mu¬ the dual position of Comptroller
of our July 7 issue. With the pres¬ tual Life Insurance Co. and a for¬
and Secretary.
ent
plans,
all
the
individual mer President of the Essex County f-,.;
*
*
*
Clifton banks will have been taken Park Commission.
-.yS"'■s-';;
The People's National Bank of
over.
•■'.V"'..
v ;:w
Parkersburg, W. Va., was placed
id
*
*
FIDELITY-PHILADELPHIA TRUST CO.,
Co.—and
Trust
ton
with
opened its doors on July 1, 1863,
Company
of
Bloomfield, N. J.,
with a capital of $300,000, says
died on July 8.
He was 84 years
the "New Haven Register," which
old, and according to the Newark
adds:
"Evening News" had continued his
"Today, with more than 40,000
customers, resources over $75,000,-
Benjamin,
July 2.
Simultaneously
with his election, Mr. Wright re¬
News About Banks and Bankers
National Bank had been placed in
Roland
late
died
Thursday, July 14, 1949
National Bank of
Chicago, III., increased its common
capital
stock
on
June
30
from
Peter
a
Waldemar
securities
Opens
is engaging in
business from offices
at 419 East 12th
Street, N. Y. City.
THE
Number 4820
170
Volume
COMMERCIAL
Says Business San Afford Higher Wages
&
FINANCIAL
The
In
for "the
Congress of Industrial Organizations,; by Robert R. Nathan
Associates, Inc., headed by Robert R. Nathan, former New . Deal
;
economist, the
»
—
—.
.
stand is taken
that
whole
as a
business
can
afford
pay
to
still
are
■
&
1
"Profits
are
f.-v still high but
,
y
A-.
;
to
merely
When I
highlight how. huge they
spoke before the Graduate Schoql last summer, the tide of
inflation, though
halts, was still flooding strongly. In consequence I was able to
give a fairly gen¬
support the conclusion that mod¬
eral, philosophical and political review of the
erate wage, increases do not at all
type of economic policy I believed our govhad
become.
Actually,
the
data
with
declining," the
report
states.
yf
?
"If, b
i
u s
n ess
falls much
further,
cline
Robert R. Nathan
7
prof¬
;
Will
its
de-
.
•
raise wages, the report adds:
months
to
year
not be lost of the
ago,
In
fact, business de¬
cisions-today may well determine
whether there will be apy
1950
and,
profits
Business
1951".
can
how
afford to take steps to halt
the recession.. Later it may not be
able
afford to
to
what it
do
In any case,
afford to allow
can;
come.
;
"If
business
prices, it
to
cut
types of labor income.
the other has been
or
all
sary
afford
can
afford to raise wages
can
and' other
One
now
business, cannot
a
depression to
during
the
neces¬
Pine
last
m
n
e
t$>—:—.
-
' '
.
'
'
:
'
'
' '
1
-I
-
-
-
•
follow. we, follow along 1 hope to make it' my, books. For we have a lot
of
in
7
clear that oil thoco itome
Today the sit- plpflr that all Jthese items are in ground to cover this afternoon.
: uation is much
fa.cjt; quite closely related. Again it
; more confused. may; seem that,
related or not,
. Industrial proihapy of them are a long way from
Now, when we begin to explore
dqction,.prices budget policy but this too is a the! conflicts hidden; in .the
worde
V and ;
nmtaker The' recurrent fierce de¬
/employ"maintaining purchasing power*;
:
ment all have bates as to
\yhether. balanced' or Or "ensuring economic. stability/*
begun to,, fal- unbalanced budgets simply as such we will find that they
spring from
ter. The voices -are! "gobd" or "bad" have always
two main sources., In, the £ifs|
V of the pessi- seemed to me to be sham battles place some
people will want to
J
"Six
talk
about profits being spotty, was .ab¬
surd. Today, however, many, firms
and industries ate being
squeezed^
especially the, smaller companies.'1
In giving full consideration to the
varying profit picture, sight, must'
a
n
r
should
any
4.
'
il,
_
w
.
_
..
.
*
fact that thd to-
are still very high./Nonetheless, a uniform round of identical
7,
mist * and
which
the
only
confused
-,
the
d.!
issue. We should hot ask
somewh at
icits per
stilled
,
■
super-planner,
The
the
jor 'depression will see profits re-* wage increases is not justified, .be¬
placed by losses. If the business cause there is no uniform ability
coirtmunity acts now'to" help stop to grant increases ; in every in¬
the recession, profits will continue stance.
Some companies and in¬
ip
e
t
precip-|tals
»
itously/A ma-
to be earned.
few
a
As to whether all industries cap
run¬
ning high.
,
YYY.Y'
Wt
serve
higher Wages,
since
profits preclude price decreases too,"
'
HI ^
main after substantial cuts
University of Virginia
Holding we should be prepared to meet serious business slump if it comes, Dr.
Wright urges a policy of
adding to purchasing power by unbalancing the budget rather than
redistributing wealth through taxa¬
tion. Advocates drastic tax cuts and
reciprocal program to stabilize purchasing power and stimulate
growth. Says, in order to have full employment, the investment and construction
goods industry must be
prosperous, and there must be steady growth and expansion or business will slide
backward. Denies
growth must be planned, and holds, despite high production levels, our
economy is under-equippedl
tion, of "a National Economic Policy for
x
17
By DAVID McCORD WRIGHT*
Professor of Economics,
analysis of the present economic situation and a presenta¬
1949,'' which was prepared
an
(173)
Budget, the Business Cycle and Russia
Robert R. Nathan Associates, in
analysis prepared for Congress of
Industrial Organizations, says if business can afford to cut prices,
it can afford to raise wages and other types of labor income. Admits
some industries cannot withstand payment of higher wages.
CHRONICLE
we;
during
phenomWright Ve pal
expari?
J
'
siori
of
thq
basic
"maintain
def¬
are
bad
Or per se good.
question- should1 be why dp
have
se
a
deficit. Arid in the
same
purchasing
power'V^
addirig to the total money supply*
But others will think' that tfae
thing to do is rather to! tax or in
some way to capture
"purchasing
way it is not enough- to ask shall
power," or money, which they feel
we1 run (or not run) a deficit? It is
'.'not being used."■>■ We, have
than others, and, some few cannot
last few years, are
is just as-importaht: to risk
beginning to be
afford any raise arid remain m
how; therefore, the conflict of adding
heard once more. On the one hand shall we do it. ;M<erely-b'ecayse two
business.:
' y ..
purchasing power versus redistri¬
' .? 7.\' we are
being warned that if we do people,' aP a given time, both hap** buting it. Again, some people will
"The
economic
policies
sug¬
not watch out'we will "spend our pen to believe either in "maintain¬
wabt to maintain purchasing pow¬
gested ip this report are designed
way into a depression"!' And on ing purchasing power" or in:"ecb* er and "secure;
to
restore full
stability"; withfa
employment; and the other some
people assure us. norjnic stability--',? one cannot- as¬ the framework of a relatively free
maximum production;.' Wage1 and
that only a prompt '" program of sume
that .they haye . anything anduunplanned e c 0 n o m y. -Brit
price policies geared to depression
government public works—deficit really in cOmrnpn either in social others are eager to use the excusO
conditions will in turn yield de¬
financed—can save us from dis¬ goals, or economic policy.
Both of "riiaintaining purchasing pow¬
pressions. Therefore, in consider¬
aster. In the
midspof such confu¬ "maintaining purchasing power" er" or "stabilizing the' economy1*
ing wage increases, some attention
sion fairly specific analysis is in and - "givirig stability" are phrases to force us into a
comprehensively
should be paid to profit conditions
order.. If. we .want to find our way .that can cover a multitude of sins, planned society, which,
though it
at full
employment rather than
we shall have to do a little care¬
as well as a multitude of virtues.
may
nominally respect certain,
more depressed circumstances. In
ful thinking.
When anyone starts to use them,:
: P
property rights, is otherwise in¬
other words, business must act agWhat I propose to attempt this the only safe thing to do is to ask distinguishable in basic economic
gressively on wage and price pol¬
just what they- are really talking essentials from a socialist state.
icies to bring prosperity, and then afternoon is to tie together a num¬
about. If we do not, we are quite
I am neither a prophet nor ^ a
the action can be more easily af¬ ber; of threads which are usually
liable * tb cfind
ourselves
being professional forecaster, I do not
kept separate. I shall try to relate
forded. That is why
large liquid the present threat of depression pushed, into' something/ very far know whether the present indus¬
dustries
afford
can
'much
more
McCord
-
,
-
.
moiiths.
prices
If business refuses to cut
raise wages voluntarily
or
in the early
stages of a downturn,
activity deep¬
it Will be forced to cut prices
and-the
ens,
decline in
later to avoid bankruptcy; or, un¬ reserves should be taken into con¬
as
well
as
current
fortunately, prices will be slashed sideration,
in the process of bankruptcy it¬ profits and profits at full employ¬
ment."
1
self;
•
"Profits
of
all
corporations
in
the first quarter of 1949 were run¬
ning at an annual rate of $31 bil¬
lion
before
billion
after
of
salaries
and
taxes
nearly $19
taxes.
Wages, and
corporation em¬
all
Gordon Brown
Opens
An address
D,
.
Vice-President
Trust Co. in New York, has estab¬
lished a financial and management
slightly
than
more
$80
This
rate.
annual
an"
represents profits before taxes of
nearly
of
40
for
cents
wages' and
dollar
every
of
the
consultant firm under the
Gordon
D.
Brown
the
before
formerly
Brown,
ployees except corporate officers
on
so-called budget
At first glance this may
a fairly mixed
list. But as
crisis.
Bankers
name
than
in
as
a
were
war
1944.
years
Profits
to
still
after
worth
net
third
a
taxes
in
early
above the
and 70% higher than ip
than in. 1929. For the first, half of
1949, profits
the
were
still at least 50%
first half of
"There is not any
that
corporations
1946..
question but
whole
a
as
can
billion
payroll
except
corporate
of
all
first
rate
a
lated
rose
$8
profits
1949
have been
an
annual
$23
on
billion
before taxes, or 26 cents per dollar
of
payroll
and
cents per dollar
7.2%
on
invest¬
ment.
Assuming a further 15%
drop in profits in the second quar¬
ter, ^
10%
wages
and
leave
increase iri corporate
salaries
profits
above
facts
the
on
and
And
pared."
of
J., June
cratic
also
23,
cut
1949.
capitalism. If these phrases
seem
vague,
and
corners
I, will have
ask
you
not. < But years rigo I
boy scout, and I re¬
or
a
their
member
in the
place it' is to maintain the
kind of economy which I believe
best implements that society. And
in the third place this economy I
believe to be a liberal and demo^
of
.
I
United
States
a
so.
cannot; afford
to
on
arid
why I think
But if that is the case,
ought to be prepared to deal
we
with
industrial
an
decline
if
it
We ought to be prepared
comes.
to
Pre¬
serious depressiori
explain later
this is
"Be
motto
strongly feel that the
tolerate
I will
(Continued on page 25)
to read
financing
;
-
y
after
wartime
would
taxes
peak.
still
well
These
how high profits still re¬
.
^
Second
the adjustment of
policies
and
pro¬
to fit changing conditions.
and
,
$
who
his
new
To
'
"
*
To be guaranteed
'
mature
Dunlap
DALLAS, TEX.—Hugh D. Dunlap has been admitted to partner¬
ship with Joseph B. ;Binford of
Joe Binford
name
Park
has
Company, 25Vz High¬
Village, and the firm
been
changed to Bin¬
Mr. Dunlap wa£
previously, with Dittmar & Co.
&
.
.
-
*
'
•
'
i
"
'
-d
.
i
■
'
t
*
■
•
''
■
1'
unconditionally
as to
payment of par value
.
inclusive
and dividends by endorsement
by Chicago and North Western Railway Company
7 :
7 Priced
to
yield 1.375% to 2.675%, according to maturity
Certificates are subject tp authorization by the Interstate Commerce Commission.
Offering Circular may be obtained in any state in which this announcement is circulatedfrom only
such oj the undersigned and other dealers as may lawfully offer these securities in such state.
Issuance and sale oj these
The
-
.*
offices in the William Fox
Now Binford &
ford
•.
$440,000 annually August 1,1950 to 1964,
Building, 608 So. Hill Street, Los
Angeles 14, Calif.
land
.
Equipment Trust Certificates
■
■
•
in
,\
(Phi)adelphia Plan)
assistant at
Bankers Trust. The firm is located
-
'
*
y
;
.
with Brown is W. T.
was
'
Equipment Trust of 1949
' 1*
'
y,.?yv2%%
■
subsequently assistant to Donald
W. Douglas in charge of market
research and economic planning.
Associated
*
••
*
the Douglas Aircraft Co. where he
was
domestic sales manager and
Ashby,
t
Chicago and North Western
management
coming identified with Bankers
Trust, he was for many years with
$6,600,000
*
subjects in their relation to
payroll, and nearly $14 billion
after taxes, or 16
of
trial uncertainty will turn into a
Associates.
&
corporate financing,, including new
employees
10% wage in¬
quarter
corporations
would
all
officers
billion because of
of
School
Graduate
Brunswick, N.
New
,
afford " substantial wage increases.
Just for illustration,
if the $80
crease,
government
democraticv society,
Banking, Economics Panel Session
conducted by American Bankers
Association at Rutgers University,
allowing for a 15% grams
drop in the second quarter, total
Brown has had more than 20
profits still show higher returns
years* experience in finance, ma¬
to stockholders than at the peak
terial control, engineering, sales
of war profits, and much higher
and market research.
Before be¬
above
'*
-
salaries.
Even
1929.
real aim.
basis,
ratio
1949
democratic
a
by Professor Wright
On an The company is operating on a
corporations national basis from offices in Los
earned in the first quarter of 1949
Angeles, but shortly expects to
about 23 cents for every dollar of
open offices in New York.
payroll except the compensation
The new firm will specialize in
of officers.
Even if profits de¬
financial planning and
manage¬
clined another 15% in the second
ment controls.
It will provide a
quarter .of 1949, current earnings
complete analytical and advisory
before taxes would equal 30% of
service which encompasses design,
wages and after taxes about 20%.
production,
sales,
cost
control,
This ratio is still a third higher
capital structure and all corre¬
after-tax
our
What,'! then, is. my rOal aim? depression
We'll, first of all it is to maintain used to be
second
Consultant Firm
Gordon
reirioved from
the
and
threat,
seem
totalled
billion
,
the outlook for wages' and prices,
ITO
charter,
the
Russian
the '
Dunlap.
HALSEY, STUART A CO. INC.
A.G.BECKER A CO.
incorporated
OTIS & CO.
(incorporated)
HORNBLOWER
'
-
-
WEEKS
MERRILL LYNCH,PIERCE, FENNER A BEANE
*
PAINE, WEBBER, JACKSON &
........
FREEMAN & COMPANY
July. 7.1949
.
CURTIS
WM. E. POLLOCK & CO., INC.
^
MULLANEY, WELLS & COMPANY
F. S. YANTIS & CO.
I'.
,
COMMERCIAL
THE
(174)
18
We Must Remain
Economically Strong: Byrnes
t\-
State governments
Secretary .of State and New Dealer says the first line of
war with Russia is a sound, safe American economy.
defense in cold
Warns against higher taxes
and advocates reduced government
expenditures and balanced budget. Opposes "lending our money
all over world" in hope it will provide business, and hits again
at expanding bureaucracy and "welfare state."
"There
his
iterated
attack
tions
the
on
should estimate our. rev¬
and then determine how
we
expanding
enues
Federal
that revenue shall be allotted.
bu¬
We
provide for fixed obligations
reaucracy
and
theory of
must
the
the
so-called
like the public debt and pensions.
We must provide for
adequate
'
*
1 f
w e
national defense. When
a r e
state."
to expenditures for other purposes
we must reduce
some and defer
He
imme¬
urged
others.
diate reduc¬
tion
of
gov¬
ernment
would
"Foreign
Truman's
President
developed areas, but denied any
political criticism of the present
Administration.
continuance of
cold
war
firm policy in the
a
remain
must
wise the first line of defense of all
Democratic nations.
remain
to
are
we
strong
economically,
we should now take
the fiscal ,yearc ending
In
governments
foreign
"After
in¬
dwindling national income,
increasing appropriations
of
face
that deficit
are
for the next fiscal
year. In your
business you cannot spend more
than you make and stay out of
bankruptcy^ Your
government
capnot do it and stay out
of
trouble.
serious
situation
confronting us, the government
levy additional taxes, borrow
can
or
we
reduce
in
are
expenditures.
the
midst
of
a
the
considering
whole
additional taxes. We cannot pro¬
increased purchasing power
vide
by taking more money out of the
pockets of the people.
"In time of peace and when
government officials correctly as¬
sert we are not facing a serious
depression, we should not resort
financing. When
ment does that and
tainty
and
fear
government's
govern¬
when
exist
uncer¬
financial
policies,
Pipiyate employers abandon
sion
the
to
as
expan¬
merchants pur¬
day to day basis and
prudent people buy only that
which
is
absolutely
necessary.
Widespread unemployment results.
programs;
chase
on
a
The government cannot take from
you
in taxes
through
enough
borrow from you
medium of bonds,
or
the
to
money
employ all
of
those
who will be dismissed by
private employers. If at this time
whon there is no war and no ser-
ious
spepds
depression,
more
borrows
government
than its income and
money
to
meet
current
expanses, it is certain it will fol¬
low the same easy course should
business
grow
the >time will
of
come
bonds
our
worse.
If
it
does,
when the value
will
be
affected.
Then
we will be well on the road
the disaster that always befalls
governments which in
peace time
spend more than their income.
>
"Every
woman
thoughtful
man
knows that udder
conditions the wise
and
existing
course
for the
government is to reduce expenditures and live within its income.
j
In the
light of changed condi¬
in
matters
many
which are not
matters of purely local concern.
Public highways is a good illus¬
tration, our roads being used by
drivers of automobiles and trucks
from
states.
many
However
the
dollar of fed¬
paid unless the
is approved by the Federal
government. I do not complain. If
provides not
shall
aid
eral
a
be
road
the
Federal
government collects
you and spends your
roads in other states it
should supervise the expenditure.
taxes from
money on
But
to matters which
as
local governments, involving
affairs
and
affecting the
local
daily
lives of the people, control should
in the
remain
We do not
States.
Government
Federal
the
want
lives
our
from
the
cradle to the grave.
people are lulled to sleep
by Federal Aid. Many regard it
just
as
children regard gifts from
Santa Claus. They do not realize
that there are no federal aid funds
except those taken from the pock¬
ets of the
people. It is taken from
you buy a moving pic¬
ture ticket, a baseball ticket, a
package of cigarettes or a bottle
of beer. It is taken when you buy
a
railroad ticket, or a gallon of
gasoline and when you telephone
or telegraph. It is taken when you
buy any goods, because if not
levied directly, the prices of the
goods you buy are increased in
you
when
order to
chant
must
would
over
the hope
for
ness
not
listen
those
to
urge that
we
lend
the world simply in
that it will provide busi¬
people. We know the
our
fate of the merchant whose busi¬
ness
was
mined
to
lagging and who deter¬
lend money to all his
customers in order to increase the
volume of his business. It
was
not
long before he had neither money
the taxes the
cover
must
when
pay
he
mer¬
pays
we
"Some
people
the proposals
advocated
some
by
of
var¬
ious persons to have the govern¬
ment engage in activities hereto¬
fore regarded as within the prov¬
money
and preserve
liberties.
say
from the
comes
munity, from
com¬
It is better that
the
federal
government
should
leave the money in your posses¬
sion to be spent as you wish,
rather than take it from you, send
it to Washington, pay the salaries
of thousands of people and then
offer part of it back in the form
you.
of federal aid for
some
purpose
in
which you may or may not be in¬
terested. V"'
v-;''
"It is said that the States have
should abandon
some
save
of
>,■;
-
state
our
V '
not spent what
they should spend
for welfare and educational pro¬
grams. That may be true, but in
recent
years
the
States
have
greatly
increased
appropriations
for these purposes. Give the states
a chance. If the
Congress, instead
of trying to find new ways of
spending the money which is now
collected from the
"Those patriots who signed the
Declaration of Independence ap¬
peal
of
some
billion
seven
people, will
the
re¬
approximately
dollars
of
excise
preciated the blessings of liberty.
taxes, the states could get revenue
They believed the least governed from that field.
They could spend
people were the best governed more
money
for education and
people. They were self-reliant. other
worthy causes and still leave
For a century *and a« half: their
the people with more money and
sterling qualities were emulated more
liberty.
by our people who were proud of
their independence. They realized
Not a Political Attack
that
whenever
money
they
accepted
from individuals or gov¬
ernments they ran the risk of sac¬
rificing some of their liberties.
They regarded it a duty to support
themselves and
a privilege to pro¬
vide for the less fortunate in their
families.
"Recently
as
an
and
a
I
expressed similar
interpreted by some
attack upon an individual
political party. I singled out
views. It
was
individual.
I named no party.
On the contrary, I said that each
political party tried to out-promise
no
the others.
Too Much
;;
•
"The persons who object to my
Government
views
evidently do so because
they advocate proposals in con¬
flict with the general principles
and policies I have discussed. That
They want to lean upon the State,
is their right. I disagree with them
—yet the State has to lean upon
and that is my right. For my views
each one of Us.
I have no apology. I do have a
"Our forefathers knew if they
conviction that any man who is
were to remain free
they had to
worthy of the confidence of the
limit the powers of government.
people,
must
place
loyalty to
They were right. Power once
country above loyalty to any indi¬
transferred to government is dif¬
vidual, any grou$ or any political
ficult to
"Today
too
many
people lack
this pride. They want their neighs
bors to pay taxes to support them.
recover.
Power
intoxi¬
cates men. When a man is intox¬
icated by alcohol he can recover,
but when he is intoxicated by
power he seldom recovers.
"We
are
not
only transferring
too much power from the individ¬
ual to
government but we are
transferring too many
powers
of
dite
favorable decision
a
on the Commonwealth & Southern
break-up
plan by Federal Judge Leahy at Wilmington. It now
appears likely
that, as soon as Judge Leahy signs the formal order in the
case,
"when delivered" trading will
begin in two of the Commonwealth
subsidiary stocks which do not now have markets, Central Illinois
Light (which goes in the preferred package) and Southern Com¬
(which goes to the
pany,
stock).
common
The preferred stock has been
selling around
estimated break-up value' around 110
100 compared with
(2.80 shares of Consumers
Power
and
.55
shares
of
Central
Illinois
Light plus $1 cash). The
gets .35 share of Southern Company and .06 share of Ohio
Edison; its estimated immediate break-up value is $4.30 and "sea¬
soned" or "normal" value over
$5, compared with the current price
common
of
3vv:y.'v,'
-
,y'"
;•./:■'y v';'.- V--' ;.v
Commonwealth had first set July 1 as a tentative date for dis¬
tribution of its securities, and planned to sell left-over
holdings—
32,000 shares of Ohio Edison and 324,000 shares of Southern
Company—in order to pay off the remaining bank loan. However,
now looks as
though part of these remnant holdings might be left
as free assets after providing for
expenses of liquidation—perhaps
leaving 50 or 100 a share for distribution to the common. However,
there has, been no official statement as to this
possibility, and
it
estimated
values
do
not
allow
for
any
cash.
Commonwealth has advanced from three to four this
year, and
nearly half-a-million shares were traded at 37s and 4 on July 7
when the Court decision was rendered.
What is likely to happen
when Southern Company is first traded "WD" over-counter or on
the
Stock
Exchange?
Taking Commonwealth at four, and deduct¬
the value of .06 share of Ohio Edison, there would re¬
main $2.30 as the value of .35 share of Southern or a
price of 6%.
ing $1.70
as
But
this price seems on the low side, since the stock is
currently
earning (12 months ended May 31) $1.07 per share on shares actu¬
ally outstanding or $1.10 on average shares. Earnings are showing
very rapid growth, net income for the five months ended May being
38%
last year, and for May alone 58%.
over
The
freight charges.
business.
"If
y
Supreme Court decision in the Engineers Public Service case,
fully upholding the SEC's investment value
theory, served to expe¬
some
"The
aid money
peoples.
"We
Southern Company
The
an
been in the jurisdiction of
ways
Utility Securities
By OWEN ELY
have al¬
free
lays the golden eggs. We must not
impair our economy, the first line
Public
which the Federal and State gov¬
of defense of America and of all
recession in business, it is not ince of the individual or of
Hkely that the Congress will levy
governments, f we
would
to deficit
our
to the federal
Federal aid
will be spent in the community
and increase the money in circu¬
lation. They forget that federal
nor
the
meet
While
heads of
the
picture the Congress must decide
how much can be given abroad.
We must not kill the goose that
money
its
In the
and
w^
from
government departments.
own
who
than
more
come.
money
any
than there is about requests
for funds
$1,800,000,000
"To
sa¬
requests for funds
June 30th your government spent
a
But there is nothing
income.
from
eco¬
sound American economy is like¬
we
expenditures within our
Give Abroad
strong
nomically: Our first line of defense
is not on the Rhine—it is a sound,
safe
American
economy.
That
stock.
our
Must Decide How Much to
\
"If
bear
with Russia, Mr. Byrnes
said:
"We
not
cred about the
more
After advocating in his address
should
aid
the entire reduction necessary to
which bring
program,
U. S. funds to aid un¬
use
Europe.
Congress has shown it real¬
izes the wisdom of such aid.
James F. Byrnes
Four"
"Point
ex¬
The
oppo¬
to
only
rehabilitation of
the
for
are
regimenting
penditures proposed for domestic
purposes but the requests for for¬
eign aid. I favor adequate funds
and expressed
sition
must review not
"We
ex¬
penditures to
hripg the Federal Budget
into
balance,
implied
come
we
Thursday, July 14, 1949
ernments cooperate,
law
Backing up his address at Washington and Lee University, Lex¬
ington, Va., on June lb, James F. Byrnes, long a "New Dealer" and
former Secretary of State, in an address at Greenville, S. C., before
the South Carolina Division of the American Legion, on July 4, re¬
CHRONICLE
government.
4
Former
FINANCIAL
&
is currently paying dividends at the rate of 600
some conjecture in the Street
the company is "on its own" the dividend
might be
raised to 700 or even 800. Of course this may depend
upon what the
management considers the probable level of "normal future earning-power." Recent earnings have been heavily favored by good
to
company
Commonwealth, but there has been
that
when
water
conditions—the
southern subsidiaries get about one-third of
from hydro plants. If earnings should continue their
recent sharp advance and get up to a level around
$1.20, this would
leave some leeway for possible dilution if common stock
financing
their
power
proves
necessary
next
offering, this might
year.
mean pro
Assuming the usual one-for-ten stock
forma earnings around the $1.10-15 level.
On this basis, an 800 rate would seem a little generous as
compared
with the other two southern holding companies.
However, the fact
that Southern is accruing over 200 a share per annum for
plant amor¬
tization (providing that much extra cash) might be a factor in the
decision.
Central & South West is
earning an estimated $1.50 this calendar
which might be diluted by stock financing to $1.35; it is paying
800 or only 60% of the latter figure. Middle South, earning $1.78 in.
the 12 months ended April 30, is expected to pay
$1.10, or 62% of
earnings. With estimated potential earnings of $1.15 a 700 dividend
year,
for Southern would show
This
brief
sketch
a
61% ratio, about in line with the others.
does
not afford opportunity for any careful
comparison of statistical factors for the three southern holding com¬
panies. Southern Company appears to be earning only 5.7% on its
rate base, or 6.2% if account 100.5 items are eliminated.
Middle
South
is also earning only about 6% but is handicapped somewhat
by rate regulations in Arkansas and dividend restrictions in Louisiana.
Central & South West is earning a somewhat higher
operates largely in Texas where
reasonable.
It would
an
percentage, but
8% return is not considered
un¬
though Southern Company may have
a slight
"edge" over the other two systems with respect to its ability
to expand earnings without encountering rate
restrictions, particu¬
larly as its residential rates are very low. All three companies are
of
seem
as
growing rapidly, but Central & South West
operating costs because it can make fuller
course
lower
seems
use
of
to enjoy
natural
gas for boiler fuel.
Both
Central
&
South
West
and
the
recently
listed Middle
dissolution) are
currently selling to yield about 7%, and price-earnings ratios average
about 8%. At 6%, the indicated arbitrage value of Southern based on
four for Commonwealth, its yield with a 600 dividend would exceed
9% and the P-E ratio would approximate 6%. This would appear low
even on an unseasoned basis:
It seems possible that the stock might
sell in a range of about 7—7% in early trading, to yield about 8—8Mt%.
Over the longer term, when seasoned, it might approach the other two
issues on a yield and P-E basis.
South (which
came
out of the Electric Power & Light
In any event it appears certain
that, considering the importance
new company with its $117 million revenues and 12 million
shares, Wall Street analysts will sharpen their pencils and critically
of the
examine the statistical background of the system in order to
appraise
the relative merits of the stock, and its chance for increased dividends
and market
While
appreciation.
appeal to the Circuit Court by Mr. Snyder of Philadel¬
phia (representing common stock) now is indicated, it appears doubt¬
ful that such an appeal will be sustained in view of the
strong views
recently expressed by the Supreme Court, limiting the review powers
of the lower courts largely to legal issues.
an
party.
"In
two wars you have fought
give to all mankind the liberty
we
enjoy. On this Independence
Day I hope you will rededicate
Barton
yourselves
Mercantile
to
to
your
country
and
the
freedom
you
determine
that
fought
give
to
others, you will
work to preserve for yourselves."
David W. Barton
in
Bait.
BALTIMORE, MD. —David W.
has opened offices in the
Trust Building to en¬
gage in the securities business. He
was
formerly President of Income
Foundation, Inc., of Baltimore.
Norvin Harris Co. Formed
NEW
ORLEANS,
LA.—Norvin
Harris has formed Norvin Harris
& Co. with offices at 5 Cromwell
Place to
engage
business.
Mr. Harris
in the securities
was
with Lehman Brothers.
formerly
THE
Number 4820
170
Volume
Our
Reporter
COMMERCIAL
FINANCIAL
CHRONICLE
.(175)
Problems oi Canadian Pulp and Paper
Governments
on
&
(Continued from page 4)
work
off
these
of
this occurred at the
better
forest
holders of inventories of converted
species, which permits
management,
and
towards an increasing yield from,
Although Federal has taken a hand in matters it seems as though or a more complete use of the
the government market is not going to take a breather in order to re¬
output of the woodlands.
appraise the situation despite the quick and sharp rise which carried
The industry is devoting more
prices to new highs for the year.
Some profit-taking, backing and more attention to research on
and filling would not be unexpected after the spectacular perform¬
forestry and to research on manu¬
ance put on by all
Treasury issues, especially the ineligible obliga¬
facturing processes and marketing.
tions.
However, the market is in good shape because demand is It is
expending much on new ma¬
still very substantial and higher prices are expected, particularly
chinery and plant installations. It
in the longer maturities.
It is nonetheless believed the price
is widening its impressive list of
rise from here on will be less sensational because it is indicated
products and creating new by¬
there will be some outright selling and many swaps are in the mak¬
products from materials formerly
ing even between the various tap issues.
This should tend to cast aside as waste.
temper the up-trend.
'
*
The Canadian pulp and paper
The ineligibles continue to give the best performance, be¬
industry is not a static one. It
.
.
.
.
.
.
...
.
.
,
...
substantial
cause
of
amounts
these
bonds
being put
are
away
with savings banks the largest buyers of these securities. P . .
Out-of-town commercial banks still dominate the longer eligible
market although large money center institutions are also im¬
portant buyers.
The shorts are in big demand despite sub¬
could
afford
not
to
be
The
so.
same
time
products decided to do the
as
same
thing. As a result, there was a
general backing up of current de¬
mands both
on
the converters and
by the converters.
If, as appears
there has been no
significant reduction in usage of
pulp and paper products by the
to be the case,
ultimate
this siutation
is merely an inventory adjustment
and consequently temporary.
There
Industry
inventories/* and porting industry such
ization
By JOHN T. CHIPPENDALE, JK.
consumer,
some signs of revival in
throughout the system
and certainly in Canada the sit¬
are
demand
uation has not
developed to
thing like the
same
extent
any¬
as
in
W
as
pulp and
*•
paper,.
The
solution
of international
monetary problems is not going
to be found by Canada alone and
certainly is not going to be found!
by any single Canadian industry.
It will require sweeping interna¬
tional action by the governments
concerned.
solution
it is
At
the
moment
no
to be in sight. But
seems
imperative to the welfare of
the trade of our two nations and
indeed throughout the world that.
corrective
action
be
taken,
and
soon.
The postwar world has not only
inherited financial difficulties, but
shadows of,world unrest and in¬
the U. S.
its output and the
ternational misunderstanding also
Newsprint is an exception to
challenge of the times will not
cloud, the scene; Such an atmos¬
the general picture. The Canadian
permit lethargy. With a million
phere is not conducive to trade
Canadians depending directly on newsprint industry is still running
It also reabove its rated capacity and U. S. among - the nations.
stantial switching into higher-income obligations.
it for a livelihood, its continuing
quires our countries to intensify
consumption
in
the
first
five
good health is vital to the pros¬
our
defense preparations as the
NEW RATE PATTERN IN MAKING
months of this year was more
perity of our country and vital
best chance of avoiding war. The
Government securities are in the process of establishing a new
than 7% ahead ofdast year. This
to the requirements of its custom¬
Canadian pulp and paper indus¬
rate pattern (on a lower yield basis) because of easier money market
is the highest level of production
ers in many lands.
try, like all other industries i»
conditions.
Yields on all Treasury obligations have declined since
and consumption in history, and
our
country, must prepare itself
the monetary authorities adopted the new attitude toward the gov¬
Changes in Industry's Markets
prospects are that for the imme¬
,
.
demands, for
.
.
*
...
.
.
.
ernment market.
with the kind of
Both investors and traders
...
yield
a
available and not
are
concerned
now
that is likely to evolve with more credit
curve
much interference from the Central Banks with
so
the
price trend of government obligations. ~.
Treasury bills and
certificates were on the way to new low yields, until Federal stepped
in and supplied the market
The intermediate-term obligations are
adjusting to a new pattern as are the longer maturities.
In the
interim, while the yields and prices of all governments are in a fluid
state, plenty of guesses are being made as to what is likely to take
place.
.
.
...
.
,
.
Some
of
the
optimistic followers of the
more
money
mar-
kets believe yields on the longest tap bonds could eventually go
to a 2.00% basis which would be about 107%.
Bank-eligibles,
,
they believe, could
to
go
.
.
.
,
1.95% yield and that would be equiv¬
a
alent to approximately 108%.
In the
...
eligible obligations, this would be
of the longest-in¬
case
all-time high, whereas
issue would be about a point under the
new
a
As fars
industry's mar¬
concerned, there have
been
important changes in the
past twelve months. During the
war years there were restrictions
on
production and shortages of
manpower
and materials which
made it impossible to meet in full
the high demand for pulp and
paper products.
When hostilities
ceased, the Canadian industry in
kets
as
our
are
diate future the mills will be able
to
continue
capacity operations.
It is true that supply and demand
for newsprint are in closer bal¬
ance
than they have been for
many years.
There is no longer
for
need
any
publishers
to
pay
fancy prices for newsprint on the
so-called "grey market" and there¬
fore publishers have received a
for that emergency
hoping always ;
that such preparations will prove**
unnecessary,
in
but having our plans ;
readiness
in
case
they
are
While
the problems are great,
not insurmountable. The
Canadian pulp and paper industry
they
are
is meeting its responsibilities, and
is ready for whatever the future
in their holds. It is conserving its wood¬
lands.
It is improving its plant
the elimina¬
and equipment. Through research
tries, was able to raise the levels tion of the high spot market
it is obtaining a greater yield
of production and, by large capital prices. This has been the direct
from the forests.
As the rate of
investments, to increase its capac¬ result of the successful efforts of
literacy and the standard of liv-,
ity.
All through the last four the Canadian industry to meet
with those of other
common
coun¬
substantial
newsprint
reduction
costs
by
yield of about 2.10%.
.
.
With respect to the Yics a yield of
approximately 2.25% is forecast as a stabilization level and this
would be equivalent to about 103% for the most distant ineligi-
bles.
on
most
distant
bank
previous top made in 1946..
.
. Those that are not quite so bullish
predicting that quotations of the longest bank-eligibles are
likely to stabilize around 106, which would be equal to a
;
'
North ing rise throughout the world, the
potential demand for its products
erate effort to meet the unsatis¬ print at contract prices. The bal¬ is
exceedingly great. Above all,
fied
demands
of its
customers. ance between supply and demand
it is not a rootless industry draw¬
During the last six months it ap¬ has been established, but it has
ing a fickle inspiration from,
pears as though that, effort has been done at a very high level
been successful so far as markets
changing fashions. The Canadian
the
■
,
needed.
are
years,
as
a
production has been rising
result of the industry's delib¬
the
requirements of
publishers
American
the
for
news¬
.
;
.
;
;
.
.
These differences of opinion
.
to where the longest
as
maturities might go under the changed money market conditions
|
is what is keeping the demand for these securities strong.
The general opinion is ample credit, that is likely to get more
.
.
.
plentiful, coupled with
a decreasing supply, will be reflected in
higher prices for the longer Treasury obligations. . . .
,
"
As
rate
to
the
to
seems
shorter..maturities,, especially the certificates,
be in the cards.
%%
A
...
rate
1%
a
is not ruled out in
continent
are
concerned.
indeed
and
there
is
every
pros¬
pulp and paper products, pect that it will be maintained
theer are now adequate
supplies, at or near this level for some time
and
indeed
for
some
products to come.
minor suppluses have developed.
Dollar Shortage Is Serious
Pulps, fine papers, and paperboard
.
now
Problem
be
purchased in any rea¬
sonable
quantities and with a
minimum of delay in deliveries.
A special situation exists in pulps;
can
1% CERTIFICATE RATE SEEN INEVITABLE
this
For most
To return to the problem men¬
tioned
earlier,. the
problem
quarters despite
in
most
Canada'today
serious
is, <of
Federal's selling of shorts to hold the one- purchasers in the United States
Obligations at 1%.
.Those that are looking for a 7/a% certif¬ had built up large, rather ill- course, the shortage of dollars in
are also predicting a 2% basis for the Victory bonds.
It will assorted and high priced inventor¬ traditional overseas markets. And
take time for the new rate pattern to be established and here again
ies by the end of 1948. Naturally this economic maladjustment nat¬
there seem to be differences of opinion as to how prices might act
during the test period.
It is being pointed out there is practically enough there was a tendency to urally seriously affects any ex¬
some
year
.
.
icate
...
pulp
and
paper
industry stands
the needs and
broad-based upon
culture of all mankind.
Dir. of Blair Holdings
Robert H. Huf has resigned as a
Vice-President
Blair
&
Co.,
tinue
as
a
and
Director
of
Inc., but will con¬
Director and member
of the Executive Committee of the
parent
company,
,
*
- r
Blair Holdings- J^
Corp.
.
...
bearishness among operators in the government market, although
it is believed in certain quarters quotations could be subjected to
ano
minor
adjustments, because of the sharp rise that has already taken
place under the changed conditions.
The opinion is expressed
that prices of the longest maturities could move down about a half
point or so, and then go on to new high levels.
On the other
hand, there are those who hold the belief quotations are not vulner¬
.
.
.
..
able at current levels and
not be
than % of
more
a
.
an adjustment, if it should develop, would
point.
In both instances price weakness
Chesapeake and Ohio Railway
Third
Equipment Trust of 1949
...
would be welcomed since there is
substantial
a
demand that would
like to purchase securities at slightly lower prices.
...
It is reported that dealers in many instances have been talked
to
by the
Central Banks,
the market.
securities
about what
to
.
demand Federal has been
.
was
Because
.
of
i
authorities
the
which
It
was
seems
are
due in
not pleased
no
with the
measure
some
supply
run
tral Banks
a
liquidation
Lower reserve
are
To
To be guaranteed
limited supply
some
(shorts
on
each February 1 and August 1, 1950 to 1964, inclusive
unconditionally as to payment oj par value and dividends by endorsement
by The Chesapeake and Ohio Railway Company
so
far)
Priced
to
daily price limitations
yield 1.10% to 2.55%, according to maturity
♦
"
"
,
requirements for the banks in New York City and
lowers of the money markets.
a
$133,000
must bring about
to believe that unless the Cen¬
Issuance and sale oj these Certijicates are subject to authorization by the Interstate Commerce Commission«
The Offering Circular may be obtained in any state in which this announcement is circulatedfrom only
expected in the not distant future by many informed fol¬
Federal will be
mature
to the absence of sellers and
might be revived
Chicago
(Philadelphia Plan)
closely.... It is evident
way prices advanced,
able to bring securities into the market, by their
are
limited
2Vs% Serial Equipment Trust Certificates
heavy
of the quick-turn operators, but in the
easier credit and
higher prices.... This leads
own
the
they would like to slow the market down..;. They may
be able to shake out
.long
small
and
seller of the shortest maturities and
a
is watching the market and its action very
v
not done to
this
$3,990,000
■
.
.
..
such
oj the undersigned and other dealers as may lawjully offer these
securities in such state.
When this takes place it is believed
seller of enough
long-term securities to keep the
market within the limits that have been established by
HALSEY, STUART & CO. INC.
that time.
A. G. BECKER & CO.
R. W. PRESSPRICH & CO.
INCORPORATED
Keizer Co.
BOSTON,
Harry Michaels Dies
Opens
MASS.—Alfred
H.
Keizer has formed Keizer &
Co.
with
offices at 31
engage
Mr.
Milk
Street to
in the securities business.
Keizer
was
formerly
John G. Sessler & Co.
with
Harry Michaels died July 6 at
the
age
of 63.
Mr. Michaels
L. F. ROTHSCHILD & CO.
GREGORY & SON
was
INCORPORATED
FREEMAN &, COMPANY
MULLANEY, WELLS &
COMPANY
Chairman of the Board and Presi¬
dent
and
of
was
Michaels -Brothers,
also
leider & Co.
a
WM. E. POLLOCK
Inc.,
partner in Unger-
July 13,1949
CO., INC.
&.
r
20
COMMERCIAL
THE
(176)
&
FINANCIAL
CHRONICLE
Europe's problem.
With Marshall
dollars-in abundant supply Euro¬
could hardly have
increased
they
had
their
production
affairs.
Nor
there
was
The world
duced.
Third
Quarter Traffic Estimates Encouraging
regional Shippers Advisory Boards recently released their
estimates of railroad traffic for the third quarter of 1949.
On the
Whole they do not make particularly pessimistic reading.
For all
sections of the country it is estimated that loadings will be down
652,707 cars from the like quarter of 1948. This would represent a
decline of 7.4%, It would compare with an actual decline of 10.0%
in car loadings for the 26 weeks through July 2. If it turns out that
traffic does hold up that well in the face of the general recession
that is now under way it would hardly afford grounds for the present
pessimism toward all classes of railroad securities.
of
existed.
The
ular
Marshall
Belgium
ERP
in
commodities
in
the
U.
S.
goods when the
any
for
gium
but
"free"
same
available in
are
was pro¬
neighboring Bel¬
be
cannot
bought
be¬
was
needed in the seller's market that
convert
automobile
shortage
States, for example,
made it easy for Britain to boost
her auto exports to this country."
lire
earned
in
Italy into
Belgian francs).
in the United
Aid,
to
European
creditor countries like Britain and
turn
condition
on
extend
their
own
that they
equivalent credits
currencies
(called
"drawing accounts")
debtors
ropean;
to
such
as
and the Netherlands.
a
the Eu¬
France
This has to
certain extent facilitated intra-
European trade.
We
try¬
are now
ing to persuade the OEEC nations
The inability of European
(and
*^n-European) countries to
freely the proceeds of
their exports into the currencies
they need to pay for their imports
som*
convert
Real Problem Coming
f
rest
hungry for cause France is short of Belgian
Little" salesmanship was francs
(and,
moreover,
cannot
goods.
The
the
to
ask
unless
incredibly mismanaged
problem in selling what
currencies
scarce
Europe. This has resulted in coun¬
tries like France being forced to
pean countries
not
Thursday, July 14, 1949
to expand this system to give the
debtors the privilege of transfer¬
ring their drawing account rights
from the granters of them
toother
countries. So far we are running
however, the real prob¬
lem is coming to the fore with is driving more and more of them into bitter, opposition on this score
dramatic suddenness. Not only is into bilateral deals with discrimi¬ from the British i who not only
Europe's recovery linked up with natory implications of which the fear a repetition of the "convert¬
:
The 'largest decline is expected to take place in coal loadings. the revival of
multilateral trade Anglo-Argentine agreement is on¬ ibility crisis" of 1947 but also feel
This is hardly surprising in view of the unsettled labor picture, the on the
broadest,international scale ly the most recent and most flag¬ that such a scheme would mean
drop in export demand, and the extent to which inventories were but the future
prosperity of the rant example. If this trend con? sacrificing one of their few re¬
built up in anticipation of labor difficulties. The Boards estimate a United States also.
/ And
at the tinues, the end of U. S. dollar aid maining bargaining weapons in,
drop of 379,301 cars (14.3%) in coal loadings for the country as a present time it is not at all cer¬ in 1952 will bring a new crisis international trade
namely
whole. This would represent close to 60% of the estimated overall tain that a revival of multilateral that
sterling balances which
may undo all that the U. S. blocked
decline in traffic for the period.' The second most important decline trade is what
we are going to get. has achieved in the postwar pe¬ can be used to push British ex- :
in point of volume is expected in lumber and forest products, where Indeed the new
Anglo-Argentine riod and; necessitate a complete ports in bilateral trade deals.
the estimate is for 87,995 fewer cars. The balance of the anticipated trade
It. would appear that a; point
agreement and the stiff bp- re-evaluation ,of .our, position in
drop is widely diversified, mainly among industrial freight items. position being put up by Britain the world.
has been reached now at which
On the other side of the picture quite a few items are expected to any expansion of the Intrathe United States should take a
to move in heavier volume this quarter than in the third 1948 quar¬ European
Importance of Currency
^ very firm stand. Our contribution
Payments
Agreement
ter. Prominent among these are grains, and flour, meal and other suggests the contrary. This should
Convertibility "
to
the postwar world has been
mill products. It is also anticipated that fresh fruits, other than be a matter of grave concern to
What can be done in the face very great. We have lowered our
the United States.
•
,:
citrus, will be up from a year ago. Percentagewise, the most sub¬
pf this situation? Both Mr. Hoff¬ tariff in the General Agreement
stantial increase is looked for in vehicle parts. Movement of auto¬
Generally speaking, multilateral man and Ambassador Harriman on Tariffs and Trade, taken the
mobiles and trucks is also expected to improve moderately. Perhaps trade
permits each nation to sell have made it clear that the Eu¬ lead in drawing up the Havana
the most surprising feature of the reports is that only a nominal its
exports in the most profitable ropean "member-nations
of
the Charter for an International Trade
(1.6%) drop is expected in ore and concentrates which are normally market and to buy its
imports Organization for European-Eco¬ Organization, and given billions
very sensitive to any recession in general industrial production.
where it pleases on the basis of nomic Cooperation, now that
they of dollars of aid to Europe. In
As is usual, the estimates vary widely in different sections of price and quality, which will not have
largely solved their produc¬ return, we have a right to expect
the country. All except one regional board expect declines in their necessarily : be
from
the
same tion
problems* must get together that European countries for their
areas.
The estimated declines range all the way from 15.6% for the country to which it sells its ex¬
and plan an integrated program part will make a contribution too.
Allegheny District and 15.0% for New England to a nominal drop ports. For example, the United designed to expand multilateral Unless they work together for the
of 0.2% for the Northwestern District.
The one exception to the States normally sells more to Can¬
trade and highlighted by a reduc¬ construction of an integrated Eu¬
general expectation of a falling off in traffic is the Great Lakes Dis¬ ada and Argentina than it buys tion of trade barriers and
by ropean trading system,-? ECA aid
Now,
.
—
*
'
.
•
trict where
an
increase of less than 1.0% is looked for.
The follow¬
from those
ing tabulation shows the estimated year-to-year percentage changes
more
for the individual districts, arranged in descending order of
we
'
pated declines.
antici¬
countries but
bulk of her
—
buy
we
from tropical countries than
Canada buys the
sell to them.
imports from the U. S.
but
Allegheny
-15.6%
Pacific Northwest
—
7.3%
sells the bulk of her exports
Europe. And Britain buys more
from Continental Europe than she
to
aiming at the free
measures
con¬
is* not
accomplishing
its
purpose
transferability of
European currencies. Up till now
and the conditions which gave
to
the
planning has been national by in¬
in
1952.
vertibility
and
dividual nations but
not interna¬
the
for
need
it will
If this is to
U.
S.
whether
might
rise
reappear
be the case,;
ponder,
now
is
it
Also, the highly important grain traffic is expected to increase 10%
worthwhile, apart
from, the purely political objec¬
/'
sells to that area but sells more
tives of the policy, continuing on
When
Ambassador
Harriman
to the tropics than she buys. Tak¬
the present scale for another two
ing all these trading relationships addressed the Annecy tariff con¬ and one-half
years a program that
together, the "balances"cancel ference last May 12, he sounded still
seems to
be more of a pal¬
out and enable all nations to enjoy the theme that the time had come
liative than a cure.
the fruits
of
specialization and to do more than just talk about
trade on a world-wide basis.
!. the economic integration of West¬
ern
Europe. One of the factors
The great, threat to multilateral
trade arises when pairs of na¬ responsible
for the high living
tions attempt to balance their ex¬ standards of the United States is
our huge
continent-wide trading
ports and imports equally with
(Special to The Financial Chrontclf.)
area which permits' a high degree
the; result that neither has V any
CHICAGO, ILL. —Frederick J..
of specialization. If Europe is sim¬
surplus foreign exchange left over
Cook and William J. Sennott, Jr.,
for the purchase of goods in third ilarly to enjoy the fruits of spe¬
have
above the year-earlier level.
countries^
New England
Southeast
—15.0
Southwest
—
.
.
.
6.7
■
—10.3
-
Mid-West
Ohio Valley
"
:
Atlantic States
Central Western
9.9
—
•
,
V
Pacific Coast
Trans-Missouri-Kansas
8.0
—
Northwest *
Great Lakes
3.7
1.6
—
9.1
—
—
1.3
—
—
■
0.2
0.9%
-f"
The Great Lakes District embraces the major automobile
produc¬
ing centers of the country. This largely explains the expectation of
a higher level of traffic,in the third
quarter in contrast with antici¬
pated declines in all other Districts.
Also, in this district it is esti¬
mated that ore tonnage (the most important
single freight item in
volume) will expand this year. In the Northwestern District, where
only a nominal overall decline is expected, ore is also the most im¬
portant traffic item in point of volume, and no decline is looked for.
1
On the other end of the schedule is the
Allegheny District where
coal is the dominant traffic item and where iron and steel
tonnage, in
which
significant decline is anticipated, is also important. The other
JLwo. districts expecting declines of more than 10% are also quite
heavily dependent on coal and have a large stake in lumber and forest
products. Again it is self evident that a large degree of selectivity is>
a
necessary
in formulating
a
railroad investment program.
nations
OEEC
.
Shields Go. in Chicago
when
and
scarce
ihey
This they usually do
particular currency is
a
do
verted
when
possess
freely
the
currencies
be
cannot
into
the
con¬
scarce
or
"hard" currency. For example, in
1947 Canada was in serious dif¬
ficulties because the sterling pro¬
of
were
not
her
exports to Britain
freely convertible into
dollars
to
pay
the
S.
Canada
U.
impose
continued from first page)
by: all the
together.
Cook and Sennott With
ceeds
ERP and Multilateral Trade
tional
special
for
imports from
was
forced
restrictions
to
on
American goods and divert many
down
or
removing
many
of
Europe, the European
will be able
two
legs.
If
to
no
walk
on
coun¬
his
own
fundamental
re¬
covery has taken place by then,
the removal of the crutches will
be followed by the speedy
reap¬
pearance of the ''dollar shortage"
crisis which brought ERP into ex¬
istence in the first place.
In
creasing production and the final
levels
is
only
one-half—and
the
the
quotas, preferences, and arbitrary
government controls of /various
kinds. Europe must also facilitate
freer
to
countries
flow
ibility free
as
funds
between
currency
convert¬
of
with
controls
Taking
in the direction of in¬
admittedly
involves
of exchange
the ultimate objective.
such steps
tegration
4
goods,- principally ma¬
and
beef, in approxi¬
easiest half—of the problem. Ac¬ chinery
tually industrial production in the mately equal
Marshall
whole
level.
Plan
is
now
countries
back
Indeed, if
Western
one
to
the
as
a
1938
excludes the
riod
of five
to result in
amounts
■>
for
a
pe¬
This is likely
enforced discrimi¬
years.
an
nation by Argentina against U. S.
of
Germany and goods and is the very antithesis
Austria, it is higher—in Britain by of the type of world trading sys¬
23%, in Belgium by
15%, in tem this country is trying to build
France by 9%, in the Netherlands
up.
The by 13%, in Norway by
25%, to
In Europe itself this problem
zones
1947, production indices in
most
European
countries
were
still
below
prewar
levels.
problem at that time seemed rela¬
tively simple.. If production levels
could
be
raised
and
exports
panded, then Europe could
enough foreign exchange to
for imports.
American help
ex¬
earn
pay
was
needed in the interim to
provide
-food for the workers and raw ma¬
terials and capital
equipment for
the industries. In the final
:
analy-
mention
a
few.
Of course, prewar
levels of production cannot be re¬
garded
has
as
as
also
exists.
Here
the
principal
scarce
currency is, of course, the
adequate.
Population dollar.
Thus, if France sells goods
and countries such
to Italy, she receives lire which
increased
Britain have to fill with addi¬
tional exports the gap in their
balances of payments created by
their loss of income from foreign
investments. However, progress in
the field of production should not
purchases from the U. S.
gravating this problem of "con¬
vertibility" is the additional one
"transferability."
The
whether
country
or'not
was
the
International
British
Chamber
Frederick
J.
Cook
Wm.
J.
Sennott,
Jr»
Shields &
Street.
Co., 135 South La Salle
were formerly in the
Department of Clement,
Both
Trading
Curtis
&
Co.
of
Commerce, entitled "The Spectre
of 1953,"
also emphasizes these
points.
This report
underlines
among ether things
the impor¬
tance of restoring free competitive
Joseph Reilly, a regular mem¬
enterprise with incentives for the ber of " the New York Curb Ex¬
private trader and the elimina¬ change, won the Curb Five and
tion of arbitrary controls.
The Twenty Club golf trophy for the
total exports of European coun¬
third consecutive year.
His vic¬
Jcs.
Reilly Wins Golf
Trophy Third Year
tries
are
still 18%
and their total
tory
came
in
a
match
imports 14% below prewar levels
and the "situation is unlikely to
club's, third
improve
ment held last week
are
unless
drastic
measures
taken.
Must
But ag¬
pound and the Belgian franc, be¬
a
European give rise to any complaints! *.
cause of the
relatively strong ex¬
worthy of aid was
Looking back over the past 15
related to its
willingness to for¬ months, -however, it now appears port positions of these two coun¬
mulate a national
plan for in- that this was the easiest part of tries,
have
become
relatively J
sis
of
she cannot cpnvert into dollars for
of
with
which exist in the form of tariffs,
of her
exchange
associated '
obstacles to the free flow of goods
purchases to Britain even risks but, since there can be no
tries can avoid balance of pay¬ test of ERP's success was to be though she would have preferred final solution to present economic
to buy American. The new
ments crises and can maintain or found in
Anglo- problems until this integration is
production figures.
'
even raise consumption and
Argentine trade agreement, if it achieved, it is better to make the
pro¬
duction levels.
But the
aim
Only Half of Problem Solved
of
goes into force, is likely to have attempt now while American aid
ERP was then and is now to make
Indeed our aid
ERP has been in operation for a; disastrous effect on U. S. ex- is forthcoming.
Western Europe self-supporting so 15 months and it is now
apparent ports to that South American should be conditional on: such
that when the crutches of ECA aid that
the
execution
national country.
of
Under the agreement, steps being taken. The recent re¬
are
removed in 1952 the
patient plans designed to raise production Britain and Argentina agree to port of the United States Council
into
become *
cialization, it too must develop a
larger trading area" by scaling
Insist
on
Currency
Insofar
as
convertibility^ and
transferability are concerned, the
Intra-European Payments Agree¬
ment'
has
been
renewed
in
S.
has
aid" in
a
tie
played
which resulted
annual
golf
at
at
to
the
tourna¬
the Siwa-
County Club in Bronxville,
N. Y.
Mr. Reilly shot a 78 over
the same course yesterday to de¬
feat Leonard Greene, also a Curb
Exchange member.
While
Mr.
Reilly earned the
noy
Convertibility.
amended
settle
form.
This year the
U.
been giving "conditional
dollars, in addition to reg¬
right to retire the trophy perma¬
nently by yesterday's success, he
announced following
the match
that
to
he
would
return
the
competition next year.
trophy
Volume 170.
Number 4820
THE
COMMERCIAL
&
FINANCIAL
CHRONICLE
Frank Valeria & Co.
Frank
Frank
By JOHN BUTTON
L.
Valenta
fices at
1 Wall
is
(Continued from page 3)
forming
duct Committee prosecutes, and then acts as judge and
Street, New York Here the spirit of complete impartiality is absent.
L. Valenta
& Co. with of¬
Let's Not Go Overboard
rent
-v
Advertising prepared by professionals, pictures, stories,
appeals to the emotions, plans, campaigns, direct mail lit¬
erature—most of it admittedly good and created by experts. It is
about time you may say that the securities business put some life
Assuming the current market price of 100 shares of a
given over-the-counter stock to be $10 a share, how much
above such
into its sales promotion.
YOUR
price would a dealer be justified in charging for
inventory wHich would serve to give his cus¬
tomer control of the instant corporation?
Is there a fixed
yardstick, or must the dealer take his chance that in a sub¬
sequent disciplinary proceeding, the local Business Conduct
Committee will see eye to eye with him? Must there be a
spirit of guess work and fear?
We agree. BUT DON'T BE SOLD DOWN
Remember that every time you sell the management
OTHERS,
ABILITY
driving
are
you
TO
a
MANAGE
nail in
HIS
customer's faith
your
INVESTMENTS.
a
IN
Remember
that markets and buying conditions change. There will be a
time again when individual situations will come back into favor.
Don't undersell yourself if you are selling the funds.
too,
Several
the
do!
weeks
that
fact
ago we presented
people lose money
most
saies
a
on
talk that played up
their investments. They
Then the idea
was to show, that the broad diversification, bal¬
and expert management of the funds was the answer to most
investors' problem. It is a logical idea, it probably will sell funds,
suggestions as a means of determining cur*
prices of over-the-counter securities does the
market
NASD offer?
It's easy!
clever
OF
jury*
What other
-On Mutual Funds!
THE RIVER.
21
The Perennial 5% Yardstick
Securities Salesman's Corner Opens in New York City
*
(177)
L.
Frank
stock in his
The NASD says:
Valenta
ance,
but
WON'T
it
DEALER
BE
AS
COMPETENT
ADVISING
ATTRACTIVE
AND
A
YOUR
BROKER
OR
CUSTOMERS
INVESTMENTS
IN
THE
OF
SECU¬
MARKETS.
When
always
YOU
SHOULD
WHO
BARGAINS
RITIES
SELL
times
easier
whether
tough and security selling is
DEFENSIVE
SECURITIES.
are
to
difficult
This is
sell
are
stocks
unit
mutual
to
Group, Inc.,
and
was
formerly an
Group Securities, Inc.
officer
of
is
bonds and preferred stocks.
these
to engage in the securities
business. Mr. Valenta has been an
officer of Distributors
true
funds, insurance stocks, or good
But these are the times when you can
go out and select 10 undervalued common stocks (like Roger Babson
suggested several weeks ago in the "Chronicle") and you can offer
you
selling
it
"Certain other factors which
City,
Robertson-Morgan in
Montreal; Davidson Co.
are
to be considered
both dealers and Business Conduct Committees in
by
connec¬
tion with the
application of the policy are (1) whether it is a
price stock or bond or high priced, (2) the amount of
funds involved in the transaction, (3) whether the market
is active or inactive, (4) whether more than the usual time
and effort was involved in obtaining the security to consum¬
mate the sale, and (5) any extraordinary or unusual services
low
rendered to the customer."
;
In Toronto
clients, and the chances will be
Very well! The dealers who in the above direction have
mighty good that some day in the not too distant future that, you
been set vis-a-vis their punitive policemen, the Business Con¬
could show your customers an overall price appreciation (on the
MONTREAL, QUE., CANADA—
group as a whole) that would make the performance of the average The partnership of Davidson & duct Committees, honestly try to surround their purchases
fund look mighty sick by comparison. Don't abdicate to the funds Robertson has been dissolved and
and sales by a strict observance. Now then what possible
—don't let present business conditions give you an inferiority com¬ a new partnership formed under
assurance have these dealers that their actions will be in
the name of Robertson &
plex—don't sell out because it offers the line of least resistance.
Morgan
accord with the opinions of their prosecutors and judges on
The funds have their place. ? They are good for people with with offices at 266 Notre Dame
Partners are Roy the extent of all the elements going into the foregoing five
limited buying power. They could fit in with some larger accounts Street, West.
too.
as
a
your
They have
many strong points.
But if we are going to become
for a handful of highly concentrated managements,
who sit in the larger cities of this country and collect billions of
sales
agents
Robertson and Col. W. E. Morgan.
The new firm holds membership
on
the Montreal Stock Exchange,
tests?
How
can
they know that the same dollars-and-cents
results will meet uniform
approval?
Above are a few of the problems that account for the
and then supervise it for a fee; we Montreal Curb Market, and To¬
are
going to degenerate into nothing more than money collectors ronto
Stock Exchange.
"5%" enigma.
:' '-■
;
who will be paid a living wage, and little more, for acting as their
The offices at 320 Bay Street,
agents. There Is a limit to the amount of money that can go into
Competition, not artificial regulation, should determine
these funds and still provide marketability for the shares of the Toronto, and 134 St. Paul Street,
the extent of mark-ups.
~
funds themselves, as well as the blue chip stocks which they are St.
Catharines, Ont., are being
constantly acquiring. The stock market can lose its liquidity too if
Dealers and brokers should not be required by their
dollar^ of the public's
investment
much
too
The
money
continued
goes into
markets can
dry
money
over-the-counter
almost
as
Davidson & Co.
fifty
up
to a hundred issues.
completely (that has
true function which is
anxiety to stay
happened today) if we neglect our
With Waddell & Reed
supplying capital for industry, for growing new enterprises, and of
(Special to The Financial Chronicle) making markets in individual issues.
LOS
ANGELES,
CALIF. —F.
Let us sell the funds, use their advertising, and work their
sales campaigns where feasible and sound.
But let us remember Maurice Shirk has joined the staff
that we are brokers, dealers and investment men.
That ours is a of Waddell & Reed, Inc., 8943 Wilbusiness that approximates a profession, and if we abdicate and
all
turn
efforts
our
to another, then sooner or later WE WILL
over
LOSE WHAT IS LEFT
shire Boulevard.
up
nights guessing
on
the state of the admin¬
istrative mind.
The "5 % philosophy" is but another cog in the wheel of
regimentation which may ultimately lead to a planned econ¬
omy for all of us on the basis of a considerably reduced liv¬
ing standard wherein there will be small room for individual
initiative.
-A
OF OUR BUSINESS.
This is not a condemnation of the mutual fund idea. It is just
appeal for common sense. No one ever made a real success out
of anything by becoming an extremist or a fanatic except for a
short time. The way to build a lasting business is to sell securities
that fit the customer (funds, included).
Don't sell yourself down
an
the
river.
You
are
supposed
to
security
know
values
too.
J
1
This announcement is neither
>
15
and
million
they
NEW ISSUE
440,000 Shares
people who own individual securities in this country
not goine to patronize brokers and dealers who have
are
GAS INDUSTRIES FUND
lost FAITH IN THEMSELVES.
together
Phila. Electric Offers
Common to Stockhldrs.
Philadelphia Electric Co. is of¬
fering to the holders of common1
stock the right to subscribe for,
972,624 shares of additional com-J
mon stock at $20 per share on the
basis of one new share for each!
shares held
of record
July 11,
1949. (The common stock does not
include the $1 dividend preference
common
The subscription'
stock.)
INC.
the proceeds
of the new common stock, and
that the balance will be provided
ings,
10
warrants expire Aug.
1, 1949. The
offering is being underwritten by
a
nationwide investment banking
with
Proceeds
from
the
sale
of
The
estimates
that the construction of new plant
and equipment may require the
expenditure of approximately
$219,000,000 during the five-year
period,
1949-53,
inclusive,
of
which
$189,800,000 will be for
electric facilities, $16,400,000 for
gas facilities, and $12,800,000 for
steam and general facilities used
in all operations. Expenditures of
about $51,000,000 are planned for
1949 including
$13,000,000 spent
up to April 30.
company
($1.00
par
value)
now
Prices!
$16.25 per share on each unit sale under $50,000
$15.99 per share on each unit sale of $50,000 or more but less
the
stock will be used to
Copies of the Prospectus may be obtained in any State in which this announcement is circulated
from only such of the Underwriters, including the undersigned, as may legally offer
these securities in compliance with the securities laws of such States.
the
about
one-half
and
Louis
Gross.
Mr.
Paine, Webber, Jackson & Curtis
required for the pro¬
Gross is active
will be provided from treas¬
funds including retained earn- floor broker.
,
v
Tucker, Anthony & Co.
as
an
Kidder, Peabody & Co.
Charles
funds
gram
ury
of
>'
:*
White, Weld & Co.
,
that
than $100,000
$15.82 per share on each unit sale of $100,000 or more
Gross & Co. to Be Formed
AS of Aug. 15 the New York
Stock Exchange firm of Gross &
provide part of the capital re¬ Co. will be formed in New York
quired for the company's con¬ City. Partners will be Charles H.
struction program. The company Gross, member of the Exchange,
estimates
'i.
ties in 1950 and subsequent years.
by
ing for not more than 150 shares
at the subscription price.
•.
,
Common Stock
from the sale of additional securi¬
of 102 firms jointly headed
The company, or its principal
Drexel & Co. and Morgan
Stanley & Co.
predecessor, has paid dividends on
Out of any unsubscribed shares, its
common
stock in each year
the company will offer to each since 1902.
employee the privilege of subscrib¬
group
new common
offer to sell nor a solicitation of an offer to buy any of these securitiesi
offering is made only by the Prospectus.
<
:
Your
customer expects it of you.
Once he doubts it you may also find
that he will go to someone else when he wants to buy or sell some
stocks or bonds in which he is interested. There are still about 12
to
an
The
individual
July 14, 1949.
22
(178)
&' FINANCIAL
COMMERCIAL
THE
CHRONICLE
at
Truman Pi escribes for
in
(Continued from first page)
industries, than it was
period, in Wnica we last year. Business investment is
that at a high rate, but plans for new
will promote a more stable and investments are
being made with
enduring growth m production, caution.
-v.i
some
first half of 1949
transition
less
must work toward conditions
1948.
employment,
purchasing
and
power.
The fundamental task facing us
The 1949 decline has been mod¬
in
than
the
second
production
rapid,
was
half
June had reached 13%
.
and
higher.
receipts
10%,
ceipts
content ourselves with lower lev¬
Fed¬
els of
down
were
education, health and hous¬
ing, international and domestic
security, and national develop¬
state and local re¬
about 5%. All gov¬
were up
ernmental units combined showed
of
deficit in
cash
a
industrial
in
decline
The
cash
about
about ll/z%
was
rate about 13%
a
eral
Prosperity
Thursday, July 14, 1949
1949 at
by
nual
below last
seasonally adjusted
a
rate
of $2.4
trast to
Other business activ¬
erate, and the opportunity is now ity as a whole changed but little.
ours
to reverse
the
trend
and A moderate decrease in private
a
billion
fall's peak.
in
riod
in
the first half
billion, in
surplus at
the
The
omy
con¬
and
cash
all—businessmen, workers farm¬ achieve maximum production and construction was partly offset by
was
ers, Government — is to apply consumption of goods and services a rise in public construction. This at ah annual rate of about $1 bil¬
positive policies with confidence without the evils of inflation.
y e a r's
agricultural
production lion, contrasted with a surplus at
order to achieve
a
price
structure
to slart with
we need
clear
a
likely
seems
The Adjustment Process
i
and the
restoration of maximum produc¬
The adjustment process has been
tion and employment. In so doing, rendered
less
difficult
by
the
sounder
un¬
prudent
actions
of
many
groups
approach
to
generally decreased, re¬
Policies
for
a sellers'1
buyers' market. The decreases
Economic
strength
that
did
exist
not
in
has been moderate and distress declined
9%, consumers' prices
liquidation of inventories, such as i%. from their high points of last
of the last 16 years, many steps v/e
'
*
experienced in 1920, is not to August. ;
have been taken by the Govern¬ be anticipated. Personal indebted¬
Wages increased in some indus¬
ment
to
bulwark
our
economy ness, on the part of farmers, home tries, but, at least in manufactur¬
against the forces of recession.
iwners, and consumers generally, ing, the increases were more than
periods.
Over the course
Unemployment
insurance
has
helped to alleviate the hardships
levels.
of
nen
unemployment and
incomes
sustain
to
expendi¬
tures.
The
old-age
retirement
system and public assistance for
needy persons also serve to main¬
tain purchasing power. The hous¬
ing program recently enacted by
the Congress will furnish positive
consumer
and
been
as
held
to
conservative
Many far-seeing business-
made sincere efforts to avoid
minimize price increases
or
inflation,
during
offset
by
shorter
as
overtime
work-weeks.
of
cost
reduced
and
Since
the
living decreased by about
much
workers' average earn¬
as
months ings, real earnings generally were
prices and maintained. '
have sought valiantly to maintain
Profits reflected' the decline in
production and employment. Many prices and production. Corporate
labor unions have used their col¬ profits before taxes and inventory
have
in
and
reduced
lective
recent
their
strength
with moderation
and with consideration for the in¬
valuation
adjustment in the first
that would
rious
not
be called
appropriate
for in
a
production goals achieved during
the war were a miracle to the rest
housing
construction
ment
economic
stability
both
the
have
we
terrible
or
affirmative
ent
with
policy.
the
American
progress
that,
as
now
and should
is
It
whole
to
and
the needs of
continue
of
farms, and to meet
population that will
a
to
Businessmen
grow.
should lift their sights to the needs
o
of
an
that
economy
from
prospers
of
year
previously recommended,
again recommend, that the
Congress provide
for
a
broad
I
be taken to
study of potential business invest¬
ment, expansion, and market op¬
portunities
under
conditions
of
maximum
of
use
our
;
bankruptcies and fore¬
closures.
The farm
program
affords
our
price-support
that
assurance
6,000.000 farmers and the two-
fifths
of
our
population
communities
out
preventing
of the
These
will
rural
forced
markets for goodsi
and
policies
in
be
not
are
other
sup¬
ports to business activity ana are
enlarging the opportunities of pri¬
vate business. The fact that
pub¬
lic expenditures of
Federal, State,
and
local
governments
are
run¬
ning at
a rate of close to $60 bil¬
lion dollars a year is itself an ele¬
ment
of
great
stability
in
of
transition.
But
there
is
the
present situation.
Our
position
would
during the past half year. Interest
nothing healthy about more un¬ rates continued low.
employment or less production.
Business investment
Such trends
can
and
must be re¬
versed by positive
action, piivate
ind public.
The way to check a
decline in business investment or
production is to take affirmative
government
providing strong
riod
action that will lead to
vestment
and
The way to
more
check
in¬
more
production.
increase in
an
,/■.
;■<>^'0
decreased
in the first half of 1949 from the
1948 level. Allowing for seasonal
variations, in the second quarter
it
was
26%
below the peak rate
fourth quarter of 1948
the
of
chiefly
in
as
result of
a
inventories/
ment
outlays
unemployment is to take affirmative^action that will provide more
high
jobs.
Plant
were
reductions
and
equip¬
still about
as
half of 1949.
The
to
way
prevent
our
economy from shrinking is to take
affirmative action that will
help
if to expand.
These things cannot be done by
business,
ago, but some de¬
as a year
is
crease
anticipated
in
the
last
inventories
of
customer credit.
helped
and
of
to
reduce
their total indebtedness by about
labor, agriculture,
or
be
even
government
acting alone. They 3.5 billion dollars.
stronger if we had taken adequate can only be done
by all of us
Housing starts were less than
steps to control the inflation be¬ working together in mutual re¬ in the first half of
1948, but since
tween
1945
confronted,
and
1949.
as an
We
were
spect and with
It
aftermath of the
war, by an inflationary boom that
-lifted production and
employment
to
is
with
common
these
in mind
a
considerations
I transmit to the
brief summary of the
situation
and
recom¬
extraordinary high levels. But
underneath the surface of the in¬
>
mendations for action at this time.
flationary boom, there were serious dangers. Some incomes
were
Summary Review of Recent
disproportionately
prices
were
high.
rising at
rate, and serious
a
economic
price and wage
have
been
moving up to¬
ward last year's levels.
Personal
after
taxes
income
of
decreased
consumers
only about
1% from the level of the last half
of 1948. Since consumers' prices
dropped 2%, real income did not
change
Economic Developments
Most
perilous
March
that
Congress
objectives.
tion
A
moderate downward trend
characterized most phases of eco¬
significantly.
Consump¬
expenditures in dollar terms
decreased nearly 3%. Total liquid
assets of individuals and business
distortions were being
developed. nomic activity in the first half of firms are now about
$235 billion.
,The spiraling cost of living was 1949. '■
;■ v,However, nearly 30% of our fami¬
inflicting hardship on millions of
Civilian employment
averaged lies have no reserve of liquid
families.
>
These conditions threat-
ened
to
bring ;about a serious
break in employment and
produc¬
tion.
Therefore
I recommended
repeatedly, for private and public
action, an anti-inflation program
to
,
curb
these dangers before
suffered the consequences.
A large
part of the
anti-inflation program
we
was
not
went
on
-
largely uncontrolled.
that
are
which
now
I
latent
repeatedly
warned,
of
are
is
school
harder
to
.year
are
high,
ago.
high, but it
finding
obtain
but
it
much
work
than
Production
is lower,
This
in
with
is
still
particularly
was
of
the
the
slightly be¬
first half
greatest
decrease
industries.
In
Tune of this year, civilian
employ¬
ment was 59.6
million; in June
last year, 61.3 million., The
of
unemployed
million
about
over
3.2
averaged
the
the total labor force.
labor
were
force
in
3.4%
The
number
June
was
6%
in
3.8
of
The
June,
June
of
increase
in
unem¬
the* civilian
compared
of
last
year.
unemployed
in
million, and acute
foreign trade,
exports
ports
and
have
Production
of
all
goods
and
services, adjusted for price changes
and for seasonal
variation, in the
an
increase in
falling off pf im¬
continued the * rising
a
trend in the export surplus which
began last fall.
financed
The surplus was
almost entirely
through
government foreign-aid programs.
Government
were
a
ple
translated
are
other
in
factors
confidence and determination
to achieve them. This study should
be designed
making for decline
solidated
cash
basis,
past
con¬
rather than
especially to discover
inadequacies
in capacity in basic
industries which may serve is lim¬
iting factors to expansion when
the upward movement of business
is
of
real
resumed.
,
our peo¬
into
.
,
Price and wage policies
In addition to the need
for
ex¬
panded business investment, posi¬
actions are required to en¬
effectivf
ing
large
through constantly grow¬
employment and purchasinf
our markets can absorb '
vigorously expanding output.
achieve
can
within!
few
a
We
year.'
national output well above $30f
a
billion, valued at current prices
Our goal of growth and expan¬
sion determines the kind of poli¬
that
private., enterprise
should
government
anr
develop
now
To restrict business investment
curtail
The
only ultimate
of
source
sus¬
profits is sustained em¬
ployment and purchasing power.
The ssmg concept should guide
prosperous
has declined
some¬
would
only serve to
downward.
But
drar
ir
if
field of action we do the
things that are consistent with r
strong and growing economy, we
will have a strong and growing
every
policies.
power
It is vitally important that gov¬
policy be based
determination
upon
achieve
to
the
con
a
Business cannot be
unless
the
of workers
is
purchasing
maintained.
While price reductions
are
desir¬
able, they should not be attained
the
at
collective
the
of
wage cutting.
labor, through,
bargaining, should seek
expense
Management
agreements
economy.
ernment
op¬
is far more important
maintaining profit margins.
wage
economy
further
poweri
great
a
situation
than
our
us
have
portunity to (maintain production
and
sales
volume
by adjusting
prices downward, even at the cost
of
temporarily reduced profits.
Maintaining volume in the present
production, reduce em¬
ployment, or slash wages, because
what,
purchasing
consumer
Businessmen
tained
and apply.
and
which
benefits
recognize that
improved tech¬
of
nology and productivity should be
reflected both in the wage struc¬
While ture and in the price structure.
some businessmen
may find it dif¬
Fiscal Policy
:: ficult to expand their operations
stantly
growing
economy.
•
'
under
current
government
circumstances, the
can
always take
con¬
scious and positive action to coun¬
teract recessionary forces.
that
the
come
tial
are
those who asser*
decline
in
requires that
national
could
a
we
cut essen¬
programs.
Nothing
course
of
It would contribute to the
recessionary forces that
occur.
The
Federal Budget in recent
has necessarily been large,
reflecting not only the needs of
we
the
people for government
ices
but
that
cannot prevent our economy
running downhill
States in
which
~;~
serv¬
extraordinary
of
the
United
working toward
ful world.
a peace¬
j
•
Programs Not to Be Reduced
we
"The sound objective of govern¬
from
and that those
are vital
to the
the
also
responsibilities
counteracting. It would
defeatist admission
urograms
The government's programs of
expenditures and receipts must
be carefully planned in the light
of economic developments as
they
years
represent greater economic
action.
very
in¬
national
folly than to follow this
be
economy during the
half year. Using figures on a
the
have
we
the
power,
of
the
be achieved if
tive
should be
support against
can
economy
the
Employ¬
contemplates and
ment Act of 1946
which
productive
growing
which
constanth
If
needs and aspirations
fiscal transactions
source
ment
policy
is to
contribute
ward the maximum
use
of
our
to¬
re¬
international security and domes¬
sources,
conventional budget basis, to
the effective
impact o*
total governmental receipts and
tic welfare of
having them lie idle and unused.
as
When I
must be steered in the same down¬
submitted my budget for
the fiscal year 1950 last
January,
the economy, cash
payments by the Federal Govern¬
ward
the
the
reflect
unemployment problems have de¬
payments
veloped in certain localities.
.,
output.
Yet there
In
one
the first half of 1948
equalling
ployed
of
num¬
million, the increase of about
assets.
of
manufacturing
with
still
has been increas¬
and veterans and others leav¬
ing
a
The danger?
inflation,
being revealed.
Employment
unemployment
ing
in
million.
1948.
ber
necessary
adopted and the inflation
58
low the level
into
a
—conditions
demand
Funds thus freed
corporations
skills
increasing
cies
Corporate finance reflected the
reduction
managerial
in
resources
pe¬
of
waves
and
grows
to year.
I have
and
terests of the whole economy.
ernment go far toward
to
ican homes and
recognize
action car
before,
obsolescence,
rapid progress of
underdeveloped areas of
country, to bring conveniences
labor-saving devices to Amer-,
our
consist¬
history
remove
trialize
tc
experiencec
saving value
great
invention, to improve
transportation facilities, to enlarge
the
housing supply,
to
indus¬
and
consquences
inaction and the
to
make use of the
maximum production and employ¬
ment.
Within the memory of this
generation,
are now
science and
les'
even
There
opportunities for business invest¬
now.
make our
half of this year were about 13%
All below the first half of last year. economy still stronger and to deal
with
the
new
problems of the
groups in the Nation have gained The corresponding figure for un¬
Credit Relaxation
•;
present.
an
improved
understanding
of incorporated enterprises, however,
It is fundamentally important
The
Federal
Reserve
System economic
problems
since
the fell only about 7%.
to recognize that we should direct
has been developed into an in¬
Farm income was about 8% be¬
1920's, and their actions reflect
our
strument of such strength and this fact.
policies
and
actions
not
low the first half of 1948.
elastic
power
that the risk of
We
should
Credit requirements of business merely toward preventing a de¬
not, however, be
credit restriction at the very time lulled into a false
pression or holding our ground.
sense of
security decreased as inventories and cus¬
when
business
requires
easier, by these favorable aspects of the tomer receivables were reduced. Many times I have pointed out
that the life and spirit of the
credit has been greatly reduced. situation.
Many of the price ad¬ Commercial loans of large city
The insurance of bank
deposits justments that' 'have taken place banks shrank 15 %, but otherwise American economy is progresr
has
eliminated
the
danger
of have been healthy, and - afford loans by banks and other invest¬ and expansion. We need to use
widespread loss from bank fail¬ ground for expectation that our ment institutions remained stable. the productive capacity of a grow¬
ures.
The several credit institu¬
economy will work its way suc¬ Total bank deposits and money in ing labor force. We need to trans¬
late
tions established within the gov¬
improved productivity and
circulation decreased
cessfully through a difficult
about 2%
for
support
and slum clearance.
of the world.
se
appropriate to rely entirely
"letting nature take its course"
restore
/
cour¬
always been characteris¬
tic of American businessmen. The
v
economic emergency woult
be
,
age have
Stability
However, it would be
econ¬
Business investment
These facts show that our econ¬
derstanding of the facts concern¬ and individuals in our business were in most instances moderate
ing our present situation.
system. We have had no specula¬ and orderly, with no indication of omy is still operating at high lev¬
els of employment and
Our
production
economy
today possesses tive spree in either securities or a
general
spiraling
downward.
The kind of government actioi
vitally
important
elements
of commodities.
Inventory
buying Wholesale prices by mid-year had
earlier
programs
permit,
which are
Initiative, ingenuity, and
Expansion
as
skills
■•■v~'*'* *''
1 '
I propose that we follow the lat¬
ter course.
$12.3 billion in
and
flecting the shift from
a
rate of
move
and necessary for its attain¬
ment?
the first half of last year.
Prices
to
annual
an
last
year's.
and
resources
adopt the
omy
deficit in the past half year
and courage in
going to
we
consistent with that kind of
pe¬
Federal
are
strong and productive
as
our
rate of $12.1
a
Or
forward toward making our econ¬
an¬
corresponding
1948.
ment?
of
ment
ran
upon
at
a
rate
more
than 20%
our people, as well
to the strength of our economy,
direction.
This
issue
is fundamental.
Are
going to admit that the forces
of progress in our economy have
we
higher than in the first half of
1948, and state and local payments become
so
feeble
that
we
must
not to
contribute toward
oF expenditure that
programs
I then recommended were held to
a
minimum
basic needs
consistent
in view
tionary strain
upon
of
with
the
our
infla¬
materials and
Volume
170
Number 4820
THE
COMMERCIAL
*
Lift ANC1AL
&c
CHRONICLE
(179)
manpower i then
prevailing; Now; ties.^ TheseactivRies are oL such eral prosperity without farm
pros¬ fits maintain to some extent the
removed, paramount importance that it1 is perity.
purchasing power of those who
with out of the question to slash them
There
is
immediate
need
to rave
lost
their
jobs.
Because
sound fiscal policy and common at this time;
But, as our policy overcome a number of shortcom¬ these measures contribute toward
sense
,to
make
these
programs for peace takes effect, it should be ings in existing farm
legislation. isolating the consequences of un¬
smaller.
possible in future years to reduce It is necessary to assure fair and employment and
reducing its du¬
Continuing these necessary pro¬ these
expenditures
which
now
adequate supports for major farm ration, it is not economical even
grams
involves the pro Diem of make such heavy demands upon products,
notably livestock prod¬ by the measure of dollars alone to
i ow and when we should acuieve our
Federal
budget. As oppor¬ ucts, which have not been cov¬ leave these protective devices in
a balance of Federal
receipts and tunity bffers, i shall make every ered in past programs. It is nec- an inadequate state. The cost of
expenditures, and a reduction of effort to achieve an excess of es:ary to autnoiize tne use of di¬ such measures is determined not
that tin's strain has been
it
be '
would
inconsistent
benefits
for
veterans
Servicemen's
one
25,
1950.
not
be available
for
unemployment
Such
national
been
debt.
problem than
l
to
exert
has
one
with
I, and this
diminished.
not
as
tinue
No
■
concerned
more
I
this
concern
will
con¬
effort
every
to
Federal
income
ou.go
con¬ rect production payments as an only by the extent of
coverage or
major objectives alternative to the pegging of mar¬ size of benefits but also by the
of peace and prosperity,.
;<•'.;/ ket prices if an effective support ex.ent and duration of unemploy¬
But it we tried'to avoid a budget program is to be carried forward ment.
sistent with
over
our
deficit.-by
cutting
essential
ex¬
without waste of commodities and
achieve every economy in the de¬
penditures, we would contribute wit; out denying to consumers the
to, lower
national
output .and benefits of agricultural abundance.
lower
employment, Federal re¬ It is desirable to recognize clearly
national welfare.
Balancing the ceipts would fall further, and the that the objective farm support
budget and reducing the national burden upon Federal expenditures prices is to maintain an adequate
debt.are objectives to be achieved would increase. We cannot expect level of farm income and
promote
velopment and execution of progran s that is consistent with ti;e
at the earliest feasible time.
But
d
,
•
fhese objectives cannot be
•achieved
without regard to the
general state of the Nation's econ¬
During the fiscal
omy.
and 1948
we
1947
years
able to
were
achieve,
although not to the extent desired,
the
objective of balancing
the
budget and reducing the national
k ebt.
I urged repeatedly during
this inflationary period that gov¬
ernment
to
be
revenues
provide
ment ;of
surplus
a
the
maintained
for
national
retire¬
debt.
The
present deficit of Federal receipts
below expenditures, 'caused pri¬
to achieve a budget surplus in
declining national economy.
There
'
economic
are
deficits
that
serious
than
in
would
truly
of
business
sumer
far
more
temporary deficit
budget. Could we
a
the Federal
be
social
and
be
a
the
if
prosperous
level
or
con¬
investment
.purchasing
should
power
become seriously deficient? Could
be
we
truly, prosperous with gap¬
deficits- in our' educational
ing
system
or
health
for
housing
our
services
or
our
or
our
programs
resource
development? If we
should allow these deficits to mul¬
Under
current
economic condi¬
tions, it is urgent that the unem¬
ployment compensation system be
the Congress to enact at this
session
legislation to
needs.
these
meet
eligible
compensation
Minimum
wages
provide
by
the. untimely tax
of $5 billion during
"The national tax policy should
be flexible and should be
promptly
get,
but
we
to
adjusted to the changing needs of
and
business
national debt.
and
of
course
•events."
in
consumers
evolving
::v:
the
economic
"'-f'
Under present economic condi¬
tions,
rect
we
the
the
or
lower
and
cannot immediately cor¬
of the past
level
,
of
led
national
lower Federal
to
a
income
Any
revenues.
tax increase should be judged
by
the effect which it might have
national
upon
chasing
ditions,
income
immediate
tax
so
at
as
.
Federal
policies
needs
monetary
should
of
the
expanding economy.
of
ample
supplies and low interest
an
Present
credit
rates
credit
to
are
conditions
favorable to business in¬
benefits
for
26
weeks
policy of the
gov¬
institutions
legislation
paid workers
a
from
revenue
under
such
the
tnis
Revenue
to restore
of
costs, should
visions
be eliminated.
the
in
laws
Fur¬
carry-over pro¬
income
corporate
should
be
still faced
are
hour,
and
The net effect of these three
taken
expansion- of
tivity, without
business/ac¬
causing
a signifireceipts. No
icant net loss in total
changes
would
in
in
the
result
revenues
this time!
In
A
view
road
maintain
to
and
tivities.
with
funds
available
are
laws
which
domestic
obligations,
is
the
an
only
and
abun¬
safe
government surplus. In
3 948 the value of our national out¬
put
a
of
above
goods
$250
annual
and
set
services
billion.
of
growth
which I
A
our
3-
was
or
4%
economy,
practical objec¬
Economic Report in
as
in
my
a
would
increase
tional output means
revenues at any
-
Present
are
due
in
large
and
Federal
more
of
.
•./••'77.'7,
-V/
■
7
•.:
.
/
to
which
the
dangerous
would
call
for
ance
fund be established for those
states
levels
all-out
which
standards
to
en
the
meet
minimum
that
assure
creased protection
aid
to
the
states
for the
needy aged, for the blind, and for
dependent children, such aid
should be extended to other needy
receiving
persons
general
assist¬
In most states, the programs
in operation are inadequate
Public Works
the
in¬
will not threat¬
the continued solvency of state
unemployment funds.
This would
Public
works
Fed¬
programs,
eral,
state,
and
local, * assume
added significance under present
conditions
taining
as
a
means
of
main¬
purchasing
power and stimulating investment
opportunities. My January budget
c o n s u m e r
proposals
called for Federal ex¬
penditures for civil public works
in fiscal year 1950 in the amount
of
about
$3 billion, compared to
$2V4 billion in fiscal 1949.
about
Continuing the
in the
out
any
included
with¬
programs
present budget,
even
starts, will require
new
and
expenditures of approximately $3
inescapable obligation of govern¬ strengthening of the present legis¬
lation authorizing Federal loans to
to take action when large
billion in each of the fiscal years
emergency
measures,
there is
an
represent
an
extension
ment
numbers of
through
people
fault
no
are
of
unemployed
their
own.
states whose
run
unemployment funds
low, which expires on Dec. 31,
!
1949.
Such action is
;
.
.
1951
and
rates
now
This
is
construction
1952,, at
planned.
a
*
substantial
program,
coupled with private
struction expenditures at the
and,
(Continued
on page
con¬
cur-
24)
New Issue
$1,740,000
influence
ment
by
It
is
no
answer
to
this
City of Dallas, Texas
4% and 13A% Bonds
difficult
Dated
July 1,1949. Principal and semi-annual interest (January 1 and July 1) payable in New York
City or Dallas. Coupon Bonds in denomination of $1,000 registerable as to principal only.
that this squeezes
inefficient, because it also
ruins many who are temporarily
question to
say
out the
others
in business.
from
getting
;//■••/'■/';•/
a
Interest Exempt
start
Under
■,;///:7,
The Reconstruction Finance Cor¬
ity,
will
continue
its
support
our
to
the
national
international
from Federal Income Taxes
Existing Statutes and Decisions
These Bonds, issued for various improvement purposes, in the opinion of counsel named below are
general obligations of the City of Dallas, payable both principal and interest from ad valorem taxes
which may be levied upon all the taxable property therein, within the limits prescribed by law.
poration, under its existing author¬
of
business activity by making loans
based upon reasonable assurance
cf
MATURITIES, COUPONS AND YIELDS
repayment, not under depres¬
conditions, 'but under gen¬
Due $87,000
sion
activities toward'areas where
;
f
.
Maturities
;i
become serious.
is needed, how¬
ever, to extend the maximum ma¬
turity periods for loans, in order
to permit financial assistance by
the Corporation to business ven¬
13/4%
tures
Prices to Yield
4%
.70%-1.15%
1.30%-2.10%
(Accrued interest to be added)
legislation
sound
Coupons
1955-69
employment has
New
each July 1, 1950-69, inclusive
1950-54
un¬
The above Bonds
are offered subject to prior sale, for delivery when, as and if issued and received by us and
subject to the approval of legality by Messrs. Chapman and Cutler, Attorneys, Chicago, Illinois.
which
and
are
economically
urgently needed in an
The National City
Bank of New York
activi¬
Trust Company
of Georgia
Braun, Bosworth & Co.
Incorporated
of debt.
Provident Savings Bank & Trust Company
Millions of American
ing and buy the products of in¬
Experience has taught us
can be no lasting gen¬
that there
Incorporated
Andrews & Wells, Inc.
consumers
derive their livelihood from farm¬
dustry.
Lyons & Shafto
Cincinnati
Agricultural policy
expenditures
measure
extraordinary costs of
defense
Federal
annual
given tax rate.
levels
,
Social-security
Although unemployment has not
expanding economy,1 but which
require long periods of time to
national output in real terms by develop and produce earnings that
%lx/z ,to $10 billion. Higher na¬ will permit orderly amortization
tive
January,
each
for
time before the laws of all states
Over the years, Federal lending
has come to exercise an important
a
our
increasing payroll taxes to 1 xk %
ex¬
larger net loss erally prosperous, long-run con¬
The Corporation is also
would be justified at ditions.
very
properly focusing its loan
,7,70 /{.•:/•.
v, 777
economy
to
tax
in
of
international
dant
structure,
together, will be favorable
the
to
tax'
our
badly
also
are
The present schedule for
pand their productive lending ac¬
vents
in
Congress
liberalized in
which may now be held back be¬
cause of uncertain
profit expecta¬
changes
old-
next
now
Ample
is
the exten¬
sion of the Act's coverage.
in adverse financial circumstances
order to give an increased incen¬
without being inefficient, and pre¬
tive to some business investments
tions.
the
1948.
large number of business
a
thermore, the loss
tax
lost
source
Act
the
needed.
grave problem in
upon
business invest¬
providing funds which
would otherwise not be available,
This wiM have no sigt&mmnt ad¬
particularly for small and new
verse
effects upon present eco¬
businesses. In a period of business
nomic
conditions.
At
the
same
contraction, no matter how mod¬
time, tlie tax on transportation of
erate, deficiencies in capital funds
goods, which enters directly into force many enterprises to the wall.
the
to
ance.
::
important not only
I further recommend that the
ernment will
be to continue to to the unemployed but also to bus¬
maintain orderly security markets iness, since unemployment bene¬ expiration date for unemployment
The
vestment.
in
essential to
risen
and
contribute
improvements
and survivors' insurance sys¬
tem which I have recommended
and to encourage banks and other
increases
least
the
Of
con¬
should be limited to
raising es¬
tate and gift tax rates and
closing
the
loopholes
in
their
admin¬
istration
reduction
resume
pur¬
and
Under present
power.
for¬
move
Monetary and credit policy
tax mistakes
conditions which
to
also
can
improve the tax system
The
age
and
in many localities there is
no
program at all.
Recent eco¬
maintaining adequate this purpose in the trust accounts
nomic developments have empha¬
consumer purchasing
states.
power among of most
However, these
sized the need for aid, and I again
large groups of our population. increased benefits will require
The cost of living has been re¬ action by the State legislatures urge
its favorable consideration
duced
very little,
so
that low- ?nd it will obviously take some by the Congress.
Minimum-wage
an
ward
bring state payments
to the Federal level, or when
state benefits are used
up.
up
ranging up to $30 a week for sin¬
gle individuals, with additional
meeting living can be amended for this purpose.
re¬ tiply, they would drag the whole
expenses. Higher minimum wages It will be necessary, therefore, to
duction
the economy down, and there would be are an element
in the genial im¬ allow a reasonable period before
height of inflation, against which no hope for balancing the gov¬
provement
of
American
living the requirement for new standards
I so strongly
advised, has been ernment budget. But if we pre¬ standards which
takes effect.
we can afford and
aggravated by the loss in revenue vent these deficits, if we realize
must achieve. I repeat my request
To encourage the states to meet
resulting irom the decline in pro¬ the productive potentials of the
for the immediate raising of the the new standards without
waiting
duction and national income..
American
economy,
the
whole minimum
wage under the
Fair for this period to expire, I rec¬
; As I said an my Economic Re¬
nation will prosper, and not only
Labor Standards Act to at least ommend that a Federal reinsur¬
port in January of this year:
:j- will we balance the Federal bud¬ 75 cents
marily
where
except
necessary to
amounts for dependents.
:77
laws,
should
those
on employers and
employees
January will provide the fi¬
broadened and liberalized. I rec¬ nancial basis for such
improve¬
ommend that the Congress ments
without unduly reducing
strengthen our Federal-State un¬ consumer purchasing power. *
employment insurance system by
I have already recommended to
establishing minimum benefit the Congress that in addition to
shifts in lines of agricultural procuction which will encourage an standards
for all parts of the coun¬
increase in the total domestic con¬
try and by broadening coverage.
sumption
of
farm
products.
I These minimum standards should
urge
state
Act
July
year, to
benefits
to
1-
the
under1 the
Readjustment
be extended for
under
23
Republic National Bank of Dallas
July 8, 1949.
Blewer, Heitner & Glynn
I-
I
24
THE
(180)
COMMERCIAL
FINANCIAL
&
CHRONICLE
knowledge of those that already
rent rate, and with local and state
expenditures
of
at
$3 billion
tain
the
in
rate
a
excess
should main¬
a year,
construction
industry at
a high level of
activity and thus
strengthen the whole economy.
The economic situation does not
call
now
,
for
sweeping
works.
immediate
an
expansion
-It
would
and
of
public
dangerous,
be
however, to neglect the precau¬
tionary preparation of measures
which
might be needed' if the
business downturn should become
serious.
more
to
Such
preparatory
by themselves will
measures
serve
inspire confidence that the
ernment
further
will,
if
gov¬
help
high level
They will thus reduce
necessary,
to maintain
of demand.
a
doubts that businessmen may have
about
planning investments for
the future.
age
They will also
encourcontinue their
to
consumers
normal
purchasing with
more con¬
fidence.
*
I urge,
therefore, that the Con¬
gress (1)
enact legislation to pro¬
loans to assist state and
vide for
.local advance
planning of public
(2) provide funds for the
Buildings Administration
works;
Public
for advance planning and site ac¬
quisition for Federal construction,
under the
authority recently
acted;
enable the
(3)
Public
Roads
to
en¬
of
Bureau
make
continuing review of such
a
ac¬
tivities be undertaken within the
thority and under the new legis¬
I have proposed, the Ex¬
port-Import Bank will be expand¬
construction
which
might
ments
precipitate
which
have
previously recommended.
Together with the advance plan¬
ning already under way by many
Federal
agencies, these actions
will round out
and
of
tively serious unemployment
a
try
high level for the
very
as
whole, there
a
localities
where
of
and
it
is
many
some
states
These
even
serious.
pools
heavy unemployment need to
they spread, and
responsibility is in part na¬
be treated before
the
are
programs
number of Federal
a
direct
of
action
or
areas
where
grant
loan
or
programs,
full-scale Recip¬
Act, I
Agreements
unem¬
this session
rent economic
portation
of
goods,
of losses
undertaken at
be
(2)
Extend the maximum time
limit
turity
by
fixed by law on the ma¬
now
of
loans
the
to
business
Reconstruction
made
Finance
Corporation.
expansion
of farm income supports.
(3) Provide for
in¬
directly
the
capital
-
goods
-
exporting
from
expansion of
The
us.
investment
assisting
by
least
at
broaden
75
its
projects, by
invest¬
by in¬
new
productive
opportunities, and
creasing
the
Bonds
'Loans
Federal
Banking
and
of
June 30,
investor's
private
lowances
cents
wage
hour
an
and
of
for
readjustment
veterans
State
by
(8)
not
al¬
pro¬
unemployment
benefits
Raise
under
coverage
(9)
$
Bonds
.—-,__4
Reserve
4—
3,254,388.58
___————
5,954,729.79
__
u
_______
Stock
Premises
______
420,000.00
-
Occupied
Income Accrued Receivable
and Prepaid
Resources
the
old-age
system
62,206.62
.__
$232,730.718 01
LIABILITIES
Capital Stock
Surplus
Undivided
$ 7,000,000.00
8,000,000.00
Profits
Total
Ceneral Reserve-
Capital
3,204,546.22
Funds.:
$
18,204,546.22
a-*—
Reserve for Dividends
Reserve for Taxes
Reserve for
Interest,
1,072,356.05
Payable.
.—
105,000.00
675,555.52
'.
etc.
___.
Prepaid Income
^3"
202,366.95
563,977.76
—___
Liability Under Acceptances—
^
*
40,854.00
DEPOSITS:
"Commercial,
U.
Other
S.
Bank and Savings.
209,495,280.12
Government
Liabilities
2,351,957.75
,
:
!__
TOTAL
18,823.64
$232,730.718.01
if
*In addition to this item
as
shown
we
have unused
loan commitments
out¬
standing in the amount 0) $3,569,463.20.
**This includes
$2,411,441.75 of trust
moneys on deposit in the
Banking
Department, which, under the provisions
of the banking law, Section 710-165
of the State of Ohio, is a
preferred claim
permit
to
to
planning
sites
useful
for
intensify
and
to
their
acquire
projects.
developed
assistance
areas
encourage
to
under¬
abroad
investment
to
and
in
such
against
the
assets
of
the
bank.
The process of
Edwin
ifg irnf jpl
tain
to
G.
Nourse
V
be
affect
the
critical
relationships
and the distribution of money
comes.
two
in¬
have, in addition,
important effects: the
They
other
favorable effect of increasing th(
purchasing power of the dollar
and the unfavorable effect of
gen¬
erating
anticipations
of
further
price declines which lead to post¬
ponement of buying, thus depres¬
sing the levels of production,
ployment, and incomes.
em¬
price adjustment
that further price
reductions, made promptly to pro¬
mote volume and not tardily m
to date suggests
to falling sales, are
response
sential.
made
Where and how
also
is
While
es¬
they are
important.;
increasingly active com¬
already brought about
petition has
part
the
of
there
are
power
-to
adjustment,
needed
many
fields where the
"administer"
is
prices
strong and where the practice of
price leadership is w ell -e in ¬
trenched. It is in these fields that
the
of
capacity
take the long
busirljS^meiirt„f
view and to adopt
policies conducive to fundamental
and healthy
economic
readjust¬
ment will be put to the
while
they
Fortunately, the process of price
adjustment has been in the main
mand,
(11)
Restore
the
Reciprocal
factor
other
are
prices
^st.
,
-falling,
cut production to whatever
is
degree
to maintain
they will impair the
necessary
their prices,
effort
maintain
to
economic
*
The
every
core
*
of
*
businessman,
farmer,
and
to
worker,
everyone
is
still
has
been
the
existence
ol
duction
they
the
in
will
be
price
unsure
ac¬
level and
about the
to
and
respon¬
or
later, force some kind of
justment in these areas
have not prevented sharp fluctua¬
tions in prices, have been effec¬
untary
tive in
Smiting the extent of the
price fall,
The
as
i
question arises nonetheless
to the extent to which the
which
cuts
far
have
price
made thus
helped to stimulate de¬
In
prices,
the
had
have been
the
case
of
reductions
little
effect
wholesale
appear
in
to
stimu¬
lating business demand.
:
message
my
weakened,
support prices which, while they
have
Trade Agreements Act.
;
though
at very high levels, with residen¬
tial construction and investmeni
mand.
areas.
40,854.00
598,899.15
'
.
TOTAL
legislation
localities,
3,706,708.41
,
Expense.
—
Price Adjustments
mar¬
at
situation until price cuts, which
in plant and equipment still very
thev believe are inevitable, have
high and with government expen¬ been made on all important groups
and ditures still
rising. In the case of of goods, and the results can be
ahd agricultural
prices, an additional observed. Competition will, sooner
Federal agencies, and assist States
65,848,078.46
■_
Customers' Liability Under
Acceptances
Other
60,371,130.29
92,473,722.71
tne
peak
price levels.
(10) Enact legislation to provide
__
Securities-..
Enact
technical
—
Discounts
-
s
V
—
.—„—r_.—
and
prices,
extend
and
insurance
advance
„
absorbed
e
ket
orderly.
compensation laws.
1949
RESOURCES
Municipal
Other
consumer
,
and
Bonds
of
declines, as pointed out ear¬
lier, have been much more lim¬
ited than in wholesale prices. In
tivity at the highest possibie level.
Businessmen generally will not
creasing the amount and duration dumping at distress prices. Its or¬ believe that
any importantgroup
of benefits and extending cover¬ derly character is in
large part of goods can escape from tne
age.
due to the fact that it has been forces which are
strong enough
(7) Extend to July 25, 1950, the occurring
while
consumer
de¬ to compel the current generat re¬
tected
CINCINN A.T l,OHIO
United States
State and
case
the
.
Although in individual
(6)
Strengthen the unemploy¬ cases it has been sharp, it has not
ment compensation system by in¬ been widely characterized
by
rations into
ment
■
•
coverage.
availability
creating
improved program
an
(5) Increase the minimum
to
countries that want capital for de¬
velopment to translate their aspi¬
concrete
broad study of
a
economy.
(4) Adopt
foreign
CO.
from Banks
production.
In the
are
among various prices and the size
this time.
areas.
of
b
Tn
gram.
and Due
of life
way
the trans¬ stages, the process of downward
price readjustment is almost cer¬
liberalize the
carry-over
taxes should
in
s*p
Cash
and
Those opposed to our system and
on
improve the public assistance pro¬
as
of
the economic
the
United
States.
accompanied by some
bs corporations, and raise estate declines in production and em¬
and gift taxes. No major increase ployment. Price declines not only
provisions for
survivors
Statement
strength
are
know tories, accompanied by cut-backs
hopes of new; orders, has brought fur¬
greatly de¬ ther downward pressure on prices
and
upon
situation:
(1) Repeal the tax
expanding
foreign
designed
to stimulate
private enterprise or
to effect public
improvements. To¬
ward this end, I am
directing that
of
growth of underdeveloped
buy
programs
because
nomic
technical assistance will stimulate
activi¬
at
investment and development needs
and
market
opportunities in an
countries of Europe, will imnrove
the rest of the world's ability to
to other
peace
pendent
following oy
the
take
the Congress to enact the
legislation I have recently recom¬
mended to expand both technical
and capital assistance for the eco¬
urge
to
to pro¬
ties, but it is also relevant
growing
to the under¬
developed countries and indirectly
selectivity
curement and construction
are
strong
economy,
the
and
a
Trade
available
ployment is heavy without sacri¬
fice of general national
objectives.
This principle of wise
particularly applicable
world
trade
I recommend that
summary,
Congress
actions
vestment, by making more dollars
as¬
sistance to localities which can be
timed and channeled so as to con¬
centrate upon
we
a
effective network
an
restoring
rocal
The
There
efforts
foreign-assistance
and
tional.
is
world
our
now
coun¬
are
upon
the
their vital importance in the cur¬
productive strength of free na¬
tions. In addition to maintaining
Concentration upon areas of rela¬
at
advancing
based
log of planned public works.
While unemployment is not
political
making to help rebuild
substantial back¬
a
to continue the
us
In
develop¬
have serious
would
reasons, it is espe¬
cially important at this time for
I
abroad
,
acquiring and clear¬ consequences for world
ing rights-of-way; and (4) pro¬
stability.
vide for the surveys and
planning
For these
school
ing its operations and substan¬
tially contributing to these objec¬
world
friends
well-being
ordinate
to states for
for
for
their
hoping for the vin¬
in order to co¬
dication of their prophecies that
tives.
planning, to keep the
These actions are called for by economic collapse is inevitable in individual
cases, where large cuts
various types of activity and their
a free
society.
both our foreign policy and our
in prices have been made for sales
geographic distribution in proper
Ours is at once a fateful
respon¬
domestic economic policy.
They
promotion or where new lines at
balance and readiness, and to fo¬
will
be
supplemented
by
the sibility and an inspiring opportun¬ much lower prices have been in¬
cus emphasis upon alleviating un¬
ity to prove to ourselves and to
strong
of
the
United
support
troduced, consumer response on
employment in particular areas
the
world
that
prosperity and the whole has been
States for an expansion in the de¬
relatively fa¬
where it becomes serious before it
freedom will endure together.
velopment activities of the Inter¬
vorable.
One of the distinctive
has a chance to spread. I am also
'■
\
national Bank for Reconstruction
features during the war and the
having a study made of possible
and Development.
COUNCIL OF ECONOMIC
postwar inflation was the reduc¬
changes in the laws governing
There is danger that a further
tion in the volume of and the
ADVISER'S REPORT
these
activities
which
may
be
reduction
of
economic
activity
actual disappearance of many
needed for these purposes.
Following are excerpts from
may give rise to pressure to re¬
models and low-priced
the Report to the President from stripped
Foreign economic policy
strain imports, in an attempt to
items of apparel and house fur¬
the Council of Economic Advisers.
The decline in our business ac¬ divert to United States markets
Previous economic reports have nishings, which had formed so
tivity is reducing our imports, part of the small fraction of total
large a part of the sales during
which is an important factor af¬ demand now directed toward for¬ repeatedly pointed out that price
prewar years.
With the weaken¬
levels which were geared to warfecting the ability of foreign coun¬ eign goods. It should be recog¬
ing of consumer demand, there is
tries to earn the dollars they re¬ nized that diversion is a poor sub¬ created temporary factors of dea
growing trend now for manu¬
m a n d
and
quire to restore their economic stitute for expansion of total defacturers to reintroduce and em¬
shortages
o f
health. The decline in imports, if m a n d.
Protectionist
measures
phasize such low-priced items to
could
long continued, could have very would not merely shift the prob¬ supply
make products available to con¬
not
be
sus¬
serious effects. If a severe shrink¬ lem
of
inadequate markets tc
sumers'at prices which they are
tained indefi¬
age in the flow of dollars abroad other
countries but would also,
able to pay. The relatively favor¬
nitely.
The
occurred, it would not only reduce with the present dollar stringency,
able showing in these lines indi¬
downward
our exports
now, but would also promptly reduce our own exports.
cates that consumers are actively
force other countries to try to Such measures would, therefore, adjustments
seeking them. Taking consumer
now
under
save dollars by making discrimi¬
noi; have a
stimulating effect on
prices as a whole, however, the
natory trading arrangements that the domestic economy, even in the way are a re¬
declines
that have taken, place
flection of the
would adversely affect the long- short run.
have not been great enough to
fact that full
run
future of our foreign trade.
encourage consumers to expand
Summary of Legislative
pro d uction
Moreover, it would set back re¬
their purchases of consumer goods.
can no
Recommendations
longer
covery and reconstruction abroad,
Executive Office,
and
advances
that
lation
(Continued from page 23)
Our
sion.
exist. -Both under its existing au¬
Tinman Prescribes lor Prosperity
Thursday, July 14, 1949
For this
there
(a)
are
two
reasons:
The
initial effect of price cuts when a
trend
is reversed is to create the
ad¬
but vo
-
and well-calculated pr
reductions now, with a view to
maintaining
_
volume,
would
be
highly preferable to forced and
possibly more drastic reductions
later
on.-
'
.
,
A difficult
problem of price ad¬
justment is presented by the pub¬
lic-utility services, especially
transportation, where competition
is
not
directly effective. Their
prices are a substantial elemen
in the cost of production of manu¬
factured
goods, and, instead of
falling,; they are still rising in
response to past advances in the
of additional
price
sible for the making of national expectation
policy is just this: We cannot have cuts, thus further drying up de¬ cost of materials and labor. Public
prosperity by getting. adjusted to mand. a tendency which is rein¬ utility commissions as well as
the idea of a depression—by cut¬ forced by the fact that so many company executives have the spe¬
ting investment or employment or of the price* cuts have been so cial * responsibilities of adjusting
in amount thus far; and rates in. relation to changed cost
wages or essential government slight
programs. We can be prosperous (h) there is the natural desire on and demand conditions, with spe¬
only by planning and working for the part of business to reduce in¬ cial emphasis upon the interests
prosperity, by increasing private ventories in a period of slacken¬
investment, 'production, employ¬ ing demand before reordering on
ment
and
normal basis
purchasing power, and
by carrying forward essential gov¬
a
ernment programs.
The whole world
have been substantial.
developments
in
-
*
is
the
watching
American
Our own people insist
the maintenance of prosper¬
economy.
upon
ity, and will not tolerate
a
depres¬
more
areas
where
the
-
even
price
in those
declines
of the economy as a whole.
The process of widespread price
readjustment is not pleasant nor
easy to effect. .Weaker firms are
Though in¬ overtaken by financial difficulties*
ventories
were
not
out
of
line Instances of inefficiency in man¬
with sales, business has been sen¬ agement and low productivity ot
sitive to the possibility of inven¬ labor, which tend to be condoned
tory losses due to price declines. in times of inflation, have to be
The tendency to liquidate inven-. eliminated.
These are necessary
Volume 170
Number 4820
conditions for establishing
economic base from which
Tip! COMMERCIAL & FINANCIAL CHRONICLE
a
firm
which,
a
new
tended
expansion can be projected.
past
on
to
occasions,
undermine
has probable that, orders have in many third
whole
the
While this institutional
structure.
adjustments, will development
prove feasible and helpful must
be considered in close connection
needs still further
improvement in the light of ex¬
perience, there is also need for
with wage and other
further reduction Of the
What
price
income ad¬
industrial
justments.
prices of
bought by
products
farmers.
Wage-Cutting Damaging
;
Price reductions add to real in¬
consumers'
if
only
come
Summary: The Nation's Economic
Budget
money
fourth quarter of 1949
increasingly below the
in 1948* Thus, if
counteracting forces are not mar¬
ment expenditures will continue shalled, it is at least possible that
to give support to demand.
the inventory and price adjust¬
There are other factors, how¬ ment may develop into an invest¬
ever, which could produce a fur¬ ment recession later this year or
ther
weakening.
For
example, next year.
present surveys indicate that busi¬
Despite the significance of in¬
ness expenditures and investments vestment,
it should be stressed
in plant and equipment in the that
the
downturn
commenced
been cut below the level jus¬
cases
tified
markets.
The
expected further rise in govern¬
by
income
Of
demand
so
upon
largely rests.
which get reflects a decline in business
The at¬ activity extending over six months
lower
prices
through wage cutting would clear¬
ly be damaging at a time like the
present when consumption de¬
mand is proving inadequate and
..business slack is developing.
A
sound first rule to apply now is
that the general level of wage
rates should at least be main¬
tempt
f
"
to
secure
money wages move upward
the
over
years
the gains of
to * participate ;in
technological
progress
and increased
productivity. There
are
difficulties in applying the
general principle to specific situations, but this adaptation can be
worked out through sound col¬
lective bargaining. Particular con¬
sideration should be given to those
#.
in the lower wage brackets.
*
With wage negotiations now un¬
der way in a considerable num¬
ber of basic mass-production in¬
dustries, there is
an impasse. While
a
a
equally de¬
termined attitude on the part of
management.
Should
industry¬
encourages
an
»
the first half of 1949 while con¬
income and expenditures
dropped only moderately. The de¬
leads
rep¬
wage
$9
billion
(seasonally
adjusted
annual rate) from the second half
bf
1948 to
This
is
the first half of
1949.
decline of about 3^%
a
in current
after
about
6%
in
terms
of
prices.'
current
/'■/.;
,
The most conspicuous facts re¬
flected in the Nation's Economic
Budget
that business invest¬
shows
ment
from
are
the
sharp
a
second'half
reduction
of
1948
to
sumer
cline in business investment
at once to -tax policy and
policy. I have not the time
us
resents
trend
of
which in turn largely accounts for
the present decline in economic
ment
has
resulted
from
basic
a
What I
Hansen memorial volume.
discrepancy between the trend of want to do here is to discuss the
production and rela¬ question of redistribution as a
tively stable consumer demand means of getting oat of a depres¬
over the last few years.
With the sion. The left-wing is now seek¬
progressive fulfillment of extraor¬ ing to encircle capitalism through
dinary backlog demands over a formidable ideological pincer
result, they would not
and thus darken the business
outlook.
At the present time both
employers
strive
and
work
to
workers should
adjustments
out
which
will help to stimulate ac¬
tivity, bearing in mind the need
both for holding
business costs
down and for maintaining con¬
sumer purchasing
power at high
levels.
If wage
incomes
are
maintained,
adjusted downward.
be
no purpose,
There would
and much potential
damage, in
an attempt to get back
drastically lower price
level by wage cutting, since incorhes are now geared to prices
substantially higher than before
the war or immediately after the
to
some
war.
a
Such
an
effort would involve
deep and vastly unsettling de¬
cline in wages as the accompani¬
ment to
to cut down its orders and to
stop
;
Now
it
corn,
tobacco,
j-
cotton,
hogs were close to or even
below government support levels.
Farm income as a whole has been
only moderately affected, because
lower prices have been in part
offset by high yields. But the prospect's of another year of large
crop production on top of present
carry-overs indicate that the problems of supporting farm prices
will be increasingly difficult.
expenditure
com¬
with
our
increasing
productive capacity under maxi¬
mum employment, and for
provid¬
ing a substantial basis for a sus¬
tainable high level bf investment
itself.'
have
an
infla¬
The
"enough"
"rich"
the
now;
pensation and veterans' allow¬
ances, in part offsetting the de¬
If
if
This
same.
the
corner.
every
Now it is the factor of
major slump, don't
a
even
store this year
no
growth
which is the
strategic one in oqr
basic choice between adding
pur¬
chasing power and redistributing
it. The fundamental point to re¬
laffected. Trouble, if we do nothing
about it, is probably just around
member. is so simple that I almost
blush to give it to you; .and yet
;
■i The reason why -trouble would
be likely is that in order to have
full employment the investment
and construction goods industries
must be
tolerably prosperous.
When
they shut down,
unless
it is so overlooked today that;
the economic, students in the
have
try
probably
half
coun¬
forgotten
This basic fundamental is
it.
fal¬
as
lows: The expected rate of return
which will keep a man in a busi¬
offsetting expansion
ness already started is practically
elsewhere, a "multiplier" process
sets in whereby the slump spreads always very much less than the
there is
over
we
some
rate of return which will
the whole economy. But now
to the real problem. In
him
for
the
investment
goods
constantly and
steadily employed there must be
constant and steady growth and
change. That is because mere re¬
placement only takes up about
industries
to
output. Our
or
socialist) is
ized that if it tries to
Once
lattoi
keep
a
.
grasp
the
this distinction
to
needed
return
business merely in the rut
and the return needed to induce it
so organ¬
expand and change,
to
stand still
giwv w stand still.
we
between
so¬
it immediately runs backward.
business or
I am here quot¬
leading English left-wing Keynesian, almost Marxian, economist.
ciety (and any growing society-
capitalist
a new one.
induce
expand his
ing almost verbatim. not Adams
Smith but Mrs, Joan Robinson, a
be
half of investment
to
start
come
order
of
It
we
.
have
clue which will clear up much
a
our
modern
(Continued
It muse
confusion.
on page
If
we
26)
Continental Illinois National Bank
and Trust
Company of Chicago
BOARD OF DIRECTORS
"abundance."
Again
production. For the first half
government
ran
a
Chairmen
,?
V;
J.Q.ADAMS
Real Estate
President
Statement
;
^
of Condition, June 30,1949
.'it
RESOURCES
-
Cash and Due from Banks
United States Government
CARL A. BIRDSALL
#
555,272,474.07
1,154,853,193.28
Obligations..
'■
Other Bonds and Securities...........
77,328,756.75
CHAUNCEY B. BORLAND
Managing Owner, Borland Properties
Loans and Discounts.................
D.A.CRAWFORD
378,867,429.64
Stock in Federal Reserve Bank..........
President, Pullman Incorporated
4,500,000.00
'
EDWARD A. CUDAHY
Customers'
Chairman of the Board,
The Cudahy Packing Company
Income Accrued but Not Collected.....«
JOHN F. CUNEO
;
President, The Cunto Press, Int.
Liability
on
2,416,726.46
Acceptances....
j 5,792,311.89
•
9,750,000.00
Banking House.........................
*
.
'
#2,188,780,892.09
MARSHALL FIELD
President, Sun and Times Co.
LAWRENCE P. FISHER
Direttor, General Motora Corporation
I
"poverty in the midst of plenty."
Ml
WALTER J. CUMM1NGS
supposed to be with¬
holding a great store of wealth
presently existing which will give
Chairman,
LIABILITIES
'
Deposits
Commonwealth Edison Company
JAMES R. LEAVELL
#1,987,989,783.66
2,416,726.46
Reserve forTaxes, Interest,
WILLIAM H. MITCHELL
Partner, Mitchell, Hutch ins & Co.
A. W.'PEAKE
Reserve for
v./'''
and Expenses.
7,447,539.86
Contingencies..,...........
18,106,550.79
Income Collected but Not Earned.......
President,
Standard Oil
.........
Acceptances.
'■
Banker !*.'
429,457.56
Company (Indituu)
Capital Stock.
H. A. SCANDRETT
Railroad
V
V
CHARLES Y. FREEMAN
Executive, retired
60,000,000.00
......
Surplus
90,000,000.00
Undivided Profits
22,390,833.76
But
we
McCormick Estates
FRANK F. TAYLOR
#2,188,780,892.09
don't
even
at full employ¬
HERMAN WALDECK
ment,
even
have
But
We
don't
Eaetsuhe Viet Preiidenl
United States Government obligations
have
source
"plenty."
enough!
there
is
a
R. L. WILLIAMS
are
second,
allied,
of misunderstanding, and a
President, Chicago and North Western
Railway System
pledged
more
ment
we
if
could
we
get
or
at
$180,732,892.54
permitted by law.
CHARLES D. WIMAN
Member Federal Deposit Insurance Corporation
merely
NEW
YORK
CORRESPONDENTS'E. J. McGRATH
operated
those
terribly
AND
L. A. ANDERSON* 14
WALE STREET.
at
1949
is
required
full employ¬
and
projects now in existence. This
is a somewhat subtle fallacy and it
capacity
carried
public and trust deposits and for other
fundamental one for our
present purposes. That is the idea
that
to secure
purposes as
President, Deere It Company
still
businesses
important
that
we
>
JUDSON F. STONE
Vite President
cline in incomes derived from cur¬
year,
was
"Watch durables! watch steel!"
are
than in manufacturing must cut corners and just say
industries alone.
As a strength¬ flatly that any one who looks at
ening factor, there was a rise in the statistics will find that this is
expenditures by Federal, State, nonsense. In the depths of a de¬
and local governments, as indi¬ pression there is always a,discrep¬
cated in the Nation's Economic ancy, sometimes a scandalous one,
Budget table. Some of these ad¬ between the living standards peo¬
ditional government expenditures ple are actually enjoying and those
are
reflected directly in an in¬ they could receive. It is easy (for
those who have an axe to grind)
crease in transfer incomes derived
from rising unemployment com¬ to dramatize and magnify this into
the
I
the great
aggregate
of
that
let yourself be misled by the fact
that consumption is at first un-
■
rent
earlier
they begin
ing industries was curtailed, em¬ pseudo scientists into feeling that
ployment in most other activities even if we ceased to increase our
was maintained or increased (after
production there would already be
ment
said
that
realized
be
that
retail
is selling as mudi
prophet and no forecaster. But I as it sold last year we have rid
am a student of the business cycle
guarantee that a depression will
and I can give you one very sim¬ not be in the offing.
For it Is
ple test by which you can tell growth that we need for full em¬
whether we are in danger of a ployment.
serious decline. That test is this:
n
The sharp cut in industrial pro¬
deficit, as compared with a sur¬
vulnerability of a small- plus in the preceding period.
Some conditions are now favor¬
unit industry whose markets are
dominated by exchange and auc¬ able for a reversal of the down¬
tion methods of sale has led to ward trend in industrial produc¬
the development during the past tion and employment. Inventories
20 years of governmental price in several lines of business already
supports to agriculture. It is now have been brought into a better
widely recognized that this insti- relationship with sales, there are
tutional
development
has pro¬ indications that prices are being
tected the economy against a dan¬ brought into a better relationship
ger of collapse in a major segment with disposable incomes, and it is
.
,
must
everyone
and
'
total
mensurate
change to remain the
talk
decreased much less in the
sity of maintaining adequate buy¬
ing power is to be found in the
agricultural situation. The decline
in the prices of farm products,
which began early last summer.,
was not arrested until the prices
.
taining
and
expendi¬
.
-
.
maintenance
consumer
essential both for main¬
are
means
I
somehow
wheat,
tures
should understand where the mis¬
lose.
a prolonged period of se¬
depression. From that, prac¬ allowance for seasonal variation).
tically no one would gain; the Thus productive activity, employ¬
economy would lose tragically.
ment, and personal incomes de¬
Another example of the neces¬ rived from
productive employ¬
of
The
stimulation of
take lies.
majority of people who
this way are probably per¬
fectly sincere about it. We are not
duction and the inventory decline
dealing just with crookedness, or
had oniy a moderate effect on
foolishness, but with real misun¬
consumer income and expenditures
derstanding. And, if one traces
for the first half of
1949 as a. that
misundertsanding to
the
whole. A noticeable decline started,
roots, I believe it will be found to
however, in the second quarter. have a twofold source.
In the
The relatively high level of the first
place many people have been
first half of the year has been due misled by all the articles in the
to the fact that, while employ¬
Sunday supplements and the in¬
ment in manufacturing and min¬ flammatory talk of irresponsible
accumulation;
vere
,
we
to 12 months a slack
first in the demand at tion many of them will say that
prices for certain lux¬ wages ought to be raised to "main¬
tain the standard of living." If we
and subsequently for
have a depression, they will say
one category after another of con¬
sumers'/ and
producers'
goods. they ought to be raised to "main¬
If we
With production increasing more tain purchasing power."
have a boom profits ought to be
than
consumption
inventories
taxed to "keep down prices."
If
were
built up steadily. As con¬
we have a slump they ought to be
sumers failed to absorb promptly
taxed
to
"maintain
purchasing
the growing flow of goods, swell¬
power." Heads I win, tails you
ing inventories induced business
and recently to reverse inventory
this obviously places a limit upon
the extent to which prices can be
If
movement.
merely reduce the spending abil¬ the past 6
ity of the directly affected work¬ developed
ers, but would also spread loss of
prevailing
production and income to other ury' items
areas
output,
mar¬
in line with total
The Budget, the Business Cycle and
labor, the uncertain business situ¬ increasing
wide strikes
failure of consumer
a
kets to expand
j
largely a reversal in the to discuss the arguments of those
inventory accumulation, who want to redistribute as a
matter of long run moral reform.
I have treated that point in some
possibility of
still very high activity.
This inventory adjust¬ detail in my essay in the Alvin
cost of living encourages a deter¬
mined attitude on the part of
ation
with
and
run
levels attained
-
(Continued from page 17)
practically by having in mind ap¬
propriate measures, and, still more
important, we ought to be pre¬
pared mentally, and morally, so
that we will neither be stampeded
into panic, nor yet rushed into a
siUy or disastrous policy.
Outlining then the basic ele¬
ments of policy which we should
adopt, I submit that a serious dec 1 i n e
in industrial production
ought to be dealt with by a policy
of adding purchasing power-rather
than redistributing it, and by a
policy designed merely to com¬
pensate for the irregularities of an
unplanned society rather than to
direct it. Let us see why this is so.
Beginning with the problem of
redistribution, we find that it
Hie Budget total, or gross
national product, declined about
or more.
dollars, or about 1%%
allowing for declining prices.
The
percentage drop from the
tained.
Beyond that, there Is a fourth quarter of last year to the
strong presumption in favor of second quarter of this year was
having
may
25
not
are
sources
current
,
correspondingly
For the first time since the im¬
reduced. This leads to special con¬ mediate
postwar readjustment pe¬
cern
for protecting those major
riod, the Nation's Economic Bud¬
incomes
(181)
Last
Chicago Railroad Fair—June 25 - October 2
year's Chicago Railroad Fair
railroads
are
was
enjoyed by 2Va million people. This
year
the
sponsoring another season of the Fair by popular request, with many
jpew exhibits, and added features.
,
26
THE
(182)
I
COMMERCIAL
suggest risking any cash
on
*
*
FINANCIAL
CHRONICLE
*
(Continued from page 25)
Markets
As
in
Walter
Whyte
trader I'm interested
a
only
one
stocks at
them at
one
thing. Buying
price and selling
higher price in the
reasonably near future. That
chances of higher prices in
By WALTER WHYTE;
the
reasonably near future
President's message; strike don't
seem
particularly
news
will rule market for
bright, so the advice contin¬
time
being.
No immediate ues—stay on the sidelines.
market change indicated.
*
*
*
a
Says—
From
If there is
chances
in¬
market
of
news
almost
increase
will
terest
the
on
now
that
are
ter of
Last week it was the ing,
weekly.
anything in the
foreseeable future in the mat¬
that is encourag¬
news
is
it
that dealing with
Federal Reserve Board's deci¬ strikes and threats of strikes.
sion
the
on
selling of govern¬
This week it
ment securities.
be
will
President's
the
mes¬
This is kind of
left-handed
a
reasoning and I'll try to
plain it.
*
be broadcast Wednes¬
day night.
sage to
Strikes
'
*
ex¬
he'll get is
question
a
pretty well do what
distribution.
to
have
A
we
low
can
it
would
be
better
operative dividends
increases.
profit
or
But
if
rise
I
ematics
may
want
we
production
taxes
on
This
column
hurt
las
stock
a
will be.
come
It
know
does
deeper meanings of Presi¬
dent
Truman's
have
all
will
message
market
of
sorts
percussions.
re¬
%
*
*
I have been cautious about
buying for some
position I don't
particularly care for. Not only
advising
does
it
But
plus
increases,
as
Brokers
inaction but
it
can't
make
any
unless there's buying
and selling. What is more im¬
portant is that the reader
can't make any profits unless
he
does
something in * the
money
market.
X
I
fail
to
po¬
anything
see.
in the current, or
other stands I know the
ket has gone up a
past week
or
the
see
up
trader
positive
I'm
quite
cal.
I
can
more
Morals
like
Yet,
to
as
a
see
more
rather
action
be sold.
:o
sells
md there
for
his
mar¬
;rader
also
is
lews
news is
good
buyers bidding
are
stock.
The
buys
bad
nake the system.
Orders Executed
*
*.
In the past week or ten
lays stocks have rallied. They
are
now
at
is
point where
a
almost
favor such
a
such
of
a
a
But
reaction that
Stock
Exchange
New York Curb Exchange
(Associate)
San Francisco Stock Exchange
Chicago Board of Trade
N. Y.
Teletype NY 1-928
*
*
Wires to Principal Offices
(
'
>
some
sort
July, maybe
before
signal
Until it is
Hme
views
do
not
coincide
Chronicle.
any
will
seen
our
we
be
will
time.
which
in
this
necessarily
at
any
with
of
the
They
are
presented
as
(Special to The Financial Chronicle)
MASS. —Alfred
C. Yeager are
accumulate
in
the
demand."
left-wing
tends'
vulnerable
equally
error.
apt to suppose
are
"supply al¬
own
to
art'
They
that "Demand
supply."
own
Remember what
said earlier
we
its
get
ways
goods?
more
The
answer
They
of
may
existing
stocks, but if the retailer expects
no
profit will he always place a
smoothly. new order for more? If the manu¬
true that
if facturer expects little or no
profit,"
his
take
a
will
he
all
The
chances
self-imposed
line
ourselves
Some
will
do
we
in
may
gov¬
isting
try to expand his plant? 1
that
are
than
more
capacity of
at
best
we
keep the ex¬
the makers of
goods occupied. There
consumers
will be little
growth, hence unem-:,
ployment in the investment goods
increase
But the intense
democratic
vulnerability of
socialism
to
Increased money demand forgoods need not result in a greater
will in my opin¬
pressure
groups
cut down its net
soon
tion.
a
security
ion
had
that the
other¬
inflation
of
gives
kick-back
certain plausibility to de¬
a
mands
for
drastic
demand
for labor.
;
,
;
?
produc¬
the
last
considerable
few years
part
from
a
of them
is
to
deferred
and
to feel that the
out of
get
depress
a
on
way
by
is
"balancing the budget," cutti g,
prices and (in most cases) cutt'ng
wages too.
Now it cannot be denied that'
the
anti-saving
propaganda of the Great Depres¬
redistribution.
But, before we accept uncritically sion. But there are a number of
such a point of view, there are
economists who will say that on
in many cases particular indus¬
things to remember.
average our saving has been "too
First
of
all, and always, we great,"
tries may, as the expression goes,'
that
once
the
postwar
should remember that our prob¬
boom
is over we
will be con¬ "price themselves out of the mar¬
many
lem
is
and
not
of
one
just
food
clothes
and
of money. Our
present output is not sufficient to
one
give
everyone
have
come
to regard as the essen¬
tials
of
"decent"
a
matter
have
o
and
how
This
of
most
livelihood
evenly it
means
us
that
is
—
want
we
want
we
supposing
fronted by
do
growth
chronic
of
excess
ket."
sav¬
Coal
seems
to be well s'al-
ed that way, and the
railroads, too.
Also, as in the instances just giv-j
en,
the main impetus for this
and refer you to my books and to i
over-pricing may often come more
the articles and speeches of
Pro-j from the
Again I will have to cut
tain
Slichter.
corners
union
If
we
can
main-'
some
can,
as
we
wooden
leader
heads,"
the*
Mr.
A thur
them.
I doubt
as
Koestler has called
all wish, continue
then
"Men of iron wills and
company.
approach to our present
consumption levels, still more if
we
more
a
ing.
fessor
dis¬
growth.
more
if
But
what
if there is any more serious mis-;:
to grow, our economy is still sub¬
understanding of the
economic
than the supposition that1
wage increases can alwrays come
out of profits. Nearly all economic
American standard of living, the
ment; and continued investment,
theorists, even most of those'
sole large-scale source of saving
whose specialty is labor economicsprivate or government, if it is not
and investing now
surviving is in will, I believe, concede
0
caipse
inflation, will demand
that, at"
this, country. It would be a des¬ least
continued saving. If' our redis'trisometimes, money wage in- *
perate tragedy for the human race creases will not be
butive program cripples the long
able to ' cutif the United States ceased to be
run
motive for saving then our
into profits at all except at the'
an
investing nation.
next boom is likely to be
expense of investment, output, or'
highly
Finally we come to the notion employment. Assuming that we'
inflationary.
In other words, a
that- even
if
more
:ound
economic' policy - cannot
growth
is want to maintain output, price re¬
merely be improvised with ref¬ needed this can only take place if ductions may therefore be severe-*
erence to the demands of the mo¬
people's consumption habits rise ly limited by the level of wages in
ment. We have got to look ahead and that the only way to get them the industry concerned.
to rise is by increasing wages and
and see what is coming.
If the
But, if in one of these over¬
habit of saving is on average a cutting profits.
There are three
priced industries management and;
aseful one, then we would be
points to remember here. In the labor could
very
get together to cut
foolish to liquidate it for the sake first place it has been shown sta¬
prices and wages, it might wellof a short-run emergency — even tistically
that
the
proportional turn out, other things
being equal,
supposing (which I doubt) that spending habits of the economy do that both sides would find them-*
we
the
get
stantially
under-equipped.
Fur¬
industry started again,
thermore, if the rest of the world
,ve must remember that continued
is to approach anything like an
growth demands continued invest¬
of
process
-
such
a
liquidation would
do
any
C.
Another idea which is important
is the notion
that growth
be
"planned"
if it is
to
be
of themselves
and that if
tuations
over
we
within
can
bounds
not expect a permanent
sumption.
as
the longkeep fluc¬
some
and
the
con¬
But
could
not
planning
This
be
matter
no
who
■
technical points there is
mere
did
it.
question.
thesis, furthermore, has been
American
•
by
not
only
by
reviewers
of
\
'I.
1
•
:'
y
I
1
;
all
«'
,
f
really
tax
increases,
raise
the
'
believe
not
that
this
And I certainly do notcan
be
used
as
an*
cure
for unemployment.
The
right-wing policy, no less than theleft, must be tested in reVion to
a
its
effect
new
on economic growth and
investment.
Can anyone
plausibly maintain that
phere of continuing
ba«ic
price cuts and wage
in a1 able
living tion
standards of the poor to any great
book
my
and
slump,
larrer
argument for general indiscrimi¬
nate price and wage redoction rs*
Would drastic wage in¬
creases
the
one
do
believe that it
change,
important, any
avoided
I
pression.
technical
more
with
they
type of policy alone can be relied'
upon always to get us out of a de-i
els. It can fall suddenly though
consumption be rising steadily (as
economy which tries to give the was the case, in 1929). It can rise
public "what thev want when they though consumption be falling as
want it" will be liable to recurrent has frequently occurred.
threats of "over" expansion which
"But beyond and behind all those
permits
still
off and
than
and/or price cuts.
wage
more
that
at length in my little
book, the rising. In the third place, invest¬
"Economics of Disturbance." In it ment is not rigidly and mechan¬
1 have shown that
any economy ically geared to consumption lev¬
which
better
had before/
This is the argument for selective
need
we
lag in
of
selves
incomes
a
depression is simple-minded Keynesian's have
Again -raising consumption
solely the result of "lack of plan¬ said.
ning." I have discussed this thesis by redistribution does not keep it
stable
with Edward conceded
Co., 53 State Street.
rise
run
good.
i
But
its
general expansion
a
equally
is too afraid to
in
and,
Three With E. E. Mathews
John
-v
maintain
is
wise would have been spent. This
must
Whyte.
those
creates
ways
super-orthodox'
said
as a
industries may continue.
More
might at spending does not automatically
first be generated by government translate itself into more
produc-;
have
here
expressed
who
it
the;
and
tivity almost to nil.
thing to do is to cut down on sav¬
In the light of these
Coming back, now, to the main
principles,
ing by redistributing wealth and thread of our
argument, I have it Js time to discuss a program
raising money wages. In that way, pointed out that if the habit of which we have so far overlooked
they say, we will get the money
saving is on average desirable and —the program of the extreme
"spent" which is "being hoarded."
If left-wing writers,
necessary, we would be foolish to right-wing.
Now it cannot be denied that
liquidate it in a slump. For social tends to forget the factors I have
once
a
serious industrial decline
habits of this sort cannot be al¬ been discussing, right-wing think¬
gets under way some money will tered
just overnight. The great ers are apt to be h.voerconscious;
,
Thursday.
those of the author only.]
E. Mathews
i
to
those
15
of
on
.
on
Sheffield, Joseph M. Warren and
Barbara
Monterey—Oakland——Sacramento
■
is
*
of August
BOSTON,
'
Rosa
it
I think it will take the rest
[The
Members
may
base will be built.
irticle
Fresno—Santa
news
reaction, I think
—Walter
Schwabacher & Co.
a
imminent.
fact that the
The
on
New York 5,
I just live
it.
oy
ust have to bide
Pacific Coast Exchanges
Francisco—Santa
is
we
vheels
More next
OOrttandt 7-4150
there
to say that
much" saving
tributed.
worthwhile
Securities
14 Wall Street
when the
and
declining prices. Maybe the
ystem is wrong. But I don't
leen.
York
shrewd
it
whole.
approaching the problem of a
depression. Whenever we have a
slump there will immediately be
people
last
ernment direction of business
for
no
than
Pacific Coast
San
stock
The shrewd trader
of the month of
Private
cyn-
when the
part
New
the
highly
and
in the is coincidental.
less of negative action before
,
that
aware
above attitude is
reaction
possibility of it
days.
I'd
mar¬
little in the
ten days.
bit
a
few
next
opportunities.
recent, mar¬
ket action that warrants any
going
likely that such a
bring in addiional selling. It is just that
kind of selling that creates
will
to
unions; it is also true of the
"too
of
economists
I
they
(part
gains, then is "not necessarily."
find ourselves clear
the
shelves
chance
ra
it
%
Despite this unpopular
also
also
off
order
.
ilenty of stock being offered
v
s*s
sition
is
ell
in
everyone
keep
start
It
position that is re¬ kets, however, have little in
common.
Stocks were made
highly unfavorable.
a
garded
threats
ible that stocks will sell off.
a
mean
also
is
strike
current
any
new
It is
wdeks.
Should
week develop into action it is prob-
that for at least the next
the
if the
than
more
ridicule
theory always creates its
a
rom
*;
During, the
much
years
that
are
does not always proceed
net
no
chances
not.
justified) has been heaped
I consider it
appear
profit expectation
building a new plant will poverty.
Not only is this true of a num¬
*eep the private economy in. an
ber
of
ndefinite slump.
private
businesses
and
or
tock reflects it almost imme¬
doesn't know what the out¬ just temporarily.
underlying such
end unemployment?
or
the
heads
a
It is true that
which leaves the businessman lit¬
he
think
probably
all cutting one another's throats.
profits
wage
of
will
we
ployment in our society, then the
picture changes entirely. A commoney
and
extent,
would
particular prices and
.he standard of living to increase
or even if we
only want full em¬
of
Economist"
almost
at time
duction
tc
want
we
several
utterly vicious. The reason is that about the need of
incentives for
"back-logs" are not wholly me¬
growth.
Increased money wages
chanical things.
If every vested and increased taxation
of "hoards"'
interest of both labor and man¬
may,, it
is true, result in more
agement starts to hold back pro¬
spending, but will the people al¬
interest.
significantly, and if
by
inevitably take
planned slowdown.
And however beautiful the math¬
develop
productivity theory here, and in
any event wage theory is not im¬
mediately relevant. It is enough
to realize that a
stationary society
would not require much or any
ever,
will
the form
cannot, how¬
academic marginal
wage
"London
sion
than
rather
also
one
The attempt to direct production
so as to avoid
depres¬
"cut
to
but
including
in advance
the gravy" through co¬
on
read
the "Economic Journal."
capital would be enough. There
to be sure, still good reasons
why
socialism
;he
are,
labor in
have
English reviewers, for example in
return
Considerations
such
as
these
get arguments about diately. Yet, I know of no
from either side of the polit¬ single instance where a strike give us the necessary background
fence.
leading economic theorists
of
you can
ical
I
of the
are,
wish with
we
very
Cycle and Russia
whom
we
then, within broad limits,
.onstant
always been
*
*
%
regarded as market calam¬
ities.
If a major company is
How much of what Presi¬
faced with labor unrest, its
dent Truman asks from Con¬
gress,
only want to stay where
oination
#
Thursday, July 14, 1949
The Budget, the Bnsiness
the outcome.
Tomorrow's
&
|
to
new
seems
servative
an
atmos-;
deflation,j
cuts',
is favor¬
investment? The posi¬
me absurd.
So con¬
to
a
writer
i
•:
*
as
Processor
.
t
Number 4820
Volume 170
THE COMMERCIAL, &. FINANCIAL CHRONICLE,
Schumpeter points out that the de¬
flationary process may go far be¬
yond the point of any possible
promptly and without further de¬
lay ratify the ITO and Continue
the reciprocal trade program so, as
start the Federal Government into
usefulness.
to make it
continue,
There
however,
is,
final
one
to
possible for our friends
solvent without further
keep
argument which, it seems to me,
casts the balance overwhelmingly
loans from
in favor of
them,
or
them
to
policy putting more
maintaining purchas¬
than cutting prices.
a
emphasis on
ing power
all ways at once.
has
got to grow up. It
has got to stop thinking locally.
It has got to realize that we stand
today with our backs to the. wall
ideologically. Our tragedy is that
yve think (too much in political
-terms .and not enough in economic
I
ones.'
10 times
am
economic
of
isolationism
than
Russia.
But the
would
lend to
can
give
or
There
are
in
massive
we.
might
It
fifth
first
instance
should
in
not
mated.
power
us
onward
time it will send
same
to
renewed
a
and
vigorous achievement.
(Continued from first page)
tions
I
slogans
time must
of political isolationism.
All during the last few years when
the representatives of the United
lead the unthinking!
may
come
sooner
Of
course,
the
6t later when the true inward¬
am
ness
much
moved, their opponents have said:
You
will
let
the
over
mysterious situa¬
soon
'
The British
are short not of dollars but of
goods and
they "apparently now claim as some sort of
God-given right, but which they can not or will not make
for themselves and which they can not buy abroad for the
;
All during the la?t few years, simple reason that they have not produced the quid pro quo
when we have been plugging the
m
goods and services which foreigners want. In plain, blunt
freedom and the wealth of the
language, Britain is pdverty-stricken. In ordinary words,
United States, and of democratic,
capitalist countries generally, the moreover, Britain is how in the hands of a ruling clique
representatives of the Soviet of radicalism which insists that each and every subject of
Union have said>: "Wait. They may the realm must have this and
that, which in the very nature
be better off now, but soon they
of the case he can have only if he produces vastly more than
will
be
selling apples on
the
streets of Detroit once more." Now he is producing,; or, of course, only if some one who does
we seem to have reached the test.
produce the goods is willing more or less in perpetuity to
And once more I ask you: Shall
carry these subjects of His Majesty on their charity list.
your
we
go
last few years We
gradually increasing
recovery
in the non-Communist
European countries.
The Com¬
munist ideology seems to be wan¬
ing. We have begun to talk of a
"year of balance" in 1952 or 1950.
We
the
seen
have
able
been
to
cut
—but
The
for
aid
be
once more
—
if indeed
that long.;
,
,
that
as a
right
trouble is lack of production.
been
soothe^! iulq. a state of semi-lethargy by the
granof the socialistic regime which has been in
power almost ever sihce the war, and by its ability, re¬
peatedly demonstrated, to persuade or cajole the people
of the United States into supplying what was necessary.
diose phrases
clamoring
,
An Awakening Due
we
live.
"Shortage of Dollars" cliche had best be forgotten.
Stanley Group Sells $150,000,000
Morgan
Standard Oil of New
Jersey Debentures
Largest Industrial Debt Issue Ever Offered
banking group headed by Morgan Stanley & Co.
a
issue
offered
industrial
debt<§>
history of American announced $150,000,000 refinery at
Fawley, England. V
'■=''<■
in the
.-finance.
••
Proceeds
of
the
issue
will, be
replenish working capital
being depleted by capital expendi¬
tures and to provide funds fox fur¬
ther capital outlays by the com¬
pany and subsidiaries.
Primarily a holding company,
Standard Oil Co. (New Jersey)
was incorporated in 1882.
Its sub¬
;
sidiaries and companies in which
it has investments operate in the
Western
Hemisphere, Europe,
North Africa, the Middle East and
used to
the Far East.
The European and
North African
subsidiaries of the company have
regained control of their proper¬
ties except in those countries un¬
Communist-dominated
gov¬
der
ernment
have
control, and in most cases
able
been
war
levels.
rebuild
to
businesses to reach
or
their
exceed pre¬
Y(\
.
■
Consolidated gross operating in¬
come in 1948 amounted to $3,300,-
'000,000 compared with $2,355,000,000
in
Consolidated
1947.
net
1948 was $366,000,000
Approximately 50% of the $1,- which after adjustment for prior
859,000,000 net property, plant and years charges amounted to $378,equipment of the company and its 000.000. This compares with $260,r
in 1947. The company
Western Hemisphere subsidiaries 000,000
represents facilities for oil pro¬ estimates earnings for the first
duction and exploration. In 1948. half of 1949 to be about 30% below
'
Y
re¬
more
important world factors.
The
publicly
For that lack
Government, with its nationalization schemes
talk about capital investment and all
the rest, must bear a heavy responsibility. But after all,
the British are able at any moment they wish to discard
all this nonsense* along with those who presistently
preach it. The fact of the matter is, we suspect, that the
rank and fileof the people of that country have long
what
then
Now
real
or
once
public offering July 13 of $150,000X00 Standard Oil Co. (New
Jersey) 25-year 2%% debentures, due 1974 at 100'%% and accrued
interest. The issue which was heavily oversubscribed, is the largest
end be quite futile.
and its grandiose
they survive
V
-
as
made
the Labor
down
our
allies will
its insistence would! in the
normal
question is this; Can and will the British
An investment
plight of the British flows from deep
light-headed government could insist all it
wished that the rank and file have this
gifts and loans to Europe.
But all of this depends upon the
United States continuing to be a
good place to sell in.
If we let
ourselves go now and permit a
major decline to get underway,
the budding recovery of Europe
;will be wrecked, the communists
will once more become arrogant
and ascendant and our frightened
on
The real
the
A
sources.
a
near
produce abundantly and competitively? Will they per*
mit conditions which encourage such production?
If
not, their day is done. If so, they may yet re-emerge
through all that—Again?
During
have,
this real world in which
services which
But
somewhere
conditions
as
the price conditions imposed
would vanish. Except, possibly in abnormally feverish times
of shortages^ the loose British talk about quality justifying
the high prices asked simply is not in correspondence with
Poverty-Stricken
national
no
turned, that market Under
world, particularly in the United
States of America.
your
income drop, then raise
tariffs and ruin us as you did
in the thirties."
Now today we
seem to have reached the pay-off.
I ask you gentlemen, are we to re¬
peat the folly of 1929—Again?!
or
damage is done both the British nation and its
friends all
"We dare not let our economy get
too tied up with yours. 'You are
unstable.
particularly, complex
tion will appear so plainly that he who runs may read.
It can only be hoped that the day will arrive before too
"States have tried to get trade bar¬
riers and trade restrictions re¬
too
of this not
is
longer a creditor nation.
Her position
in banking, insurance and shipping has to be regained in
the mo$t competitive of markets.
Obviously, then* com¬
parison of British production or exports with prewar has
little real meaning. They must be immensely greater, and
the production must occur ~&t cost levels that enable the
goods to find markets in other countries. It is at this point
that Britain is very weak.
Loud lamentations are heard
about the "depression" in the United States and the van¬
ished demand for British, goods here. To those familiar with
the prices which have been charged for these goods in the
past two or three years, all this appears as some sort of a
ghastly jest. Britain must have known all along that the
volume Of sales she was making in this country arose solely
out of the scarcity of goods in this country,, and that as
and stimulating growth at
and the
consum¬
A Hard Row Ahead
Britain
wage increases.
by stabilizing purchasing
Bather
27
r
my
round
one
the
soon
outlay
want to dis¬
undone in this respect the second
left
War
capital
opinion encourage labor in fourth
and
no
policy I would suggest
not
which
of
As We
afraid
more
We
buy froilt them,
other alternatives.
That is the international situation.
America
We cannot have.it
us.
lot
a
(183)
v
profit
in
specific policy
.do I suggest? First of all I would
like to stress what; I < began by
saying: I am no prophet. I do not
know whether we are really going
to have a major decline.
But I
think
we
should
be
prepared;
Yet, if there does appear danger
of a major recession, then I think
we should
unbalance the budget
and not merely: in a niggardly and
due for a sad awakening.
When it will come no one.ean say, but the sooner the better.
They have a severe trial ahead of them, not for a few days
as at Dunkirk, or for a few weeks as in the Battle of Britain, these subsidiaries produced almost
but over the years that stretch to horizon.. There are those 400,000,000 barrels of oil, while
their net purchases amounted to
who doubt very seriously whether the resources of the
128,000,000 barrels; The more im¬
British Isles, can support in any degree of comfort as many
portant producing affiliates of the
people as now live on them. Whether that is true or not company are Humble Oil & Refin¬
Yet, on the other
have so sympathy with
those who wish to parallel the pri¬
vate economy with a new govern¬
ment, sector, to subsidize over¬
priced unions of industries, or to
It appears ing Company and The Carter Oil
TORONTO, ONT., CANADA.—
that there are doubters in Great Britain itself in view of Company in the United States and Announcement is made of the
Creole Petroleum Corporation in
amalgamation of Geo. W. Blaikie
efforts to settle and develop some of the other parts of the. Venezuela.
Imperial Oil Limited & Co. and
Cassels, Son & Co., as
globe. But what no one in his right senses can fail to be a subsidiary which operates in of July 1, under the firm: name
perfectly certain of is the fact that the resources of the Canada, has made important dis¬ of Cassels, Blaikie & Co. The new
passive
hand, I
way.
direct the flow of net new invest¬
ment;
•
What shall we'do?
Our task
it
seems
to
; >
me
is
ac¬
tually much easier than it was in
1929, if only we will assume it.
What I suggest is not to reduce
government expenditures, nor yet,
least, great¬
ly to increase them.. By this I do
not mean to approve some adjust¬
ment to help efficiency.
What 1
would suggest would be rather a
in the first instance at
drastic reduction of taxes all along
the
line—not merely
to increase
consumption but also to give in¬
centive for
I believe
new
investment.
fundamentally favorable,
fect of such
If
as
basic situation is still
our
an
the ef¬
inflationary stim¬
would, I believe, in itself suf¬
fice to ward off major deflation;
ulus
and
we
might; indeed, soon find
needing to revise our
ourselves
policy and put the taxes back up
again.
So far as our world
concerned,
I
believe
struggle is
we
ought
\
The
_
people of Great Britain
we'll leave to
are
others to decide for
British Islesxan not
be
support1 its present population with a
forgotten that long
yes
people, thehrnot nearly so numerous as they are now,
to other lands, invested their spare income
all over the world. They, moreover, served the remain¬
der of the world as banker, as carrier of insurance, as
■
,
"j"
r
.
ways.
It
was
in
to feel
early
years
were
number of other
a
able to live
as
well
as
so
they
number of other lands
even
before World War I "came to take large blocks of this
income from them
permanently.
Cassels, Blaike Co*
Formed in Toronto
What the first World
of Alberta.
in
Jersey
firm, which is
Toronto
a
Stock
interest maintain
offices
Oil Com¬ Street.
Partners
in
Arabian-American
member of the
Exchange,
will
16
at
are
Jordan
Gordon
T.
which operates in the Middle Cassels, G, Reed Blaikie, Sydney
East, and a 50% interest in Stand¬ W. Smith, William J. Loveys and
ard-Vacuum Oil Company which Norman R. Young.
operates in South Africa, India
Cassels, Son & Co. was founded
pany
and the Far East.
in 1877; George W, Blaikie &
was established in 1907.
Co.
—5
New York Stock
Exchange
from deprecia¬ Weekly Firm Changes
tion and depletion, and earnings
The New York Stock Exchange
retained in the business. It is ex¬ has announced the following firm
pected that capital expenditures changes:
for the most part
♦
in
1949 will remain near the 1948
level of
of this century. They had begun
competition from
period of 1948.
Standard also has a 30%
^ery substantial part from income
derived that the British
did in the
a
Province
the
$1,582,000,000 which were financed
journeyed
supplier of shipping services, and in
coveries in" the last 12 months
During the five years ended
Dec.
31, 1948, expenditures for
property and plant amounted to
long
the British
years,
decades (we had almost said centuries) ago
■
same
themselves.
reasonably good standard of living unless, and until, the
British show that they can and will make much more of
the resources than they are now doing. And some measure
of the improvement in production that is required can be
had by reference to the fact that at no time in history have
those islands^upported any "such population.
Let it not
the
$529,000,000.,
Arthur H. Bunker retired from
partnership
Total crude oil refinery runs
of
in
Lehman
Bros.
June 30.
Lustig, member of
the
Exchange,
withdrew
from
sphere in 1948 averaged 1,390,000
partnership in B. H. Roth & Co.
barrels daily. The companys re¬
on July 7.
finery expansion program includes
Interest of the late Richard A.
subsidiaries in the Western Hemi¬
a
$175,000,000 project at Amuay
Bay,
Venezuela,
and
a
recently
Jerome
B.
Kebbon. in Kebbon,
Co. ceased
July 6.
McCormick &
28
Thursday, July
CHRONICLE
FINANCIAL
&
COMMERCIAL
THE
(184)
Activity
Indications of Current Business
The following
statistical tabulations
shown in first column
production and other figures for the latest week or month available (dates
or month ended on that date, or, in cases of quotations, are as of that date):
cover
either for the week
are
Latest
operations (percent of capacity)
steel
Indicated
Equivalent to—■
'
.-'i
iv//;'/; v;..
'• V
castings (net tons)—————
.
-
July
July
July
—July
and distillate fuel oil. output (bbls.)—.————
July
Residual fuel oil output (bbls.)
———
July
Stocks at refineries, at bulk terminals, in transit and. in pipe linesFinished and unfinished gasoline (bbls.) at—
—July
2
(bbls.)-.
(bbls.)——
output
Kerosene
output
J—
——
Gas, oil,
Kerosene
at
(bbls.t
Residual
fuel
at
at
(bbls.)
oil
July
July
July
—
distillate fuel oil (bbls.)
Gas, oil, and
(BUREAU
ALUMINUM
aluminum in the U. 8.
(in short tons)—Month of April————
Stocks of aluminum—short tons—end of Mar.
5,483,800
§5,701,000
5.322,000
5,341,000
18,244,000
1,574,000
1,658,000
5,440,000
5,148,000
7,856,000
1,722,000
5,959,000
7,827,000
§9,055,000
7,733,000
2
of
§18,041,000
§2,116,000
§7,185,000
13,498,000:
115.715.000
114,000,000
119,106,000
April:
Total
23,617,000
21,858.000
58,597,000
Natural
66,146.000
64,063,000
gasoline
RAILROADS:
AMERICAN
OF
Revenue
freight
products
2
644,182
802.941
698,824
2
559,030
573,848
564,192
CONSTRUCTION
ENGINEERING
RECORD:
Total U.
640,258
Slab
■
$138,526,000
$180,900,000
$226,161,000
>•
•
96.484,000
137,222,000
95,642,000
84,416,000
88,939,000
100,043,000
68,675,000
7
64,839.000
61,621,000
64,455,000
7
30,803,000
22,795,000
24,484,000
Federal
Beehive
coke
(tons)—
—
—
July
July
—July
—
New
ELECTRIC INSTITUTE:
(in 000 kwh.)__
1,360.000
2
2
2
1,139.000
;
104,200
33,000
STREET, INC.
(tons
*52,689
69,402
*75,830
43,160
42,705
58,644
69,345
$15,743, 360
end of
at
68,303
77,537
74,054
67,086
;
period
4,982,173
,5,410,392
5,300,091
4,760,316
153
177
174
VALUATION
(tons)—
—
...
DUN
6c
INC.—215 CITIES—Month
$18,842,667
$15,783,492
71,679, 066
65,937,616
86,795,445
36,416, 666
35,885.670
30,726,324
86,694, 490
>43,937; 872
83,446,186
"47,565,461
47,664,798
J 18,772, 574
1 18,660,959
22,400^568
12,723,982
.i 64,935,015
75,605,873
$347,997,556
" 38,753.201
$353,039,653
47,943,465
;
—'
1
-—
\
Central
—
—
11,488, 857'
■
Mountain
265
—July 7
—
v-
—
8,068,000
82,796
Central
West
2^100
•
259
247
237
2
—-
———————————
Total
8F
BRAD-
6c
182.950,000
555,000
Central
1 .65,848,
188
$330,581,073
States
United
York City
38,898,668 "
—
v
of New York Clty__
63,359,155
10,708,903
'
305,096,193
291,682,405 / 309,244,355:
(BUREAU OF MINES)—Month
COAL OUTPUT
of
INDUSTRIAL)—DUN
AND
190,375,000
28,000
/
Atlantic
June:
and
coal
Bituminous
(COMMERCIAL
5,048,000
—
Atlantic
South
100.000
964,000
*73,300
63.000
East
3,678,000
9
.July
Electric output
'•IFALLURES
grades
all
England
Outside
-
5.107,000
of. May:
New
(EDISON
9,757,000
5,832,000
(tons)——T—'
period
BRADSTREET,
54,663.000
14,012,000
9,990.000
♦11.850.000
SALES
STORE
output,
PERMIT
Pacific
INDEX—FEDERAL RESERVE SYS¬
TEM—11)35-39 AVERAGE=100
July
DEPARTMENT
11,085,000
Month
of 2,000 lbs.)—
of
orders
Middle
COAL OUTPUT (U. 8.
<
—
INC,
lbs.)
end
BUILDING
South
BUREAU OF MINES):
Bituminous coal and lignite (tons)
Pennsylvania anthracite (tons)
11,952,000
$168,718,000
42,884,000
July
_—;
municipal
and
State
7
7
7
f
construction
Public
July
—July
July
July
11,000
:
INSTITUTE,
(tons
at
Unfilled
———
11,676,000
11,000
—_———
(bbls.)
smelter
2.000
Stocks
>"■'
■
—'+
164,509,000
12,772,000
imports
ZINC
zinc
of
NEWS-
ENGINEERING
construction
S.
construction
Private
.
—
176,213,00(1
161,955,000
12,335,000
—
of June:
757,278
July
174,738,000
150,354,000
5,835,000
(bbls.)—
output
stock
Increase—all
Shipments
CIVIL
162,700 000
i,—. '■
(bbls.)—
§47,538,000
>July
(number of cars)
received from connections
9,253
(bbls.)
:
Indicated consumption—domestic and export
§60,926,000
^
freight loaded (number of cars)
Revenue
11,786
of 42-gal-
(bbls.
output
(bbls.)—
imports <bbls.)_
AMERJ.CAN
ASSOCIATION
11,746
—i.—
oil
output
Refined
§18,733,000
65,741,000
2
23.313,000
63.049.000
production
crude
Domestic
Benzol
53,277
.
domestic
.Ions- each).
:■■■
§104,145,000
64,587,000-
2
2
lignite
35,274.000
47,470,000
3,407,000
tons).
(net
Beehive
coke
v:
(net tons)-
53,118,000
*4,403,000
Pennsylvania anthracite (net tons)——
•
4,590,000
561,300
*539,500
279,700 "
■
COKE
-ARON AGE COMPOSITE PRICES:
Finished steel (per lb.)
Pig iron
,
,
——
ton)
(per gross
'
,
■-
—-—
Scrap steel (per gross ton)—
METAL PRICED (E.
—
J. QUOTATIONS):
6c M.
July
———July
July
3.705C
$45.9r
$45.91
■$.45.91
$40.51
$19.33
5
5
5
:
>
$19.33
$2L67
$40.91
Straits
Lead
tin
York)
(New
(New York)
'
Louis')
(St.
Lead
Zinc
(East St.
—July
July
July
at
at
at—
July
July
——
at
Louis)
-—
Beehive
DAILY
PRICES
BOND
OF
•17.325c
15.925c
'17.750c
21.550c
103.000c
103.000c
103.000c
16.525c
l—
Average corporate
Aaa
12.000c
6
12.000c
12.000c
11.830c
11.850c
17.300c
9.000c
10.750c
12.000c
•
"
A
9.000c
6
Group
Sale
Group
Industrials Group
DAILY
Government Bonds
U.
8,
YIELD
BOND
103.37
113.50
113.31
119.41
119.20
118.80
118.2C
117.80
117.60
117.40
116.2:
112.56
112.37
112.37
112.5'
104.83
107.98
108.81
Spinning
114.46
114.21;
Active
117.80
117.60
117.40
117.2C
Active spindle hours per
July 12
2.2S
2.26
2.99
3.00
2.71
.
Public
Group
2.76
2.77
2.78
2.8-
3.03
3.04
3.04
3.o:
3.46
3.47
3.46
3.3:
3.30
3.31
3.28
3.2:
July 12
July 12
Group
Utilities
2.63
July 12
1
Railroad
2,765
2,816.
96 3
932
.
23.782,000
spindles
23,783,000
23.742,000
\
19,862,000
19,801,000
21,723,000
7,358,000
7,442,000
10,030,000
325
2.90
2.91
2.93
2.9'
2.76
2.77
2.73
337.9
333.7
342.1
,
327
284
*293
303
267
May—
spindle in place, May
STORE
SALES
(FEDERAL
*288
289
♦
>
"
450
RE¬
SYSTEM)—(1935-39 Average=100)
-
,,
.
of June:
Adjusted for seasonal variation
Without
seasonal
adjustment—.—
July 12
Baa
Month
2.9f
2.7'
2.69
July 12
July 12
—
3,245
*;
COMMERCE)
OF
spindle hours (000's omitted)
SERVE
2.4*
2.38
2.98
July 12
-
3,258
2,745
in place on May 31
active on May 31
104.66
114.85
—
A
,
6,993.^
—
—
(DEPT.
107.44
July 12
Aa
•
6,991
:
-
107:62
AVERAGES:
1,536
2,054
969
Spinning spindles
107.0f
3,590
2,241
2,275
3,728
credit
SPINNING
COTTON
.
3,249
credit
Single payment loans
Service
-
4,115
Charge accounts
113.31
113.12
$14,311
7,318
■
4,173
6,963
credit
Noninstalment
101.2''
101.63
103.27
July 12
Aaa
8,631
4^16
2,325
104.83
.
-
'
2,386
;
V
$15,622
<
8,884-
V 4,711
115.04
corporate
Average
$15,847
.
Automobile
DEPARTMENT
MOODY'S
short-term
credit
July 12
.—
.—
,
Utilities
Public
801,900
of May 31:
as
credit
consumer
Other
July 12
.
Railroad
599,400
FEDERAL
THE
OF
July 12
--July 12
Baa
5,746,000
632,943
1,472,537
'
July 12
«.
;
^5,760,570
..
539,454
1,747,677
-
Instalment credit
17.500c
11.850c
July 12
July 12
Aa
': ft
6,345,400
*;•
*
1
(net tons)
SYSTEM—Estimated
in millions
credit
Total
AVERAGES:
Bonds
Government
S.
6,393,513
;
j> 5,798,230
————:
tons)
GOVERNORS
RESERVE
21.200c
15.700c
15.925c
103.00Qc
66
6
July 12
July 12
U.
(net
coke
6,33.7,684
t
—.—
—
Oven coke (net tons)—
^
Loan
MOODY'S
tons)—
May:
CONSUMER CREDIT OUTSTANDING—BOARD
July 6
refinery at
refinery at
Export
(net
Oven coke stocks at end of month
Electrolytic copper—
Domestic
MINES)—Month of
OF
(BUREAU
Production
3.211r
3.705c
1:3.705c
% \
J
,
.•,
54,852
INSTITUTE—Month
PETROLEUM
Crude-oil
2
:
■.
54,076
174,649.000
1,636,600
18,462,000
115,241,000
Ago
.
MINES)—
OF
Production of primary
4.889,150
4,889,400
4,819,990
2
2
2
2
to
runs
Gasoline
90.8
1,598,300
1,128,200
Year
Month
:
AMERICAN
INSTITUTE:
J.
average (bbls. of 42 gallons each)stills—daily average (bbls.)—■_
—
AMERICAN PETROLEUM
Crude oil output—daily
Crude
Month
Ago
83.7
61.2
1,434,300
July 17
Steel ingots and
Ago
Previous
Latest
Year
Month
Week
77.8
July 17
——
Previous
Week
AND STEEL INSTITUTE:
AMERICAN IRON
1949
14,
•:
FACTORY EARNINGS AND HOURS—WEEKLY
ESTIMATE —U.
AVERAGE
S.
DEPT.
OF
of May:
LABOR—Month
Earnings—
2.71
Durable
*$52.70
$51.76
V
56.93
goods
•56.86
54.65
48.98
goods
Nondurable
-
$53.08
manufacturing
All
435.:.
*48.35
48.61
Hours—
RATIONAL
Orders
PAPERBOARD
received
Production
.July
2
161.576
158,700
183,749
215,85';
Durable
.July
(tons)
2
153,817'
169,612
137,521
171,58:
39.1
Nondurable
.July
2
75
80
65
81
July
2
243,297
241,787
283,585
381,06£
goods
goods
Hourly earnings—
All manufacturing
PAINT
DRUG
AND
REPORTER
INDEX
PRICE
—
Nondurable
1926-3Ci
1,456
1.289
.July
8
128.8
127.9
127.8
TRANSACTIONS
LOT
DEALERS
SPECIALISTS
EXCHANGE—SECURITIES
Odd-lot
sales
dealers
by
ODD-LOT
THE
FOR
AND
EXCHANGE
(customers'
N.
OF
ODD-
Copper
STOCK
Y.
'*
of
orders
shares
June 25
value
of
short
other
of
short
value
of
Number
Short
363,141'
June 25
5,577'
June 25
-
-..June 25
sales
June 25
Number
198,090 V '
165,510
: ;
<
165,510
109,400
234,350
June 25
198,090
234,350
268,500
167,920
204,750
160,410
21.696c
12.000c
13.720c
11.850c
13.562c
London
New
York,
1iAntimony
Antimony
Antimony
Antimony
Platinum,
All
NEW
SERIES—U.
S.
DEPT.
OF
LABOR—
commodities
Farm
!_Ju!y
Poods
;
All commodities other
Textile
Fuel
Metals
and
foods
metal
5
July
July
materials
5
July
products
5
July
lighting materials
and
Building
All
than farm
5
products
and
152.7
165.6
161.3
144.5
138.3
130.6
165.6
189.9
124.6
5
—July
..July
products
5
5
July
5
july
other
5
*152.9
*164.0
*161.2
*145.2
*138.2
*130.6
*165.7
*192.3
*126.1
■
-
*155.9
*172.7
*167.0
*145.8
*138.4
*130.1
*167.3
*192.2
*127.2
"
.
J
,
.
167.2
196.7
184.4
149.6
148.9
133.6
159.2
197.6
135.6
(per
ingot
Magnesium,
I
operating
Grains
July
5
Livestpck
July
5
Meats
July
5
Hides and skins
July
5
.
153.2
206.7
224.0
181.6
-
.
!
Total
operating
expenses
151.2
208.2
225.1
182.9
Net
"•
.193.4
269.1
' <■ 258.5
217.9
154.8
222.3
243.9
190.3
•
•Revised figure.
Illncludes 421,000 barrels of foreign crude runs.
§Not comparable with other periods which are on new
4»asis of reporting in California.
Principal changes exclude cracking stock from distillate and residual fuel oils.
fThe weighted
finished steel composite was revised for the
years 1941 to date.
The weights used are based on the average, product shipments for
tfce 7 years 1937 to 1940 Inclusive and 1946 to 1948 inclusive.
NOTE—The
Judex.
It
National
Fertilizer
will, however, continue
Association
to
compile
has
decided
to
discontinue
publication
of
its
weekly
wholesale/ commodity
/
monthly indexes covering mixed fertilizers..
—
price
Net
ZINC
ratio—per
35.500c
Nominal
Nominal
$72,000
$82,154
$70,154$2.00000
$2.00000
$1.75000
$2.07500
$2.07500
$1.77500
$2.15000
$2.15000
$1.80000
**
17.000c
20.500c
—
—
$741,068,551
600,852,442
81.08
$69,181,314
cent
(BUREAU
-of May:
OF
5
Production
(short
Shipments
(short
tons)
end
of
Not Avail.
month
..
$796,402,811
616,231,264
77.38
$747,259,313
594,269,852
79.53
$75,966,676
$74,794,116
57,595,281
64,759,903
90,178,066
32,000,000
40,000,000
c65,000,000
10,920
10,054
30,096
12,840
9,026
29,230
Not AvaiL
Not Avail.
Not Avail.
MINES)—Month
J
Z
tons)—
at
20.500C
40.000c
(ASSOC.
————
Stocks
15.115c
17.000c
*
20.500c
railway operating income before charges
income after charges (est.)
OXIDE
35.000c
Nominal
—
revenues
Operating
38.170c
39.000c
RRS.)—Month of May:
AMERICAN
Total
Taxes
'
'
Special indexes—
ROADS
$76,000
-
38.500c
•;?
40.000c
EARNINGS —CLASS
OF
41.730c
39.000c
**Nickel
RR.
$35,000
$82,200
■v
33.500c
pound)u„_/
(per
102.000c
$35,000
41.730c
(per
pound)
pound)
pound)
Aluminum, 99plus, ingot (per pound).
102.000c
$80,269
(per
tCadmium
»
'
12.000c
103.000c
$35,000 : '
min.
(per flask of
SCadmium
PRICES
1926=100:
45.000d
$4.02750
11.880c
103.000c
102.000c
(-§£)—:
price)
"
76 pounds)
——
(per pound) (E. & M. J.)
(per pound), bulk, Laredo———
(per pound), in cases, Laredo
(per pound), Chinese Spot
refined (per ounce)
—
99r/c
'
•-' ?
103.000c
(per ounce U. S.
Quicksilver
tCadmium
WHOLESALE
9.548c
—
Straits
York
43.500d
'$4.02690
43.500d
$4.02557
:.
74.625C
71.500c
71.500c
1
New York
Gold
17.300c
'
(per ounce)
(pence per ounce)
Exchange (Check)
Zinc (per pound)—East St. Louis
Tin (per pound)—
Silver,
v
17.500c
-
Sterling- Exchange—/
New
;
: «
New York
Louis
St.
and
s
by dealers—
shares
of
—792,975
$28,621,771
,
>:.v
109,400
June 25
purchases
•
498,877
$17,992,606
512,546
June 25
-
5,100
.•
21.200c
18.019c
Sterling
798,072
,
5,410
17.763c
Silver,
134
27,910.
.
504,287 s
$16,938,143
$16,678,126.
18,557
.
15,314
357,564
,.
.
16.342c
16.543c
Silver
28,044
V,
141
..
527,860
r
\
sales
Round-lot
18,678
June 25
—'
shares—Total
for month of June:
Common
$32,392,94*,
18,698
383
13,576
,
by dealers—
sales
Other
141
June 25
sales
sales
——
19,061
13,717
June 25
sales
other
Customers'
Dollar
Round-lot sales
$19,165,927
$13,834,953
June 25
total
1.231
(per pound)—
Common,
1
—
shares—Customers'
Customers'
1,365/
J. QUOTATIONS)—
& M.
domestic refinery—
export refinery
(per pound)— 1
..
.
*
'•
Lead
27,427
850,96(
17,682
503,806
$20,229,968
"
"
sales
sales
Number
f
sales)—
sales
Customers'
.
total
orders—Customers'
Customers'
.
(customers'
20,572
560,201
14,062
388,337"
June 25
purchases by dealers
Number
.
-
June 25
of
Odd-lot
'
$i.3or
Electrolytic,
COMMISSION:
purchases)—
Number
Dollar
.
'
*1,458
*1.286
:
'
Electrolytic,
Number
•
(E.
PRICES
Average
ACCOUNT
THE
ON
39.5
146.e
METAL
STOCK
40.1
*$1,376
$1,375
goods
39.8
39.0
/
38.0
Durable goods
OIL,
38.3
37.6
38.6
manufacturing
All
ASSOCIATION:
(tons)
2
(short
tons)
"
'Revised
figure.
the producers'
tons
or
more
and
Colbourne, N. S.
tBased
on
than
quotation.
tBased on the average of
§Based on platers' quotations
liDomes.tic, fiva
f.o.b. New York.
**F.O.B. Port
the producers'
platers' quotations.
but less
carload
lot packed in casas,
U. S. duty included.
SSTin contained.
?■
'
y
;
•»»-
.
"
*
+"
-•
'
■
,
"
.1
- •
-
.*•
; *'
"
■'
* '
w" * " " .»
«.'»
»,...
*-
.t. *
£*. ;
J
Sf ml, t: .* ' '•
*
»>-i 'V
■«
i-r* -is -i"-' S-
_■
.
j;
Volume 170
Number 4820
•
7
,
THE
.
.
COMMERCIAL
.•
.
FINANCIAL
&
CHRONICLE
A Rate Structure for the Securities Business
(Continued from
4)
page
1
At first appearance our system
induced promptly by the of access appears to be highlj
developed and complete. Orders
higher "concession."
Second: In November, 1947, the may be placed in member offices
New York Stock Exchange raised all over the country and almos.
duce
its
are
minimum
The
commission rates.
York Curb Exchange
New
did not raise its rates until Feb¬
ruary, 1949. As a result a higher
scale of commissions existed for
Stock Exchange transactions than
for Curb transactions throughout
pensation under the second meth¬
od is difficult to estimate, but re¬
cent tests indicate that it prob¬
ably exceeds 3% in 48% of such
transactions and is less
than 3%
pact at the
Over the years, in practice and
j to the market consistent with his "rate structure for the securities "
in the contemplation of the law. ■!
type ox business, but instead bars business."
'
most of the differences between
him by establishing prohibitive
the two methods have tended to
central point.
look
ever, an informed
another story.
Orders to buy
How¬
tell
may
securities do not
arise by some sort of spontaneous
combustion in the minds of po¬
and
with the Stock Exchange volume
or
to
go
up
when the Stock
securities.
They are the result of
advice, discussion, persuasion, dis¬
Exchange volume went down.
suasion
these
ratio
Curb
20
ever
In
did the
down when
years
go
normal
This departure from
indicate that our
daily business, too, moves from a
lower to a higher area of com¬
may
pensation.
and
all
business
other
if
elementE
When
we
orders
consider the accessi¬
the
of
central
must
we
market
to
overlook it?
not
accessibility to all those people ir
the business who
are
the advisor?
of
buyers and sellers and their
dealer firm in'
grass-roots channel to any market.
Third: Recently a
the Northwest decided to estab¬
lish its own mutual investment
trust rather than handle the sale
of shares in the excellent trusts of
Boston and
New York.
The firm
patterned its investment policies
There
sands
hundreds, even thou¬
people in the securities
are
of
business who
Curb
are
partners
or
members of th(
or
its member firms;
employees o
but there arc
selections on a well-known many thousands more who are not
These thousands of non-members
Eastern trust that it had handled
each surrounded by his own cus¬
for years, but it decided to make
are
potential
conduit?
its shares more attractive by ap¬ tomers,
and
plying
a substantially lower "load¬
ing" charge for sales. The venture
unsuccessful.
was
'
£--V
'
-j
-•
'v.
•
:•'..-I-
vis Commission Rate Structure
'
clues
the solution of
lems
but
in
the
of the
some
prob¬
business;
securities
think
I
not point to
may
they do.
the
market.
central
Today
those potential avenues of acces?
are
blocked.
The rate structure
of stock
Obsolete
These
through which orders might flow
to
exchanges does not pro¬
vide for the assistance or partici¬
pation of a non-member. There
is seldom any
business
why
a non-member should send his, or
believe his customers', orders to the cen¬
I
reason
these clues suggest that we may
be studying a case of incipient
tral market for execution.
suicide and not
a
markets
well
our
be
that
murder.
present
structure is obsolete and
lack
of
adequate
an
compensation
business
our
needs
to
the
reach
in
to
it
funds
which
the
to
it
scattered
now
provide those who
with
which
tracted
of
system
investment it must
and
work
rate
that for
denying to
are
reach
sources of
without
we
It may
the
men
the
job
inducement
are
at¬
not
increasing
of
services.
our
This limitation of access to our
is
hangover from the early days of
exchange development. It is the
result of the
long campaign which
exchanges have waged to estab¬
lish high standards of member¬
ship and conduct.
I believe tha*
character which our
the national
exchanges have attained, and thf
advances in the standards prevail¬
ing throughout the securities busi¬
this
ness, may now have made
old limitation obsolete.
If these were the only clues we
might make the mistake of merely
increasing commissions and over¬
stage
looking other problems of equal
sion
Perhaps we have reached <
in the development of our
business and in the wide disper¬
importance. Our business is not
as simple as that.
which
In my opinion, there is no idea
in the securities busmess which
change
is
sound,
more
more
fair
or
more
requires
country
our
not only
level of
us
to
commission structure
business
the
market
than
the
idea
the
that
value
of a widely dis¬
security should be estab¬
through competition be¬
an
securities
whole
must be integrated
tributed
public
lished
words
with
business
our
of
grea^
piou?
rot by
cooperation Abut
markets,
by
?
tween buyers and between sellers
rate
in
professional, whether member or
non-member, f'ts and finds hi?
public
market.
Through
many
years
of mechanical and
human
development, stock ex¬
changes, such as the New York
Curb Exchange, havp created
a
be
structure
which
into
is
the
in
difference
the
each
idle gesture to
an
permit mem¬
theii
on
any
basif
bers of exchanges to divide
commissions
1%
non-members.
with
Such
a
step
realistic rate
structure nor increase the chan¬
nels
of
effective access to the
would not create
a
Experience ha?
market.
central
shown that it would amount to nc
change commissions.
cut in ex¬
The amount
the
non-member
than
more
general
a
conceded
so
to
far
would be
little to fit hie
too
type of business or to induce
to
the
adopt
him
methoc
brokerage
give up the dealer method.
and
Dealings
"Out of Town"
moment, let us leave tc
one
side the problem of giving
non-members effective access to
For
a
the
tiie
consider
and
market
central
access
who
do
problems of member?
not have offices in the
city where the market is located.
Here also we find that limitations
on
have grown up.
access
member sends
through f
member, a "wire
An "out-of-town"
his
market
to
orders
correspondent
house," in the market city. This
arrangement usually involves r
division Of the commissions
each
on
earned
the
transaction between
"out-of-town" and the correspon¬
members.
dent
No
matter
potential reason for the "out-oftown" member to execute his or¬
ders elsewhere when he can.
must improve
of the "outcoincident with
I believe that we
the channel of access
of-town-' member
If
establishment of an effective
industry-wide rate structure.
we
don't
we
will not have com¬
pleted the job of developing fully
the national channels of access to
our central markets.
town
clearance by
exchange ma¬
Our member firms are
experimenting with new forms of
chinery.
rapid
of doing
for
tinuous
giving wide and
public
information
bids, offers and prices and
access
con¬
a
so
sys¬
to the central market
place for members and their
tomers
on
cus¬
that their bids and of¬
fers
may
be concentrated and
produce open market prices.
This idea, and the market ma¬
chinery it has created, have been
expanded
many
me
and
decades.
Perfected
over
it seems to
But
that we have tended
look
one
important
their development.
lected
to
in
We have neg¬
fully all of the
access t° our central
To the extent that bids
and offers jn
a
ity, available at
not
over¬
utilize
channels of
marked.
to
element
r^a^neled
particular
any
into
central
market, to that extent the central
market
fails
and
offers
to
services
methods
vide
to
perform +o the
maximum degree its function of
producing the fairest price.
accounts.
omnibus
centra? corporations
a
business which today di¬
industry.
The norma?
our
exchange method of doing bus;ness is the procedure under which
a member acts as agent or broke*for his customer, buys or
sell'
for
his customer's
account and
the
to
methods
ones
are
which
more
insurance
of
successful
mutual
and
trust, we have reviewed some of
the problem of access to Our cen¬
tral markets for non-members and
for
members
separated
by geog¬
rate structure might be
a
two minimum rates of
mission system was evolved under commission which exchange mem¬
circumstances which we have now bers would charge in executing
based
on
outgrown. In the distant past the orders in exchange securities. One
speculative trader probably pro¬ rate, which might be called the
vided a much greater percentage "retail"
rate, might be fixed at
of the exchange volume. The han¬ about 3%% of the
purchase price
dling of such orders by member when securities are bought and
firms,
the
and
debit
earnings
the
on
1% of the sales price ,when secu¬
balances
they entailed, in¬ rities are sold. The other rate,
minimum of effort and which might be called the "whole¬
a
high rate of profit on a low sale" rate, might be fixed at
rate of commissions. In effect this around xk of 1% of the market
volume business paid the way for
price when securities are either
volved
the
a
relatively
numerous,
•
small bought
and much more
costly accounts of
the general public.
For
many
years
has not existed.
So far
as
or
sold.
Under such
rate structure
a
ex¬
would be re¬
quired to charge the "retail" rate
the evi¬
to all customers except those who
this condition
dence
members
change
permits a guess, the per¬ have filed a commission
agree¬
centage of speculative volume on ment with the
exchange and who
exchanges has grown smaller over fall into one or more of the fol¬
the years. Long ago price manipu¬
lowing
"wholesale"
rate
cate¬
lation and security pools were run
gories:
out of oqr stock markets. No one
(1) Brokers and dealers regis¬
can honestly regret
their depar¬
tered with the Securities and Ex¬
ture from our private business, but
change Commission;
we have too long failed to
recog¬
nize that with their departure a
(2) Members of other national
securities exchanges or recognized
part of the "low cost-high volume'
assumption,
on which
mission structure was
our
com¬
based, dis¬
appeared.
foreign exchanges; br
(3) Customers who have paid
gross
commissions in excess of
$1,000 during the preceding year
on
exchange transactions made
through the member firm execut¬
ing the order.
Under such a program, the com¬
mission agreement which a cus¬
in our markets must be preserved tomer would be required to file
and encouraged and not barred by with the exchange before becom¬
prohibitive costs if we revise our ing entitled to the "wholesale"
system of compensation. Condi¬ rate might express his agreement
tions have already changed our to three conditions:
First:
Observance of the min¬
markets fundamentally and wis
dom urges us to recognize and imum "retail" rate in executing
orders for his customers in ex¬
adjust to this change.
change securities;
But
although
the
character,
methods, and volume contribution
of the large trader have changed
radically over the years, what re¬
mains of the professional or semiprofessional speculative elemeni;
Conclusions
I warned you
Placement of bids and
Second:
that this would be
offers for his own account in ex¬
dull and detailed speech. Per¬ change securities on the floor of
haps I hhd better not try your the exchange for a reasonable
patience further. Perhaps this is time before attempting; execution
the time; to make a break with elsewhere; and
'
Third:
Consent that the ex¬
details arid lunge into some deduc¬
tions as to where these clues may change might cancel his privilege
to receive the "wholesale" rate
be pointing.
They seem to point toward sev¬ at any time if his financial con¬
eral conclusions:
dition or business conduct should
a
First:
The present general level
compensation for securing and
executing orders to buy securities
of
central
our
on
markets
may
be
in t^e opinion of the exchange
require such action.
Such a tentative outline of a
for
structure
rate
the
securities
business necessarily omits, for the
sake of clarity, many important
..details.
fact
In
it does
no
more
give simple form to various
increasingly scattered sources of ideas which others have suggested.
It is not a program but rather a
business,;
Second:
Avenues of access to springboard to discussion.
It seems possible, however, that
our central markets for bids and
some
such
offers originating in the offices of under
system
each
"out-of-town" members and in the
member gfrid non-member element
appropriate place
offices of non-members should be
might
improved and established;
in the business of our central mar¬
If
Third:
to
are
our.
central
approach
markets
maximutn
the
service of which they are
capable
kets
find
an
provide
compensation
the costs and
incentive without
receive
and
adequate to
cover
the
their functions which the business
with the maximum centralization ward.
and
to
perform
bids
of
all
we
should expand our commission
available
schedules
into
an
and
offers,
industry-wide
rate structure in which members
in thr
raphy from the market place. But
we will not be finished
accumu¬
commission. The normal
non-member method is the deale"
procedure under which the non-
lating clues until we have pow¬
dered the finger prints of one
other essential element in sound
cen+r^l market perpormance.
reconcile
We
must
can
noft go for¬
continue to seek im¬
provement in the environment in
which
American
business
and
American finance work and sup¬
have an
receives his- compensation
form of a
member
buys
tomer
acts
from
and
or
as
a
principal am1
sells
receives
to his
his
sation in the form of a
cus¬
compen¬
profit.
Speculative Trader
That other element represents
Role
perhaps
tal
secur¬
moment, are
the
bids
I believe that our present com¬
problem nadeqi. ^ not only from the point
Chicago of view of costs, but more par¬
has taught us all a great deal ticularly because it does not pro¬
about the feasibility
of out-of- vide sufficient incentive to reach
tem for providing convenient and
system
nel
Such
Many solutions to this
are now being pioneered.
Our clearing
studying custodial
may result in di¬
point.
■;■■■■"
Av-VC'UAV.'..^''
But the development pf such f rect access by "out-of-town" firms
These
experiments and studies
rate structure would be an idle
and useless gesture unless it rec¬ must be diligently pursued.
We have compared our business
onciled the two different
benefits and inducements to chan¬
and unsound.
how
mutually agreeable and fam this
division may be, it constitutes f
snd
the ethical standards of American
in harmony with the long rise in
the
compensation. Because
of this difference and the complex
reasons that underlie it, it wouk
any
exchange into a rate struc¬
ture which is industry-wide. Per¬
haps the time is now here when
of
hn
However, the impor¬
which has per¬
difference
commissions, but also to
convert the
firm
calls
"broker."
tant
ex¬
minimum
the
raise
in
wealth
of
and he
"customer"
its
him
probably
understandable
an
In each case the firm
that firm.
calls
Proposed Rate Structure
costs, then it will be inappropriate
average
amount of
Commissions
bility
disappear.
sisted
Non-Member Participation in
Exchange volume went
This happened for the first
up.
whose
someone
which make up a decision to buy
the Stock
time in 1948.
pensation, ,or his losses,
from I the decision to do nothing, will
changes in price: Access for that1 be made by the people affected;
element to the market must be jut no harm can come from piec¬
maintained if the market is to
ing together these clues and vi* ;
remain reasonably liquid and satr rious ideas which are
being dis¬
isfy the needs *of those who wish cussed in the business today and
to buy or sell to meet their in¬
drawing from them a tentative .
vestment or cash requirements. If procedure.
the rate structure does hot provide
The heart of such a program i
the large trader with ready access
might be what I have called a- »
in 52% of such trades.
failed either to go up and down
of
29
instantaneously register their im¬
I doubt whether the
public customer today
tential buyers.
1948.
In the 20 years preceding
They are more realizes that there is any real dif¬
1948 the ratio of Curb volume to normally the result of a personal ference between selling through
Stock
relationship between that buyer a securities firm and selling tc
Exchange volume never
none
(185)
•
i
.
Broker and Dealer
The average
Compensation
"commission"
com¬
of
a
small percentage of to¬
volume, but it may
market
well constitute the difference be¬
tween reasonable
price continuity
price fluctuations. That
non-members, large traders and port our nation.
Certainly. We
the
general public would each must protect our securities mar¬
kets from threats to their free¬
appropriate place.
It should not be impossible to dom made from without or with¬
be
and erratic
er's agent
tive trader—the non-member who
to
agent.
buys and sells and takes his com¬
the air.
and 1% for the seller's
The average "profit" com¬
can
be called the specula¬
not
from
the safer
pensation under the first method
amounts to about 1% for the buy¬
dement
these
conclusions
or
to
in.
But
it
seems
to
me
that
we
workable must also beware that our mar¬
and effective program.
Perhaps kets do not move toward their
this final job of specific sugges¬ own destruction through failure
tion should be left to industry to adjust their systems of com¬
committees and to industry and pensation to new conditions of
public consultation. That would business or failure to develop
produce
them
course,
a
but it does
fully all potential channels of ac¬
through which bids and of¬
might flow to their central
Ultimately a program, or posts.
appeal to me because it seems
cess
in
fers
leave
the
matter
hanging
30
(186)
THE
E;m)
(Continued from
able
we
to
survive
like
are
n
then
hollow egg shell.
A hard crust outside witn
no sub¬
a
the problem
stance inside.
The
"Today
Federal
for
for
when he said:
find governments in
we
millions
months is difficult for the
human mind to understand. I was
impressed
by
42
dollars
billion
News
and
the
World
Report"
two-thirds.
high
S.
compared
the
budget
with the present
aay value of all
the world's gold mined since Co¬
a
lumbus
that
ago—which
years
be
worth
America—456
is
estimated
to
only 40
billion
dollars.
The United States
is said
to
would
be
barely enough to cover
expenditures
for
Federal
months.
seven
Surely this
day of credit expansion!
To avoid
is
a
com¬
ing fiscal year the President has
asked Congress to enact tax
legis¬
providing
another
four
lation
billion dollars of revenues.
is not expected that
it
While
Congress
will
comply
for
request
the
the
President's
under
cannot
afford
on
"It is not
mediate
adian
profit
business
matter
of
under
,
.
for
the
is
a
wealth
creation
of
the willingness
on
remove
long-stand¬
people to risk their money in con¬
structive enterprises."
I think the Canadian Minister
hit the nail squarely on the
head,
and I'm glad to see that his party
won last
Monday's election in the
Excise
Tax
As
an
example, the excise tax
transportation which adds 15%
to the cost of
your passenger
was
enacted
war
Another factor,
no less impor¬
taxes, preventing private
enterprise from making adequate
profits is the ever increasing pres¬
ticket
both from big government's
of bureaus and from special
sure
maze
interest groups to encourage fur¬
to
during
the
recent
ther
Federal
of
is
the
yet
necessary for
of the impor¬
tant role played
by the railroads
in the development of our
great
country. The railroad industry is
use
locks
the
of
since
1880.
ment-owned
million
channels
The
in
the
like
have
that
the
"Communists
will spread
this
is
to all democratic
the
tions in the world.
»
Depression, like many diseases,
is psychological—one
man
feels
sick because he
sees
a
few others!
uation
We
many
and
warn¬
to
writers
industry
is
public ownership
this
happen it will be due
to
a healthy
readjustment..*
returning from the war
sober
a
buyer's
competition.
normal
railroad
If
as
are
prise is allowed
fidence
should
will
be
to
binge
market
with
If free enter¬
operate,
restored
con¬
and :our
will have the healthful
that 'adequate profit can,
economy
inaction
vigor
bring.
the part of Government which
Y.Yy.Y ;i"-: !
;
Y:--\ '
additional
appropriations from Congress for
the purchase of new barge
equip¬
ment to operate their tax-exempt
in
competitive
transportation.
agency
Recently
New York
a
public
Forgotten Men
"Times"
(Continued from page 6)
editorial pointed out that in
spite
of the fact that our
transportation
structure
all
represents one-fifth of
invested
capital in the
the
control,' ownership
A few months ago
a
50-yeai» period shows that rarely
has
the
ratio
present.
been
There
low
as
has
also
as
at
been
•/
tial to enterprise and that cause
both
new
savings and existing
pools of funds to
a
take
shelter, in-
striking divergence between stock "Safe" investments.
United States, for which our peo¬
Unfortunately,
discourage public use of and subsidy.
and bond yields
during the past a drying up of the supply of venture
hard-pressed transportation facil¬ during the inflationary period the ple pay 30 billion dollars annually decade.
This
spread
has
been capital is hot generally accom¬
for services, so far there has been
ities. Now that almost
asked
every rail¬ President
Congress
for
irregular inter¬ panied by spectacular danger sig¬
no
serious effort to formulate an widening, with
road is suffering substantial losses
power to construct Governmentruptions, since the great onslaught nals of the sort that arouse
over-all transportation policy to
on
people
passenger traffic, with more owned industrial facilities where
on
ownership began around 1936. to action. The resulting deterio¬
coordinate activities under cen¬
seats empty than
filled, many un¬ private industry could not in¬
I believe the unhealthful condi¬
ration
in' national
tralized direction while
productivity
derstanding Senators and Con¬ crease production to a
preserving tion
of the equity capital markets and
satisfactory
living standards is. not inW
gressmen of both parties have in¬ rate. Now that the turn has come the driving £orce of private enter¬
is the inevitable
consequence of mediate or dramatic, but comes
prise and competition.
troduced bills to repeal this
tax, in the inflationary trend, the Pres¬
tax discriminations. ;•v
slowly and almost imperceptibly,
but to date the problem of bal¬ ident asks for the same
Surely if such a policy were
powers to
,
^
ancing the budget has foreclosed
favorable
bills.
consideration
these
measures
Many other
duced
of
intro¬
to
luxury
repeal
other
wartime
taxes have likewise been
stalled
by
our
big
guard against deflation and to
provide full employment. It seems
to
me
with
that business has been faced
national emergency after
another for the past 20 years.
one
s
the
revenue
government.
needs
Time
Every
of
and
or
business,
competition,
urged in hearings the removal of
critical
double taxation
roads face
corporate divi¬
dends, the repeal of the 2% pen¬
alty tax on consolidated
returns,
the easing of the
Treasury's policy
regarding depreciation allowances,
and many other needed
revisions
in the Tax
Code, to no avail.
Just how big our
Government is
and how much
now
should
grow
to
all
to
the
just 20
bigger it can
deep concern
of
taxpayers
earner
In
be
from
large
years
the
wage
corporation.
our
annual
rate
.of
Federal
expenditures
has
mounted from 3 billion
dollars to
42
billion
taken
dollars.
from
The
"bite"
national
our
income
by the Federal tax
changed from
1928
in
to
a
1948,
"bites"
crumb
a
of
has
4%
in
large mouthful of 20%
and
when
taken
by
local tax collectors
total is more than
tain
collector
that this
the
the
State
are
and
added, the
25%.
overall
other
I main¬
tax
burden
is
choking the flow of private
venture capital and
strangulating
the free enterprise
system.
'
In
20
years
we
top surtax rate
comes
seen
the
individual in¬
jump from 20% to 83%, the
maximum
rate
from 20% to
tax
have
rate
on
on
estates
jump
77%, and the income
to
and
other
excise
and
import
duty levies.
It is small wonder
that the potential investor of
risk
capital feels he has little to
gain
and much to lose under
ent tax structure.
,
regulation
but
I
situation
and
believe
which
the
the
rail¬
today is the most out¬
our
accounting, financing, borrow¬
ing,
are
relations
constantly under the surveil¬
lance of
or
intef-railroad
and
some
Government bureau
commission.
for
materials
While
our
costs
Recently the Finance
ouj> pres¬
would
be
railroads
eral
greatly
not
are
subsidies.
chance
for
relieved.
In
The
Capital
ask
we
is
a
the
competition with
other transportation
agencies with
minimum
a
of
Federal
ment interference.
diversion
of
railroads
to
The
Govern¬
from
carriers
study, "Economic Progress:
a
njost important functions
of
the capital markets. One of them
is that security prices as deter¬
mined
increasing
business
other
Markets
is
no
specific way to
performance of the
the
economy
with what it might have
Jobs and Taxes," to be published
very shortly, we have enumerated
asking for Fed¬
All
there
and
of
compare
fair
tant
the
in the markets
measures
of
are
value.
impor¬
A large
part of the country's wealth today
could
takes
the
form
condition of
fective
of
corporate
ward at
business
accelerated pace until
it was not until July of
recently,
1946
that
creased.
freight rates
in¬
were
Railroad
operating ex¬
penses, including taxes, have risen
93% in the 10 years since 1939.
On the other
hand, freight rates
charged by the railroads have in¬
creased
with
a
when
now
still
progressively
the
fares
over
have
25.4%
during
While
appeals
rate
total
only 51.7%
senger
beginning
6.5% rise in mid-1946 until
increases
1939.
gone
the
up
is
Pas¬
but
period.
pending for
same
were
we
increase
have
watched
expenses
mount
when the increase
benefit had
higher so that
was granted its
already been lost.
Difficulties
of
Railroads
With the slacking off of traffic
since the war the rail¬
volume
equally effective
allowing them to
We handled
supplies began
rising in 1940 and continued up¬
an
to
but has not been
in
recent
war
earn
enough.
record volume of
through*
during the
had
good
made
better
by
the
service
efficiency of
opera¬
;■
.
been if investment had not beenim- >
peded.
In fact, one of the ironical
of
governmental
policies that result in shutting off
consequences
the
flow
of
make
it
ment
itself
equity
capital.
;
.;
is
funds
that the
appear
the
only
is
to
govern¬
source
YYYY','YY• • Y\fy
of
•
\
se¬
So
use
as
col¬
to
banks
raise
found
capital.
it
ad¬
Because
state
of
the
market, the
offering had to be made at a price
representing about two-thirds of
Capital expenditures for equip¬ conservative" book value, so that
the offering diluted the
ment and other
equity.
improvements to
railway property made by Class I Insurance companies have had
similar experience in the last sev¬
railroads
in
1948
totaled
more
eral years. Other companies, un¬
than iy4 billion
dollars, the great¬
est amount spent for
any year on
record.
Of course this sum
pur¬
chased
much
only
as
it
about
would
one-half
have
20
as
years
ago,
willing to accept what appeared
be unreasonably
their stocks, have
to
in
a
tion
passenger cars
most
and
diesel-electric
low prices for
delayed stock
financing, only to find themselves
neverthelesss, it represents a
substantial amount of
freight and
disadvantageous posi¬
Basically, it is al¬
impossible to interest sav¬
more
later
pn.
ers
in
new
ownership interests
rail, automatic train control sys¬ when they and their friends are
tems,
signals
and
interlockers, trying to explain the mystery of
improvements to freight and pas¬ stock prices of important Compa¬
locomotives,
senger
ing
as
well
as
heavier
stations, etc. We
every
dollar
are spend¬
available
for
nies which
seem
dead
alive—in
not
than
comfort and safety for the public
improvements which will
only result in better service,
but will enable
us
to reduce costs.
than
to be worth
more
other words,
liquidating propositions rather
as
Dangers
going businesses.
of
Present
Tax
Policies
We must stay
methods, modern equip¬
continually alert
Government aid.
While we must ment and
technological aids can to the danger of tax policies that
Minister spend huge sums for maintenance
bring about more profit for us and
discourage the risk-taking essen-
New
democracy
.
than
any other.
Weconvinced that; we'
that system
a
fair'
equally
are
must
give
chance to
survive and to prosper'
by removing the handicaps which'
certain
place
features
of
our
laws
tax
it and which threaten
upon
to destroy the
tality.
'yf' /•
sources
of its vi¬
Y''
.
_
the
transportation.
pipelines are the only public
transportation not subsidized by
to
much
visable
of
as
the
wish
for generalities.
Re¬
cently one of the most important
these
and
institutions.
also important
corporate stocks and bonds
lateral for bank loans.
roads have been facing stiff com¬
petition
from
other
forms
of
The railroads
are
businessmen who
Much metropolitan
1948.
been
toward
greater
tion.
a
passengers
and
have
has
progress
railroads
and
business
in keeping the railroads
making too much money— Security prices
from
freight and
and
on
duplicate in many ways and
further complicated
by the
various
Government
Function
the
We hold firmly to the position
standing example. Being the first soon be reversed if the railroads
had the same opportunities to ad¬ curities, and since a security is that the surest road to economic
of the large industries to be
regu¬
worth only what it will
bring in progress
is
lated, we have operated under In¬ just rates and the freedom from
through the timethe market, quotations are used in
terstate
tested American system of indi¬
Commerce
Commission control now enjoyed by our com¬
assessing the wealth of individ¬ vidual
control for more than half a cen¬ petitors.
enterprise and that our
It has been said that Govern¬ uals, figuring estate tax liabilities, system is more compatible with
tury. Not only are our revenues
and
determining the financial freedom of individual action and
ment regulation has been most ef¬
controlled by rate
regulation, but
corporations go from
11% to 38%. These taxes
overlap
are
large
small, must be constantly alert
again tax experts, on invitation of
Congressional Committees, have
on
whether
adopted and followed in operation,
plight
of
railroad • profits
-
na¬
and postwar seller's market
nationalization.
on
The
believe
to
serious depression which
a
*
tottering.
The
experts
in
this'
country recognize the present sit¬
or
Govern¬
market
would call our aver¬
of 3.62% on invested
threatened with
or
stock
received
of you
ings from economists
Waterways
is presently seeking
dollars
by
scales.
quate.
Inland
Corporation
18
river
clouded
shakedown, the rise in unemployment, and a general softening of
return
capital for the past 27 years ade¬
more,
t
ness
would
We
could
*■
start of
age
has
an¬
and
It
•
price
none
speeds.
utilities
industries.
The present prospects for busi-*
in this country have become -
be
not
remind you
economically
tolls have been charged for
no
the
should
to
public
basic
pen.
Our strength like that of
any business depends on an ade¬
quate profit:
I am certain that
by over¬
traveling at danger¬
pending to spend 2 billion
other
happen here—but it need not hap¬
healthy.
of the high¬
Government
mines,,
reserves,
stands ready to act as the bulwark
of our internal defense
by its de¬
sire
to
remain
caused
Federal
*
justly proud of its record of serv¬
ice
during the recent war and
already spent 2 billion dollars on
our
waterways
to
make
them
navigable and appropriations are
our
tant than
Transportation
agree that 93%
The
new
of
It
me
for
li¬
suffi¬
7%
of^
the world, it took other forms of'
public transportation as well, and^
then
by
gradual
process,
the.
economy now
combination of only
Public
ment
pay
taxes,
about
cover
and excessive
ous
future
lines
gasoline
loaded trucks
system where we depend,
and must depend, for full employ¬
the
truck
damage
way
a
and
receive
of building and maintaining
highway network, road engi¬
cost
our
Can¬
rather it
.
concern
of
the
to
neers
position
railroads
and
cient
to
question of the im¬
a
the
cense
tax system.
oux
for
mail pay for carrying
more
While
neglect
implications of this defect in
the
nothing
of
a
profits, and
borrowing on equip¬
trust obligations.
3.
carrying the remaining 94%.
steady flow of venture capital,
we
for
6% of the first class mail tonnage
a
increases during Dominion by a landslide.
session, there is also
hope for tax decreases Government Pressures on Business
revisions to
ceive
and
paid
costly Government
air navigation and traffic
control.
The airlines re¬
aids to
enterprise
tax
ing inequities.
on
that
me
private
airports,
and
venture
present
sources*
safety
.
present
very little
or
with
to
our
Y 1. Depreciation
:
2. Retained net
than
of
under
sufficient
three
dollars
the benefit
may
be as
distribution to
upon
seems
system
ment
deficit for the
a
tax
attract
from
nicipal
remaining
which depends for its existence
have
60% of the world's gold stock, or
24 billion dollars
worth, but this
our
80%
as
"It
ardele
recently
discovered
The
-
the
of
to
come
of
The problem
could prevent such a catastrophe
by permitting the railroads to earn
capital to permit this moderniza¬ reasonable profits. When Govern¬
tion
program
to. progress.
Our ment ownership engulfed railroads
funds
for
capital
expenditures in most of the other countries
is
Airlines pay only nominal rent
for the use of Federal and mu¬
stockholders.
"U.
a
out
of
significance
when
distributed
Thursday, July 14, 1949
by the public treasury.
this
the
12
CHRONICLE
Profits
on
country, as well as in most
coming fiscal year calls for the other countries, taxing away at
expenditure of approximately 42 least a third of corporate profits.
In addition, the personal income
billion
dollars.
A
requirement
tax rates apply in full to what is
this large to run one
government
budget
FINANCIAL
of Canada, in
announcing sweep¬ and real estate taxes on our road¬
ing tax cuts for the Dominion, in¬ beds, the airlines, truck lines, and
dicated a sound
understanding of barge lines use facilities costing
8)
page
&
lower rates for you.
lulti D))h1;
;
profitably,
COMMERCIAL
Jobs—First Requisite
...
The nearly one and
lion young
a
people who
....
half mil¬
are
com¬
pleting their education this
are
entitled to
make
an
year
opportunity to
tnemselves
contributing
efforts
to
standards
useiul citizens,
through their own
raising
their
living
over
those
of
the
pre¬
ceding
generation.
Their
first
requisite is jobs. Private industry
can
relied
be
jobs
tools
the
when
formed
and
structive
In
tax
number
laws- permit
venture
necessary
to
provide an
of jobs
necessary for such
on
ever-increasing
and
capital
the
to
encourage their
be
con¬
use.
the
study to which I have
have shown that two
developments in our econ¬
omy
in5 recent decades are re¬
sponsible for drying up the stream
of
risk -"capital:
There are the
alluded,
we
basic
increasing preference for security
as
contrasted
constantly
with
risk,
increasing
and
portion
the
of
Volume 170
Number 4820
the
income
national
THE
the
Federal
needs,
Government's
reve¬
specif ic
recommendations, the
adoption of which would go a long
way in correcting the tendencies
which can only result in either
arresting economic
government
progress
in
or
financing of private
industry,
or
mentions
are:
both.
(1), Make
.
■
a
These
recom-
credit
a
equal to 10% of their dividends
on
stocks
common
when
com¬
puting their income tax liabil¬
ity.
■'
*
\
■
(Continued from page 5)
-term
,
gains
to
10%,
increasing
to $5,000 the amount by which
capital
against
losses
v be
can
offset
ordinary .income
each
year, and shortening the hold¬
ing period to three months. ;;
The
is
gained.
Mr.
(187)
31
most
appealing feature of
these proposals, compared
with
other tax plans, is that little or
Truman
not
Down 3 cents from
a
week ago, the Dun & Bradstreet wholesale
food price index registered $5.66
'
does
WHOLESALE FOOD PRICE INDEX OFF 3 CENTS TO
EQUAL
YEAR'S MAY 17 AND FEB. 8 LOW
want
a
national
strike and will do
everything in his power to prevent one.
probable that in the end he will have to resort to an
injunc¬
The only thing that could
prevent it would be a fact-finding
report that would suit both the steel companies and the union and
the chances of that are not
good, "The Iron Age," national metalworking weekly states in its current summary of the steel trade.
is
on July 5 to equal the low toucned
previous occasions this year—May 17 and Feb. 8. The current
evel represents a drop of 20.5% from tne
corresponding date a year
ago when it stood at $7.12.
"
on two
tion.
Murray
magazine
iaider
.o
than
iaise
at
hope that he will get favorable treatment, the
states, but this time the steel firms will buck
can
time
any
since before
the
against
war
attempt
any
wages,
grant, nonconiributory pensions
or
agree to high
security demands. The economic pattern seems to favor the
,ceei side with orders
off, production declining and customers hamnering at the price line.- But with the government in the picture
.ociai
t
finally
may
The
mean
situation
a
compromise at
in steel
is
,
(2) Revise the treatment of
capital gains and losses by re¬
ducing the tax rate on long¬
,
concession
rade
by allowing
take
a
It
start in eliminat¬
to
CHRONICLE
steel
•
ing the unjust double taxation
individuals
of
Mr.
•'
!
„■
of dividend income
FINANCIAL
The State oi Trade and
Industry
<
have offered two
we
&
passing
through the hands of the Federal
Treasury. Without losing sight of
nue
COMMERCIAL
i946,
1947
or
1948
some
now
than it
was
in
when
wage increases were reluctantly granted,
There are three major points of dif¬
(1) Steel demand is weakening every day; (2) higher wage
will either mean higher steel prices or forestall the kind of
;^The Iron Age" poihts out.
ference:
osts
;uts
that may appear necessary later on to stimulate
business;
(3) price increases didn't hurt steel demand during the past few
inflation years but they would be rough on business in the current
deflation.,.:;7;r■; --v^; >'(-V:'V'■
The
theory
Trading volume in leading commodity centers was considerably
The daily wholesale commodity
price index, compiled by Dun & Bradstreet, Inc., fell to 237.39 on
July 2, a new low since early February, 1947, and closed at Z37.45 on
July 5. This compared with 238.15 a week previous, and with 283.16
slower during the past holiday week.
on
the corresponding date a year ago.
Grain markets fluctuated irregularly in
comparatively light
Demand for wheat was disappointing and prices worked
trading.
lower despite a somewhat poorer crop outlook.
future date.
radically different
COMMODITY PRICE INDEX IN PAST WEEK ESTABLISHES FUR¬
THER NEW LOW SINCE EARLY
FEBRUARY, 1947
'/
that a steel strike would so deplete steel users'
inventories as to produce a boom in steel sales at the strike's end
is partly wishful
thinking. If basic steel is shut down many of its
justomers will also be struck by the steelworkers' union. The auto¬
mobile industry, steel's No. 1 customer
today, is an exception, this
crade paper observes.> The
Big Three in Detroit have been putting
#
Corn offerings were small and prices held
fairly steady. Oats and
showed declines for the week. The outlook for the corn crop con¬
tinues excellent.
Domestic flour bookings remained small as
large
users continued to buy
only for immediate and nearby requirements
in the hope that expanded wheat
marketings in the Southwest would
bring about substantially lower prices.
:
\
rye
Cocoa displayed a somewhat firmer trend as demand for actuals
improved and offerings from primary markets continued light. The
undertone in the coffee market remained
strong, reflecting a tight
statistical position. A moderate amount of new business was noted
,
in the spot market at firm prices.
Consumer demand for butter remained slow but prices were
steady to slightly higher
as
the result of better speculative inter¬
est and government support buying.
In the Chicago livestock
market, demand for hogs was light in
the face of relatively large market
receipts; prices trended lower
suppliers for weeks in efforts to build up
would be provided until a thor¬ inventories, y They've been buying distressed sheet stocks and even throughout the period. Cattle prices fluctuated unevenly and closed
about 60 cents higher for the week, aided by
improved pre-holiday
oughgoing revision of the whole purchasing big quantities from warehouses.: As a result most Detroit
demand from the East. Increased
marketings of Spring lambs brought
Federal tax'structure can be uif^ motor car plants have 30 to. 60-day steel stocks on hand. • ;•
sharply lower bids from big packers and prices as a consequence were
dertaken. j
But the question of how long the auto industry can
,
,y'
go in the down
sharply from a week ago. Lard and vegetable oils continued
event
of a steel/ strike probably rests
In conclusion, may I state
with its parts suppliers. weak.
Many of them have unbalanced inventories and may have to depend
blunt truth:
The cotton market developed a firmer undertone last
week; spot
on their customers to bail them out in case of a
long strike. This prices at New York showed a net
gain of about 30 points for the
could lead to a mad scramble for certain steel items which
Ownership Weakened W* might period..
f"".'"•.v?"'-'■".
'
Ownership, w^ch lies at the bring the automobile industry grinding to a halt. On the other
Some of the supporting factors included the announcement
base of the whole economic struc¬ hand,; concludes "The Iron Age," it would clear up excess finishec
of the mid-June parity price for cotton at the same level as a
ture, is threatened. When farm-^ goods inventories now in -the ..hands of automotive parts suppliers
month previous, whereas a decline was generally looked for in
and. return them to the market for steel at the end of the threateriec
ers
were
injured by forces of a
the trade, and the possibility of a continuation of the
steel strike.
■
90% of
'
"
general*'* character in relation to
parity loan rate on next year's crop.
the conditions affecting the rest
The American Iron and Steel Institute announced this week
Also lending support were reports of increased weevil infestation
that the operating rate of steel companies having 94%
of^he country, farm
loss; of
no
and
is
: revenue
welcome
a
involved,
interim
period
pressure
their >steel
on
.
r
t
>
.
•
,
parity
devised "to
When
legislation
was
of the
situation.
the
correct
steel-making capacity of the industry will be 77.8% of capacity
for the week beginning July 11, 1949, as against
61.2% in the
preceding week, or an increase of 27.1%.
This week's operating rate is equivalent to 1,434,300 tons of
steel ingots and castings for the entire industry, compared to
lagged
behinc
economic forces and labor
ai;
was
i
1,128,200 tons
scale social and welfare demands
—much
in
as
some
restricted
our
of
form
the proposals
approval—and
time
be
militarily
offer needed help
warrant
the same
may
at
prepared
to
and
in
Europe
world of uneasy peace. We can
meet pressing social demands de¬
a
spite our large-scale obligations
only if the country is prosperous.
You will note that I
began this
a
week ago, 1,598,300 tons, or
86.7%
and 1,636,600
tons, or 90.8% of the old capacity one
1,281,210 tons for the average week in 1940, highest
for
ownership insofar as the ex¬
traordinary fiscal situation. wil
permit. We cannot in this country
at the present time cater to lhrge-
continued quiet with most buyers withdrawn from the market at the'
,
a
disadvantage, labor was granted
the. equivalent of parity treat¬
ment. What I am striving
for, in
effect, is merely fair treatment
in parts of the cotton belt and the confirmation of the
purchase of
60,000 bales of cotton by Spain. Carded gray cotton cloth markets
a
month
ago,
year ago
and
prewar year.
CARLOADINGS ADVERSELY AFFECTED BY COAL MINERS'
freight for the week ended July 2, 1949,
which included the coal miners' annual vacation
period, totaled 644,182 cars, according to the Association of American Railroads.
This
was. a decrease of -158,759 cars, or 19.8% below the
preceding week.
It
also
revenue
represented
decrease
of
113,096
14.9% below the
corresponding week in 1948, but an increase of 14,978 cars, or 2.4%
above the similar period in 1947, which included the
July 4 holiday
well
as
as
a
the miners' vacation
ELECTRIC
OUTPUT
DROPS
cars,
or
JJNDER LIKE PERIOD OF 1948
The interest of many consumers in vacation goods was stimulated
by very warm weather in many parts of the nation the past week.
Dollar volume of all retail purchases rose moderately in the period
IN
PAST
Wednesday of last week, but
was slightly below the high
& Bradstreet, Inc., re¬
ports in its latest summary of trade. July clearance sales were started
in many localities and shoppers generally responded
favorably.
Z1
As temperatures climbed in
lightweight apparel
rose
skirts
and
housedresses
many
sections, the demand for
noticeably.
The retail volume of women's
WEEK
increased
bathing suits, sun-dresses, shorts,
moderately.
Mark-down
sales
of
the interest of many shoppers.
The amount of electrical energy distributed by the electric
light
and
on
level of the corresponding week in 1948, Dun
men's shirts attracted considerable attention. Men's tropical worsted
suits remained very popular and promotions of
rayon suits evoked
period.
FURTHER
j
RETAIL AND WHOLESALE TRADE VOLUME MAINTAINED AT A
LEVEL MODERATELY
ended
ANNUAL VACATION PERIOD
Loadings of
approach of the holiday period.
Total retail purchases of food
were
about equal to those
of
industry for the week ended July 9, was estimated at
the preceding week with unit volume practically unchanged from
4,982,173,000 kwh., according to the Edison Electric Institute. This
the high level of a year ago.
rv;,.,.• ':v:'
del of capitalism. I did so delib¬
represented a decrease of 428,219,000 kwh. below output in the pre¬
Housewives displayed a slackened interest in large meat cuts,
erately, for I am convinced we ceding week, 221,857,000 kwh*or- 4.7% higher than the figure re¬
though canned meats and picnic items were in substantial demand.
must cast aside half-hearted apol¬
ported for the week ended July 10, 1948, and 451,640,000 kwh. in
ogy and a defensive attitude. The excess of the output reported .for the corresponding period two years Dairy foods and fresh fruits were very popular and demand for
cann^ and bottled beverages rose seasonally.
gift of freedom, by the only test ago.
While interest in furniture and large appliances dipped slightly,
worthy of the name, the acid test
the demand for other home furnishings rose
of experience, has not been the AUTO OUTPUT LOWER DUE TO JULY 4th HOLIDAY
noticeably. Small kitchen
Production of cars and trucks in the United States and Canada appliances, electric fans, refrigerators, fiber rugs and curtains were
priceless heritage .that we know
*
talk with
power
reference to the cita¬
a
.
.
except where private
ownership is encouraged and re¬
spected. As I have said elsewhere,
the past week dropped as a result of the Fourth of
July holiday to an
estimated 116,878 units from last week's postwar record of
there is another way, but he who
pays
the piper calls, the tune.
Volume production, enhanced by nine-hour shifts in some
plants, offset production losses because of scattered walkouts be¬
Who
cause
it
to
be
can
look upon an expansion
of
government lending to busi¬
ness without the certainty that it
must lead inevitably to the di¬
rection of industry and the alloca¬
tion of resources, and finally the
end of the freedom of both labor
and
miss
ownership?
in
We shall be
re¬
responsibility if we
our
part in the most
our
144,822
(revised) units, "Ward's Automotive Reports" states.
of the heat and kept the daily automotive assembly output
a year ago
and
Last week's output consisted > of 91,246 cars and
18,937 trucks
built in the United States and 4,378 cars and 2,317 trucks in Canada.
and
industrial
failures
declined
in
urgent business at this moment—
the business-;of explaining why
job holders and job seekers have
comparable weeks of 1948 and 1947 when 88 and 82 occurred
the
tively. They
the
to
do
greatest
barriers
in
stake
to
progress.
•
further
/■ /'.
•
;
removing
economic
;
■
.
•
.
Chicago Exchange Member?
1
CHICAGO, ILL.—The Executive
Committee
of
the
Chicago Stock
respec¬
in the corresponding week
Casualties involving liabilities of $5,000 or more fell to
from 147 last week, but exceeded the 71 of this size which
curred
a
year
ago.
Small
$5,000, remained at 30; they
the similar week of 1948.
failures, those with
were
almost twice
as
123
oc¬
liabilities under
numerous
as
in
volume
in
the period ended
estimated to be from 1 to-5% below
on
a
Wednesday of last
year ago.
The number of buyers attending wholesale markets fell consider¬
ably from the previous week, but was slightly above the level of a
year ago.
many
volume
businesses closed for the long holiday week-end, the
of wholesale orders dipped moderately in the week
high level of the comparable
and continued to be somewhat below the
week in
1948.
Department store sales
on
a
country-wide basis,
as
taken from
the Federal Reserve Board's index for the week ended
July 2, 1949,
decreased by 11% from the like period of last year and compared with
a decrease of 6% in the
preceding week.
For the four weeks ended
July 2, 1949, sales registered a decrease of 7% from the corresponding
period a year ago and for the year to date a decline of 4%.
Retail
trade
here
in
New
York
last
week
suffered
contraction in dollar volume when compared with one
a
sharp
year ago.
Estimates for department stores place the decline at about 20%.
According
to
the
Federal
Reserve Board's index, department
City for the weekly period to July 2, 1949,
ures declined in the
In the preceding
week, while wholesale trade casualties rose to 19 declined by 15% from the same period last. year.
Farra
week a decrease of 7% was registered below the similar week ©f
Co., Lexington, Ky., and from 13 last week. Both
manufacturing and retailing had about twice
1948.
For the four weeks ended July 2, 1949, a decrease of 10%
Edmund W. Harrison of Harrison as
many failures as in 1948, while construction was the only industry
was reported under that of last year.
For the year to date volume
& Co., Cincinnati Ohio.
group with fewer failures than a year ago.
decreased by 7%.
Exchange has elected to member-
1
were not as high, however, as
of prewar 1939 when 208 concerns failed.
was
Regional estimates varied from the levels of a year ago by
the following percentages: New England 0 to —4; East —2 to
+2;
South and Southwest —1 to —5; Midwest —4 to —8; Northwest
and Pacific Coast —2 to —6.
dollar
the
holidayshortened week ending July 7 to 153 from 177 in the
preceding week,
Dun & Bradstreet, Inc., reports.
Although at the lowest level since
January, casualties were considerably more numerous than in the
fail
week
As
BUSINESS FAILURES OFF IN HOLIDAY WEEK
Commercial
an increased volume.
The retail volume of automobile accesories and sporting goods also rose moderately. The sales of new auto¬
mobiles continued to be above those of a year ago.
Total retail
at 29,000 units, Ward's reported.
The total for the week compares with 98,700 units
114,318 units in the like week of 1941.
sold in
ship William B. Holton of Holton,
.
,
Retail, manufacturing, construction and commercial service fail¬
store sales in New York
32
(188)
THE
COMMERCIAL
&
FINANCIAL
■i.
,n,i
i~in
<r,
CHRONICLE
"i
f
Thursday, July 14, 194(
irirt"m
'
■
•
All States Oil & Gas Co., Washington, D. C.
•
;
June 28
(letter of notification) 280,000 shares (500 par)
stock. Price—$1 per share. No underwriter. To
drill new wells and complete wells, for general corporate
common
INDICATES
SINCE
•
Crescent Junction
Nevada
'■''
•
Development Research Corp., N. Y.
notification) 50,000 common shares
(par $1) offered for subscription by stockholders of
record July 8 in ratio of one-for-2y2 at $2 per share.
Rights expire July 22.
Stock donated to company by
large stockholder and proceeds will be used for general
V
•
:
(letter
Underwriting,
none.
operating expenses, including
11th Street, Denver, Colo.
Bay Brook Oil & Gas Co., Inc., Brooklyn, N. Y.
July 6 (letter of notification) 100,000 shares of capital
stodk. Price—$1 per share. No underwriters. To be used
for oil development. Office, 47 President St.,
Brooklyn,
f
Howard
Webster, Montreal,
Quebec, Canada at $11
or
Underwriter—Gordon Weeks & Co., Memphis, Tenn.
writing,
■
46th
1,500
outstanding 6% and 7% preferred stock. Office,:
319 Madison St., Jefferson City, Mo.
.'/w\
ceeds
.
—
For
and other
,
.
.
,
,
^
.
v
Electric & Gas Co. (7/20)
132,874 shares ($3.50 par) common stock.
Underwriters—Paine, Webber, Jackson & Curtis and
Stone and Webster Securities Corp., New York.
Price
and underwriting terms by- amendment.
Proceeds—to
finance an $8,400,000 expansion program for two tele¬
phone subsidiaries.
Corp. withdrew
as
None;
The
First
have not yet
been
are
Chicago Pump Co.
,
(letter of notification) 29,000 shares of 70-cent
cumulative preferred stock.
Price—$10 per share. Under¬
writer—Straus and Blosser, Chicago. To retire an interim
loan of $250,000.,
Office, 2336 Wolfram Street, Chicago.;
Corp., Washington, D. C. >
(letter of notification) 2,800 shares of Class A
Citizens
June 22
common
Class B
Credit
stock
($12.50 par)
stock.
common
shares of Class A and
unit.
To
one
and 1,400 shares (250 par)
be offered in units of two
of Class B stock for $29.75
per
Underwriter—Emory S. Warren
;
D. C.
& Co., Washington,
Proceeds—General corporate purposes, including
a small loan office in Mt.
Rainier, Md.
Columbia Gas System,
Inc., New York (7/26)
June 29 filed $13,000,000 debentures, due 1974. Under¬
establishment of
.
writers—Names to
>•
be
determined through competitive
Probable bidders: Morgan, Stanley &
Co.; HalStuart & Co. Inc.; Merrill Lynch,
Pierce, Fenner &
Beane; Lehman Brothers and Goldman, Sachs & Co. and
Union Securities
Corp. (jointly); Salomon Bros. & Hutzler.
Proceeds—To finance construction
bidding.
sey,
,
Ex¬
program.
pected July 26.
Cooperative G. L. F. Holding Corp.,
Ithaca, N. Y.
June
stock.
29
filed 44,088 shares 4%
cumulative preferred
Offering—To be offered at $100 to farmer and
non-farmer
G." L. F. Exchange and its
affiliates. Underwriting—None.
Proceeds—To replenish
working capital.
patrons
of
the
Cooperative Grange League Federation
Exchange, Inc., Ithaca, N. Y. ";,V-v.- ;'-//■ 'H/-
-
June 29
filed 1,200,000 shares
($5 par)
Offering—To be sold to members and
Underwriter—None.
stock.
common
farmer
patrons.
Proceeds—To be added to
working
•
Financial
•
to
all
offices
V
new
financing by the
X
'*<■/_;
Co.,
Decatur,
III.
(7/26)
loans made to finance construction.
23
(letter of
(par $100).
::
Inc., Pittsburgh
notification) :500 shares of class
Price,
par;
Underwriting,
none]
!;■/>/■/;;/;/
Finance Co., Inc., Kensington,- Md.
(letter of notification) 1,000 shares of commoi
be offered'at $10 a share and 1,000 shares oi
preferred stock, to be offered at $25 a share. No under¬
to
writer.
Working capital.
V
.
*
company.
•
Jennison, Taylor & Co;; lnc., New York '
24 (letter of i notification) -1,000 common
shares|
(par $1); 500 shares 4% cumulative preferred stock (pai
June
'i
Industrial
and $50,000 j 10-year lVz% bonds.
Price, par^
Underwriting, none.: Operation of business. Office/ 14£
$100),
Fund, Inc./ Denver
common
stock (par lc).
East 61st St., New York.
Price, market.
■'
•
&
Kaman
Rhoades & Co. and Bear, Stearns & Co.
(jointly); Shields
Co.
Proceeds—To pay off $3,200,000 of short-term
•
ice
Bank & Trust Co. and
Gas
and
off
pay
owed
by
$250,000
corporation
Nielsen of
Cody, Wyo.
on
a
to
its
8
Overseas), 120 Broadway, New York.
>
f/',> ./
15-year 3V4%
bonds, series A, due July 1, 1964. Under¬
Co., Columbus, Ohio.
' / '
Atlantic
Transportation Co., Jacksonville.
Co.
ocean
pay
ferry, to finance dock and terminal facilities, 1
obligations," and 'to provide working-
current
Hawaiian Electric Co.,
Ltd., Honolulu
-
Offering—Preferred will be offered to preferred holders,
at
l-for-3 rate and-
common
will be offered to
common
personnel.
Acquisition of equipment and
W. 73d Street, New York 23,1
N. Y.
Communications and inquiries should be ad¬
dressed
to
Barclay's Bank (Dominion, Colonial and|
writer—The Ohio
Gulf
service
shareholders of company.
facilities./ Office. 301, 25
promissory note
stockholder, Glenn E.
(Ohio):. Telephone Co. • i
(letter of notification) $125,000
first mortgage
train
Corp.,
•
-
Geneva
July
Motors
Kingswood Films, Inc., New York
July 6 (letter of notification) 290,000 50c voting common!
shares (par $1).
Price, par. Underwriting, officials and
$1,000,000
sole
Conn.|
medium-sized station wagon.
/V
5Gate City Steel Works,
Inc., Omaha, Neb. K
June 16 (letter of
notification) 2,500 shares of 6% cumu¬
lative first preferred.
Price—$109 per share.
Under¬
writer—The First Trust Co. of
Lincoln, Neb. Proceeds—
To
Locks,
Huntsville, Ala.
May 10 filed 5,000,000 shares (30 par) common.
Under-]
writer—Greenfield, Lax & Co., Inc., New York. Price—I
$1 per share. Proceeds—For plant facilities, equipment!
and
working capital to
manufacture
a
low-priced,|
Industries Fund, Inc., Boston, Mass.
July 7 filed 340,000 shares ($1 par) common stock.
Price,
at market. Underwriter—Colonial
Associates, Inc. Pro¬
investment.
departments; and to
Keller
other
corporate purposes. Bids—
Bids for purchase of the bonds will be received
up to
noon (EDT) July 19 at 2 Rector
Street, New York.
-V
ceeds—For
Windsor,
Price,]
&
construction
Corp.,
$5.50 per share. Underwriter—None. Purpose—To
ac-|
quire machinery, tools and equipment; to buy land
and]
buildings; to produce 30 helicopters and accessories;
to]
complete engineering changes; to setup sales and serv-|
Co.; Halsey, Stuart & Co. Inc.; White, Weld & Co.;
Bros.; The First Boston Corp.; Carl M. Loeb;
borrowings from Central Hanover
Aircraft
May 23 filed 170,456 shares of class A non-voting com¬
mon stock (10c per share non-camulative
dividend), anc
11,362 shares of class B voting common stock. ,
Lehman
for
'V
.
Judea
Development Corp.
;
June 23 (letter of notification) 19,250 class A preferrec
(par $10), 90 shares common (par $50) and 5,000 shares
class B non-preferred (par $10).
Price, each class, par.1
Underwriting, none.
To engage in commercial enter-l
prises in Israel, etc.
Office, 1133 Broadway, New York.l
'
June 21 filed 150,000 shares of series E cumulative
($20
par) preferred and 50,000 shares of ($20 par) common.
.
\
Insurance
stock
Florida Power & Light Co.
(7/19)
May 20 filed $10,000,000 first mortgage bonds, due June
1, 1979. ; Underwriters—Names to be determined through
competitive bidding. Probable bidders: Harriman Ripley
Chicago
:•
■
July 8
capital.
Private Wires
:vV"
Industries,
Working capital.
Financial Industrial Fund,
Inc., Denver
July 5 filed systematic investment certificates, periodic
payment, the aggregate not to exceed $2,500,000, and
cumulative investment certificates, fully paid, the aggre¬
gate not to exceed $300,000.
Underwriter—Investment
Service Corp.
Proceeds—For investment.
to
Cleveland
bank
price of the
offering. Proceeds—
from holdings of Mrs. Benjamin
Underwriter—Investment Service Corp.
Proceeds—For investment,
an
San Francisco
j
Power
stock
> Underwriters
will buy the
remaining 135,000
plus unsubscribed shares of the new commonOffering! price of class A $5. Proceeds—To complete
Philadelphia
Co.
Increte
4y-3,. June
shares
'
'
Underwriter
determined, but the stock
July 5 filed 2,300,000 shares of
&
Pittsburgh
York
Maryland Mines Corp., San Francisco
July 7 (letter of notification) 9,000 shares of commor
stock.
Price—$1.80; a share.
Offering to be made bj
Errol Macboyle of San Francisco. ' Underwriter—E.
F]
•
May 31 filed 620,000 shares of class A
participating ($1
par) stock and 270,000 shares (25c par) common stock.
Offering:—135,000 shares of common will be offered for:
subscription by holders on the basis of one-for-two at
25 "cents per share.
Underwriters—Names by amendment, and may include John J.
Bergen & Co. and A. M. Kidder ;
Boston
tc
Idaho
short-term
Florida
New York
1948
petitive bidding. Probable bidders: Halsey, Stuart &
Co]
Inc.; Harriman Ripley & Co. and Glore, Forgan & Co|
(jointly); The First Boston Corp. Proceeds — To repaj
•
June 20
in
.
par)
,
ceeds—For investment.
>
-
Underwriting]
spent
June 30 filed $15,000,000 first mortgage bonds, due 197(
Underwriters—Names to be determined through com-l
stock.
Price—$45 a share.
No underwriters.
Operating capital for finance business. Office, 718 Jack¬
son Place, N.
W., Washington, D, C.„
•
,
Phonograph Corp.
«
,
cash
(letter of notification) 35,000 shares commoi
(par 5c).
Price,$2 per share.
Underwriting]
General working capital.
Office, 160 Broadway]
Illinois
—
&
J :
share.
per
for
Company
28
Hutton &
common
tion.
;;
4
officers and employees
Price—$25 per share to public,
employees. Underwriters
T. C.
Radio
-
Inter County Telephone &
Telegraph Co., Foi
Following ;;
sale of the shares, the Abrams
Myers,. Fla.;,V/ycl/;/'Vv;,;
family will own approxi¬
June 27 (letter of notification) 4,500 shares ($25 par)
mately 25% of the company's 800,000 shares of common
5%|
stock.
cumulative preferred stock. Price, par. Proceeds—To im¬
;
' v.
•.;
•
prove the company's property/ Underwriter — Florid*
Federal Services Finance
Corp., Wash., D. C.
Securities Co., St. Petersburg, Fla;/.
July 7 (letter of notification) 2.930 shares (no
;
underwriter. Proceeds—For construc■.
Office, 13 West
Co. and Wheelock & Co., Des
Moines,
additional equipment, plant additions, etc.
Emerson
do not involve
Boston
Century Shares Trust, Boston - '
July 8, filed 200,000 trust shares (par $1). Price, market.
Underwriter—Harriman Ripley & Co., Boston.
Pro-
,
^.
-
& Sons, Rensselaer, N. Y.
Ice-Flo Corp., New
New York.
•
Abrams, Mrs. Max Abrams and Mrs. Louis Abrams, wives
principal officers and directors of the company, and
Light & Power Co., Findlay, Ohio
—
&
To buy
to
Reimburse
stock
of
June 17 filed 25,240 shares ($10 par) common.
Offering
—To be offered to common stockholders at the rate of
Underwriter
share
The shares to be sold
.
one-for-five.
etc.
| would be used for other corporatt
construction.
(F. C.)
$36, and preferred, $55
none.
will not be sold below the market
price on the New York
Stock Exchange at the time of the
;
Central
Ohio
Iowa.
offering
June 29 filed
Central
Working capital,
N. Y.
June 7 filed 235.000 shares of capital stock.
—F. Eberstadt & Co., Inc. The terms and
working capital, exploration, development
purposes.
•
underwriting.
per
Henderson
redeem
Carnegie Mines Ltd., Montreal, Canada -V
April 27 filed 500,000 shares of common. Price—60 cents
per share.
Underwriters — Name by amendment. Pro-
'
mon,
June
shares will be offered to
without
Huyck
none.
St./' New York 19,
$23.75
balance
or
24
(letter of notification) 1,000 common shares
(par $5) and 500 vClbss A preferred stock.
Price, com¬
Concensus, Inc., New York
none.
Proceeds—To paj
June
1117
Economy Forms Corp., Des Moines, Iowa v.//June 27 (letter of notification) 7,500 shares of
preferred
stock, of which 6,000 shares will be publicly offered and
•
Capital City Telephone Co., Jefferson City, Mo.
July 5 (letter of notification) 3,000 shares of 4V2% preferred stock ($100 par). Price, par. No underwriters. To
-
-
•
June 22 (letter of notification) 10,000 shares of 5% cumu¬
lative preferred stock.
Price, $5 per share.
Under¬
Big Tree Timber Co., Samoa, Calif.
July 5 (letter of notification) corporate notes in the
amount of $20,000. No underwriter. Proceeds to be
paid
on minimum annual timber
payments. Office, P. O. Box
462, Samoa, Calif.
'/v"':
Duval's
The
purposes
.•;/,/:>;> /;
•
or to the underwriters.
purchase this stock.
ital.
•
'
funds.
•
Berry Motors, Inc., Corinth, Miss.
June 21 (letter of notification) about 4,300 shares (no
par) common stock. To be sold for the benefit of R.
$12.
Office,
Underwriters—Dillon, Rea<
promissory notes and to carry merchan¬
dise inventories andt receivables or to replenish treasi
Durham Aircraft Service, Inc., New York
July 1 (letter of notification) 40,000 common shares
(par $1).
Price, par. No underwriting. Working cap¬
N. Y.
,
salaries.
/.•%-»
off short-term
r J "
■
•
,'"Lj 4
stockholders at l-for-9 rate.
No underwriters.
of
corporate purposes.
;■ *
.j
& Co. Inc. and Dean Witter & Co. will
buy unsubscribet
preferred; unsubscribed common will be sold either aj
July 8 (letter of notification) T,500,000 shares (100-par).
To defray cost of exploratory drilling
and development work.
Office, P. O. Box 1228, Las
Vegas, Nev.
y'• ' , ^
'
•
Den Orado Industries/ Inc.,
Denver, Colo. 1 "V /'
July 7 (letter of notification) 91 units of an oil lease at
$250 a unit. No underwriters. Proceeds to pay general
Associated
1
V'
t
ISSUE
Exploration Co., Las Vegas, " public auction
-
.
July
PREVIOUS
capital and used for general corporate purposes, includ¬
ing payment of $12,693,000 in loans to an affiliate, Co- "
operative G. L. F. Holding Corp.
*
;
Office—327 Southern Bldg., Washington, D. C.
purposes.
ADDITIONS
Vc-'v;
"i
in
Knox
(Earl E.)
■
Co., Erie, Pa.
June 14 (letter of notification) $150,000 first
mortgage!
convertible .sinking fund 6% bonds, due May 1, 1969.
Underwriter—Reitzell, Read & Co., Inc., Erie, Pa/ Price,
Volume *170
THE COMMERCIAL
Number 4820"
.
&
CHRONICLE
FINANCIAL
(189)
33
npnmnai
made
■■;s.< v/;ik
J^vrV4>'
v;5»S'; vn *
•
r
for, construction of additions and betterments sub- > 1, 1949. No underwriter. T*o drill and equip oil wells in
sequentto: April"30/1949.X Sale deferred luntil jate)r tliis^ j Colorado. .'Office,^838 :Symes ;Bld^., Dteirver,::Qblo." Pp'-'p
:'year:'".> ^\n-'-c'^' ' *r* ?•*";
Trenton Chemical Co., Detroit, Mich.
V
New Jersey Power & Light Co. .(7/19). !-y: - y;v March 30 filed 131,341 shares 6% cumulative convertible
June 3 filed $3,500,000 of first mortgage
bonds, series due' class B preference ($2 par). Underwriters—Straus &
1979, and 20,000 shares ($100 par) cumulative preferred t Blosser,
Chicago; Carr & Co., Detroit, and Lester & Co.,
stock.
Undenvriters-^To be determined through com-" Los Angelesi Proceeds—To build chemical plant and to
petitive bidding. Probable bidders: Halseyr Stuart & Co;: j replace wbrking tapital used for capital additions.
; *
Inc.; Equitably Securities Corp.; Union Securities Corp,.;",
I1 Mrs. Tucker's Foods, Inc., Sherman, Texas
Carl M. Loeb, Rhpades & Co.; Otis & Co.; Kidder Pea-,;
Nov. 26 filed 200,000 Shares of common stock (par $2.50> '
body & Co.; Salomon Bros. & Hutzler. Bids—Bids fpr. •
of which .80,000 will be sold by the company and 120,000 r
H
?^|!P!P| CALENDAR §f|
itJuly 19, 1949
■*"v.
Chicago Great Western Ry,
Noon
•:/
*
(CDT)__-_rr__^T_-_---_EQuip. Trust Ctfs.
Florida Power & Light Co., Noon (EDT)____Bonds
New Jersey Power
V;
Noon (EDT)__—
&; Light Co;^,r-^
_ _
Jr _ _ __ _
St. Joseph Lt. & Power
^—-
Co., 11
^ 20,
a.m.
-—-——-Bonds
purchase of the bonds will be received
up to noon (EDT) 'j
2401, 61 Broadway, New York. Proceeds
applied to the payment of the cost of, or in
reimbursement of! payments made for, construction of
additions and betterments subsequent to April 30, 1949. -
(CDT)-Bonds v
July 19 at
—Will
1949
shares by certain stockholders. :
room
Pierce & Co.,
be
Underwriter—Rauscher,:
Inc., Dallas, Texas.
corporate purposes.
Proceeds—For general
„
,
,
Central Electric & Gas
•-
Co.____rw_——...Common
England Power Co._-—w—__—___i___^Bonds
Kansas
City Southern Ry.__„_-Equip. Trust Ctfs.
';V:
-j
July 26, 1949
Columbia Gas System Inc.^
V Illinois Power Co._
^
-
-
4$%* - - --
--
'u
\,.v:
-Debentures
-—-'-Bonds
21r 1049
■■Worcester
r
-
VV' *
1
■-
•
'
.
New York & Cuba Mail Steamship, New York
'
County Electric
;
and: "interest.1 Retire $5^5,396Tfiisl/^<>r$gage2 toorid^j:-:
orking capital. >
;
PPPP\fP'Zfippk'
ar
U.
Rubber Reclaiming Co., Inc., New York
(letter of notification) $100,000 5% notes, 1,000
options to purchase 15^000 shares of convertible curau- 1
June 17 filed 190,125 shares of 5.6% cumulative preferred
lative preferred stock and 15,000 shares of convertible
($25 par) stock, which Atlantic Gulf and West Indies- cumulative preferred stock.
Notes will be offered at'
Steamship Lines is offering :in exchange for its own
par and interest for subscription by stockholders and'
preferred (5% non-cumulative $100 par) at the rate of
Ladenburg, Thalmann & Co. and Milton Dammann, as
one Atlantic share for three shares of Cuba Mail pre- *'
underwriters, will purchase and hold as investment any
ferred plus ,$25. in cash. No underwriting.
>
* -: ^ notes not taken
by stockholders/ Each $100 unit will
•
carry an option to purchase 15 shares of convertible :
Northern States Power Co. (Minn.)v ;;1 pSpp'{P
July 8 filed $15,000,000 first mortgage bonds, series diie j cumulative preferred stock at $6 per share, r Subscrip- f
tions to note are payable before 3 p.m., Aug. 15, next. •
Aug. 1, 1979. Underwriters—To be determined through
V
competitive bidding. Probable bidders: Halsey, Stuart & • Proceeds for working capital.
P'-p.'-P-'.-Pp ■ - ;
Co. Inc.; Lehman Brothers and Riter & Co. (jointly);
Upper Peninsula Power
Equitable Securities Corp.; Merrill Lynch, Pierce, Fen-; Sept. 28 filed 200,000 shares of common stock (par $!>)• *
ner & Beane; Union Securities
Corp.; Glore, Forgan &; Underwriters
Names to be determined through com¬
Co.; Smith, Barney & Co. Proceeds—Will provide part > petitive'-bidding/ Probable bidders include Kidder, Pea¬
of .the pew capital needed for company's construction : body & Co., Merrill
Lynch, Pierce, Fenner & Beane and
program.
Paine, Webber, Jackson & Curtis (jointly). ^Proceed*—
■■
New
•
S.
June 29
'v
■
•
—
"Uly 5 (letter"of notification) 3,700 shares.($1Q par) compn stock. Price, par. No underwriters. To expand facilties for repair of vacuum: tubes.IJQffice, 30 EL Rapcho
•
Oit Hunters^*inc;,:Fort: Worth, Texas
•
'pPiZ
ve., Los Gatos, Calif.
; v 1 C / ;:/! *' %
t. ><* x ). June 28 (letter of notification) 750,000 shares (100 par) *
.
•
„
^
LuckyStores, Inc., Oakland, - Calif#
27 filed 400,000 shares, ($1.25 par) comjnbri stock,
;•
•
-
Macco
by amendment. Proceeds—Shares
behalf of Blair Holdings Corp.
/
on
Corp., Paramount, Calif.
"/ '
Maracaibo Oil
,
1
dian Securities-Corp., New York.
ceeds—To expand
-
of
•
•
Merrimack
,
P-
^
writers.
Main
•
productions.
o
88
30
ferred
Finance
(letter
N,
notification) 25,000 shares of pre¬
and 4,000 shares of class A common.
to
June 30 (letter of notification) .1,000 shares of 5% cumu¬
lative preferred stock ($100 par) and 500 shares ($10
par) common stock. Price—$200 for a unit of two pre¬
ferred and
one
shares.
common
ventory and advertising.
•
.
No underwriter.
•
of Illinois
(Hawaii)
June 7 filed .150,000 shares ($10 par) convertible pre¬
ferred stock, series B. Offering — Offered initially to
stock June 20 in the ratio of
June
due
one
preferred share for each five of commop held at $10
share (flat). Rights expire July 20. Underwriter
—Kidder, Peabody & Co. Proceeds — Proceeds will be
used for construction and expansion which in 1949 will
involve expenditure of about $4,340,500.
i
per
!
England Power Co., Boston : (7/20)
June 3 filed $5,000,000 of series C bonds due July 1, 1979.
petitive bidding.
Co.
to
be
determined
Probable bidders:
through
Proceeds—Proceeds
used
to
of the
bond
and stock sale will
be
$5,324,700 of bank loans obtained for
construction and to provide money for construction ex¬
pay
penditures
July 20.
off
expected
to
be
-P
made.
Bidding
~
expected
'P
New
Jersey Power & Light Co.
June 9 filed 20.000 shares ($100 par) cumulative pre¬
ferred stock.
Underwriters—Names to be determined
through competitive bidding. Probable bidders:. Kidder,
Peabody & Co.; Smith, Barney & Co.; W. C. Langley &
Co.; Lehman Brothers.
Proceeds—Will be applied to the
payment of the cost of, or in reimbursement of payments
(letter of notification) 1,700 shares of preferred :
Price—$25 per share. No underwriter. To buy
property and equipment and provide working capital
for the staging of theatrical productions.
Office, 452
Washington Bldg., Washington 5, D. C.
; •
^
stock.
-
Joseph
10
(Mo.)
royalty
filed
trust
Price—$40 each.
ment.
Willcox & Gibbs Sewing Machine Co., New York.
June 6 (letter of
Light & Power Co.
(7/19)
record June 28 at
for each 25
$50
(EDT) July 15.
share in ratio of
of
preferred
Rights expire 5 p.m.
Underwriting—None. Subscriptions pay¬
common
per
one
shares held.
able to Central Hanover Bank & Trust
New
York.
capital.
: •
To
pay
loans
Co., 70 Broadway,
($250,000), working
/
.
Woodruff
bank
'
;
(S. D.)
& Sons, Inc., Orange, Conn.
July 5 (letter of notification) $35,000 of 5% debentures,
Underwriter—Day, Stoddard & Williams, New
Haven, Conn. To liquidate indebtedness and for addi¬
tional working capital,
Office, Old Grassy Hill Road,
Orange, Conn.
*
Worcester County
Electric Co. (7/27)
10 filed $5,500,000 of first mortgage bonds, series
A, due July 1, 1979. Underwriters—Names to be deter¬
mined through competitive bidding.
Probable bidders:
Halsey, Stuart & Co. Inc.; Merrill Lynch, Pierce, Fenner
& Beane, and Salomon Bros, & Hutzler (jointly); Kid¬
der, Peabody & Co.; The First Boston Corp.; Otis & Co.
„
Proceeds—To
be applied to payment of bank borrow¬
($4,950,000) and for construction or to reimburse
company for previous construction outlays.
Expected
July 27.
ings
•
Workers
Finance
Co.
of
North
Bergen
July 12 (letter of notification)
$150,000 6% cumulative
deferred debentures, due in 20 years.
Price, par.
No
underwriting. To make small loans.
/ ;
,
Canada
1,120 units of non-producing landowners
certificates, at $247.50 a share. Under¬
Co., New York City. Proceeds
Prospective Offerings
Arkansas
Gas
Service, Inc., Ontario, Calif.
March 31 (letter of notification) 4,000 shares ($25 par)
series B preferred and 20,000 shares ($1 par) common—
issuable upon conversion of preferred. Price—Preferred
$25 per share. Underwriters—Wagenseller & Durst, Inc..
and Lester & Co.
To buy Antelope Liquid Gas Co.
June
Toronto, Canada
; :
June 7 filed 375,000 shares of common stock. Price—$1
per share (U. S. funds). Underwriting—None. Proceeds
—Funds will be apolied to the purchase of equipment,
road construction, exploration and development.
Topside Oil Corp., Denver
July 1 (letter of notification) 1,000,000 shares of Series
A capital stock (100 par) at 25 cents; 100,000 shares of
the same stock reserved as a "bonus," and 100,000 shares
at 10 cents to the stockholders of Topside of record May
29
Power &
Light Co.
in September of
Stuart &
Co. Inc.; The First Boston Corp.; White, Weld & Co.;
Lehman Brothers and Stone & Webster Securities Corp.
(jointly); Equitable Securities Corp.
reported company plans sale
$8,700,000 bonds.
Probable bidders:
Halsey,
California Oregon Power Co.
27 reported company may issue
,,
Sudore Gold Mines Ltd.,
•
notification) 6,000 shares of 5% cumula¬
To
tive convertible preferred stock, series B (par $50).
be offered for subscription by common stockholders
—For development purposes.
■'
life in¬
Western Oil Fields, Inc., Denver, Colo.
May 19 (letter of notification) 800,000 shares of common
capital.
Price, 250 per share.
Underwriter—John G.
Perry & Co., Denver, Colo.
For working capital and
drilling of wells.
writer—Thomas G. Wylie
Suburban
Underwriter—To be named by amend¬
Proceeds—To qualify the company to sell
in any state.
surance
June
filed $4,750,000 of first mortgage bonds, series
Underwriters — Names
to
be ; determined
Alherta.
30
;
/Western American Life Insurance Co., Reno
30 filed 12,500 shares ($10 par) common stock.
due 1964.
•
.
Spring Coulee Perpetual Royalty Trust,
&
plans to sell 360.000 shares of common ($20 par) to its
parent, New England Electric System, at $25 per share.
'
1979.
June
Inc.; Kidder^ Peabody & Co. and White, Weld & Co.
Burr; Carl M. Loeb, Rhoades & Co.; Merrill
Lynch, Pierce, Fenner & Beane and Lee Higginson Corp.
(jointly) and Harriman Ripley & Co.
Company also
.
through competitive bidding. Probable bidders: Halsey,
Stuart & Co. Inc.; The First Boston Corp.; Otis & Co.;
Equitable; Securities Corp.; Kidder, Peabody & Co.;
com¬
Halsey, Stuart &
(jointly); Equitable Securities Corp.; Otis & Co.; Union
Securities Corp. and Salomon Bros. & Hutzler (jointly);
Coffin
*
>
-
White, Weld & Co.; Salomon Bros. & Hutzler; Carl M.„
Loeb, Rhoades & Co.; Union Securities Corp. Proceeds
—For property additions.
Bids — Bids for purchase of
bonds will be received by company at Suite 2200, 105
West Adams St., Chicago, up to 11 a.m. (CDT) July 19.
New
Underwriters—Names
Co., New York. Proceeds—For admin¬
expenses
and drilling.
Statement effective
Rose Hilflis Memorial Park,
St.
Telephone Co.
common
'
_
110, Whittier, Calif.
.
holders of the
4
;
Whittierr Calif.
July 5 (letter of notification) $294,500 20-year 3 Vz % con vortible debentures. No underwriters. Working capital
and new cemetery property, acquisition. Office, P, O. Box
notification) 968 shares of common
stock.
Price—$14 a share. Middle States is making the
offering on behalf of Central Telephone Co; No under¬
writers.
:/ ;, 'pp'[ PPPpppP:':pr^UPPP^iP^PP^pApPPPP
Mutual
to employees only.
June 27.
(letter of
6
sold
istration.
For in¬
r
Middle States Telephone Co.
July
be
P. G. Cranwell &
Office, 4T Central Wharf, Bos¬
.
?
Power Petroleum Ltd., Toronto Canada '
April 25 filed 1,150,000 shares ($1 par) common of which
1,000,000 on behalf of company and 150,000 by New York
Co.. Ltd.
Price—50 cents per share.
Underwriters—
Mellin's Food Co. of North America, Boston
ton. Mass,
Washington Theater & Opera Co., Washington,
June 27
-
Pitney-Bowes, Inc., Stamford, Conn.
July 8 (letter of notification) 10,000 shares of common
stock.
Price—$8.54 a share. No underwriter. Stock is;
Price, preferred, par; common, $12.50 per share. Under¬
writing, none. Working capital.
r' >/P'
•
$5
March
•
of
(par $1Q)
•
Harbor, Cooperative Association," Inc.,
June 24 (letter of
Jersey City
Co.,
Pearl
Philadelphia Reserve Supply Co.
notification) 1,520 5% cumulative pre¬
ferred stock and 65 shares of common stock.
Price, $100
per share.
Underwriting, none.
Working capital and
debt reduction.
Office, Luzerne and F Sts., Philadel¬
phia, Pa.
p
Office,
J
(letter of notification) $230,000 common stock.
Price—$50 per share. No underwriter. To build, equip
and stock complete supermarket. Office, P. O. Box 982,
Honolulu 18, Hawaii,
Street, Concord, N. H.
Mechanics
June
dramatic
(no par)
.uncapitalized expenditures.
\
June 27
of
Finance
(Ohio) Telephone Co.
(letter of notification) 3,000 shares
dividend preferred stock. Price—$100 a share. No under¬
writers. To help capitalize $587,226.05 worth of hitherto
Pro¬
Price—$5 each.
weaving facilities.
•
•
Warren
July 5
Honolulu
Playhouse,
(letter
7
•
,
•
Inc., Concord, N. H.
notification) $20,000 6% cumulative
preferred stock (no par). Price—$50 a share. No under¬
July
34,000 shares, respectively; Copper Range Co., 34,000
owners 11,200 shares.
shares and several individual
,
Mills, Ltd., Tel Aviv, Israel
June 29 filed 300,000 ordinary (common) shares, one
(Israeli) pound par value. Underwriter—The First Guar¬
Exploration Corp.
Consolidated Electric A
Gas Co. and Middle West Corp. will sell 120,000 sharea ,i
com¬
Palestine Cotton
(letter of notification) 49,500 shares of capital
stock (par $1). Price—$5 each. Offering —
Offered for
Kansas.
oil
July 1 (letter of notification) 1,000 shares (no par) com¬
mon stock.
Price—$50 each. No underwriter. For general
corporate purposes. Office, 995 North Mission Road, Los
Angeles 33, Calif. * \
! "" 'J
30
subscription by stockholders of record July 13 in ratio
one new share for each eight shares held. Rights ex¬
pire Aug. 9. Underwriter,' none but Alfred J. Williams,
President, has agreed to exercise rights to buy* 1,487
shares and his wife 651 shares, to which their holdings
entitled them. Mr. and Mrs. Williams will buy 17,862
more shares if other stockholders don't buy this much,
proceeds—To develop properties in Louisiana, Texas and
an
Pacific Outdoor Advertising Co., Los Angeles.
•.
uly 5 (letter of notification) 1,000 shares ($1 par) comon
stock.
Price—About $5 per share. Underwriter—
Edward A. Pellegrin, 1611 Fletcher Ave., South Pasa¬
dena, Cal.
'
,
June
To maintain
No underwriter. Office, 203 Maj estic Bldg.;!3Fqrt '
Worth, Texas.
<
-
pany.
nderwriter—Names
being offered
Price—10 cents.
stock.
.common
une
Will go to selling stockholders.
and
June
$7,500,000 bonds
Probable bidders: Shields &
Co. and E. H. Rollins & Sons (jointly); Halsey, Stuart
& Co. Inc.; Merrill Lynch, Pierce, Fenner & Beane and
for
expansion
purposes.
Kidder, Peabody & Co. (jointly); Lehman Brothers;
Blyth & Co., Inc. and The First Boston Corp. (jointlyL
Oregon Power Co.
I
has applied to the California P. U. Com-'
mission for exemption from competitive bidding on a
California
Company
(Continued
on page
34)
34
(190)
THE
COMMERCIAL
(Continued from page 33)
issue
proposed
Proceeds
of
for expansion.
250,000
sale
from
would
additional
be
used
June
repay loans and
Blyth & Co., Inc.
tric
June
will
30
be
given
the
right to subscribe for an aggregate of 191,500 addi¬
shares (par of?) in a l-for-5 ration at approxi¬
mately 271/2 cents per share. Rights will expire Sept. 13
tional
and
exercisable
are
at
office
&
Power
12 reported company may be in the market this
with $7,500,000 first mortgage bonds and $3,000,000
common stock, the latter to be sold to United Light &
Rys. Co. (parent).
Bidders for bonds may include
Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler;
Kidder, Peabody & Co.; Lehman Brothers; Blyth & Co.,
Inc.; W. C. Langley & Co., and Union Securities Corp.
(jointly); The First Boston Corp.; Glore, Forgan & Co.,
G. Becker
Co.
&
Co.
Iowa
Aug. 9
Southern
Utilities Co.
stockholders
will
vote
»
creating an issue of
$3,000,000 cumulative preferred stock and increasing the
authorized common from 360,000 shares to 560,000. Com¬
pany plans to sell as much of the preferred issue as "can
be marketed on advantageous terms."
on
•
mortgage bonds.
Probable
Blyth & Co., Inc.; Merrill Lynch, Pierce,
alternative
proposals
Ry.
company plans sale at an early date of
$5,700,000 equipment trust certificates. Probable
bidders: Halsey, Stuart & Co. Inc.; Salomon Bros. &
Hutzler; Harris, Hall & Co. (Inc.); Lee Higginson Corp.
a
Public
Utilities
share.
Details of
the
Unsubscribed shares
•
'
'
petitive
of the
understand
But this, Avenue.
The public must under¬
The pub¬ stand this and make the choice.
Robin Hood
the
effect
philosophy of Government Laws
redistribution of wealth
and Regulations
capital
Not to be confused with the Ad¬
formation.
It, of course, doesn't ministration's
attitude toward fi¬
understand the role 01 capital for¬
nance. but
historically growing out
mation and its productive use in a
of it, is the
impediment of Gov¬
free society. The public likes the
ernment laws and
on
Robin Hood idea in taxes and will
continue to do so until it receives
truly
a
effective
grounding
in
fundamental economics. The mem¬
bers of Congress are naturally go¬
Corp.
applied
to
the
distribution of
proposed
•
ing to be responsive to what the
public wants.
Another
important impediment
is the attitude of the Administra¬
tion toward
business, particularly
the
financial
I'm
sure
the effect
on
stection
of
business.
I don't have to elaborate
that, this has
on
our
capital.
Kremlin
are
ring about them and
class hatred breeders of
sidious character.
an
in¬
Mr. Stalin was
quoted by the Baltimore "News"
last winter
an era
of
as
saying that this is
Communism, not of Wall
Street. Which side
way?
are we
on, any¬
Can it be possible that
our
Government leaders do not know
that
our
financial
markets
are
glad to
say
Administrators
Acts
are
likewise concerned with
his phase of
is
heartening
is
field
one
■ess
in
which
bringing
progress
be¬
which
complished too
red
du¬
tape,
operation
as
possible
cannot
be
as
are
phasis
is
that lies at the door of
many
of our
concept
industrial leaders in their
of
management
—the real
the
responsibility
toward
with
the
proposed
sale
back
the
to
economic
on
of
many
in this
part of
the
over-em¬
security.
owners of the
business.
asked ICC permission to sell competi¬
Halsey, Stuart & Co. Inc.; The First Boston
Corp. and Kidder, Peabody & Co. (jointly); Harriman
Ripley & Co.; Salomon Bros. & Hutzler; Shields & Co.
a
and Harris Hall & Co.
free economy.
This cannot be
our
young
This
attitude
is
dark
a
on
econ¬
The prospective provider of
equity capital takes stock of these
pension plans and dives back into
hole
own
ment.
our
gradual
a
enterprise.
only be done through
a
It
direct
this
of
enterprise
by.
While these/
difficulties I
tioned stand in the
have
many
of
does
us
high
hopes
his
part I
for
men-.
if each still have;
way
the
accomplish--
ment of this task.
1
-
(Continued from page 5)
of their past
performance record could be similarly
challenged, but
whose records are nevertheless
included.
In
omy.
his
therefore,
socalization of
can
Government
ownership
the American people.
men,
cloud
the horizon of any
dynamic
and,
more
Inc. (jointly).
A
fact, the market recognizes this fallacy to
seen
in
with
performance.
the
non-correlation of the
State
Street,
some
extent,
closed-end companies'
as
discounts
temporarily closed-end company,
riskless invest¬ has consistently sold at a premium
over-the-counter; whereas other
closed-end funds with better investment result
performance sell at
of
.
a
,
I have heretofore
spoken about
the impediments whose removal
requires
the
active
discounts of between 10 and 35%.
cooperation
public, the Government
industry. The final, being
highly important factor, is one
a
our
investment business
own
is responsible
only
various
the
.
for, and
who
ones
I
can
we
do
the
are
anything
internal
problems of
archaic form, the defensive
concept of profits, the wheel-spin¬
ning of our activities from the
serious manpower
problem. Time
does not permit an
elaboration of
Lhese, but I can assure you that
many of
and
are
make
us
are
business
them, and find
at
least
conscious of them
doing all that
our
this
a
we
can
conscious
to
of
real solution for
part
of
the
over-all
problem.
Widespread
great
our
individual
be
owner¬
a
in
strengthening
wealth,
in
to
the
solidly
put
these
fighting ranks for
over¬
advantages
adequately mentioned.
/
Glorifying the American Trust
Also "in
line with the times," the
Wiesenberger book conforms
general over-selling tendency, in
"glorifying" the trusts, and
comparing them with other "sacrosanct" investment media
such
as life
insurance and government
to the
bonds, which in reality are dif¬
This tendency is epitomized in the book's
frontispiece, designed by Rockwell Kent, which shows the
temple
of "Security"
resting on four pillars designated as "Life
Insurance,"
"Savings Banks," "Government Bonds," and "Investment
Compa¬
nies." Constructive restraint on
the industry's excessive enthusiasms
will no doubt be exercised
by the newly-formed Mutual Fund In¬
stitute under the direction of Mr. Paul
Bartholet.
ferent "breeds of pups."
Although Mr. Wiesenberger's book represents a masterful
and
voluminous statistical
achievement, some of its methodology reflects
industry practice which is open to question. For
example, in show¬
ing the comparative expense ratios, in cases of
leverage trusts the
interest item is excluded from the
expense total although the addi¬
tional assets and income which it has
brought in are included in the
on
tool of
democratic processes. The op¬
owners
and greater investment value
base
can
portunity is here, because of the
of
funds,
The
potency
the trust
field, this latest edition has in¬
the relative
emphasis devoted to the open-end
weighting their advantages as contrasted with the closed-end units.
This year discussion of the
closed-end field is relegated to the rear
of the book, and nowhere
are
their numerous relative
our
merchandising—in particular,
.
Following the times in
creased
talking about the
am
'
,
Neglect of Closed-Ends
of j the
and all
of much broader base of ownership
stockholders
company
tively $6,870,000 series B general & refunding mortgage
bonds, dated Aug. 15, 1949, due Aug. 15, 1974. Probable
predicate for
Security
on
trace
ship of securities
impediment
I
power
bred
philosophy, who are
knocking at the doors of industry
for
jobs, are more interested in
pension plans than anything else.
ac¬
soon.
Another serious
one
of the
Avoiding
into
uniformity
are
No
your own part
process.
objectives
there
progress.
plication, cutting down
much
these
of
problem, and it standpoint of playing our role in
to report that this economic society,' and the very
important is the
and
of
field
our
encouraging signs of
regulatory
high of¬
ficials in the Administration have
am
the
Privilege"
from
I
much
hat
ing made in
in 1?
problem
great
also
can
own
of
whole
Over-Emphasis
permit
flow
the
i
about it.
eeded
connection
stock
policy, pension plans, done
by an institutionalization of
general stockholder relation¬ their
savings because this is only
ships.
a
Securities Acts, but we do believe
he Acts need
changes which will
financial markets. Political slogans
such as "Wall Street Gluttons of
com
involves
regulations. The
securities business does not quar¬
rel with the basic
purposes of the
freer
in
common
Wheeling & Lake Erie Ry.
July 11
would be offered for
public
dividend
that
a
bidding
their
of
bidders:
We
present taxes are drying up the community — certainly
not
the
springs of, investment from community itself. Here again the
which flow jobs and production real trouble is a lack of
public
and that this in turn, means less
understanding. The politician may
real income for the Government know
better, but he is going to say
and less real wealth for
everyone. I what the
people want to hear.
It would,
therefore, seem very Don't forget this—any move that
simple to get this tax structure re-1 investment banking makes will be
vamped along lines that would from Main Street to
Pennsylvania
doesn't
Co., Topeka, Kan.), and offered to the
price of the public offering will be $102
preferred and $11.25 a share for common.
and
,
well
lic
The
for
Upper Peninsula Power Co.
Teco, Inc.
financial
stimulate the economy.
share
June 16 Middle West
Corp. and Consolidated Electric &
Gas Co. applied to the SEC for an
exemption from com¬
Under the terms of a
proposed
contract between
Zenith Radio Corp. arid
Teco, Inc., to be considered at
the annual
meeting of stockholders of Zenith Radio
that laid the golden egg. It is rea- made in Main Street and
that Wall
sonable to assume that the memstreet, as such, is only the major
bers of Congress realize that our
clearing house of our
a
public.
a
value
$24
Impediments to Free
Flow of Risk Capital
again, is naive thinking.
expires
Stock not purchased by preferred holders will
by an investment group (probably
underwritten
panies proposed to sell the stock at competitive
bidding.
The SEC has scheduled a
hearing for July 6 upon the
proposed sale of this stock and the request for
exemption
from competitive bidding. *
General
This
7)
each
Beecroft Cole &
Louisiana & Arkansas
page
for
a
holdings in the company con¬
sisting of 34,000 shares (17%) and 120,000 shares
(60%),.
respectively.
In their original application for authori¬
zation to sell the
stock, filed last September, the com¬
11
ment.
about
:
be
835.000 shares, including the record
date, subscrip¬
tion price and other terms are to
be supplied by amend¬
July 8 reported
(Continued from
five
July 5.
the
Brothers; Salomon Bros. & Hutzler; Harris,
(Inc.).
/
the right to
share in ratio of
shares held and 7,000
$100
common shares at
$11 per share in ratio of one common
for each share of preferred owned.
The offer
company
sale.
.;/■;
at
shares
new
of
covering
and Lehman
•
buy 2,000 preferred shares
two
SEC for
authority to dispose of its stock interest in the
Rochester Gas & Electric
Corp. GPU stockholders would
offered prior subscription
rights to the Rochester
Gas stock. As owner of all
775,914 shares of Rochester
stock now
outstanding, GPU would cause Rochester to
reclassify the stock into 835,000 shares at a stated
certificates
maturing half yearly over a 12-year period and cer¬
tificates maturing over a 15-year period. Probable bid¬
ders: Halsey, Stuart & Co. Inc.; Harriman Ripley & Co.
Hall & Co
Union Gas
System, Inc.
Company is offering preferred stockholders
be
City Southern Ry. (7/20)
The company will receive bids July 20 for the purchase
of $3,990,000 of equipment trust certificates. Bidders are
submit
paid by subscribers will be returned
expenses.
!
is to be sold without limit
to stockholders and
employees.
Proceeds for construction.
Rochester Gas & Electric
Corp.
July
Kansas
to
amounts
deducting certain
•
& Light Co.
reports that additional financing will
be undertaken to finance construction
program. It is ex¬
pected to take the form of an issue of
75,000 preferred
shares.
Traditional underwriters:
Drexel & Co. and
The First Boston
Corp.
29
that
Tellurite Power
Co., Salt Lake City
July 8 FPC authorized
company to issue 3,000 shares
(par $100) 6% preferred
stock, to be offered for sub¬
scription by stockholders at par.
-Any unsubscribed stock
Pennsylvania Power
June
(jointly); Harriman Ripley &
provides
sale, the
after
15,
next, of approximately $7,000,000 additional first mort¬
gage bonds to retire outstanding notes and to finance
its
construction
program.
Probable bidders:
Hal.ey,
Stuart & Co. Inc.; Lehman Brothers and
Riter & Co.
(jointly); Equitable Securities Corp.; Merrill Lynch,
Pierce, Finner & Beane; Union Securities Corp.; Glore,
Forgan & Co.; Smith, Barney & Co.
May
one
•
June 28 company contemplates the
issuance by Nov.
Light Co.
year
A.
share for each five shares held.
The
the right to subscribe will ex¬
pire 20 days after the offer is made.
Under the terms of
the proposed
contract, Teco, Inc. will agree that; unless
its entire authorized
capital of $1,000,000 shall have been
obtained through the sale of
its stock within seven
months after such stock shall
first have been offered for
contract
Pacific Power & Light Co.
Iowa
15, the right to sub¬
share, for stock ($10 par) of Teco,
Inc.,
per
to the extent of
Old National Bank of
of
stock of Zenith of record
July
scribe, at $10
Fenner & Beane.
Spokane.
and
offer,
mon
&
underwriters:
July 26, Teco, Inc. will, if such con¬
meeting, become obligated to
(upon effective registration) to holders of
com¬
on
tract is approved at such
of western South Dakota.
Montana-Dakota Utilities Co.
will lease and operate the facilities.
Company proposes
to sell $6,000,000 3J/2% first
Cornucopia Gold Mines, Spokane, Wash.
record
Power
Thursday, July 14, 1949
Corp. to be held
i
3
Montana-Wyoming Gas Pipe Line Co.
July 1 this company, recently organized, will be pub¬
licly financed, to build a pipe line costing
$8,000,000,
to bring gas from the Worland
(Wyo.) Unit Area, being
developed by Pine Oil Co., into markets now being
served by Montana-Dakota Utilities Co. in eastern
Mon¬
tana, western North Dakota and the Black Hills region
,
of
Utilities, Inc.
Light Corp. Probable bidders: Merrill
Lynch, Pierce, Fenner & Beane and Kidder, Peabody &
Co. (jointly); Blyth &
Co., Inc.; Dillon, Read & Co. Inc.
Corp.
stockholders
CHRONICLE
at
Chicago Great Western Ry. (7/19)
Company will receive bids up to noon (CDT) July 19 at
its office, 309 West Jackson Boulevard, Chicago, for the
sale of $6,150,000 equipment trust certificates, due semi¬
annually Jan. 15, 1950-July 15, 1964. Probable bidders:
Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutzler;
Harris, Hall & Co. (Inc.); Harriman Ripley & Co. and
Lehman Brothers (jointly); The First Boston Corp.; Lee,
Higginson Corp.
Common
South
FINANCIAL
reported Electric Bond & Share Co. plans sale
competitive bidding of 803,230 shares of common stock.
(no par) which it will receive upon dissolution of Elec¬
shares.
common
to
Probable underwriters:
and The First Boston
Middle
&
which the asset and income ratios
are
calculated.
*
-
.
public's
uncertainty over the. nomenclature of this
new
American industry is typified
by the book's title, "Investment Com¬
panies." Although this designation is
technically correct, per the
SEC legislation, it is
confusing to the public at the
"Mutual Fund"
consumer
or
merely "Fund"
seems
to
level.
more
apt, and not prone
other functioning in the investment
field. It is hoped
that this will be taken into account in
the elaborate
advertising
campaign scheduled to be launched next Fall.
to
imply
some
COMMERCIAL
THE
Number 4820
Volume 170
when
In support of his
Taft stated;
great regret that I
that
I cannot vote in favor of ratifying
the Forth Atlantic Treaty because
I think it carries with it an obli¬
is with
"It
»
have
'
to the conclusion
come
gation to assist in arming at our
the Nations of Western
expense-
Senate
attitude, Sen- Charter.
Europe, because with that obli¬
gation I believe it will promote
war
in the world rather than
Resolution
an
;ion
No.
239, adopted by the Senate on
May 19, 1948, contained three
clauses proposing improvement in
the United Nations Charter: first,
a voluntary agreement to remove
the veto from many questions;
second, maximum efforts to ob¬
tain agreement for a United Na¬
to
our
use
ally
whether it is
(Continued from fir-st page)
ator
to
CHRONICLE
if the President
not necessary
s
:hooses
;Taft Says Atlantic Pact
"Will Promote War
FINANCIAL
&
is
or
armed forces
and
act
war
fail
the
;
if
Pact
I would vote for
reservation
a
were
adopted denying any legal or
moral obligation to provide arms.
'
"The purpose
"
of American for-?
eign policy, as I see it, is to main¬
tain the freedom of the people of
this-country and, insofar as con¬
sistent with that purpose, keep
tion
our
sweet
own
will."
the
Article 51 to create
a
reach market
based
,
1
more
aid
economic
on
is
however
that
the belief
a
world which is prosperous and
well off is less likely to engage in
war than one in which there are
of
improved international prganization which could be fol¬
an
lowed
self.
a
Largest
indicated
Summer's heat apparently is no
when bankers have a
<
"In the
economic
readily acceptable piece of busi¬
ness under way. That was proven
quite conclusively by the rousng demand which greeted this
week's
:
.
1
have considered
that the best method of preserving
1. the' peace and security of this
-country is the maintenance of
past,
we
force to
a
offering
of
25-year 2%% debentures
Oil Co. (N.J.).
Largest
industrial
offering
ever placed in registration with
Standard
the
Securities
the
signing
Commission,
prevent aggres¬
Exchange
and
this
huge
sion between those nations with¬
dertaking, offered by
out veto and with reliance
underwriting
on
million
$150
af new,
of
by the United Nations it¬
might have established
it and
that
will
The
deterrent
'
great inequalities in the
condition of the people.
of these
30-year bonds
bids
It
law between the nations
is
of
of
famous
The church
and the main ball
at McAlpin Hotel were
jam¬
med with guests from all over the
world,
coming from Swit¬
some
zerland.
The
were
band
leader thought they
actor and actress.
DIVIDEND NOTICES
Burroughs
on
which it is
least
eight
opened
next
at
he
the
group
un¬
national
numbering
a
194th CONSECUTIVE CASH
Florida
DIVIDEND
A dividend of twenty cents ($0.20) a
share has been declared upon the
stock
of
BURROUGHS ADDING
MACHINE COMPANY, payable Sept.
10, 1949, to shareholders of record at
the close of business
same
day
St.
Joseph
(Mo.) Light & Power Co* will
sell $4,750,000 of first
mortgage,
and signs now
Jersey Power & Light
scheduled for July
offering of $3,500,000 of 30year first mortgage bonds. The
proposed offering of 20,000 shares
of $100 par cumulative preferrcc
has
S. F. HALL,
Secretary
©
The New
Co.
19
August 5, 1949.
Detroit, Michigan
July 6, 1949,
30-year bonds,
point to at least nine bids for
this offering. ■ :
also
an
COLUMBIA
THE COLUMBIA
■VtTgM
stock has been deferred until the
Fall.
•
CAS SYSTEM, INC
■
Nice Business
some
175
underwriters
and
competent court
dealers proved a real "fence This was suggested by Mr. Hamil¬
Philadelphia Electric Co's of¬
buster."
ton Fish Armstrong in an article
fering of 972,624 shares of addiThis was the case in spite of tional common stock to its share in
Foreign Affairs in October,
of American armed forces suffi¬
1948. It is the general plan sug¬ reports that, one or two of the holders, and possibly to employ¬
cient to defend us against attack,
domestic and
Canadian ees got under way this week.
gested xii Senate Resolution 133, largest
wd
a
wise
diplomatic
policy
introduced by the distinguished insurance companies decided to
Bankers acting in a "stand- >
which does not antagonize other
forego their subscriptions at the
by" capacity have agreed to
nations. These still are the main junior Senator from Alabama add
ten other Senators oh Friday, with last moment when the offering
take over any unsubscribed
essentials to the maintenance of
which I have great sympathy.
price of 100 lk was announced. /
portion of the issue when
peace." ■■''• v;--At that level the indicated
"But the State Department did
"rights" expire on August 11 /
"But as the world shrinks in
yield was around 2.72% to the .J next.
not adopt any of these suggestions
size, as new weapons are develpurchaser. And from current
and has shown no intention of do¬
The company will use the pro¬
oped; as we inevitably become
reports there had been a dis¬
ing so or even followed the advice
ceeds to finance construction.
more involved
in the affairs of
of Senate Resolution 239. We have
position on the part of some
otber countries, it has become ap¬
to consider here the North At¬
potential buyers to anticipate a
parent that these weapons alone
lantic Treaty as it has been drafted
price of 100 which would have
Lohrman-Myers Wedding.;
will not assure peace. And so we
raised the yield basis slightly.
without the improvements Sena¬
Miss Margaret Helen Lohrmann
i
have committed ourselves to the
But
withdrawal
of
the
few
tors would like to see made, but
of Woodhaven and Schroon Lake
principle of an association of sov¬
which
twelve
nations
probably prospective buyers did not ma¬ N.
Y., (Miss Schroon Lake 1942)
ereign nations banded together to
would. not agree to
once
this terially affect the undertaking. was married July
4, 1949 at s
preserve peace by preventing and
Treaty is ratified. The Atlantic On the contrary, demand was
nuptial high mass, 11 a.m., at St
punishing aggression. In the Uni¬
heavy and widespread and the Thomas the
ted Nations Charter we accepted Treaty as drawn is certainly no
Apostle R. C. Church,
subscription books closed quickly Woodhaven L.
the principle that we would go to improvement over the United Na¬
I., to Andrew Breen
tions, nor can it by any stretch of with the issue reported command¬
war in association with other na¬
Myers of Elmhurst, L. I.
the imagination be regarded as^ a ing a small premium in the overtion's against a nation found by the
The bride wore an ivory satin
perfection or supplement to tljat the-counter market.
Security Council to be an aggresThis highly successful project gown with a flowing train of about
Charter.
Apart from the obliga¬
sor.
This was a tremendous de12
feet; a beaded pearl crown
tion to provide arms, the Treaty provided at least a good tempo¬
parture from our previous policy,
is permitted by the Charter, wfiich rary
antidote for the Summer finger tipped illusion veil; prayer
but
one
which I have
always
book with white orchids.
The
says:
'Nothing
in the present doldrums which have been gradu¬
urged and approved from the days
maid of honor wore a beautiful
Charter shall impair the inherent ally settling down over the mar¬
of the League of Nations.
I beright of individual or collective ket and brought a note of cheer pink gown; the brides-maids aqua
JUiVe that all nations must ulti(7
self-defense if ah^armed attack to the investment banking com¬ gowns; and the flower girl
\ naateiy agree to an international occurs
years of age and beautiful) wore
against a member of the munity.
} law defining the duties and oblia
lovely, most distinctive pink
United Nations' ttrrtil the Security
i gallons of such nations, particuKansas Gas & Electric
dress.
(She is the bride's sister.)
Council has taken the measures
larly with reference to restraint
There were seven priests at the
Very evidently there is equity
:
from f aggression and war.
I be¬ necessary to maintain /interna¬
lieve that there should be inter¬ tional peace and ^purity.'
The money around if the people altar. Rev. Father John Browne
national "courts to* determine Charter merely recognizes this in¬ handling an issue know where to who officiated is a boyhood friend
;
whether nations are abiding by herent right as necessary because Igo and lodk for it. This has been and school chum of the groom.
decision
lives
on
room
early next week.
Power & Light Co's $10,000,000 of new first mortgage,
Treaty
small United
times
turning their attention to
of relatively small utility
offerings which are scheduled to
Tuesday.
Atlantic
North
16
authors.
series
United Nations Charter.
"The
literature, etc., at
Fordham University. Lectured for
them on radio in 1948 and 1949,
are
proposed, a compact under Article
51, based on the defects of the
might have been an effort under
teaches English
With the big Standard Oil Co.
which
Resolution
in Europe. World War 2
in, foreign service.
He
veteran
issue out of the way bankers now
junctions of Senate Resolution 239
and
concentrated
only on that
of
studied
35
Ahead
Issues
Small
armaments; and,
third, a review of the Charter by
a general conference called under
clause
reveals
every one
making a treaty on the theory
;hat we expect to violate it in ac¬
of national
We are, of Nations within the larger group
course, interested in the welfare improving upon the United Na¬
Charter,
eliminating
i\s
of the rest of the world because tions
we
are
a
humane nation.
Our defects, and furnishing an example
huge
that virtually
of the 15 or so more
or less recent new bond Issues
is now ruling at or above the
original offering level.
kets
iot
with
Treasury issues, and
on
perusal of prevailing mar¬
a
tions armed force and the reduc¬
this country at peace.
t
yields
Congress could refuse to
-
Nations Charter.
found real solace in the sharp
downward
adjustment
in
declare war, but certainly we are
cordance
in hand.
were
But municipal dealers have
to
because I think that
Article 109 of the Charter. As far
'with the arms plan it is wholly
as I know, the State Department
contrary to the spirit of the obli¬
has entirely disregarded those in¬
gations we assumed in the United
peace,* and
were showing a tendency
to "back up" and sizeable inven¬
seems
could
particularly munic¬
ipals,
attacked.
But
not, the obliga- tories
President
the
.hat
issues,
new
to me
oinding upon the United States as
i nation, so that Congress would
oe obligated to declare war if that
were necessary.
It is pointed out
to
go
(191)
a
The Board of Directors has declared this
the following
day
quarterly dividend:
Common Stock
No. 59, WAt per share
payable
record
-
August 15, 1949, to holders of
close of business/July 20, 1949.
on
at
DALB Pasker
July 7,1949
Secretaryf
^
•
-
.
*
COMBUSTION ENGINEERING.
SUPERHEATER, INC.
•
*
■
A
:
Dividend No. 180
:
•'.»
'
.
.v'-
*
*
•...
quarterly dividend of fifty cents (50c)
share
1949
all
on
Company
the
per
outstanding stock
of the
declared payable July 30,
of record at the close of
1949.
been
has
stockholders
to
business
July
20,
OTTO W. STRAUSS, Treasurer.
'
COLUMBIAN
-
<
CARBON-COMPANY
One-Hundred and Eleventh
*
Consecutive
quarterly dividend of 50 cents per
share will be paid September 10,1949
to stockholders of record August 12,
1949, at 3 P.M.
*
'
,
■
the veto provison of the
proven
time and again in recent
months by the marked success of
any one
veto
principally because
of the large nations can
the
action
of
the
Security
Council, and because there is not
sufficient
justice
as
emphasis on law and
a guide to the action of
the Council.
But
we
have advised
nation
President that prompt action
should be taken to improve the
whether
consultation
Council,
court
attack has
"Some
main
as
a
an
or
not
there
is
joint action by the
finding by any
unjustified armed
occu&pgdL
doubt
vml
always
re¬
to whether the Congress
-wap** before
our
declare
forces actually take part,
inclined to think such action
armed
I am
or
or
that
must
the
Treasurer
by his presence, he is Rev. Father
a
number of
stock under¬
common
takings.
The
most
current
support
for
the theory is found in the case of
the sale of 550,000 shares of Kan¬
Gas
sas
stock
&
Electric
Co.
common
disposed
of to
bankers by the American Power
& Light Co., and the issuing com¬
recently
pany.
Pando, Dean, St. John's Uni¬
versity, where the bride had re¬
ceived a B.S. (pre-Med.) degree
a few years ago and was a dean's
list student. The couple received
a special Papal blessing.
The bride received her B.S. at
St. John's University; studied for
M.S.
at
Fordham, and
is now a
-■!/": junior at N. Y. Medical College
.
Bankers paid the sellers $25
IOWA SOUTHERN
UTILITIES COMPANY
Jose
N. Y.
'
It is defective
)
GEORGE L.BUBB
The sub-deacon honored the bride
may
Charter
result in complete/inaction oh
enforce that law and the decisions the part of the Security Council.
"What is the
nature of; that
of that court. I believe that in the
■.' ■ •/v,&~ ;
end, the public opinion of the Treaty? ■
"It
is
obviously a -defensive
world will come to support the
principle that pations like indi¬ military alliance betweeri^ceriain
viduals are bound by law, and will nations, the essence of which is
insist that any nation which vio- an obligation under Article 5 to
lates the law be promptly sub¬ go to war if necessary with any
nation which attacks any one rof
jected to the joint action of na¬
tions : guided by a determination the signers of the Treaty.
%c]h
an
attack may come from out¬
to enforce the laws of peace.
siders, or it may come from one
"It is quite true that the United
of the signers of the Treaty. The
Nations Charter as drafted does
obligation is completely binding
not as yet reach the ideals of in¬
for a period'of twenty years.
It
ternational ; peace
and
justice
imposes an obligation upon the
which I have described, but it
United
States to each member
goes a long way in that direction.
that law, and I believe that there
should be a joint armed force to
Quarterly Dividend
A
of
Delaware
Dividend Notice
The Board of Directors has de¬
clared
on
a
a share
Stock of the
dividend of 300
the Common
payable
Company
September
1, 1949 to stockholders of rec¬
ord August 15, 1949.
EDWARD L.SHUTTS,
C.^/;'//
President.
t
a
i
cceded with reoffering to the
The groom received his BS:MS
and is now studying for his doc¬
public
torate in
share for the stock and
at
$26,625
a
pro-
share.
Most recent reports indicated
that
f
the
issue
is between
80
English. His schools were
Peters, N. Y. C.; Fordham'
Columbia
University,
and
he
St.
and 90 per cent sold.
Clearing the Shelves
tirely bare at the moment, but
they, are considerably lighter than
was
the case a forthnight ago,
prior to the sudden shift by the
Federal
Reserve
and
the
DIVIDEND NOTICE
THE MINNEAPOLIS & ST.
Treas¬
in their monetary policy.
Along at that stage of the game
The Plainfield National Bank of Moosup
located
at
Moosup, In
is closing its
the State of Con¬
necticut,
affairs.
All credi¬
tors of the association are therefore hereby
notified to present claims for payment to
the undersigned at said bank.
BENJAMIN
Dated June 24,
1949
P. DAWSON,
Liquidating Agent
,
LOUIS
RAILWAY COMPANY
Liquidation Notice
Dealers' shelves may not be en¬
ury
July 13, 1949t
The Board of Directors of
this Company
1949, authorized the payment
of Twenty-five (25tf) Cents
per share on all shares of common stock
outstanding as of the
close of business
July 22, 1949, such dividend to be payable
August 1, 1949, to the holders of record of
shares of said stock at the close of business
on July 22, 1949.
on
June
of
a
25,
dividend
By Order of the Board of
Directors.
JOHN J. O'BRIEN, Secretary
36
THE
(192)
COMMERCIAL
FINANCIAL
&
CHRONICLE
:
Thursday, July 14, 1949
laws, has served notice that, aU
though he has been stopped by
BUSINESS BUZZ
the
House Democratic leadership
his pet project to set
up a
special Joint Committee to soften
up
the insurance companies
from
on
•
•
•
BeKnd-the-Scene Interpretations
from the Nation's
•
/Iff w\AJ.
Capital
f-r few
JL
against the day of Federal regula¬
tion, he, Manny, will at least get
B. BLOOPER
at this business in connection with
his antitrust probe,.
SECURITIES
(This column is intended to
and may or may not coincide with
the "Chronicle's" own views.)
of today
fee given another loan, the Congressional answer, at least as
would be an emphatic "don't give them another dime."
Congress has been watching in-^
tensely the news out of London. direct cash subsidies to farmers
Yet Congressmen have refrained a minimum wage of 75 cents per
Ralph De Pasquale
Opens Office in N. Y. C.
broadened
with
hour
coverage
pretty well from sounding off on
the subject. The restraint indicates and so on.
*iot inattention, but a great deal
The President also got aboard
of caution.
the
jumping to the
The boys are not
conclusion
White House
the
that
will back another loan
proposal. The Senators and Representatives are
refraining from
actually
'
•
expressing the thought for publication generally which many of
them seem to have in the back of
'
\
of two things:
one
Either
i
,
plan
Marshall
the
falling flat
for
extension
He
of
socialist
steps to buttress the
the
Amos
the
state
he
in favor of
plan
ning of
finance
to
a
England.
#host of
loan
that
assurance
proposed.
a
*
loan will
a
u-
-
•••••••
The proposed "broad study
investment
needs"
final
the
amount
requested
The
disillusionment
over
the
The
little
note
both
of
the
was
earlier
the
"Eco¬
and fall political trade,
summer
the "Economic
Expansion Act."
The President also gave only in¬
direct encouragement of the cur¬
drive
rent
get
of organized labor to
fourth round of wage in¬
a
creases.
of the
'
V,,'
will build up just a
opposition to the
There
*
were
President
trade agreements extension and
was
*
'■
~';Vv'
,
'
■'■-I
also signs that the
instilled with some
thinking about the part business
investment plays in maintaining
business activity, albeit he ap¬
tion proposed by
proached
the
subject about as
cans.
"
■.»,
ff
*
*
charily and clumsily as a long¬
time heathen walking down the
Apart from a cut in ECA, key
church aisle.
economy
advocates of Congress
confess
privately that they are
One proposal was to extendpretty pessimistic about getting
the carry forward of business
any blanket appropriation reduc¬
losses.
Another was to cut the
tion passed this year. Neverthe¬
transportation tax. Congress is
less, they say there still is some
obviously unlikely to attempt *
chance.
A strong effort will be
such a restricted tax program,
help
of
a
little toward the adoption
the
"peril
modifica¬
the Republi¬
point"
-
"
?
made
toward
the end of the ses¬
sion to get the 5 to 10%
as
directive
?
.
If it
will
passes
be
an
more
House
again
will be
The
a
proposed
higher
final
estate
»
;
proposal
maximum
against the
The
sales line,,
to ' extend
the
maturity of business
loans made by the Reconstruction
Finance Corp., is a rabbit which
pressure
leadership block of this
proposition.
submitting
to others,
costly. The President, as a
concession to his old
Senate there
the
brought to bear
the tax laws to these changes
and gift taxes.
awful
to open
without
the Senate.
pass
it would be difficult
up
brought up on the floor of the
Senate, despite the Administra¬
tion's opposition.
If it does get
considered, thi3 economy cut will
.
effort
did not
Senate economy rider
come
out of the RFC hat.
Absolutely, the President de- of its loans being for five or six
dared himself flatly for deficit fi- years with the borrowers customnancing during a period of declin¬ arily paying off in less time.
ing business activity. He renewed,
This economic report is nega¬
was
expected,
of
his
welfare state proposals. These in¬
cluded the familiar schemes to ex¬
pand the benefits and
cial
of
the
conservatives
Robert K.
McConnaughey, who
as Commissioner
of the
Securities and Exchange
Commission, has become a mem¬
ber
of
the
firm
of
Greenman*
Shea, Sandomire & Zimet, which
will continue the~ general practice
of law in New York City urtder
that
name,1 and in- .Washington,
D; C.} under the name of Shea,
Greenman, Gardner & McCon¬
naughey.
v • r
/•,
0
'WtM
"A fine statistical report this is, Pemberton—'Blond, five feet
five, 120 pounds and
he
but
to it.
hardly
There
that
gave
lip service
always
was
this summer the
a worry
President
a
very
Some time this fall
study-will
\
party'!"1
warm
get
a
under
monetary
by
way
a
Economic Committee.
line.
outstanding believer of the gov¬
ernment way of solving things,
Senator
Paul Douglas,
Illinois
That
is not out of
worry
the way.
*
<
*
15!
Earl Goldbofd With
Mercantile Commerce
subcommittee of the Senate Joint
might get jittery and go over¬
board for the entire left-wing
this
of
man
The Chair¬
subcommittee
is
an
ST. LOUIS, MO.—Earl
WYGdld-
returning to St. Louis and
becoming
associated
with, the
Mercantile - Commerce Bank and
bold is
Trust
Company, Locust-Eighth-St.
Charles, in the sales department.
Another
member
is Mr. Goldbold recently resigned
During the war the Advertising Democrat.
Senator Ralph Flanders, a Ver¬ from partnership in Rotan, Mosle
Council was created.
This con¬
sisted of advertising agencies and mont Republican, and often iden¬ and Moreland of Houston. He was
others, who devoted free the ef¬ tified with the left wing of his in the investment business in*St.
forts of advertising men and the party.
Another member is Rep. Louis for many years with the ex¬
dollars of big advertisers, to plug Wright Patman of Texas, a pro¬
ception of the last few which he
for everything needed to win the fessional fighter of business mo¬
has spent in Texas.
war,
whether it be selling war nopolies
and one who
often
.,
bonds
or
White
be
saving fats and oils. The thinks it's
House
is
"interested"
now
in
reported
a
to
proposition
said to have been discussed within
the Council, that there be an ad¬
vertising campaign pitched along
the theme that there ain't going
to be a depression. The campaign
get under way, how¬
ever, because of the technical dif¬
may
never
ficulties obvious in trying to fig¬
ure how to sell that one.
If
business
any
terested
about
in
the
house
in¬
is
spreading the word
Truman
Administra¬
tion's medical program and what
it would cost and wouldn't do,
the
Chamber
of
Commerce
of
the United States, 1615 H Street,
N. W., Washington 6, D. C., has
out
got
"You
The
a
and
Basic
Socialized
Medicine,
a
Call
to
Action." The Chamber will mail
out
copies
on
bonds.
With Fabian &. Co.
.
(.Special to The Financial Chronicle)
The only member of the sub¬
committee
the
who
might
be
or
of
with the
system as it grew up with the
country is Rep. Jesse P. Wolcott
of Michigan, ranking Republi¬
monetary
having
can
any
system
sympathy
member of the House Bank¬
ing Committee. Ordinarily Wol¬
cott disdains the JEC, which has
become
where
more
and more
witnesses
can
a
hand
case,
ever
may
that at least
so
opinion
Wolcott
can
a
BEVERLY
Charles
added
off
take
In
a
O.
to
CALIF.
HILLS,
—
Franzen, Jr. has been
the
staff
of
Fabian
in
application.
Trading Markets:
Ralston Steel Car
*
Oregon Portland Cement
Riverside Cement A & B
minority
be written to what¬
the subcommittee may hash
Rep. Emanuel Celler, New York
Spokane Portland Cement
♦Latest
Figures Available
LERNER & CO.
Investment
Democrat,
House
who
will
Judiciary
head
the
subcommittee
10 Post Office
Securities
Square, Boston 9, Mass.
Telephone HUbbard 2-1990
Teletype BS 69
study of revision of the antitrust
HAnover 2-0050
Teletype—NY 1-971
propose
•
nomic
the broad socialist
NEW YORK 5
FOREIGN SECURITIES
Executive & Underwriting Offices
70
All Issues
of
last
P.AM. MARKS 4
STREET
O. INC.
FOREIGN SECURITIES
50 Broad Street
SPECIALISTS
Trading Department
120
New York 4. N. Y,
eco-
Spring,
WALL
Tel. WHitehall 4-4540
AFFILIATE: CARL MARKS & CO. Inc. CHICAGO
program
Hill, Thompson & Co., Inc.
Firm Trading Markets
Congress.
only did not
&
Co.. 9500 Santa Monica Boulevard,
forum
sound
in favor of the "Fair Deal."
this
'
sus¬
of understanding
either
pected
entitled,
Facts
and
wrong for banks to col¬
lect much interest on government
up.
pamphlet
.
The President not
so-
security, the Brannan plan for
McConnaughey
recently resigned
tively important, in the view of
course,
scope
past
Two years ago, in
revising RFC's
on one of the last of the appro¬
statutes, the Congress placed a
priation bills.
maximum
maturity limit of 10
*
*
*
years on
business loans,; on the
Taken as a whole, the Presi¬
theory that anything longer thar
dent's economic message was that certainly was not a loan but
widely regarded as conservative, | a sharing of equity risks. Actualnot in any absolute, but only in a
ly RFC does not use the maximum
relative sense.
maturity, the greatest proportion
as
the
v
de¬
its redesigned model for the
of
hint that Britain might
more preclusive bar¬
more
that
be
nomic Stability Act of 1949" and
enter into
dollar area,
is renewed." This
ness
proposed.
ter swaps at the expense
indicated
"should
the upward movement of busi¬
British crisis, particular¬
the
study
a
In
Joins Law Firm
Left.
which serve as lim¬
iting factors to expansion when
beginning of this week by the
-Senate Appropriations Committee
was
in the works, more or less,
before the British crisis, and the
final appropriation probably will
not be reduced so much as the
ly
Robt.
con¬
extreme
the
industries
way
working out in Britain.
The 10% cut recommended at the
are
Senate group
to
signed especially to discover in¬
adequacies in capacity in basic
"
things
of the few
one
President
such
of
development
and
was
cessions
achieved
the
j fey President Truman might be$100
} tnillion or so greater than it would
I tiave been but for the beginning
of
the abandonment of
the welfare state program.
On the other hand, the
.
be
[ '
appropriation will be
but
under
tut
-<
■
The ECA
passed,
have
show—but there is no
a
Co.
Investors of New York.
come
a
Federal production
planning agency, government-inindustry, and government loans,
and
government insurance and
guarantees of loans; r
\.~~i
proposed
won't
^
&
manager of the trading de¬
man
j." plans for
only clear
/ For the moment the
indication is that a
Pasquale was
trading depart¬
Gillespie & Co. and
partment for Clark, Kohl & Eyand was a principal of In¬
plan¬
shelf of public works.
and
Treat
was
De
the
ment of E. F.
Point IV for aid to underdevel¬
oped countries, and
Mr.
formerly in
Agreements
carrying out of
the form of the "Economic Expan¬
sion Act of
1949" bill with its
in
crowd
government
additional
'
business.
the
Trade
Reciprocal
Act,
veterans.
for
the
Presi¬
dent definitely turned down the
scheme of the CIO-left wingers in
its face, or it will
on
more
any
I
for
finances
j
is
fall flat if this government takes
-
f
club
52-20
their minds, that what is happenNo one expected the President
trig to England's economy at pres¬
to turn Right and call for sound
ent is a pretty good indication of
cither
|
Ralph De Pasquale has opened
at 25 Broad Street, N. Y.
City, to engage in the securities
offices
bandwagon to continue the
asked
re¬
flect the "behind the scene" inter¬
pretation from the nation's Capital
WASHINGTON, D. C.—Should the State Department's prescrip¬
tion for the latest British crisis just happen to be that England should
BROADWAY
Tel. REctor
2-2020
ESTABLISHED 1S39
In 2 Sections-Section 2
Reg. U. S. Pat. Office
Convention Number
New
Price 30 Cents a Copy
York, N. Y., Thursday, July 14, 1949
»
THE COMMERCIAL and FINANCIAL CHRONICLE
I mm
Thursday, July 14, 1949
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THE
The C.N.R. has been
land has
St.
Rupert
on
network,
a
serving the nine provinces of Canada, and
most
our
men
Ever since its
National has been
not
AIRLINES
that Newfound¬
ten
provinces from
easterly point in Canada, to Vancouver, Victoria and Prince
population. It adds
and
women
more
than 700 miles of rail lines,
a
a
telegraph
•
into the C.N.R. family of
more
than 100,000.
beginnings with the first railway in Canada in 1836, the Canadian
an
essential factor in the
development of
our
nation. The Canadian
only grows with Canada but helps Canada to grow. Partners in a
they go forward together into
•
now
all
across
CANADA
fleet of steamships and an important dockyard to the Canadian National System.
brings 4,000
National
WITH
the Pacific. Union with Newfoundland makes Canada the greater and adds
vigorous people to
RAILWAYS
GROWS
joined the union, the services of the Company extend
John's, Newfoundland,
It also
NATIONAL
CANADIAN
J£&At4t/A,'A/fc vfvv*v;
STEAMSHIPS
•
a greater
HOTELS
future.
•
EXPRESS
•
TELEGRAPHS
great past, now
Convention Number
THE
COMMERCIAL and FINANCIAL
1
i
'
i
;
CHRONICLE
3
*
OFFICERS 1949 -1950
HONORARY
John
B.
E.
Ames
A.
Ltd.,
Ridley
HONORARY
PRESIDENT
PRESIDENT
VICE-PRESIDENT
Arthur S. Torrey
Co,
A
Toronto
C. Pitfield A Co.
J.
A.
Gairdner
Gairdner & Co., Ltd.
Toronto
VICE-PRESIDENT
H. Norman
St anbury
Stanbury
& Co., Ltd.
Ltd., Montreal
VICE-PRESIDENT
Peter
Kilburn
Greenshields
Co.
&
Inc., Montreal
VICE-PRESIDENT
VICE-PRESIDENT
C. L. Gundy
Wood, Gundy A Co.
Ltd., Toronto
D. N.
Knight
Wood, Gundy A Co.
Ltd., Winnipeg
VICE-PRESIDENT
K,
D
P. Duggan
M.
Duggan
Investments
Ltd,
Edmonton
EXECUTIVE
ASSISTANT
VICE-PRESIDENT
THE
TO
PRESIDENT
SECRETARYTREASURER
DIRECTOR
OF
EDUCATION
i
W.
J.
Borrie
Pemberton
Vancouver
A
Son
Limited
Vancouver
Joseph
W.
G.
Clark
J.
A.
Kingsmill
Investment Dealers'
Investment Dealers'
Assn., Toronto
Assn., Toronto
H. L. Gassard
Investment Dealers'
Assn., Montreal
Policy and Economic Trends
Canadian Budgetary
22 it
On March
was
as
Budget
I
o
chapter in
in
and
m
o
In
other respects
it marked the
opening of a
chapter.
Sees strong
new
it
the
Govern¬
dian
ment
First,
that,
tax
C. Abbott
Hon. D.
barring catas¬
the
trophe,
#
had come
postwar price inflation
end. There might
still be a
and
downs
in prices but, speaking
generally, the powerful inflation¬
ary forces generated by war had
largely spent themselves. Recent
events appear to have justified
to an
shortages and some ups
few
view.
our
Taxes Reduced
,
1
Substantial tax reductions were
Parlia¬
ment and, in accordance with our
practice, put into effect imme¬
diately. The details are readily
therefore recommended to
than
more
shall not give
brief description of
I
and
available
a
income
cut in
forms:
The
changes.
taxes
took
main
the
two
first, an increase in the basic ex¬
emptions and in the income de¬
ductions for children; and, second,
a
reduction in the rates of tax.
The
basic
deduction for single
was raised from $750 to
$1,000, and for married persons
from $1,500 to $2,000. Where the
taxpayer is in receipt of family
allowance
payments
(ranging
from $6 to $9 per month), the
deduction for $ child was raised
from
$100 to $150. For
other
dependents the exemption was
raised from $300 to $400. These
changes meant a return to prewar
levels of exemptions.
persons
reduction in fates,
the structure of the tax schedule
was thoroughly revised and*simplified. As a result, three out of
every four of those liable to pay
income tax will be subject to a
Apart from
rate
of
15%
income
—
of their net taxable
reduced
of
and;%p Jess.
more
no
sulting from the
benefit
the
reductions^ re¬
Canada
against
their personal income tax equal
to 10% of the dividends they re¬
ceive
from common shares of
Canadian taxpaying corporations.
Thus, double taxation on the divi¬
dends received by an individual
shareholder of a small corporation
earning up to $10,000 is, to all
intents and purposes,
removed.
lower
resident in
a
credit
shareholders
allowed
were
of
Shareholders
corpora¬
though
significant,
receive
tions
larger
less, relief.
undertaken,
These reforms were
deterioration
in the profit position of Canadian
corporations, but because in the
government's view, the economic
development of Canada depends
upon the willingness of our people
not
of
because
any
risk their money
to
in construc¬
tive enterprises.
Reform in Excise Taxation
1949
The
job
major
field
the
in
removal
taxes.
Budget also did a
of simplification and
excise
of
Special wartime taxes on
as transportation, tele¬
soft drinks and candy were
grams,
abolished. These
which
taxes
did
we
"nuisance"
were
not
wish to
forward into our permanent
addition, a num¬
carry
tax structure. In
ber
retail
of
taxes
trans¬
were
formed into taxes at the .manufac¬
All
were
know
This
of
more
is
reflected
par¬
his
additional
earn¬
ings has been raised to the $25,000
is
bined
estimated
effect
emptions
be
to
of
and
bring
that
the
the
com¬
be
rates
one-third
ex¬
will
less
from personal income tax
than the 1948 rates.
r
revenue
something
about
recent
developments in this
field.
Yet,
probably the
most
significant feature of the recent
Budget
was
that,
substantial
a
lief, I
ance
was
even
Structure
were
the
Budget was intro¬
Canadian corporations
duced,
required to
Federal
porate
tax
of
profits.
pay
30%
As
in
flat rate
a
on
the
all
cor¬
United
States, dividends, when distribu¬
were taxed again as part of
income.
For
several
personal
years it
has been the declared
ted,
aim of the Canadian Government
to introduce
a
measure
of reform
into this system of corporate tax.
During war and the inflationary
period following the war, little
could be done. In 1949, however,
when
substantial tax relief could
be given
after giving
of
measure
tax
able to predict
between
revenue
a
re¬
bal¬
and expen¬
diture—indeed if things continue
they are, a small surplus. In
other words, the 1949 Budget was
prudent
popular
:
Budget,
without fear of feeding
inflation, the opportunity
arose
of
as
well
as
a
cumulated to
ensure
unsatisfied
this
of
themselves,
the
a
in
the
of
rest
carry-over
into
demand
the postwar period. Some of
demand was for goeds usually
possible partly
because in recent years we have
been following a deliberate policy
was
During the past
have been able to remove or relax
mand
into
was
sources
the
and
therefore
channeled
of supply
in Canada
United States. Canadians
almost
have
more
always
imported
from the United States than
ices,
on
pent-up
demand for American
products reached record propor¬
tions.
Imports from the U,
soared from a level of about $500
million in 1939 to $1,405 million
in 1946 and almost $2,000
in 1947.
million
and
the rest of the world, and Europe
import
unless
or
surplus
the
from
United
Canada,
States
ac¬
cepts far more imports from Can¬
than
ada
she
Canadians
much
from
the past,
purchase
as
States
as
they
has
in
cannot
the
would like to.
Multilateral
The
a solution
problem must of
necessity involve a reestablishment as far as possible of the sys¬
this
to
basic
tem of multilateral world
and
a
trading,
breakdown of artificial bar¬
has
therefore
goods.
taken
an
energetic part in the discussions
leading up to the formation of the
free convertibility of currencies,
International Trade Organization.
Canada had sold more to countries
We participated actively in the
America
than
she
States.
war
had
changed all this. Currencies
were
The
dollars
built
up
tiations
now
taking
place
at
Annecy, France, for the extension
of the Geneva Agreement.
As part of the effort to over¬
the
United
States
have
been
of
war.
particular importance to us in
Obviously this could not go on helping to expand our earnings of
forever..
Our exchange reserves American dollars.
from
about
$1,500 million at
the
United States.
A third
watched
discovery is also being
with
keen
interest
in
Canada, that is, the discovery of
than
more
ilmenite
bec.
200
million
at Allard
Plans
been
have
of
tons
Lake in
Que¬
for
made
the
building of a railway and a
processing plant to exploit this
deposit in the near future. So far,
titanium, which is derived from
the ore, has been used chiefly as
a
pigment. Recent experiments,
however, have resulted in the
production of metallic titanium, a
new metal which may have
many
important uses. When the costs of
production
have
may
been
reduced
production
be begun
the
of
on
a
com¬
These
important
which
sources
natural
re¬
just on the
development
should
improve
our
exchange
are
of
verge
greatly
position
vis-a-vis
the
United
States, both by reducing our im¬
ports and by increasing our ex¬
ports. Already it is being pre¬
dicted
short
that
within
period
relatively
a
of time
the
output
of oil from Alberta will be suffi¬
cient to satisfy the needs of the
whole of Canada, although it may
be economically more efficient to
Agreement on Tariffs and
continue
a
two-way
trade
in
Trade, and we are continuing to
lend our assistance in the nego¬ petroleum products between Can¬
during the
the end of 1945 to $500 million by
con¬
open
Geneva
longer freely convertible. As come the adverse trade balance
long as she was able, Canada sup¬ with the United
States, the Cana¬
plied credit to overseas countries dian Government places a
great
to bridge the gap on a level at
deal of importance on tariff con¬
least as generous as that pro¬
cessions granted by the United
vided by the United States. But
States in return for reductions in
goods sold on credit produced no the Canadian tariff. The reduc¬
earnings with which to buy the tion in the American tariff on
American goods Canadians were
beef and beef cattle, and the in¬
demanding. We therefore had to crease in the size of the quota of
pay for them with reserves of gold Canadian cattle allowed to enter
American
low-cost
are
trade talks which resulted in the
no
and
favor
of
tons
deposits
mercial scale.
Canadian Government has
Before the war, in the days of
North
million
The
large and of good grade and
metal
Trading Favored
recognized clearly that
Canada
had bought from them, and had
used the foreign currencies re¬
300
sufficiently,
riers to the movement of
Exchange Situation
of
assured.
ditions
imports.
enable them to
they exported to that country, but
after the war this diverted an J
outside
is
pit
Any lasting improvement in our mining during six months of the
are
several
large
exchange position, however, de¬ year. There
sources
of water power within
pends on more fundamental fac¬
convenient reach of the ore zone.
tors, involving conditions of world
Plans are
under
way
for the
trade generally.
As long as the
rest of the world is unable, for building of a 350-mile railway to
the St. Lawrence, from where the
one
reason
or
another, to earn
ore can be shipped to the steelenough dollars through commod¬
ity exports, the providing of serv¬ producing areas of Canada and
many
in
particular, can be increased
this
sufficiently for Europe to pay for
im¬ its
ported from Europe, which were
not available. This unsatisfied de¬
fell
one.
This result
of debt reduction.
Reform of Corporate Tax
Before
interested to
Canadian
a
higher
reduced
in
will
as
taxable income level.
It
of
the
recently
deposits of iron ore
along the Q u e b e c-L a b r a d o r
boundary has not yet begun, but
experts
are
satisfied
that
a
Exploitation
minimum
controls
to
discovered
imports of capital, to
buy more freely
in North America, the Canadian
world,
unable to purchase a
exchange position vis-a-vis the
great many things which they had
United States will depend upon
come
to regard as essential to
the level to which we can expand
their
standard
of living.
Both
our
own
exports to the United
voluntary savings and savings en¬
States.
Put in its boldest terms,
forced by the
government ac¬
unless United States imports from
found
with
common
United
also
incomes.
most of the war period,
Canadians
been reduced to 10%.
Chronicle"
ticularly in the fact that the point
at which the taxpayer is required
to surrender to the Treasury 50%
fvDuring
sulting from this export surplus
to purchase U. S. dollars to pay
for her import surplus from the
level.
of the "Commercial and Financial
providing additional incentives to
those
earning somewhat higher
troubles
special excise
higher than 10%
at the manufacturers' level have
turers'
taxes which
middle
and
groups, ,the government
realized the importance of
Not that we are free of
such items
I
give
prominence
to
tax
changes because I believe readers
to
accrue
time to come.
some
This reduc¬ and anxieties. The crippling ef¬
tion was specifically designed to fects of the war on world trade
help
the
small family-type of could not help but have some
business. On profits in excess of effect on Canada, depending as
she does to sueh an extent on the
$10,000 the rate was raised to 33%.
At the same time individual export of her surplus products.
the
exemptions
new
rates
for
$10,000 of cor¬
first
the
on
will
levels in Canada
at high
sufficient
ore
that incomes and employment
remain
reduced the rate of
we
income
or
as
economy.
porate profits to 10%.
a
While most of the
and
of
making a start on the reform
the corporate tax structure.-
Cana¬
fields should soon
new
supply the re¬
quirements of the Prairie West.
are
under
way
for the
building of pipe lines to important
centers throughout the west.
was
judgment
the
of
Canadian
and output
Plans
and
history.
For
be
in Alberta
both
made
from these
aiding development
increasing risk capital. Describes excise tax reforms, and contends,
despite tax reductions, nation's budget will be balanced. Defends Canada's
exchange restrictions and calls for increased U. S. imports to remedy situation.
dividends
elimination of double taxation of
tial
financial
been
in Saskatchewan,
and
trend. Estimates one-third loss in revenue from personal income taxes
1949, and upholds Canada's reduction of corporate taxation and par¬
eco-
i c
n
have
changed
a
Canadian
oil, and already production figures
have doubled. Futher discoveries
jgv:;g"
■
Dominion, of Canada
Holding postwar price inflation has now ended, chief financial officer of Cana¬
dian Government outlines tax reductions put into effect to conform with this
marked the
end
hon. douglas abbott
Minister of Finance,
Minister of Finance for
Canada
to
present the annual
Budget. In many respects this
lege
^by
^
privi¬
my
Thursday, July 14, 1949
CHRONICLE
COMMERCIAL and FINANCIAL
THE
4
The
Canadian Government and
businessmen
generally
ada
and
this
forecast
eliminate
an
United
is
States.
realized,
it
If
will
drain
enormous
on
Canada's reserves of United States
dollars. If the Labrador field
pro¬
duces
10
million
tons
of
ore
a
year, and most of it is sold in the
United States, we will have found
a very profitable
new source of
American dollars in the export of
iron. Similarly, imports of titan¬
ium may be reduced to
negligible
proportions as a result of the
titanium discovery. These three
alone of savings and earn¬
ings of American dollars will go
sources
far to
ance
overcome
of
trade
our
with
adverse bal¬
the
United
States, which by 1948 was already
reduced to $300 million.
Canadian
November, 1947, and to a low of attach great importance also to
$461 million in December, 1947. attempts to relax customs formal¬
and
Quick action was necessary, and ities
practices
which
are
the
I have dwelt at some
Canada's
of
„
trade
length
position
on
because
the importance it holds in the
economic
life
of
in
our
nation.
But
November, 1947, the Canadian often more effective than tariffs this report would not be
complete
imposed rather se¬ themselves in hindering the inter¬ without
some
mention
of
the
national flow of goods. The Gen¬
vere restrictions
on the importa¬
domestic
economic outlook. In¬
tion of a number of
eva
Agreement dealt with this
commodities
ernment
has
been
ternally, demand remains high.
reduced
by
from all countries. No one regret¬ problem, and we earnestly hope After
the war there was a tre¬
$1,625,000,000, roughly 12% from
ted these restrictions more than that'those countries which signed
the level of March 31, 1946. Last
mendous upsurge in capital in¬
we
Canadians, who have become the Agreement will make a seri¬
year
our
vestment, surpassing in relative
surplus of just, under
ous
effort
to
so accustomed to American prod¬
comply with its terms even the
$600,000,000 was in excess of total
huge investment
ucts and who, as a matter of prin¬ terms. Canada itself amended its
boom in the Uninted States. The
expenditure of the Federal gov¬
ciple, do not like quantitative re¬ own Customs Act for this purpose
impetus given to the industriali¬
ernment in a typical prewar yaar. strictions
on
trade.
Fortunately in June, 1948.
zation of Cananda as a result of
Recent developments have given
While it did not seem desirable these
restrictions, coupled with
war demands had
provided a sup¬
us hope
our drive for more exports to the
that our dollar shortage
to maintain taxes at a level cal¬
ply of trained workers and of
United States and large off-shore will not be a permanent problem.
technical knowledge, and a do¬
culated to produce another sub¬
purchases by European countries I refer in particular to the dis¬ mestic
market ready
to
accept
stantial
surplus
in
1949-50, out of ECA funds, resulted in a covery of large oil reserves in Canadian
products.
Continuing
Western Canada and the extensive
neither did there seem to be
any marked improvement in our ex¬
shortages
as
a
result
of
the
iron and titaniferous ore deposits
reason to budget for a deficit. The
destruction
of plant
change reserves which reached a in Labrador and
in Europe
three fiscal years, i.e., during the
three years ending March 31, 1949,
the net debt of the Federal gov¬
view
no
we
reason
then
to
had
alter
—
it
and
now
I
see
—
is
Government
level of $1,067 million by
of
March, 1949.
the end
Consquently, we
In
Alberta,
Quebec.
extensive drillings
have uncovered large deposits
of
and
the
extraordinary
(Continued
on page
back-log
27)
-
THE
Convention Number
COMMERCIAL and FINANCIAL
CHRONICLE
5
In Attendance at I.D.A.C. Convention
AUSTEN, J. F. Wi':-'
'
KNIGHT, D. N.
ERTL, E. C.
I
"The Financial
Nesbitt, Thomson & Co., Ltd.
Montreal
Times," Toronto
EVANS, F. O.
McLeod, Young,
Ltd., Montreal
AYLSWORTH, A. R.
Cochran.
Murray & Co.
Toronto
,
BACKIIUS, H.
,
<
S.
Weir
&
&
Co.,
Eastern
Burns Bros. & Denton, Ltd.
Toronto
Brawley,
Ltd.
A
"The
BELL, H. B.
Di¬
Dealer's
Co., Ltd.
GALLAGHER, C. A.
Toronto
&
b.
R.
of
A.
Cochran,
Vancouver
"Oil in Canada,"
Wood, Gundy & Co., Ltd.
de PENCIER,
JOSEPH
Collier, Norris & Quinlan, Ltd.
Toronto
de PITRAY, L.
Co., Ltd., Toronto
Paris
POPE, E. R.
Milner, Ross & Co., Toronto
MURPHY, HAL E.
"Commercial & Financial
Daly Co., Ltd., Toronto
Calgary
Toronto
Matthews & Co., Toronto
&
Co., Ltd.
OLIVER, A. E.
I.
Dominion Securities Corp., Ltd.
Ottawa
Harrison
&
'
NICKLE, CARL O.
MITCHELL, N. A.
Canada, Ottawa
"
Murray
Toronto
MATTHEWS, PAUL W.
Son
McKIBBIN, R. B.
Montreal
Brawley, Cathers & Co.
h.
McLENNAN, A. W.
Mills, Spence & Co., Ltd.
J. A. M.
Co., Ltd., Toronto
MATHESON, A.
Nanton,
V,
NEWMAN, M. F.7
Mills, Spence & Co., Ltd.
Vancouver
Bank
&
Co., Ltd.
,
Nesbitt, Thomson & Co., Ltd.
Toronto
McCULLOCH, R. G.
Osier, Hammond &
Ltd., Winnipeg
Ltd.,
Investment
gest," New York
W. C. Harris &
Co.,
&
.Montreal
'
MASSEY, A. B.
Cathers &
Pemberton
•
FROST, JACK
Montreal
Harrison
Mcintosh,
City Co., Ltd.
Vancouver
Corp.,
MALLON, f. P.
McALPINE, W. D.
J FRASER, G. LYALL
Western
BEAUBIEN, A. S. |
L. G. Beaubien & Co., Ltd.
Securities,
Ltd., Toronto
Co., Ltd.
R.
Ames
NESBITT, A. D.
Dominion
Toronto
FARNSWORTH, H. R.
Royal Securities Corp.,
Calgary
Toronto
Securities
E.
Winnipeg
MAGEE, E. D. B.
Co., Toronto
Saint John
Edmonton
BEATTY, D. S.
&
A.
Securities, Ltd.
Toronto
MacMURRAY, J. A.
Securities, Ltd.,
FALKENBERG, CARL,
Carlile & McCarthy, Ltd.,
Midland Securities Ltd.
Mackellar
..'-v.
'
LACE, F. D.
Matthews
.
Montreal
Co.,
BARTLETT, H. D.
BE LSI! AW,
;
EVANS, W. J. S.
:
Guildhall
McLeod, Young,
Ltd., Toronto
Weir
MURRAY, J.
MACKELLAR, S. R.
Wood, Gundy & Co., Ltd.
Winnipeg
7-"
Chronicle," New York
(Continued
10)
on page
GASSARD, H. L.
Toronto
The Investment Dealers' Assoc.
BEVES, GEORGE E.
Calvin
of Canada, Montreal
Bullock, Ltd., Montreal
GEE, HARTLAND W.
BLACKMORE, O. RALPH
"Globe &
Canadian
Mail," Toronto
BLAIR, K. S.
Vancouver
la
de
GLASGOW, EDWARD
Societe
Generale
Peter D.
Belgique, Brussels
Son
Vancouver,
BRENNAN, F. J.
E.
Curry & Co., Ltd.
Melady, Sellers & Co., Ltd.
7"Jr., Winnipeg
BROOKS, L.
GRAY, R. A.
Gardiner, Wardrop,
Ltd., Toronto
McBride,
James Richardson
,
BULGIN, J. D.
Dominion Securities Corp., Ltd.
& Sons,
Winnipeg
GUITE, J. P.
Credit Interprovincial Limitee
Winnipeg
Montreal
CHALMERS, L. P,
W. C. Pitfield &
GUNN, E. H.
Co., Ltd.
Midland Securities Ltd.,
Toronto
Toronto
CLARK, J. W. G.
GUNN, N. H.
The Investment Dealers' Assoc.
Bell, Gouinlock & Co., Ltd.
Canada, Toronto
Toronto
CLARK, ROBERT E.
HANK, K.
Canadian National Railways,
Bullock, Ltd.
York
7:;
COCHRANE, A. C.
Bankers Bond
Montreal
HANSON, T. R.
Corp., Ltd.
Goulding, Rose & Co., Ltd.
Toronto
Toronto
COLVEY, D.
Canadian
The Canadian
HEATH, S. B.
Dow-Jones,
Toronto
COMBE, C. V.
HEYWOOD,
The Winnipeg "Tribune"
Winnipeg
&
Gardner,
Anderson &
These branches reach into
Co., Toronto
HUGHES, J. R.
COX, MURRAY
&
Co., Inc.
Montreal
every
Canadian agricultural
community; through the great forest areas; into all the rich min¬
HUNT, A. D.
COYNE, B. L.
W. C. Pitfield &
Co., Toronto
COYNE, J. E.
Co., Ltd.
Montreal
ing sections, including the new oil fields of Western Canada; as
HUNTER, H. W.
Canada, Ottawa
Fairclough & Co., Ltd., Toronto
CURRY, PETER D.
Peter D.
practically
Royal Securities Corp., Ltd.
Toronto
F. H. Deacon &
across
Saskatoon
HOWARD, A. L.
Oldfield, Kirby
Ltd., Winnipeg
Greenshields
the Dominion.
through its 550 branches
GEORGE
James Richardson & Sons,
COPLAND, R. A.
of
Bank of Commerce offers Canada-wide service
Walwyn, Fisher & Co., Ltd.
Montreal
Bank
■"
GOWER, WM. E.
J. Brennan & Co., Ltd.
Saint John
Calvin
7 '■■■■■
"
F. B. Ashplant & Co.
New York
Ltd., Vancouver
New
'
■■■
GOODEVE, C. W.
Pemberton &
of
':'T:W
'
Winnipeg
BORRIE, W. J.
F.
Canadian Bank Connections
Montreal
BONVOISIN, PIERRE
de
Ltd.
GENGRAS, GERARD
Rene T. Leclerc Incorporee
James Richardson & Sons
Bank
Alliance Corp.,
Montreal
Curry & Co., Ltd.
Winnipeg
well
JENNINGS, JOHN E.
the
as
major industrial centers. Enquiries cordially invited.
Jennings, Petrie & Co., Ltd.
London
DEAN, R. H.
JENNISON, G. L.
Nesbitt, Thomson & Co., Ltd.
Montreal
Wills, Bickle & Co., Toronto
JOLLY, C. E.
DEWAR, H. H.
Dominion Securities
Investment Bankers' Assoc. of
America, New York
JOYCE, JAMES H.
DINGLE, D. B.
"The Financial
Wood, Gundy & Co., Ltd.
Post,"
Toronto
Toronto
KEATOR, A. S.
DUFFIELD, A. R.
Dominion Securities Corp., Ltd.
Wood, Gundy & Co., Ltd.
/
Montreal
The Canadian Bank of Commerce
Montreal
KILBURN, PETER
DUGGAN, K. P.
D. M.
Corp., Ltd.
Toronto
Duggan Investments, Ltd.
Greenshields & Co., Inc.
Montreal
Head Office: Toronto
'
Edmonton
.
r- *'■>.
/.;•
.
1
'
'
:
;•
v
.
•
; '
*.
•
DUNCAN, J. L.
Wood,
Gundy &
••
.•
•
A. E. Ames &
Co.,
Ltd.
Vancouver
ELY, E. II.
Wood, Gundy & Co., Ltd.
Toronto
EMBURY, F. G.
Digitized A. E. Ames & Co., Ltd., Toronto
for FRASER
Toronto
KINGSMILL,
Co., Ltd.
"
.
•
_
KIMBER, S. B.
■
.
.
.
•
,
550
4,
Branches
/I
•
.
'
-
J. A.
New York
Seattle
Portland, Ore.
San Francisco
The Investment Dealers' Assoc.
of
Canada, Toronto
KINNEAR, E. F. C.
W. C. Pitfield &
Toronto
•
Across Canada and in
Co., Ltd.
London, Eng.
and
The West Indies
Los Angeles
THE COMMERCIAL and FINANCIAL CHRONICLE
Thursday, July 14, 1049
Consumer's Interest Comes First
As
:
opportunity of address¬
ing this world Congress of fellow
businessmen in Quebec City.
It
is particularly
fitting that
you
should
the
this
Eu¬
best
and
traditions
Ca¬
own
our
nadian life are
finely
so
Leading Canadian retailer contends distributor's aim is to see highest living
standard is given consumer, which he, as a producer, makes possible. Says
only practical solution of this problem is found in private business under free
profit-motive enterprise, and denounces devices for restricting international
trade and weakening domestic competition. Attacks economic system based
on "congery of private and government efforts."
city
esque
where
sents
value
line
the
at
ance
the
from
ducer. It
stage along
primary pro¬
every
E. G. Burton
therefore
In
origins.
way
a
the
belief
and
Canadians
it
past should be cher¬
the
with
apparent needs of
That is
the Chairman of our
Commission,
Mr.
subscribed to
beliefs
for
many years.
His splendid service
to
businessmen engaged in dis¬
Emile Bernheim, has
fundamental
these
high level of produc¬ It is
pro¬
a
tidy formula, no set
and simple recipe for solving this
the
most
complex
problem of
will
solutions
rather
nessmen
ments.
than
exercise
Let's
look
First of all
must look again
tremendous advance in
retailer, many de¬
a
con¬
have been made but not all
them
tailer
by any means.
finds
the
quite
he
same
cannot
control
The re¬
exercise
the
over
the
idea
basic
on
which
the
old-fashioned
somewhat
as
and
archaic. In our "disillusioned world
able to exert over pro¬
Marxism in various guises is sub¬
xacturer
is
The
duction.
of
maker
cars,
of
stituting
a
religion of burnt offer¬
of any other object can ings and half-truths for the true
tribution the world over has long
almost, at will, control output pathway to progress.
We must
been recognized. It has been, how¬
radios,
limits.
within
in his reasoned
ever,
for
service to the consumer
more
that the
enthusiasm
greatest tribute should be
paid to Mr. Bernheim. I am hon¬
ored to be able to do that here
today.
retailer
must
the fact that while only
face
also
The
everyone's time is
spent in productive effort, every¬
a
portion
is
one
24 hours
consumer
a
Whether
in
of
day.
a
eating or merely sitting
favorite
chair, or sleeping,
things already made for the
In addressing myself to the sub¬ consumer are gradually depreciat¬
ject of the consumer as the dis¬ ing at a varying but sure rate.
tributor's priority No. 1, I might The retailer has really no satis¬
point out that the views expressed factory way of measuring these
here today may perhaps offer a changes in replacement demand.
different
side
to
this question
In most of the countries whose
which is of such vital importance
representatives are here there is a
Distributor's Aim
to
distributor
every
of
the
we
a
irrespective tendency of
country in which he does
To begin,
business.
it is important
remember that the consumer is
human
being, not some
weird
specie of economic man. Part of
the time in addition to being a
consumer
he
is
also
a
those
a
producer
to
a
recurrent character,
produce goods and services in
of
excess
can
be
the
rate
which
at
distributed.
they
We must
member that while the
re¬
capacity to
distribute may at times be over¬
on
or
our
more
correctly
standard of
supplier. And it is through living have not as
yet been ap¬
functioning of the market proached, Of
course, in totalitar¬
place that he is able to change ian States the major swings of our
and
a
the
roles to achieve his ultimate
ma¬
wards
tions.
about
contribution
the
of
balance
on
should and will receive
he
all
each
has made
producer.
a
for
our
can be
extremely
distribution
which
which
is
market
he
is.
generator
wheel
of
the
entitled.
the
at
and
our
value
The
made
tern.
of
a
pre¬
be
defined pat¬
Strangely enough, in addi¬
according to
a
the magic
of legislated
source
wealth,
time, the
same
also
the
progress
balance
economy.
and
selling of goods on a basis of
competition regulated by the laws
of
Ever since the First Great War
to
open
supply and demand. Business¬
may enter it at will or with¬
men
use
of in¬
given
it has
as
people
our
unquestionably
much higher
a
that
it
is
the
now
know
distribution of dur¬
mass
able goods is
We
principle method
possible.
of large scale
shrink
production.
Decentralization in Distribution
Decentralization in distribution,
particularly in
some
centers
United States, nas
marked
develop¬
been
the
of
another
ment.
Tne
of the larger
increase
tremendous
in the number and use of automo¬
biles has created traffic conditions
shifts
and
bound
are
the
population
exert
location.
store
cn
in
to
effect
an
which
influence
There is
also
shopping habits of
on
the shorter work-week. The super¬
market which is usually a one-
story operation for the self-serv¬
ice sale of foods is no longer the
exception but the rule in tne en¬
virons
In
North American cities.
of
the
United
States, and more
a hybrid but
recently in Canada,
the area
completely integrated form of re¬
market is able to operate. tailing has come into being. It is
known as the community shopping
fastening a burden
of increasing weight on our econ¬ center, about a half-hour's driving
omies is subtle, hardly noticeable distance from a key city or sur¬
in the palatable way it is offered. rounding towns.
Situated in a
to
open
This process of
You can measure, gentlemen, how
close you are to the static state
where there is little risk, little
draw from it when
stimulus must be most imperative
limit
is
consumer
It
this tendency
in which the
have witnessed
we
business economies do not exist.
The governments of those coun¬
they wish.
virtue
ous
selected standard of living can
and delicate pattern
experience where the ness community who think they
greatest advances were made un¬ should be protected from competi¬
der the stimulus of rewards and tion using various devices of their
own
of monopoly, eartelization,
penalties,
price-fixing and the power of the
Freedom has come to be thought
state to establish restrictive stand¬
of mainly in political terms, an
ards.
Both these
shortsighted
intangible to which most of us
groups who wish to throttle com¬
give lip service but little further
petition using the excuse of either
thought. In its specific application
freedom of the market is the most general or special interest have
valuable tool which any business¬ adopted, knowingly or not, the
fetish of "security."
man
can have
to assure that the
receives
The
It contains
during the years of this cen¬ Within it a further constructive
tury a belief that a central au¬ influence since the greatly in¬
thority can and should legislate creased market make possible by
greater wealth into being from its use also permits tne economies
business
consumer
the form of service.
up
of adding by division,
of there are all too many in the busi¬
complex
ing costs of department store oper¬
ations.
Nearly all this increased
cost has an offset in the value
which the customer receives in
whereby
as
intentioned, ideologies
when
realized
be
according standard of living.
Unfortunately there has grown
operate
goal which is of course the
consumption of goods and serv¬
ices.
The sale to a consumer is
terial
shares
even
but
consumers
well
substitute
always
but slow and stalment selling has been matured
is made to¬ and refined in recent years. Credit
the greater wealth of na¬
selling is no longer regarded on
No promises are or can be
this continent as a somewhat dubi¬
tion to those who look to the state
no
which I repre¬
one
a better job
consistent progress
aoing
realize the hard fact that however
consumption It makes provision for the buying
loaded, the limits
is great. Some businesses will fail
because others are more efficient,
as
hundred years.
Adam
Smith, who wrote the "Wealth of
Nations," has come to be regarded
of distribution that the manu-
rate
tion
ard of living has been made over
past
the
as
sell
the statisticians talk about mount¬
market is allowed to func¬
effectively, the risk element
open
to
the
of re¬
not only merchandise
but merchandise plus service. That
sent,
should
It its true of course where the
stand¬
our
two-way
a
structure
,
made
at this further.
we
delivered
to
control
some
where needed, there we must be¬
gin.
of importance to the
govern¬
distributor
at
cisions
busi¬
by
by
the
Because
best
can
found
be
the
within
zations
Risk and Profit
no
democratic society, yet I am con¬
vinced
that
the
only
practical
of these develop¬
some
tailing.
On the one hand we see
the development of the self-serv¬
ice, low cost, type of store; on the
other,
established department
stores have been enlarging both
their
merchandise
ranges
and
service
facilities in response to
consumer demand.
Such organi¬
goad to technological prog-
a
TOSS.
There is
most difficult but im¬
a
a
portant challenge. When goods are
of
Distribution
that the high¬
by his activities as
sumer
the future.
In Europe,
see
make possible.
ducer
that
ished but made use of in accord¬
ance
tributors' aim to
most
of
epitomizes
Americans
values of the
It should be the dis¬
distributors?
experiment in
est standard of living is delivered
cooperation
to the consumer which the con¬
and cultures of
sumer
between two races
different
successful
a
with
tion.
is readily understandable
why the retailer dis¬
blended.
In¬
charges a particularly important
deed
Quebec
and often unappreciated responsi¬
is symbolic of
bility. What is the challenge to
our free world,
of
are
ments? There has been
vS
shift
pictur¬
rope's
'
President, Simpsons, Limited
chosen
have
What
By EDGAR G. BURTON, C.B.E.*
retailer, I wel¬
Canadian
a
come
semi-rural
of
a
area it usually consists
department store, food mar¬
ket,
specialty
shops
various
of
production and consequently little kinds, a'restaurant and that typical
tries, therefore, tell their people competition are intense enough to distribution, by to what degree American landmark, the motion
of
our
apparent inadequacy to forge and shape individual dis¬ the country in which you live is picture theatre.
the point at which this final claim
meet this
problem.
The reason tributors' policies
labelled a "mature economy." To
At the merchandise level today,
according to the
on a long chain of productive ef¬
why there are no such fluctuations ever changing needs and
priori¬ me this is a term which should there is greater use of product
fort takes place.
The total price in the volume of business in dic¬
ties of their customers.
Surely have no place in the world in marketing research in order to pin
which the consumer pays repretator States is that those regimes the
point where the competitive which we live, for there is no real down the particular wants of the
♦Introductory
speech
by
the
Fourth
Plenary
Burton
at
Mr.
Session of the International Cham¬
ber
June
of
Commerce,
Quebec,
Can.,
on
a
minimum
basis
where production is barely geared
to the basic necessities to sustain
life.
Nevertheless,
economies there is
a
in our own
challenge to
retailers to deliver goods in bal-
16, 1949.
is the
arena
where
where the forces of
goods
pass
the
can
bands of the retailer.
the
ability of
majority of consumers. This can
be very valuable in that it helps
to avoid waste by reducing the
as long as there is
That com¬
the challenge of risk, the lure of gamble
in
producing the mass
itself felt profit, the fear of failure and the markets.
Used
intelligently
it
from
on
to
petitive spur makes
right back to all levels of business, satisfaction of
In
this
as
a
Progress
should
success.
although com¬
are hampered at
country
petitive
forces
various
points,
risk
man
consume.
be made
effort
are
risk capital and
finding outlets in
business.
During the past four
years Canadian business has un¬
dertaken the greatest capital ex¬
pansion in the history of our coun¬
try.
In this short space of time
about $10 billion will have been
spent by business as their bet on
the future.
tion
It is
those
to
a
who
would
see, we
do not agree that all our
static state.
can
As you can
be
satisfied
by existing plant.
Nevertheless,
restrictive practices either of gov¬
PRODUc*S
Canadian
Copper Refiners Limited
1600 ROYAL BANK BUILDING
.
.
.
TORONTO 1, ONTARIO
market
research.
By
putting so
the majority's
wishes there is always the danger
much
that
emphasis
on
the
minority of consumers
they want. Sec¬
ondly, by placing too much regard
will not get what
on
producing for
sufficient
a current
attention
market,
not be
given to experimenting with new
and improved products.
Market
make
a
wants
lower prices and bet¬
I might point out, how¬
ever, there are two possible dan¬
gers in placing too much faith in
may
decisive rejec¬
Canada
consumers
mean
ter goods.
research
at
the
manufacturer's
and retailer's level
help
does, however,
eliminate
to
some
of
the
guesswork in merchandising.
On
the
continent
have
we
re¬
ernmental, industrial or labor cently initiated one of Europe's
origin have been growing in the tested methods of making known
past 20 years and were given established lines as well as new
added impetus by the control phil¬ products.
Our Second Canadian
osophy
which
permeated
our International Trade Fair has just
come
to a close in Toronto.
thinking during World War II.
It
Within
this
more
restricted
retailers are do¬
ing what they have always done,
attempting to find new ways and
means
of serving the consumer.
competitive
area,
has had
in
a
real measure of success
permitting wholesalers and
tailers to discover
able goods to sell.
(Continued
new
re¬
and desir¬
Our friends in
on page
26)
THE
Convention Number
GRIFFIN, H. S.
FINANCIAL
Bell, Gouinlock &
Halifax
Toronto
:':v
RIDLEY, JOHN B.
A. E. Ames & Co., Ltd.
Toronto
KILBURN, PETER
Greenshields
KILBURN, PETER
Greenshnelds
&
Co.,
Inc.
Wood, Gundy & Co., Ltd.
ISARD, C. E.
Isard, Robertson & Co., Ltd.
Inc.
Co.,
Winnipeg
McCULLOCH, R. G.
Toronto
D.
•.:*? Matthews & Co.,
Montreal
COLE, J. N.
Wood, Gundy Corp., Ltd.
MURRAY, J. R.
Co., Ltd.
Winnipeg
STEPHENS, S. C.
James Richardscn & Sons
Winnipeg
(Continued
Ltd., Regina
Toronto
E. Ames &
A.
HOUSTON, W. M.
Houston, Willougkby & Co.,
LACE, F.
Nanton,
Osier, Hammond &
Ltd., Winnipeg
Nesbitt, Thomson & Co., Ltd
Winnipeg 1
MASSEY, A. B.
Mills, Spence & Co., Ltd.
BEAUBIEN, ANDREW S.
L. G. Beaubien & Co., Ltd.
Securities, Ltd.
Lightcap
KNIGHT, D. N. (Chairman)
Wood, Gundy & Co., Ltd.
Winnipeg
BENHAM, H. A. '
Royal Securities Corp., Ltd.
Winnipeg
London
Montreal
GUNDY, C. L.
&
(Chairman)
LIGHTCAP. J. S.
AUSTEN, J. F.
Toronto
Montreal
Stanbury & Co., Ltd., Halifax
Co., Ltd.
HUNTER, H. W.
Fairclough & Co., Ltd.
Eastern District
STANBURY. H. NORMAN
7
Western District
GUNN, N. H.
(Secretary)
Wood, Gundy Corp., Lta.
mittee
CHRONICLE
Executive Committees
I.D.A.C
Dominion Executive Com¬
COMMERCIAL and
11)
on page
Montreal
Toronto
KNIGHT, D. N.
Wood, Gundy & Co., Ltd.
EVANS, W. J. S.
Guildhall Securities, Ltd.
-•
jXX:'X; XvV'
Montreal
Winnipeg
DUGGAN, K. P.
D. M. Duggan Investments, Ltd.
Edmonton
Rene-T.
Son Vancouver,
For
Garneau, Boulanger Limitee
Quebec
•
i
G1NGRAS, G.
BORRIE, W. J.
Pemberton &
GARNEAU, J. EMILE
a
World of Service
,
Leclerc, Incorporee
Montreal
Ltd., Vancouver
RYAN, G. G.
L. G. Beaubien &
Co., Ltd.
Montreal
HUNT, A. D.
Maritime District
W. C. Pitfield & Co.,
STANBURY, H. NORMAN (Ch.)
Stanbury & Co., Ltd., Halifax
BAGNALL, E. M.
F. J. Brennan &
HUGHES, J. R.
Royal Securities Corp., Ltd.
Montreal,
Co., Ltd.
Ltd.
Montreal
NESBITT, DEANE
Nesbitt, Thomson & Co., Ltd.
Montreal
v
Whenever you
■
Charlottetown
on
COLWELL, R. M.
Eastern Securities Co., Ltd.
Halifax
FISHER, F
Central District
business
may
GUNDY, C. L. (Chairman)
Wood, Gundy & Co., Ltd.
Toronto
'
:
be
every
or
sure
"Go Canadian Pacific"
in
holiday mood
a
.
.
.
.
.
.
you
of courteous, gracious service
mile of
journey.
your
C.
Eastern Securities Co.,
Ltd.
BACKUS, H.
S.
',V;
■
,
RAILWAYS
McLeod, Young, Weir & Co.
Ltd., Toronto
Saint John
HILLS, HARRY
Royal Securities Corp., Ltd.
Halifax
BAWDEN, H.N,
Dominion Securities Corp., Ltd
Toronto
MACKAY, H. H.
W. C. Pitfield & Co.,
Saint John
Ltd.
MORRISON, GEORGE
F.
J. Brennan &
Co., Ltd.
Halifax
WIN SLOW,
CASTLED1NE, V. S.
V. S. Castledine & Co., Ltd.
Ottawa
CHALMERS, L. P.
W. C. Pitfield &
Co., Ltd.
STEAMSHIPS
Toronto
J. D.
Winslow &
X Woodstock
Winslpw, Ltd.
.XXIX' X\XXX:'-;
to
Bankers Bond
Toronto
By WATER
Cruising the Great Lakes
DEANS, M. C.
Corp., Ltd.
.cX-V"---s::' XX-''
Alaska
...
or
Atlantic
broad
...
"down North'
or
by White Empress across the
.
.
.
Canadian
travel
efficiency.
Pacific
hospitality and
style is marked by traditional
,,
Dewar Praises Work oi ID AC
AIR LINES
The swift,
modern planes of Canadian
Air Lines maintain
to
on
the rim of the Arctic
two
routes
Pacific
regular schedules reaching
across
.
.
will
.
soon operate
the Pacific to Australia
and the Orient.
HOTELS
HOTELS and luxurious
COMFORTABLE
sorts
...
Communications
.
Travellers Checks complete a
which make Canadian
COMMUNICATIONS
.
.
chain of services
Pacific the World's Most
Complete Travel System.
EXPRESS
SPANS THE
Full
information through your own Agent or any
WORLD
Canadian Pacific Office
"
re¬
Express and
Canadian Pacific Railway—Mastei
be of more than passing
that from
the outset it was recognized that
It may
President,
challenged, President of Canada's lead¬
who believe in work to explain and main¬
tain it. Holds organized business concerns can make most effective use of
natural resources, labor and capital under system in which consumer is "boss."
Extols profit motive and hints C. P. R. is "designated for nationalization." Says
present level of freight rates is inadequate, and new capital to expand facilities is
not available to meet transportation demands. Cites low price of C. P. R. shares.
the
Rail¬
way
in per¬
petuity was a
for
private enter¬
prise.
This
fact
clared
by
why
Parliament in
10
Second, to do everything
years
before
company
our
the
was
economy
incorporated.
Moreover, the
and
_
William A. Mather
of
preference
construction and
operation of the railway as a pri¬
for
Parliament
vate
rather
than
rating the company.
There
are
two
of our
aspects
relationship which I should like
to discuss briefly. The first is in
regard to our position as owners,
operators or managers of private
enterprise in a free economy. The
which
transportation is called upon to
second
is
the contribution
render in the development
free way of
under
life and the conditions
which
contribution
that
be made with the
efficiency and benefit.
may
You
and
of our
I
can
throughout the lifetime of your
Association and the history of the
all of the
Does Not Condemn
>{?■!;
■■
Social
Legislation
doing so, we are not con¬
demning that social legislation by
which opportunities in health and
education are more evenly dis¬
tributed, and which affords some
protection against poverty in old
age or other personal misfortune.
Far
from
being
opposed
to
humanitarianism, we welcome it.
The fruitfulness of private initia¬
tive and enterprise has made it
possible for the State to afford
gradually increasing measures of
social welfare.
Nor
do
measures
some
mental
control
regulations
to
of
see
govern¬
that
fair
provided and the
are
rules enforced.
Our concept
is that, under free
enterprise, individuals or groups
of individuals, organized as busi¬
ness concerns, can generally make
which I represent, free
enterprise has been the accepted
basis of our order of doing things.
the most effective use of our na¬
But today free private, enterprise
tural resdui-cel, labor arid capital
is being challenged, in one way
in producing goods and services
or another,
in nearly every part
to satisfy human wants. The very
of the world. Even on this North
American continent, where it has simple reason for this is that un¬
der a free economy the consumer
achieved its greatest success in
is the "boss." He is at liberty to
promoting high living standards,
the principles of the system are spend his dollar where it will go
farthest in providing his wants.
by no means universally accepted.
The producer must govern him¬
Believing as we do, it is our duty self
accordingly and his profit
to follow through in two main will be measured
by his success
courses of action:
in satisfying consumer demands.
company
and
nessmen
26 cents. The
distance
is
almost
exactly the
same
in
both
cases.
Lumber
William costs only
ton
existence depends upon their
ability to anticipate and meet
consumer
requirements.
Dangers of Bureaucratic
Plannning
is not so;
but perhaps we should
more frequently and with greater
conviction give the simple refuta¬
tion
mistaken
this
to
is
and harm¬
the
regulator
that directs the means of produc¬
tion into those channels where it
idea.
can
the
Profit
satisfy consumer demands to
maximum degree. Under a
system in which production and
prices respond to consumer pref¬
erences
(and this is the essence
of the free economy), the exist¬
ence of profit calls into service
more
resources,
where the
the
consumer
of
absence
for the
has indicated
Conversely,
profit is a signal
them.
for
need
a
labor and capital
release of means of pro¬
duction
from
their
previous
use
the
attention
ernmental
as
is needed
ensure' honesty and fair play.
The alternative to this system, by
whatever
name
it may be called
those
to
planning
is
who
the
of
wants
can
never
consumers
gauge the
with such
delicate precision or such constant
solicitude as a multitude of busi¬
plan
to
General
"Nationalization"?
for
the
when
the
planners are able to
govern the Nation's affairs. Why
we
should be so honored, I do
not
IN
HAS
ACTIVELY
UNDERWRITING
big
warn
however,
likely to
you,
not
are
having killed off
The
SINCE
ITS
GOVERNMENT,
CORPORATE
PROVINCIAL,
MUNICIPAL
AND
ALSO
EQUIPPED
TO
EXECUTE
ORDERS
ON
ALL
STOCK
EXCHANGES.
fate
TWO WALL
in
producers
Canada.
the
vital
I
and
need
role
con¬
hardly
which
rail¬
play in the economy of the
Canada
from
as
the
nation
a
Atlantic
to
Pacific
national
and
since
Although
or
still
have
Confedera¬
forms
of
into
come
have been
the-
to
has grown
other
during that period,
which
upon
economy
prospered
developed
the
railways
artery of
major
There
is
every
believe
be
VANCOUVER
LONDON, ENG.
cost
cents
almost
in
MONTREAL
denied.
to
WINNIPEG
VICTORIA
Last
freight
the Canadian Pacific
65
mile.
other
TORONTO
unprec¬
traffic
we
As
result,
a
our
net
fair return
a
in
ment
the invest¬
on
railway
property. We
have been able to provide some
to
rived
from
is
come
in
the
the
ton
per
years
any
world
ago,
was
believe
modern
the
rail
I
mile.
the
shippers
was
only
In
1885,
the
corre¬
1.20 cents per
that in no
industrial
can
year
country
there be found
transportation
provided
at
lower average cost. Detailed
in connection with
to
the
tem¬
world
freight
Commissioners
by
the
da
an
rail¬
increase
in
which,
if
granted,
rates in Cana¬
our
considerably below the
level
age
in
the
freight
the
aver¬
States.
20%
in¬
allowed,
an
the level of
Canada would
in
rates
represent
has
United
if
even
is
crease
ap¬
Canadian
20%
a
rates,
will still leave
advance
since
1939,
less
than
much
been
experienced in wage
rates, material costs, or the cost
of living in that period.
A moment ago I mentioned that
the level of freight rates
today is
below the true current economic
cost of rail transportation and that
railway earnings fall far short of
yielding a fair and equitable re¬
turn
on
way
property.
in
heavily
I
the
this
am
investment
There
situation
of
many
in
is
a
which
upon us and it is
sure
you
rail¬
factor
weighs
one
have
that
en¬
countered in your own industries.
I refer to the problem of
replace¬
ment costs.
Accounting practice dictates and
income tax authorities permit de¬
preciation to
be
charged against
amount of, but
of, the original cost
of property being worn out in
service, less the salvage value of
expenses
not in
in
of
today
the
excess
equipment
various
ments bear out the idea that rail¬
de¬
railway
than
other
attributable
for
ways
cost
move¬
income
large
markets, and we
have benefited through our stock
ownership in the Consolidated
Mining and Smelting Company.
As you know, there is presently
pending
before
the
Board
of
comparisons
specific commodity
because of
owners
unusually
percentagewise,
transportation
sponding figure
%
materials.
and
railway
basic
ton
Telephone worth 4-2400
of
enjoyed in recent years, the
railway revenues have not kept
pace with the rising cost of wages
Moreover,
1.13
STREET, NEW YORK 5
volumes
came
into
being
through the building of the rail¬
ways and the railways have pro¬
vided, in war and in peace, the
on
5.
Notwithstanding the
edented
Transport
the
average
I
tion.
have
plication
all
cannot
& Co.
Unfortunately, the present level
of freight rates is below the true
economic cost of rail transporta¬
of
that, given a
chance, they will continue to
serve the
country in this way for
INCORPORATED
know
we
is
to which bears upon the interests
to come.
That they have given
cheap, as
well
as
efficient
transportation
E. Ames
it
porarily high prices of base metals
many years
A.
maintain the record for
operations. Much of this other in¬
fair
i
We are proud that Canadian
railways have been able to give
cheap
transportation,
not
only
last year, but for many years in
the past. It is our ambition to
the
hunters
transportation.
INQUIRIES ARE INVITED
Cheap Transportation in Canada
can catch him. No doubt
the lowly gopher will be the last
on the list.
/
the
antelope and maybe even
sprightly
jack
rabbit,
if
reason
YOUR
in the Western United
areas
States.
the
are
CANADIAN
tural
return
existence
IS
to
at less than the
rates which are charged from De¬
troit and Chicago for movement
over equal
distances to agricul¬
the
the
await
transportation
IT
Ontario
Western
points
the
tion.
SECURITIES.
from
moves
Prairie
com¬
of
the
CANADIAN
important
many
Agricultural machinery
deer,
game.
will
moose
country.
DISTRIBUTING
modities.
like
ways
ENGAGED
AND
with
movements of manufactured
reputation. I
be satisfied after
the
ORGANIZATION
comparison exists in
same
earnings are at an
unhealthy and dangerously low
level. They do not give anything
stretching
FOUNDATION
ship¬
to
know, unless it be the pro¬
pensity of the hunters for big
game and the establishment of a
stress
OUR
Maine
in
for the Canadian Pacific.
attack
against the free
way of business. The Canadian
Pacific Railway Company is one
of the enterprises already desig¬
nated for "Nationalization," if and
sumers
1949
The
connection
has been worked &ut
A strategy
Railway in the realm of trans¬
portation—problems, the solution
1889
points
good for Canada and
what is good for Canada is good
May I now turn to certain more
immediate and pressing problems
faced by the Canadian Pacific
canadian securities
Chicago
from
move
Phila¬
delphia at 81.62 cents per 100
pounds, while the movement from
shipping points in New Bruns¬
wick
to
Toronto,
which is
a
longer distance, is at 46 cents.
ping
that
CPR Designated for
the
be, it
it
for
Staff,
whose common purpose is to de¬
feat the enemy, but quite a dif¬
ferent
thing
to
estimate
the
myriad and shifting wants of the
whole population
in peacetime.
of
needs
well-'ntentioned
may
the
wartime,
however,
thing,
one
the
that the hunters
bureaucracy
in
good
is
that if
say
Washing¬
and
should be good in peacetime. It is
politically, is a bureaucracy of
planners. Any bureaucracy tends
to
entrench itself and to gloss
over its mistakes. But however,
a1
consumers
That
requirements.
tary
answer
The profit
to
civilian
of
wants
must be subordinated to the mili¬
which they will find
greatei* favor with the consumer.
incentive and the fear
Of red figures are the spurs con¬
stantly prodding businessmen into
serving consumer wants with the
utmost diligence.
The merit of this system is that
it is almost completely self-ad¬
justing. It requires only such gov¬
in wartime, because
dispensable
Potatoes
area.
The
tendency toward bureau¬
cratic
planning was powerfully
stimulated by the experience and
necessities of war. Such planning
was inevitable and is indeed in¬
Detroit
the
to
to
cheaply
more
State of
from the
than
whose
producers,
Ontario
Central
Columbia
British
from
moves
very
regarded as being anti-social in
thought and action. We know that
to others in
question the need
we
profit is represented as
being a most unworthy objective
and anyone who strives for it is
ful
In
for
enterprise system. We sometimes
take
it
for
granted,
because
free
and prosper,
continue to promote the
general well-being of
■people. •••;'
greatest
in the free
believe
con¬
grow
can
government
a
enterprise, is stated in the pre¬
amble
of the Charter incorpo¬
within
to maintain the
under
which
the
power
ditions
quarters, at home and
some
abroad,
believe in it;
we
In
citizens
First, to tell our fellow
de-
Fort
to
Saskatoon
from
ment
re¬
was
peatedly
the
cheaply
Company
ing transportation system urges those
Canadian
matter
Canadian Pacific Railway
Asserting free enterprise is today being
responsibility and risk of con¬
and
operating
services are rendered more
in Canada than in the
United States; for example, one
hundred pounds of wheat move
from Billings, Montana, to Duluth
at 60V2 cents,-while the move¬
way
"
structing
Pacific
Work of Private Enterprise
By W. A. MATHER
interest to you to know
the
Thursday, July 14, 1949
and FINANCIAL CHRONICLE
COMMERCIAL
THE
8
and
installations. The
replacing
is much
(Continued
in
that
property
excess
on page
of
26)
the
THE COMMERCIAL and FINANCIAL CHRONICLE
Convention Number
9
U. S. Direct Investments in Canada Increase
A
recent
report
on
"United
States Direct Investments in Can¬
ada," excluding Newfoundland, is¬
sued by the Canadian Department
of Commerce and published under
authority of the Rt. Hon. C. D.
Howe, Minister of Trade and Com¬
merce, reveals a steady and in¬
flow
creased
United
of
States
Canadian enterprises
during the last three years. Ac¬
cording to the report, direct in¬
vestments of United States capital
capital into
praised by any single criterion. subjective factors arising from erating expenses of the larger
manufacturing
com¬
be¬ Of significance in judging the po¬ close business relationships be¬ Canadian
cause
of the inclusion of all in¬ sition of United States direct in¬ tween
Canada and
the United panies controlled in the United
States.
In making this analysis
stances where one-half or more vestments in
Canada there
are States.
The degree of control and
of the capital is owned in
the such objective factors, for exam¬ active management exercised in only the larger United States con¬
United States.
The group, there¬ ple, as the relative place which Canadian companies controlled in trolled
companies in
Canadian
have
been
in¬
fore, is not limited to investments these occupy in the total number the United States varies greatly manufacturing
which are actively controlled in of
Canadian
businesses, in the from company to company and cluded. These constitute, however,
the
United
approximately 81% of the total
States
but includes value of investment, and in the
United
States
centrated
cases
rather
with
where
one
than
con¬
company
potential control may value
majority sharehold¬ ment.
rest with the
of
production and employ¬
But in
addition to factors
j' from industry to industry.
The
study which appears in
Section II of this report has been
investment
of
all
United
States
controlled manufacturers in Can¬
ada large and small as there is a
object of an¬
concentration in the operations of
alyzing some of the factors in the
in Canadian industries and other non-resident
control there
is a tically such as the extent to which position which United States di¬ 154 concerns in which the capital
businesses
controlled
in
the
special interest in the place which control is exercised, the influences rect investments occupy in Can¬ investment was at least $1,000,000.
had
States
United
of
value
a
$2,428 million in
1946 and $2,544
million
in
A
stantial
rise
1947.
further
value
the
in
in
vestments occurred
sub¬
in¬
of
ers
in that country.
such
Because of the characteristics of
direct investments occupy in Can¬
adian
not
industry.
one
which
these
as
upon
be
readily
ap¬
are
others
prepared with the
style and design of Canadian adian
This position is products
can
there
which cannot be measured statis¬
and
upon
the
industry.
business presented
environment generally, and many
value of production,
This
1948.
resulted from the transfer of large
amounts
of
Canadian
branches
Can¬
to
reinvest¬
Canada of the
in
ments
of
capital
new
and from continued
ada
earnings
sub¬
and
sidiaries by
United States parent
Preliminary incomplete
concerns.
returns indicate that the value of
United
investments
direct
States
in Canada by
the end of 1948
may
have exceeded
$2,700 million, with
part of the increase
year being in manu¬
the
major
during the
facturing.
.
rV;
.
manufacturing
in
in
Canadian
concerns
controlled
investments
The
United
the
million in
1947,
States
$1,366
were
1946, $1,488 million in
well
probably
and
over
$1,600 million by the end of 1948.
The group of direct investments
occupies a special place in total
investments of United States cap¬
in Canada which
ital
in
of all
totals
types of investments
United
are
million
in these latter
Included
1947.
States
of
holdings
Canadian government and
ipal
$5,157
were
million in 1946 and $5,187
bonds, portfolio
corporation
munic¬
holdings in
Canadian
stocks
and
bonds, and miscellaneous' invest¬
ments, as well as the direct in¬
industries
Canadian
in
vestments
Total investments
and businesses.
in Canada by
all non-residents are
estimated at $7,175
million in 1947,
including investments held in the
United Kingdom of
investments
and
overseas
other
in
million.
of
United
investments
Direct
capital constitute a special
of non-resident investments
States
group
in
$1,642 million,
held
countries of $346
investments
these
As
Canada.
represent active or potential con¬
trol
over
a
Canadian
of
group
businesses they constitute a more
positive form of investment than
more passive types like port¬
public issues
the
folio investments in
of
securities.
have
led
Canadian
duction
development
resources
of
0\d * evet
cot**
and
Canadian
the
into
of
and the intro¬
industries
new
businesses
investments
Direct
the
to
They have consequently
economy.
accelerated and diversified Cana¬
industrial
dian
substantial
curred
ments
in
in
in
this
group
recent
1
statements
1939
years
2.
and
the
1947
and
A
has
oc¬
of invest¬
as shown
doMP
development.
expansion
k®
^f°t>
,
|Q
Cert*0®
,sQ
\V»e
oW **"
Between
value
of
the
whole group
increased about $663
million or 35% through reinvest¬
ments of earnings and fresh in¬
flows of capital for new invest¬
ments and expansions of existing
establishments. During this eightyear period the value of United
States direct investment in Cana¬
dian
manufacturing rose by $500
million
or
more
than 50%.
The direct investment group has
been
taken
ments
to
in
include
Canadian
all invest¬
companies
where 50% or more of the
capital
United
States.
was
in the
owned
In addition certain other instances
of
important minority holdings by
States
companies have
been
included
where
they are
United
known
trol.
of
to
have
There
direct
stances
are
constituted
in
the
category
certain
in¬
the majority of
the
investments
were
con¬
shares may be widely held in the
Rlitfci
POWER
&
PAPER
COMPANY,
An
LIMITED
analysis is
of the investment, the
and the op¬
In
using the analysis, therefore, it
should
be
borne
(Continued
in
mind
on page
25)
that,
and FINANCIAL
COMMERCIAL
THE
10
CHRONICLE
Thursday, July 14, 1949
Increasing Ontario's Power Facilities
Ontario, Canada's frontranking manufacturing province,
low
cost
the
vital
be built at Windsor and construc¬
SAUNDERS, C.B.E., K.C.
ROBERT H.
By
In
tion is underway.
A second steam
generating station is scheduled for
Chairman, The Hydro-Electric Power Commission of Ontario
hydro-electric power is
force
sparking
an
Chairman Robert H. Saunders furnishes details of construction
un-
program
the
of The
Hydro-Electric Power Commission of Ontario designed to supply adequate
leading manufacturing province and to meet the
power
In
1948
two
developments
Eastern
in Northwestern Ontario.
one
The
were
service—one in
put into
and
waterpower
completed and
is at Stewartville
former
on
the Madawaska River and the lat¬
Aguasabon on the north shore
Lake
Superior.
With a ca¬
ter
of
ROBERT
precedented
H.
era
pacity of 60,000 kilowatts (80,000
h.p.),
Stewartville
serves
the
highly-industralized
sections
of
SAUNDERS
of industrial de¬
velopment.
To
keep pace with the everincreasing
demands; for
more
electricity from the manufacturer,
the
householder
The
and
the
farmer,
Power Com¬
Ontario
is
making
Hydro-Electric
mission
of
ing rapid
expansion
with a vast
program
designed to
add 1,125,000 kilowatts, or well
over
1,500,000 horsepower, to its
power
resources
by the end of
1951.
At the
same
time plans
progress
are
proceeding
the
conversion
schedule for
the
25-cycle
on
of
areas
of
Southern
cycle power,
Ontario
to
60-
project requiring
to complete
and expected to cost approximate¬
ly $200,000,000,
from
10
to
a
15
years
Initial steps of the construction
with the
end of the war in 1945. from plans
drawn up prior to the close of
hostilities and previously blocked
by the lack of essential materials.
In fact the shortage of materials
has persisted but in a lessening
degree, almost up to the present
time.
Nevertheless, work went
ahead as rapidly as possible and
in September, 1947, the first chap¬
ter was completed with the open¬
ing of a second 57,000 kilowatt
(77,000 h.n.) generating unit at
DeCew Falls in the Niagara Pen¬
got
program
insula.
Eastern Ontario with 60- and 25-
cycle power through the medium
of a frequency changer at Scar¬
borough just outside of Toronto.
*
source
paper
is
;
in the future
strategic sites along this
historic stream, dams and power
the province.
an
plants are in varying stages of
construction.
First, both in point
and
degree
of
at Des Joachims,
40
miles
upstream from Pem¬
broke. Designed for an ultimate
capacity
of
358,000
kilowatts
(480,000 h.p.), second only to the
great
Queenston-Chippawa sta¬
tion
among
the
Commission's
plants, Des Joachims is expected
to be delivering power from four
of its eight generating; units by
of
flourishing Lakehead
district.
This plan has a capacity
of 40,000 kilowatts (53,000 h.p.).
The
generating
resources
of
Ontario
ther
in 1948 by the
fourth unit at Ear
a
Falls in the Patricia district.
from
Des
Joachims and 12 miles from the
town
of
ceeding
The
Renfrew, work is pro¬
the Chenaux project.
on
is
and six of its eight
expected to be in serv¬
horsepower,
addition brought the station's ca¬
units
up to 18,750 kilowatts (25,h.p.) and provided a valuable
source of power to the important
gold mining properties in the Red
ice
Lake and Woman Lake areas.
Present estimates place
pacity
000
The fourth
addition to
power resources
net from
a
Hydro's
during 1948
was
water power develop¬
but was from the Polymer
Corporation's huge steam generat¬
ing nlant at Sarnia. Through this
ment
medium
watt
added
an
by 1951.
The third Ottawa
project is about 60 miles upstream
from Des Joachims near the town
but
can
the
at
quency
er
vV\;
be
is 60-cycle
power
Westminster
Fre¬
Changer and Transform¬
Station
near
Major theatre
of the
Commis¬
parts
of
Cave
for
distribution
Northern
will be carried
on a
transmission
line built through to Sudbury. To
feed
the
Southern
System an¬
built to the
transformer station in Barrie.
will
line
other
be
Grid
tric
developments
underway
tacular-canyon project, is sched¬
uled for completion early in 1950
and will furnish 42,000 kilowatts
(56,500 h.p.)
for the Sudbury,
Nipissing and Temiskaming dis¬
tricts.
Pine Portage, far to the
northwest, above Lake Superior,
will deliver power to the Thunder
Bay
System,
augmenting
the
supply now received from existing
plants at Cameron Falls, Alex¬
ander and the previously men¬
tioned
Aguasabon Generating
It will have an ultimate
Station.
capacity
of
kilowatts
120,000
(160,000 h.p.) and will start initial
deliveries with a capacity of 60,-
(80 000 h.p.) in 1950.
phase of Hydro's ex-
Chenaux
will
be
fed
into
Another
and
the
Dansion program is the building
steam generating power sta¬
of
One
tions.
with
is in the unique position of being
000
able to serve both
an
projects,
these
of
ultimate capacity, of 120,-
kilowatts
In
work
the
at
sites, extensions and im¬
provements
to the transmission
being
carried
on
systems
are
throughout the province in 1949.
New transformer stations and
denser stations for the
con¬
regulation
of voltage have been erected, and
frequency-changer
a
Westminster
in
demands
the
built at
was
handle
to
increased
western
section
of Southern Ontario.
New
The
Generating
Commission
Facilities
has
also been
in
active
exploring
potential
sources
of power to help meet
anticipated consumer demand
growth over the period that must
necessarily elapse before the ma¬
jor developments upon which it is
now engaged can be brought into
service. As a result, emergency
generating stations are being in¬
stalled
and
are
to
be
supple¬
mented to some extent by Diesel
electric units. Some of the former
will be installed where existing
sources
of
steam
are
available
thereby eliminating the need for
installation
the
of
steam
gener¬
ators.
Arrangements are proceed¬
ing for emergency installations
having a total capacity of approxi*
mately 60,000 kilowatts (80,000
h.p.).
Hydro is also giving considera¬
tion
to
ments
peg
further
on
power
develop¬
the English and "Winni¬
in
Rivers
Northwestern
(Continued on page 22)
Municipal
Utility and Industrial Securities
from page
Paris
Gairdner
Weir & Co.,
Toronto
STEPHENS, S. C.
James Richardson
GEORGE
Toronto, Ont.
SWINDELL, G. S.
Halifax, N. S.
Hamilton, Ont.
Saint John, N. B.
Winnipeg, Man.
Charlotte town, P. E. I.
Calgary, Alta.
St. John's, Nfld.
TAFTS, W. M.
A. E. Ames &
Co., Ltd.
Bell, Gouinlock
Winnipeg
Toronto
ROBERTS, R. G.
Ottawa, Ont.
Toronto
New York
Thomas &
James Richardson
&
Hammond
R.
Nanton,
W.
Eastern Securities
Daly Co.. Ltd., Toronto
ROWLAND, L. O.
"Canadian Finance," Winnipeg
L.
G.
Beaubien
&
■
Securities Corp.,
Toronto
HArbour 3121
ADelaide 7104
&
Co.,
SELLERS, WARREN
,
"The
Telegram," Toronto
SEYMOUR, H. F.
Greenshields & Co., Inc.
Montreal
WILLIAMS, L. B.
|v Hagar Investments Ltd.,
s'
SELLERS, GEORGE H.
Bay Street
Montreal
Montreal
A. E. Ames, & Co., Ltd.
Toronto
:'£;
Ltd., Winnipeg
Melady, Sellers
Winnipeg
Co., Ltd.
WEST, R. B.
Co., Ltd.
Montreal
Royal Securities Corporation Limited
Sons,
Saint John
ST. PIERRE, G.
Dominion
&
I
WEBB, G. W. M.
Bell, Gouinlock & Co., Ltd.
RYAN, GERALD G.
British West Indies
Sons,
Kingston
WATT, CLYDE T.
R. A.
Correspondents in Bermuda and the
Co., Pittsburgh
Calgary
.%!
URQUHART, D. E. B.
ROBINSON, C. S.
ROBINSON,
Ltd.
;;;
Toronto
Ltd.. Calgary
—
Co.,
TURNEY, A. H.
James Richardson &
ROBERTSON, W. H.
Mills, Spence & Co., Ltd.
Osier.
&
TOMASIC, A. E.
Dominion Securities Corp., Ltd.
Vancouver, B. C.
Sons,
Wood, Gundy & Co., Ltd.
Winnipeg
RIDLEY,,
Quebec, Que.
&
Winnipeg
T.
Winnipei
Montreal, Que.
Co., Ltd., Toronto
STANLEY, IL D.
Royal Securities Corp., Ltd.
Canadian Press, Toronto
Dominion-wide service, with offices at:
&
Winnipeg
Co.,
&
H.
McLeod, Young,
Ltd., Toronto
RHUDE FORBES
RICHARDSON,
5)
SHAW, D. B.
A. E. Ames & Co., Ltd.
.Tames Richardson & Sons
with
Along
power
Banque Nationale pour le
RATCLIFFE, J.
330
the
of
part
SIIARPE, S. G.
POUTNEY, F. B.
Houston, Willoughby
Ltd., Regina
St. W.
latter
this
Commerce et l'lndustrie,
244 St. James
the
respect it will be the initial link
La
Wire connections: Montreal — Toronto
in
1948.
Southern and
Ontario.
(Continued
Public
occurred
as
will
(160,000 h.p.)
POSE, ALFRED,
Canadian Government,
de¬
Ontario
System.
They will also assist in
offsetting
power
supply
short¬
ages due to low river flows—such
at
present are located at Pine
Portage on the Nipigon River and
Tunnel, on the Mississagi River
near Thessalon. The latter, a spec¬
System
Power from Des Joachims
Southern
the
ex¬
consumer
The two remaining hydro-elec¬
000 kilowatts
Closely-Knit
Northeastern
London.
Southern
and
the
This presages a day,
long visualized by Hydro engi¬
neers, whien through the tie-ins
of
a
closely-knit grid
system.
Hydro power wherever generated,
will be interchangeable through¬
out Ontario.
The power from La-
Southern Ontario System. LaCave
changed to 25-cycle
new
Rapids.
LaCave's
generating capacity at
153,000 kilowatts which is the
equivalent of 204,000 horsepower.
Initial deliveries from this plant
are expected to begin in the lat¬
ter part of 1951.
available to the Southern Ontario
This
LaCave
at
potential
(30,000 h.p.) has been made
System.
Mattawa
of
kilo¬
22,500
are
Northern
in
Commission
the
designed to have an ulti¬
mate
capacity of 119,000 kilo¬
watts .or
approximately 160,000
augmented
opening of
Ottawa
the
Down
It
fur¬
were
is
the Summer of 1950.
development of the
Northwestern
importance
completion,
province's
underway
.
important
of power for the pulp and
industry and a key station
Aguasabon
present time
is on the upper
reaches of the Ottawa River.
At
three
'
in
mand
between the two great power sys¬
the
to meet the
pected increases in
tems
of
of power
reserve
Tremendous
approximately $200,000,000.
sion's construction program at the
new
ex¬
initial
of 155,000 kilowatts or
approximately
200,800
horse¬
When completed, the steam
generating stations will provide a
demands of manufacturer, householder and farmer. Es¬
Frequency Conversion Program to cost
is
an
power.
1,125,000 kilowatts capacity will be added by 1951.
timates
it
and
area
capacity
electric service to Canada's
ever-increasing
Toronto
pected that it will have
Victoria
WILLIAMSON,
Ltd.,
A.
H.
Wood, Gundy & Co., Ltd.
Vancouver
WOOD, J. M. D.
Fry & Co., Toronto
YOUNG, N. D.
Dominion
Securities
Ltd., Toronto
'
Corp.,
THE
Convention Number
COMMERCIAL
and
FINANCIAL CHRONICLE
11
Canada and the National Railways
By R. C. VAUGHAN, C.M.G.
Forgetting
the
Indians,
and
taking no note of the Vikings,
who
established
sand years ago
colonies
tory
the
Canadian rail executive points out though Canada had European settlements
early in 17th century, its actual development as a great trading nation did
not begin until coming of railways three-quarters of century ago. Since that
time, in peace and war, railroads have been inextricable part of Dominion's
economy. Describes vast operations of Canadian National Railways, extend¬
ing into all transportation services on land, sea and air. Sees railways suffer¬
ing from inadequate rates and insufficient capital to improve facilities.
but left scarcely a
dis-
covery
of
N ewf ctund-
land by Cabot
in 1497. A dec
i si
v e
step
forward
t
with
Jacques
der
would
out
Car¬
decades
later
and
the
history of the
country really
got under
R. C.
way
the first French settlements
of 1604 and 1608. But in the
mod¬
political sense, Canada is
more
on
than
82
old.
years
It
July 1, 18-37, that the
North
American
no
was
British
colonies
were
united, under Confederation, into
the
in
Dominion
it
1867
province
created
was
of
Canada.
of
Manitoba
the
Prince
could
1870, British
following year
Co¬
granted.
portation remained
and
tive
Island
in
1873:
Saskatchewan
and
came
that
or
rail¬
was
eastern
of
and
the min¬
wealth of tne
tapped
eral and puipwooo
north,
of
it
been said that trade
nas
xollows the flag. It would be just
as true to
say, in Nortn America
at any rate, tnat trade ionows
locomotive wnistie.
even
an
it
industrialization
ploitation,
leading trading nations of the
world, taking an increasingly im¬
portant part in world affairs, has
in
barge
ranch lands to settlement and ex¬
the
concentrated
the
empire of tne western grain
nation
one
primi¬
coacn,
the
canoe,
the steamboat,
sive
within the framework of the Brit¬
as
the
the
in
stage
Canaaa possible, that opened the
Yet Canada's development into an
sovereign
tne
service tnat made the inten¬
way
province.
Eigthy-two years is but a mo¬
ment in the history of a nation.
ish Commonwealth and
We
have been had trans¬
of
age
even
the tenth
independent
never
wagon,
being in 1905, and this year
Newfoundland entered the union
been
for
not
into
as
it
take
we
was
Edward
Alberta
railways,
sometimes forget that the devel¬
opment
of
tins
vast
continent
The
until
lumbia
that
Even
not complete.
the
than
more
its own
railway. It operates
express service, handling
a
nearly 2,000,000 shipments
montn in tne year and
every
carrying
a
xarge volume of money order busmess.
It maintains a commercial
telegraph company which, with
some 23,000 miles of pole line ana
more than 173,000 miles of wire
of the union.
Tne railways came circuits, handles more than 1,000,000 messages a month. It operates
on the scene three decades before
three ocean steamship lines, one
Confederation.
Progress came on wheels, driven serving the Pacific Coast ports
between
Vancouver, B.C., and
along steel rails by tne power ol
steam.
This
is
so
seli-evident Skagway, Alaska, one carrying on
Vaughan
with
ern,
have happened with¬
never
which opened
up the country and made possible
the
stream
of
2,00o,000 immi¬
grants within ten years. Without
them, Confederation would have
been
meaningless
and,
indeed,
railway service linking the prov¬
inces was one oi tne provisions
about
four
plies
shorter
Ana
Tne
population.
tnat
tne
im¬
railways
operated
separate company,
Air Lines,
flying
over 16,000 miles of routes, across
Canada, south to important United
States centres, south to Bermuda
as
a
Trans-Canada
and
the
increases
tremendous
development
steel
were
kept
-.A*;;
_
Vfj;
•
Edmonton
FARNSWORTH, H. R. (V.-Chm.)
Royal Securities Corp., Ltd.
Calgary
BAXTER, HARRY
trains
tne
is also the oldest.
the
"Rocket"
there was no outside or
except in the far north;
inside
Canada
Over the decades,
war
as
it
so
that
of the Canadian
closely
identified
it
of
could
their
of
we
as
f
tury
ago.
and
efficacy
of
firm foothold in history, that
Vancouver.
Ltd., Vancouver
not
DINGLE, H. H.
Wood, Gundy & Co., Ltd.
field
of
speak
is
whole
the
importance tola
of their daily
accomplishing
essential
place.
duty
of
carrying
goods from place to
To do its job of transport¬
better
velopment of the country and its
public
serv¬
When
Northern
could no
The Canadian people have their
problems but they have every rea¬
son for faith in their country. Be¬
fore
ada
the second world war, Can¬
stood fourth in world trade;
in 1944 and 1945 she held second
place; today she is third. In the
production of newsprint, nickel,
radium, platinum and asbestos,
wheat and fish she stands in the
front
rank.
resources
Her
are
100,000.
Canadian
The
not
National System
only supplies efficient service
;;
EDGELL, R. H.
plays
Securities, Ltd.
in
no
and
at
a
pace
accelerated by the two
agriculture but
fulfills broad economic and social
world wars, capital expenditures
have increased and employment is
obligations to the people of Can¬
ada. The country profits incalcu¬
lably by a complete and modern
at
to
commerce
a high level.
Through the efforts of her vig¬
orous,
practical and far-seeing
railway service. As a pioneering people, Canada in her relatively
and developing agent, as a public short history has risen to great¬
service, the C. N. R. has a number ness in the world. Still greater
of unremunerative "thin-traffic" years lie ahead.
Established in 1905,
organization is engaged in the under¬
our
writing and distribution of Canadian government, municipal
and
corporation bonds and corporation shares.
With head office in Toronto, branches are located from
to
Victoria in Canada
well
as
as
Halifax
in London, England.
wire
connections
Stock
between
New
York, Toronto
and
Exchange orders executed.
any
small part in the devel¬
opment of the country as
Victoria
GLASGOW, F. L.
Royal Securities Corp., Ltd.
Vancouver
A
a
whole.
gigantic consumer, we are also
the
largest individual purchaser,
Wood, Gundy & Co.,
Incorporated
14 Wall Street
New York 5, N.Y.
Head Office—36
King Street West, Toronto 1
spending approximately $235,000,-
SAMIS, B. C.
Samis & Co., Ltd., Vancouver
SHERWOOD, G. D.
McMahon and Burns, Ltd.
000
a
year
for materials and sup¬
plies, and the whole country ben¬
efits when
we
go
Shopping.
Vancouver
DUNCAN, J. L. (Sec'y-Treas.)
Wood, Gundy & Co., Ltd.
?
.
.
r
The
Canadian National System
The Canadian National System,
it should be
pointed out, is much
natural
and
immense
since the beginning of the century,
Such a concen¬
buying power is impor¬
country's economy
and as the largest single employer
of labor in Canada, paying out
more than
$300,000,000 in wages
every year, the Canadian National
tant
known
still
longer carry on as private enter¬
Montreal.
of
directed
placing the railways in a
position to serve in the de¬
Canadian Securities
Direct
than 24,000 miles
of lines, tire Canadian National
System, for example, requires a
more
transpor¬
toward
tration of
Vancouver
railway
recommendations
make
exist
and
staff
BROWN, COL. A. M.
Odium Brown Investments,
Ltd., Vancouver
the
proprietors of the Champlain and
operating
BORRIE, W. J. (Chairman)
his
railroading took a
ing in a year 86,000,000 tons of
freight and 21,000,000 passengers,
Pacific District
wide
tation and ask the Commission to
carriers
men
McCarthy, Ltd.
Nor
commerce.
their
Calgary
a Royal Commission on
Transportation. In its submissions,
the National System will cover the
them,
work
Calgary
YORATH, E. J.
The Government of Canada has
appointed
body
story
James Richardson & Sons
as
Trunk, Grand Trunk Pacific and
Canadian
standards and to improve its fa¬
cilities.
in
inextricable part
when
Ltd., Edmonton
TURNEY, H. A.
Son
in
any more than the
could live without
arteries. It is not for nothing that
we call the railways the arteries
Driscoll,
&
operated
The Federal Government it¬
self built the Intercolonial and the
the
It needs money
at high
that service
peace, the railways have been an
human
,
ices.
maintain
complex net¬
transportation service.
without
.
Edmonton
Sydie, Sutherland
abolished and
early days, the railways
encouraged by public grants.
When they failed, they were taken
were
over and
first, the
commerce.
Public Grants Failed
In the
financial results.
and
The second railway in this
York.
comes
R. is also concerned about
and
of
with
SYDIE, JOHN E.
were
Richelieu
"portage" on the water
While the provision of
service
held together by a
work
Edmonton
Vancouver
in the cost of labor and
all one, its enormous
its great diversity
was
distances
economy,
MORGAN, R. T.
Wood, Gundy & Co., Ltd.
a
the
on
a
route between Montreal and New
Canada
was
onstrated
In
Johns
St.
served as
with
River
been
enormous
car
It was in 1832, only
after Stephenson dem¬
ion.
Lawrence
have
the
include
lines,
three years
James Richardson & Sons
Yorkshire
centres;
the frontiers
DUGGAN, K. P. (Chairman)
;' D. M. Duggan Investments, Ltd.
&
with
lew years
Alberta District
Pemberton
connected
setuers
St.
as
cover
technogolical advances will multi¬
bus and
tram prises, they
too became public ply the usefulness of many of
ferries, lake steamers, property. All the government lines them. Vast areas of the country
coal mines, oil wells and stock¬ were welded into the system now
remain practically unexplored but
known as the Canadian National,
yards.
:\"f'
enough is known about them to
with the completion of promise great things for the fu¬
The largest railway in Canada which,
(and, in mileage, the largest in Confederation, includes the New¬ ture.,..The, manufacturing,., indus¬
tries
North America), the Canadian Na¬ foundland Railway.
have
expanded amazingly
services
markets of tne world the product
7)
page
Melady, Sellers & Co., Ltd.
Winnipeg
Carlile &
that
the
those great enterprises, the Grand
brougnt in the tnings wey needed
irom outside and
out to the
THOMAS, G. N.
-i,!
older
lifelines
tne
to
National Transcontinental.
Great
essential
Canada's first railway was openea
for traffic. It connected La Prairie
West
of their enterprise ana
(Continued from'
\-r
tne
the
I. D. A< G. Committees
colonization; they
were
to
Indies, across the
Britain, is the
property of the Canadian National
Railways. The System owns 12
hotels and its manifold auxiliary
Atlantic
quick to realize the potenti¬
alities of railway transportation
when it was in its infancy a cen¬
■
increases
granted do not
C. N.
communities of
New¬
foundland with the capital and
with the mainland.
While it is
tional
>
rate
outlying
of
f
in com¬
with other railways in Can¬
ada, is Suffering the disabilities
imposed by the times. Such freight
the Grand Trunk.
century.
1
they are of vital importance
development and the de¬
granted a charter by the legisla¬
ture of Lower Canada.
In 183b,
on
that
when they are operated at a
mon
dies and the third connecting the
Drought tne people in; tneir bands
of
Railroad
Lawrence
them.
fense of the country.
The Canadian National,
Canada's trade with the West In¬
went
aneaa
St.
needs
demonstrated
to the
country, the Montreal and Lachine, which began operations in
1847, was also a portage line, de¬
signed to bypass the Lachine Rap¬
ids. These two railways, merged
in 1857, ultimately became part of
span of time; most of it
has taken place within the present
This
Canada
been
materials.
arrival of
e
loss
was
taken
But
has
even
of Can¬
begins
with
It
thou¬
a
trace, the his¬
ada
lines.
Chairman and President, Canadian National Railways
Branch Offices in
Montreal, Winnipeg, Vancouver, Ottawa, Hamilton, London, Ont.,
Kitchener,
Eng.
Regina, Edmonton, New Westminster, Victoria, Halifax and London,
THE
12
Gerald
Ryan,
Investment in Canada
Expands
bond finance
By GERALD G. RYAN*
gives me great pleasure to
open the 33rd Annual Meeting of
The Investment Dealers' Associa¬
tion of Canada and to thank the
It
Retiring President, The
Investment Dealers' Association
of
of
Canada
In presidential
address, Mr. Ryan lauds European Recovery Program as bene¬
Says investment of capital in Canada continues at impres¬
stricted
Canada
stock exchanges.
on
of
our
Associa¬
tion.
An address of this kind is
highly selective. As in¬
vestment dealers, we are closely
Gerald G. Ryan
concerned with events and trends
at
in
public finance, private enter¬
prise
and
general
business,
a
the honor of repre¬
field too wide to
warmly appre¬
better
known
to
of
Annual
Mr.
Ryan
Meeting
of
at
the
33rd
Invest¬
European Recovery Program
ment Dealers' Association of Can¬
ada, Minaki Lodge, Ont., June 22,
1949.
Perhaps
the
most
powerful
single influence, economically and
politically,
discernible
in
the
western world today is the Eu¬
Naturally,
the
Program
transitional period which,
terminated earlier by the
unless
United
States
Congress,
will end
June 30, 1952.
But
speak
of
a
Already Canada,
others, is experiencing
the trading difficulties
inherent
the
The
marks
on
beneficent.
operation
amongst
a
♦Extracts from Presidential ad¬
dress
most
the
general
permit
only of a rela¬
tively few things which seem to
me
of outstanding interest, with
the hope that my choice will be
confirmed by your approval.
ciated and has been most helpful
making
the
therefore
operation during the past year, as
other years, is
Recovery Program. And
not only the most powerful but
ropean
review of the period elapsed since
our last Annual
Meeting. I shall
Representatives of the Press
cordially welcomed. Their co¬
are
in
nec¬
essarily
senting the IDAC.
in
of
some
in
the
would
the
unaided
essential
like to
point
make is
future.
which
this:
I
That
ERP is meeting considerable suc¬
in its prime objective which,
would do well to recall, is
cess
as
we
to promote the economic recovery
of the participating countries, not
the easy prosperity
of the ex¬
porters of the western hemisphere.
The
remarkable
ERP
is
achievement
of
measured
by the return
of hope and vitality to one of the
key areas of the world. Given
this, we are all given much, and
Canadians by no means the least.
With this, plus intelligent coop¬
eration between
cerned,
Dominion
and
Provincial
Government
Bonds
the
reasonably
conditions
the nations
eventual
Public
t-
'
■
Utility
■
■
of
should
not
possible despite the
problems involved.
Investment
trading
prove im¬
formidable
Canada
in
capital goods in
Canada continues at impressive
levels, both in terms of physical
volume
and dollar value. During
1948, capital expenditures by Ca¬
.
and
Industrial
con¬
return
satisfactory
Investments in
Municipal Bonds
business (including agri¬
culture), governments and insti¬
tutions,
excluding
the
cost
of
repairs
and
maintenance,
nadian
Financing
amounted
to slightly more than
$3,000 million, a remarkably close
approximation to the government
forecast
Dominion Securities
corpn. limited
survey
time
the
40
MONTREAL
high
of capital investment,
being estimated at al¬
$3,300 million.
Compared
the
actual
results
this estimate indicates
NEW YORK
an
of 8% in dollar value and
LONDON, ENG.
Exchange Place, New York, 5, N.Y.
Telephone Whitehall 4-8161
of
$2,800 million. The
for 1949 forecasts an all-
total
most
with
Established 1901
TORONTO
maturities
10
on
market
for
necessitated
short-
greater
the single term, sink¬
a
Government,
A Step Toward End of Double
dividends,
Taxation of Dividends
A
novel feature
of the Budget
brought down last March was of
outstanding interest to investor
and investment dealer alike, both
in its immediate tax relief and in
public the work
Commerce.
gress in Que¬
bec City last
the serial issue,
first
ing fund issue. *
ing field of institutional investment.
4k
Chamber
week,
Canadian
confidence
the
and
reliance
of Invest¬
Canada, and concludes with plea for broaden¬
Dealers' Association of
ment
^a n d
which I had
Expresses
which has already taken first step to eliminate double taxation of
will ultimately abandon it altogether. Praises educational program
of
Bank
terms
sive levels and is in contrast with lack of enthusiasm reflected in low security
prices
was
the
usually offered to the banks.
The changed policy of the banks
in regard to such offerings has re¬
ficial to Canada.
attendance.
which
were
President, L. G. Beaubien & Co., Ltd., Montreal
members
Securities
J. E. Coyne,
Corp., Toronto; R. G. Roberts, Dominion Securities Corp., Toronto;
Bank of Canada, Ottawa
Joseph
Pancoast, San Antonio, Texas; John B. Ridley, A. E. Ames & Co., Toronto;
W. G. Clark, Investment Dealers Association of Canada, Toronto
McKibbin, Bank of Canada, Ottawa; N. D. (Jack) Young, Dominion
R. B.
Co., Montreal; Hal Dewar, Dewar, Robertson &
L. G. Beaubien &
Thursday, July 14, 1949
COMMERCIAL and FINANCIAL CHRONICLE
Teletype N.Y. 1-702-3
advance
Massive
in
physical
investment
in
of
1948,
increase
a
slight
volume.
capital
goods has been
one
of the prime
contributors to
our
postwar eco¬
nomic
prosperity. Both private
and public spending have played
important parts but naturally a
special interest lies in the propor¬ its hopeful implications for the
tion of capital expenditures at¬ future. I refer, of course, to the
tributed to private enterprise. It step taken towards the eventual
is worth noting, therefore, that in elimination of double taxation of
1947 the expenditures of business corporate profits by the allowance
undertakings (excluding housing to individuals of a credit against
and government-owned corpora¬ personal income tax equal to 10%
tions) accounted for $1,400 mil¬ of the dividends received on com¬
lion, or 58% of the total $2,400 mon stocks of Canadian tax-pay¬
million of new capital investment ing corporations.
The purpose of
during that year; in 1948, $1,600 this concession is to render more
millions, or 53% of the total $3,000 attractive the purchase of equities
millions; the indicated share of and thereby to stimulate the flow
venture
business for 1949 being $1,580 mil¬ of
capital
into
sound
lions, or 48% of the forecast total Canadian enterprise. The move is
of $3,300 millions.
because,
as
we
all
Assuming ex¬ opportune
pectations for 1949 to be realized know, in an economy based on
this means a total new capital in¬ private enterprise, the buyer of
vestment by business of
almost equities is a V.I.P. Judicious risk$4,600 millions during the three taking and an adequate supply of
years, 1947 to 1949, inclusive.
If venture capital, arising as much
the figures for repairs and main¬ as possible within our own bor¬
tenance were included, the total ders,
are
essential to Canada's
would
rise
to
$7,000
millions, economic progress. Obvious im¬
equivalent to 57% of the 12^4 bil¬ pediments
are
heavy
personal
lion dollars raised by cash sales income
taxes
and
the
double
of War Loan and Victory Bonds taxation of
corporate profits. Both
during 1940-45. Even after allow¬ obstacles received sympathetic at¬
ing for increased prices, these are tention in the recent Budget, and
handsome figures which,
during there is good hope for the pro¬
the
immediate
postwar
period, gressive removal of the second.
would have seemed well beyond
Consequently, the position is
reasonable expectations either as
considerably better than it was
to size or continuity of expansion.
but not, in my view, as good as it
Investment
of
this
magnitude should be. On this
point I would
points to a boldness of leadership like to make two observations:
in business which contrasts oddly
First, the tax credit is limited to
with the lack of enthusiasm re¬
the most junior class of share¬
flected in the low price levels cur¬
holder whereas of recent years at
rently obtaining on the stock ex¬
any rate, it is the buyer of senior
changes.
stocks who has provided the bulk
The
record of Canadian bond
of the capital raised in Canada
and stock financing, less retire¬
by equity financing.
My second
ments, during 1948 compares as remark relates to the
anxious and
follows with the figures for 1947:
doubting mind which, understand¬
Dominion direct and guaranteed
ably enough, is characteristic of
(excluding banking issues)—a net our times. We hear
very frequent¬
decline of $211 millions as against
ly the fear expressed that the
a
net decline of $271 millions in
present
prosperity
cannot
last.
1947; Provincial—a net increase This is
quite true. Obviously, it
of $188 millions, up very sharply
cannot
go
on
forever and cer¬
from the net increase of $65 mil¬
tainly cannot continue in its pres¬
lions reported for 1947; Municipal
ent pattern for more than a few
—a net
increase of $52 millions,
years at the very most, if that.
also up very substantially from
Our current export activity is ab¬
the $28 millions shown for 1947;
normal to the extent
that it is
corporate bond and stock issues—
temporarily and artificially stim¬
a net increase of $195 millions and
ulated
by ERP off-shore pur¬
$45 millions, respectively, com¬
chases in Canada.
Domestic
paring
with
$121
millions
$110 millions in 1947.
1948,
a
and
vestment in
capital
in¬
goods is
ab¬
Up to early normal to the extent derived from
favored form of corporate
I
(Continued
on page
22)
THE COMMERCIAL and FINANCIAL
Convention Number
13
CHRONICLE
Kilburn, Greenshields & Co., Montreal; Hal Dewar,
R. H. Dean, Nesbitt, Thomson & Co., Montreal; C. S.
Dean Nesbitt, Nesbitt, Thomson & Co., Montreal;
Dewar, Robertson & Pancoast, San Antonio, Texas, President of the Investment Bankers Association of America
Robinson, Osier, Hammond & Nanton, Calgary, Alta.
Ian Matheson, Dominion Securities Corp., Ottawa
Peter
•'
'
:
•
'
•
•;
■
remarkable state
a
"j
'
>
*'
'
.;
thinking
that Texas has
at
least the "big¬
whole
the
Yewnited
Out¬
States."
side
size—
of
whether
re¬
ferring to land
area, industry,
hats or mouths
o. Nickle
plenty of reason to boast.
Texas
wealth
to
Texans
and
and
in
world
and
State is produc¬
ing about one-quarter of all the
oil
being
used
by
the
whole
world—enough
entire needs of
Canada—and
all
eight
provide
to
nine times the
to
world's
the
is
Americans
living outside of Texas will agree
biggest
with
gas
producer.
latter
the
statement
but
—
they won't necessarily be thinking
of natural
gas
of the kind to
I come from Alberta—a
people
to
reason
their land
I
from
come
good
will
Canada.
of
Texas
Furthermore,
province
have
now
believe
the
become
and has become of in¬
importance to the con¬
tinent and the world.;
economy;
creasing
This Alberta oil and gas
Cal¬
indus¬
try has already uncovered natural
resources worth at least 2,500 mil¬
dollars, despite the fact it has
completed only a minute
fraction of the ultimate, thorough
lion
far
so
dian
job. It has recorded
growth of any Cana¬
industry
in
the
postwar
years,
in terms of spendings, pro¬
exploration
fastest
the
and
duction
for
oil
This
revenues.
first time
the
berta
year,
in history, Al¬
made
has
Prairie
the
Province's self-sufficient in petro¬
There
leum.
which I refer.
whose
inces; has made its weight felt in
increasing degree in the Canadian
grown
of petroleum
natural gas. The
job which has during the past
years vastly altered the economy
of Alberta, now and for genera¬
tions to come; has greatly affected
the economy of the Prairie Prov¬
.
have
stature
affairs because
has
Texas
—
is
good
to
reason
hope that, in from three to five
Alberta can develop oil
and productive potential
large enough to make all of Can¬
ada self-sufficient in petroleum.
When
and, still, if — that day
comes,
Canada can achieve at
least two major objectives:
(1)
years,
reserves
—
that Foothills City, Oil
Capital of Canada, whose citizens
over
the past half century have
contributed
greatly
to
making
gary
—
other Albertans, other
the
and
scious
and gas
oil
world
of the
Canadians,
industry, con¬
of oil
rich promise
underlying the province.
Calgarian
and
an
Albertan, I have been pretty good
reason
to
start
talking like a
Texan. I may dish out some stag¬
gering sort of figures and pre¬
dictions. When I'm finished speak¬
Being
a
ing, I hope that you will believe
—as
I
sincerely do—that what
is taking place in Alberta, and
to
a
lesser extent in other western
provinces, is of
Canada
to
even
would
the matter full
Over
the
be
importance
such
the
world
Texan
blowhard
a
bertan
and
hard
that
Al¬
or
put to
do
justice.
Plains
Foothills
and
Alberta, four score companies
—Canadian and American, large
and
at
small—have
work.
*An
They
some
are
self-sufficiency
in
4,000 men
carrying
on
a
address
by Mr. Nickle at
the Annual Meeting of the Invest¬
ment Dealers' Association of Can¬
resource
as
the basic
necessities,
food,
clothing
and
shelter;
(2) elimination of the
greatest single drain on Canada's
U.
S.
dollar
supply,
and
the
achievement by Canada of a lGng-
term favorable "balance of
trade."
East
Middle
world's
'
'
i
'■
•
;
v.^—'vv
oil
Alberta
These
Canada
reserves
are
mighty important to Canada and
friends among world nations
from the defense viewpoint.. The
our
oil found,
more
will
his gang
ent
the
more
secure
be should Joe Stalin and
we
decide to turn the pres¬
"cold
war"
into
"shooting
a
proved oil
World
During
War
use
II
the
about two
million barrels of petroleum daily
reserves.
The
which
winds
warm
blow
across
Mountains at frequent
intervals, sometimes raise tem¬
peratures 40 to 70 degrees in a
few hours, melt away the snow
and bring us Spring weather —
the Rocky
until the next blizzard appears.
The
MacDougall
John
Rev.
—
pioneer missionary who built a
church in the Foothills west of
a
Calgary more than half a century
ago—had a favorite Texas-style
"true experience" story about Chinooks. He claimed that one day,
winters ago, he
many
hitched a
from
There was
horse to his sleigh to drive
his church to Calgary.
plenty
of
on
snow
hurry, be¬
a
see
warm
heading
down
the mountain
Wind
him
towards
pass
could
he
cause
ground,
the
but he knew he had to
from
to the west.
Just
as
he
climbed
aboard the
and started his horse to¬
wards
Calgary,
the
Chinook
sleigh
caught up with him. He raced the
Chinook all the way to Calgary,
but could never quite get ahead
of it. He
Chinook
so
finally reached Calgary,
nip and tuck. As
race was
MacDougall
Rev.
fast
Wind
as
it
explained,
melted
raced
the
the snow
beside his
to fuel the armed
sleigh, he was barely able to keep
sea
the front sleigh
forces, on land,
and air. If Communism forces
war
need
on
us,
we
and
at least two
our
allies will
million barrels
daily for the fighting job alone.
During the last war the United
runners
in snow,
all
and the rear runners travelled
the way
The
in water.
Chinook story has a
common
lot in
with Alberta's oil indus¬
own
Chinooks are beneficial. So
discoveries.
Sometimes
Chinooks can be temporarily em¬
the
barrassing as one almost was to
States carried the
try.
It is no
are
supply burden.
longer capable of fueling a
and
war
1949.
minimum
still
look
civilian
after
needs.
its
In
*
' ' . '
about
* •
*
''
"*
it, let
us
■
.
look back at the
past and review the present pic¬
ture.
A
John
MacDougall. So can oil dis¬
and expansion of
pro¬
coveries
long history precedes the Le-
duc
discovery of February,
which started the modern,
est
era
of
Alberta
Alberta oil boom
oil.
was
a
1947,
great¬
The first
half
cen¬
tury ago. It started because Al¬
berta pioneers
Kootenai Brown
and Lafayette French saw a band
of Indians, back to
1898, skim¬
ming a brown, vile-smelling, oily
off the top of a slough
Pincher Creek, in the south¬
west corner of Alberta.
liquid
near
ductive
are the only ones
potential — as they are
Kootenai and Lafayette figured
capable of expanding right now in Alberta.
the
liquid—which
the
Indians
Chinook winds can travel fast
production fast enough to fuel a
were
using for internal and ex¬
war—and Joe Stalin sits right at Ability to produce oil can expand
ternal-lubricant
(for purgatives
the back door to those reserves. far faster than transport, process¬
and
rub-downs)—was rock oil.
He could take over, or at least
ing and marketing facilities can
They made a deal with the In¬
neutralize,
Middle East oil in be created to cope with potential.
dians, traded them a pack horse
event of war.
That is Alberta Oil's problem to¬
for the slough, and then headed
For safety's sake alone, if for day. The industry is straining its
for
Calgary.
Calgarians joined
no other reason, great oil reserves
britches, suffering growing pains, them to provide capital, and in
in Canada and the means of pro¬ getting bigger every day, waiting
1901 a forest of tents sprang up
ducing, transporting and refining for pipelines, refineries and mar¬ around the slough and drilling
tnose reserves, are vital not only kets to give it a vastly greater
was started.
In those days a few
to
in the North
American
us,
but also to the United place
hundred feet was "deep drilling."
States,
Great Britain, and our economy.
other good friends in the world.
Before looking into the future, The first oil promoters reached
As some of you know, south¬
(Continued on page 19)
and discussing what is being done
west Alberta enjoys each winter
what we call "Chinook Winds"—
presently
but the
war."
located half the
are
countries
Arab
Chinook
Mighty Important to
ada, Minaki Lodge, Ont., June 23,
a
vital to the economy as
democracies had to
of
,
may
best
gest and
•
become the Texas of Canada, Mr. Nickle contends, in
Alberta alone, oil industry has potential resources of $2% billions. Points out
importance of oil industry in defense and in development of Canada, and looks
for expanded markets for products when pipe lines are built. Sees need for
additional large capital investment in Northwest Canada's oil projects, and con¬
cludes Alberta oil is destined to be one of Canada's greatest industries.
Holding Alberta
big, talking
big, and doing
big. Anything
in
'
..
Editor, "Oil in Canada" Magazine
State—is used
be
'■
•
Publisher, "Daily Oil Bulletin," Calgary
American
must
•
•
By C. O. NICKLE*
husky and rich. The ma¬
jority of its people—to a greater
extent than those of any other
to
*
•
—
vast,
Carl
/
Significance of Alberta Oil to Canadians
'
■
is
Texas
•
oil
Ratcliffe
H.
J.
Ltd.,
Co..
Gundy
&
teletypist for Canadian Na¬
Ross,
Telegraphs, who put a special wire
through for the I. D. A. C. Convention
tional
R. B. McKibbin, Bank of Canada,
Edmonton, Alta.;
trip
start of fishing
Norma
D. M. Duggan Investments,
Ottawa; D. B. Dingle, Wood,
Co., Toronto; George Richardson, James Richardson & Sons, Winnipeg
Coyne, Bank of Canada, Ottawa; K. P. Duggan,
E.
J.
Young, Weir &
with Indian guide at
McLeod,
Toronto,
Thursday, July 14, 1949
CHRONICLE
COMMERCIAL and FINANCIAL
THE
14
Canadaxs Role In Europe's Problems
We
much in the days of our
General
as
destructive
has
us
heart
c
i
of
his
a n a
d
friendship
are
did
the
two
cause
yet
solete
ideals.
and
na¬
tionalism,
real
trine
Napoleon,
a
able to perceive their common
World
First
The
War
opened their eyes. Faced with the
German conception of war and of
we
in
sense,
French
this
international
in
deep
and France had the same reaction.
where
Brittany,
realized
that they
were
together not only because
they had a common enemy, but
because they had a common sense
very
from
were
suffered,
died,
killed in action and succeed¬
Thus, from the outset, the Second
World
War
was
an
ideological
war
in which the fate of Chris¬
Tney felt closely asso¬
justice.
culture.
ing the same enemy.
mon
gratitude to these pioneers
not imply
Traditional
that
they were separated by
major causes. And even when they
fight with
*An address
one
com¬
and not merely fight¬
nationalism remained
Relations
France.
another,
continued
nations
two
between
to
in
the
be
friendly, but each considered that
its basic duty was to serve its own
the Annual Meeting of the Invest¬
ment Dealers' Association of Can¬
interests.
The
June 22,
which
1949.
Second
World
War,
in
Germany put into practice
Christian
and
tianity itself
But
the
Nations
much stronger in England than
by Mr. Pose before
ada, Minaki Lodge, Ont.,
cause,
a
ripe for the establishment of a
thoroughgoing and lasting cooper¬
ation between the two countries.
other in North America in the be¬
ceased to
defence of
for the
However, the time was not yet
feeling of hos¬
their adversaries.
a
tility toward
England and France opposed each
lief
Christian civil¬
our
Latin
ciated
does
foundations of
ization, revealed to England and
France
their
profound spiritual
kinship, based upon their common
England
relations,
keeping alive in this land
the French language and a French
Our
implicit in the doc¬
pan-Germanism, that is,
the refusal of any rights to the
human person, created for Eternal
Gloiy, and the denial of the very
of
of
sometimes
in
ed
theories
bound
Normandy, Charentes and Poitou
lived,
the
all
brutality
They
country
peasants
unrestrained
with
feel "at home"
a
was
inheritance.
at stake.
victory
United
of the
Germany
over
was
L. G. BEAUBIEN
*
C°
LIMITED
not
Communism
when
the
of Marx
was
among
Thus arrived the day
the victors.
Christian
nations,
at
last, became fully aware of the
futility of any past motive for
disagreement and of the urgent
of
need
DEALERS
and
a
solemn
diplo¬
act, known to the public as
Pact, from now on
justifies the profound solidarity of
these
countries, each of which
had, for centuries, struggled for
its own supremacy/
Gentlemen,
matic
the
Atlantic
speaking, before it be¬
came
officially sanctioned, this
solidarity was imposed in fact,
and
has
proved
its
existence.
Since
time
immemorial,
the
armies of the East have period¬
ically descended on the West; but
1914,
Europe
there
have
invasions
of
without the
been
no
Western
intervention
have been compelled to
NOTRE DAME
STREET, WEST
Kyacintlu
Paris
countries where
civilization
I
certain
Trois
Ottawa
Shawinigan
Brussels
acknowl¬
edge, and have today proclaimed
that
their
spiritual
boundaries
run
across the center of
Europe.
These
boundaries
include those
parishes and Fabriques,
MONTREAL
St.
It
Rivieres
Falls
a" r
such
wel¬
to
in the
politics
where only such a short time ago,
utmost brutality and even cyni¬
come
realm
idealism
pure
of
international
cism ruled.
independ¬
are
not
a
powerful industry, warrant¬
just after the
was
of 1911
war
Why did this happen? Because
the
long
treasured
civilization
wnich
Western
inherited
in
European nations
the
from
common
Greco-Latin
scale
a
certain type of
dominates,
of values
where
are
a
recog¬
nized, where a certain conception
Man triumphs, in short where
an
order prevails without which
life would not be worth living.
It is indeed comforting, in this
of
era
where materialism
seems pre¬
first
spoken of, this expression
referring to industries considered
vital to national defense. The war
of 1939-1945 has but considerably
enlarged the
tradition
from
and
mother
us
how
to
waste
ments
soul
futile
their
when
of
it is
time
the
their
for
the
neighbors
in
very
disagree¬
heart and
civilization
is
at
stake.
tions
tims
danger
Europe,
of
modern
industry,
have
become
the
Science with
of
very
na¬
vic
¬
which they
had, with such pride, endowed the
world.
Obviously none of them
owns
the huge resources now ade¬
quate to the safeguard of national
independence.
Unable, today, to protect them¬
selves without outward assistance
these
nations,
cannot
moreover,
afford to maintain the standard of
the First World War. Before 1914,
greater. Members of
even
Christianity, faced with the
that
weighs
upon
their
men¬
com¬
Europe,
where
industry
was
materials
and
agricultural
Division of
uce.
themselves, on
manufacturing
is
caused
under
the
quently, several
tries
had
larger scale, to
activity
from
which they found themselves able
to derive important resources: this
crease
ing
elements
of
two
na¬
tions live
closely associated, after
being so fiercely opposed in the
past, shows how fruitful such a
movement may become.
The birth of a European feder¬
European coun¬
their agricul¬
allowed
ture to decline in order to devote
the
where
thus
Europe, pri¬
and the rest of the world. Conse¬
powerful and generous impulse of
great
Republic
of
North
America, that crucible of all Europeah races.
The example of Can¬
prod¬
was
manufacturing producer,
dilemma, and the reason
why the first step was taken to¬
ward a United Europe.
A steady movement to that end,
a
labor
between
established
nations'
progress
modern
world with its industrial products
and
in exchange, received raw
marily
making
powerful
located, supplied the
civilization,
suddenly
ac¬
knowledge that they are brothers
and must remain such if they do
not wish to perish.-"Unite or per¬
ish," such is now the European
mon
ada
Western
In
war.
living which they enjoyed before
Europe
the whole
Christianity rose to check the
tide
of
Mohammedanism; once
more today, it
rises to oppose a
ace
so
the
among
duct
Orient threatens to force
delivering
complicated,
that
industrial
nations
themselves, very few possess the
combined assets necessary to con¬
vast,
so
culture
new order
and
Christianity
has
established, after the
upheaval
caused by the fall of the Roman
Empire,
are
in
danger.
Now,
again, the inherent tyranny of
of this recent
of destruction have become
means
Christianity, the
which
scope
Industries
concept.
_
Twelve centuries ago,
past, flattered themselves on
their attitudes of either "splen¬
did
detachment"
or
"isolation"
Religious Institutions.
-
from
own resources
ing considerable output.
of
the
Municipal, Corporation,
everywhere,
A United
America.
England and America which, in
of QUEBEC
ponderant
unity.
Atlantic Pact—Symbol of Unity
Specialists in Securities Originating in the
School Commissions,
barred
are
whose
very
Occident into outrageous slavery.
And this danger reveals to all of
with the victory of
principles because the
of England and
Government,
by the level of manu¬
production: those na¬
adequate to the development of
the
similar
UNDERWRITERS
Quebec
tions
ence
Christian
since
221
facturing
synonymous
Truly
Province
is
war
first place,
more prosperous
not develop be¬
nations were not
after the fall of
a.
although
narrow
self-sacrifice on the
The issue of
today determined in the
and
that so-called key-industries were
free from ob-
Alfred Pose
and
Europe. Cites world-wide industrial¬
ization following World War I as creating need for new patterns of inter¬
national cooperation, and urges Canada to cooperate with European nations
in a common program of action to foster world-wide economic expansion.
Sees Canada benefiting through international investment.
spe-
minds
our
wars
in modern warfare
chiefly depend on gal¬
not
part of its soldiers.
feeling
for C
And
in
a
1
a
problems facing Europe as result of two
extols U. S. European recovery aid and Atlantic Pact as
leading to united and
men,
one
every
does
Commerce et l'lndustrie, Paris
le
lantry
Jacques Cartier, Champlain
and
Montcalm,
that,
Banque Nationale pour
Manager,
Prominent French banker reviews
of
names
ous
nation engaged
By ALFRED POSE*
have dreamed
Frenchmen,
child¬
hood, of the French-Canadian ad¬
venture symbolized by the glori¬
so
a
a
their population
to in¬
considerably while enjoy¬
continuous rise in the stand¬
ard of living.
The first setback to such
cialization of labor
trial
was
a
spe¬
the indus¬
development, in the United
Specialization
further impaired by the war
States of America.
was
of
1914-1918
which
almost
com¬
danger; it is also the
expected outcome of an evolution
Western Europe to retire
from the manufacturing markets.
Europe began to import products
that she formerly exported, while
which had its start at the time of
the
ation is not
of
a
the
only the
consequence
common
First
World
War
and
was
only hastened by the Second.
The modern European nations
which took shape among the ruins
of the Roman
er
in
a
Empire
long¬
their
the fate of a
are no
position to protect
independence.
For
pelled
United
States
of
America
brought their / own output to a
huge volume and, in doing so, in¬
creased
markets.
their
control
They
of
world
finally,
driven themselves into war. Many
new countries then, which had re(Continued on page 23)
were,
THE
Convention Number
COMMERCIAL and FINANCIAL
Facing camera, left to right: Andrew Beaubien, L. G. Deaubien & Co., Montreal;
W. J. S. Evans, Guildhall Securities, Ltd., Montreal; back to camera:
Frank Evans,
McLeod, Young, Weir & Co., Montreal; A. D. Hunt, W. C. Pitfield & Co., Ltd.,
playing bridge on the special train in the Fort Pitt Modern Lounge Car of the
Canadian National Railway
CHRONICLE
15
Seymour, Greenshields & Co., Montreal; Peter Kilburn, Greenshields &
Montreal; Lyall Frazer, Western City Co., Vancouver; A. R. Duffield,
H. F.
Co.,
Wood, Gundy & Co., Montreal
Outlook for International Investments
As
a
from
start of our eco¬
nomic history, and certainly since
the industrial revolution, we have
always
been
But
Belgian banker points out important role of international investment in world
economic development and looks for United States to replace Britain
among
and France
of
1 confronted
lenders of
battleHeld
^
never
among
large
strong
Generale
de
to
group
be
Belgique,
which
feel
I
the
to
honored
attached, the Societe Gen¬
erale
ated
people and
supply the ade¬
to
banking organization and
especially to the Societe
most
to
rich
us
estates
which
under
originally
was
formula
a
cre¬
which
quite audacious in 1822,
was
as a com¬
pany formed to promote the na¬
tional economic development.
International
What
Has
Investment
Accomplished
out
that
is
generation
international
about
Yet it
the
1949
around
present
the world
understand less and less
to
seems
in
all
point
was
investments.
only because the mech¬
of
Then
came
World War I,
leav¬
ing the Western European coun¬
exhausted.
Great
Britain,
tries
financial
long the
world,
so
of
center
the
could
government, had not enough re¬
sources
to rise again from her
war destructions. And tremendous
needs
capital
of
apparent
were
everywhere, in Belgium, in Ger¬
many, in central European coun¬
tries, not to speak of Russia which
been
nomic
world
the
of
eco¬
The whole investment
area.
system
European
the
1914
was
com¬
met.
territory.
Germany has
hardly a large city which has not
been seriously damaged.
Europe
Then
appeared
something
nent
for
chance
a
The New Conti¬
new.
into
came
the
foreground.
The United States which had been
previously
a
debtor country saw
reversed in
balance
had
1917
and
made
clients
the
capital
equities
needed
to
bonds
which
create
the
were
industries
trade in the so-called
countries.
and
and
undeveloped
If European capital had
not originally taken the risk of
developing what was then called
in
Europe the New Continent,
how
would
such
a
How
Canada have become
well-equipped community?
would
the United
States
centuries
tc
Investments were not
of savings but rather
acquire.
to spread among
their
London
taken
ties, how to finance them and how
the portfolios of
out
with short-term money.
So, when
eventually the deflationary crisis
started the system collapsed. Nu¬
merous
off.
claims
The
had to
be written
social and political
sta¬
bility of the new world were
shaken and recovery was not yet
completed
when
World
War
II
started.
And
now
once
faced with the
again
same
we
are
problems of
Minaki Lodge,
Dnt., June 24, 1949.
had devastated areas in 1918 only
along the front line, has now to
And
so,
the building up of
later
more
likely that there
remain quite a lot of
still
requirements
be
provided
for.
which
So
will
many
present moment
thorities.
After Marshall
Plan Ends, What?
new
Men and women had lived
mined.
vate enterprise has been obliged
under such ap¬ to indulge in government plan¬
palling
circumstances
that
in
ning to distribute its long-term
many countries they could hardly
pull themselves together to get
so
years
many
down
work
to
sometimes all
bles
for
and
the
of
start
and
today will help out those econ(Continued
on page
18)
over,
The ground
anew.
an
easy
penetration
desperate ideology of the
V'-';.
Reds.
Role of United States
Under
a
expect that the rich communities
of
thus prepared for social trou¬
was
such
conditions
gloomy
CANADIAN SECURITIES
brilliant hope was brought about
when the United
States, realizing
QUOTED IN AMERICAN FUNDS
Europe could not rise again
that
came
to the rescue
first, and
for the
with various devices at
with
Marshall
the
Plan
last two years.
For this most gen¬
given to the impover¬
erous
aid
ished
countries
the
of
European
OUR DIRECT PRIVATE WIRE
Continent, Europe and the world
will always remain indebted.
The
emergency
then been taken.
measures
COVERS
world
the
is
at
ALL
CANADIAN
SYSTEM
MARKETS
have
INCLUDING THE WESTERN OIL
But now the re¬
sponsible people are faced with
long-term problems. Everybody is
aware
that the economic life of
CEN¬
TERS OF CALGARY AND EDMONTON
present engaged
temporary period which will
come to
end in 1952.
According
in
a
to
expectations
the
trade
balance
of
the
given,
the
beneficiary
will not yet, by then,
equilibrium. So the ex¬
perts are already working on a
long-term program. For it is a
necessity that the equipment of
each
community be adapted to
its requirements so that each may
countries
be in full
try to restore at least a
rehabilitating the world economy.
*From an address by Mr. Bon- The destruction is far greater than
/oisin before the Annual Meeting after World War I. Great Britain
>f the Investment Dealers' Asso¬ has been badly hit. France, which
ciation of Canada,
much the
most
plans and the development of
Who will finance them?
That
already existing industries has is the
question. Not much can
has been cut by the iron curtain started. I am not going to go too be
expected from the citizens of
and natural "currents of
bygone deeply into the many intricacies the countries upset by the war.
days are to be replaced by a new of such a planning. Though it is There will still elapse quite a
mechanism.
And on top of this something of a paradox that a time before
savings can be ade¬
material
destruction
the
social country believing in liberalism, in
quate to the needs. Has the time
stability seemed to be under¬ individual initiative and in pri¬ come when it is only logical to
without help,
investment
study new business opportuni¬
so
Europe, both for private enter¬
prise and for the services which
are discharged by the public au¬
food and raw materials have been
her
from what was
since,
ever
before
its
After 1952, and
needs exist at the
of
definitely been cut, and has
had
not
repair ruins spread over the whole
known and worked
to
will
is
the
of
feature
a
in
was
well- gradually became the bankers of
smoothly that the world. But it seems that tc
the
great ventures of the 19th become an international center.,
Century were successfully brought it is not enough to be possessed
to
The
completion.
It was because of large financial means.
in those bygone days the private United States lacked the experi¬
houses of old Europe knew how ence and the technique which it
anism
it
exchange and capital transfers. Upholds recommendations of International
Chamber of Commerce regarding foreign investment protection.
pletely out of balance.
What is rather strange to
course
on,
capital
hardly tackle the problems
arising from its impoverishment
quate means to meet the needs and its re-adaptation to a new
world economy. France, who used
of our economic expansion.
Yet
to be quite instrumental in ab¬
we succeeded in
doing so, thanks
to
the organization
of our in¬ sorbing in her long-term market
vestment market, thanks to our the bond issues of many a foreign
had
capital abroad. Praises ECA program, and lays down
international in vestment: (1) removal of war fears;
secure
Europe for
which had been for
centuries, we
have £
still
is
E.R.P.
transitory period.
to
have risen to the limelight of eco¬
nomic supremacy?
Pierre Bonvoisin
again this first achievement
all others brought by the
political structure of would-be borrowers; (3) mutual respect of
creditor and debtor countries; and (4) removal of controls on foreign
(2)
ing scale the
p
as
conditions essential
as
ever-fncreas-
\
do otherwise.
to
la Societe Generale de Belgique, Brussels
Vice-Chairman of the Board, Banque de
very
*
help. It would have been difficult
By P. C. BONVOISIN*
Belgian I may add that
the
standard
Then
ments
the
comes
out the
30 BROAD STREET
•
Co., Inc.
NEW YORK
Teletype
Phone:
HAnover
NY
2-9251
1-1979
living.
of
problem of
into play.
Already the Marshall
set
minimum
W. C. Pitfield &
invest¬
Plan has
principle that part of
the dollars given away
should be
employed for long-term use as
soon as the first urgent needs for
Montreal
Cornwall
Halifax
Toronto
Moncton
Edmonton
Saint John
Vancouver
Ottawa
London, Eng.
THE
16
COMMERCIAL
and
CHRONICLE
FINANCIAL
Thursday, July 14, 1949
•
-
1
'
$
«
=1.'
\
1
I
'
-V.
%
■
D. Bartlett, Midland Securities
Limited, Toronto, displaying catch of fish
Eddie Gunn and Harry
Clark, Calvin Bullock, New York City; James
MacMurray, Eastern Securities Co., St. John, N. B.
Robert
Hal
Murphy, Commercial & Financial Chronicle,
York; J. P. Guite, Credit Interprovincial Ltee.,
New
Montreal
The Retail Securities Market Is Still Here!
What
has
happened
Market
for
securities?
By D. BRUCE
Retail
to
Even
a
A. E. Ames & Co.,
cursory
examination
will show
that it hasn't disappeared. Instead,
expanding like
present
holders of in¬
s
in-
tr uments
with
on
money
'V''
not now
securities
but have
The
sav¬
so—that
market, far
from
melting
D.
Shaw
Bruce
away, has been expanding like a
puff ball.
In
the
were
tions
first
178,363
War
individual
bonds.
for
Loan
In
there
In
1930,
had
applica¬
each
of
the
the
Chartered
Banks
40.712
there
shareholders;
now
55,371 names on the
are
Unintelligible
People Have More Uninvested
Money
And
lists
money
people have more
uninvested now than ever
in
Canadian
of
Chartered Banks.
more
Selling
Language
Another possible difficulty could
be the language in which we talk.
There
be
may
too
terms
many
which may mean
but which are
Telephone has 52,500 dred seventy-eight thousand of
sharing in the profits of these
people
had
accumulated
that
company,
and having the more than $1,000.
As of Sept. 30, 1948, these ac¬
right to vote at its shareholders'
meetings.
This is nearly three counts had grown from 4,000,000
times the number listed in 1935, to 6,600,000 in number for a total
and nearly double the number in of $4,048 million. Now there are
1945.
887,000 of these people whose sav¬
There can be scarcely a family ings have passed the $1,000 mark.
in Canada that doesn't now own,
So, we see that in 15 years,
or has
not at one time owned a Canadians
have
tripled
the
Victory Bond.
The number of amount of money they are carry¬
people owning and familiar with ing in savings accounts, and there
other types of securities—provin¬ are
more
than
three
times
as
cial, municipal and corporation many people now as there were
whose bank accounts
run
bonds,
preferred
and
common then
shares, must run into the hun¬ into four figures.
before
shareholders'
long enough to
his traveling expenses and the
pittance which would rep¬
resent his share of profit.
small
investment instrument.
Bell
Victory Loans from the Fifth to
the Ninth, inclusive, there were
roughly 3,000,000 individual ap¬
plications for bonds.
dreds of thousands.
business
pay
new
people
ings to invest
if they could
be
persuaded
to do
bidding for
if the employer could
even
in
stay
issues. Urges simplified language in
merchandising securities, and suggests instalment buying of securities as new
buy more, or
people who
own
but, instead has been
away,
a
keen competition in
hand to
may
$1,000, $1,500 and
$2,000 clients. The salesmen would
puff ball, Mr. Shaw cites increasing number of securities
holders. Says Canadian people have more idle funds than ever before, and
ascribes lack of active retail market development to small profit margins and
by market we
vestment
search of these
starve
Asserting retail securities market is not melting
the market—if
mean
SHAW*
Ltd., Winnipeg, Man.
Patently the market is there.
True, the impact of war time and
postwar taxation seriously affect¬
the necessary appeal—isn't cut to
the measure of our prospects.
It
be that
may
need
we
some
kind
of
packaged merchandise attrac¬
tively wrapped and put up in
standard
ety
sizes
of
meet
to
needs.
sufficient
the
This
most
resort
packages
may
the
common
to
be
overcome
cost
vari¬
standard
necessary
to
involved
in
something to us,
unintelligible to
investor making our business
the
and
our
him.
merchandise
It
to
seems
might take
a
mystery to
me
that
leaf from the
a
chandising manual of the Insur¬
Companies and the Invest¬
ance
ment Trusts.
Terms like Ordinary
Life, 20 Pay Life, Endowment and
Pension Plans, have been so in¬
cessantly used by all insurance
salesmen, and terms like
Protection and Life Trust
custom
tailoring.
Perhaps we aren't
we
mer¬
Living
so com¬
getting the
used
by
Mutual
Trust
business simply because we can¬ monly
salesmen, that the public at least
not afford to go after it with our
assumes
that
they
understand
present margins of profit. When
what they mean.
These are ac¬
many of us in this room began our
cepted.
Perhaps we have a job
careers in the investment
business,
we
carried
our
brief
vastly different line in
bags. I have before me
an offering letter of my own firm
ed the accumulation of new capi¬ from which I worked in
my first
tal in the upper income tax brack¬ sales
territory. I could put on dis¬
ets.
Equally true, heavy succes¬ play Dominion of Canada Guar¬
a
history.
to
do
used
on
in
our
the
glossary
investment
It may be that it should
fully
culled
and
of
terms
business.
be
care¬
unnecessary
or
meaningless terms eliminated, or
sparingly used.
And finally, if we are serious
at least
Bank de¬ sion duties have broken up many antees—C.N.R. 5s of 1954—On¬
familiar to you, previously large accounts.
The tario 5s of 1948—Torontos, Hamil- about developing this Retail Mar¬
look at fact still remains, however, that
ket, we may need a new invest¬
Forum Discussion of the Invest¬
tons, Londons, Kitcheners, Winnithem. In 1934 there were 4,000,000 there is plenty of
ment instrument. The
type of in¬
money avail¬ pegs,
ment Dealers' Association of Can¬
at
yields
ranging
from
strument which will permit us to
able for investment.
The catch
ada
Annual
slightly below 5% to something
Meeting,
Minaki savings accounts in our banks, for
work along with the
seems to be that this money is in
program of
better than 5%.
In the corpora¬
a total of $1,370 million. Two hun¬
Lodge, Ont., June 23, 1949.
the hands of people who, for some tion field I could choose from Bell the
thrifty Canadian making a
practice of regularly saving some
reason, prefer to leave it in bank Telephone
at
4.96%,
Gatineau
accounts, rather than placing it Powers at 5.22%, Manitoba Power part of his income, however small.
in investment securities.
Surely there must be some way
Surely
*A
talk
by
Mr.
Shaw
at
the
our
posit figures
but
let
us
are
take
another
5V2S, fetching 5.42%, Shawinigans
these
people
we can
stand to benefit if
persuade them to put their
effectively to work.
money more
BRAWLEY, CATHERS
8s
COMPANY
Developed?
-
MUNICIPAL
-
CORPORATION
BONDS
BANK
OF
ble,
COMMERCE
ADELAIDE
5821
BUILDING
lack of
success
find
to
dollars
and, if possi¬
corrective
some
ness
important, it
days for
is
was common
more
realistic than in the
cessions
available
an
to
sub-agents.
These
sub-agents
were
to
There
scarcely
us.
small
too
good
was
to
important
be
drawn
and
the
small
between
grocery
corner
our
business
business.
The
might logi¬
cally sit down some evening and
one
or
more
wonder what has happened to the
available
to
have
sub-agents
There
undoubtedly,
are,
Perhaps
manship
in
that word.
who
search
us.
the
Yet
we
lack
better
we
are
many
sales¬
sense
of
the people
largely developed and direct¬
ed the sales program so successful
during nine Victory Loans.
Perhaps
our
merchandise hasn't
out
These
a
town
You
investment
men
know
were
grocer
the
funds
not
situation
now
stream-lined
merchandising oper¬
Operators like
Safeway,
Loblaws, and
Dominion
Stores
profit have narrowed so as to
buy top flight merchandise, tack
make the use of sub-agents prac¬
on
a
competitive profit, dress it
tically out of the question.
Our
merchandise is largely out to the up in attractive packages, put it
out where it catches the
eye, and
specifications of institutions, and
arrange their stores so that the
not designed to attract the mod
merchandise
is
easy
to get at.
est investor.
No longer can we They
let their customers serve
With the keen competition in bid¬
ding
measures.
reasons.
TORONTO
close to 6%.
too, of making the buying of com¬
mon
stocks more
popular.
The
profit margin in this type of busi¬
retail grocery business. He could
for
willing scarcely conclude that the grocery
course, is that some, if not all of
to work for nothing, and did not potential today is any less than it
us have not been too successful to
was 20 years ago.
find it necessary to do so.
He might come
Our
date.
There is, perhaps too, an
profit margins permitted us to to the conclusion that HIS lack of
implication that we are losing our
give them worth-while commis¬ success is a matter of profit mar¬
touch, and that we are not as suc¬
sions, usually % of 1%, and still gin—OR—if he is a keener ana¬
cessful as we were 15 or 20 years
have enough left to compensate lyst, he might come to the con¬
ago on a relative basis. The prob¬
clusion
that
the
chain
the salesman and the firm.
grocers'
lem is to get at the reasons for
growing success is the result of a
our
CANADIAN
these
out of the savings accounts and
into deposit boxes in the form of
securities?
The
implication, of
CANADIAN
GOVERNMENT
entice
basis, and an attrac¬
of industrials yielding
in those
brings us to the
part of the topic assigned to this
discussion period, "What can we
do to develop this Retail Market?"
we
group
bond business, if costs can be
kept
offering list
to carry a perforated strip at the down.
second
Maybe there is „an analogy to
right hand side, indicating con¬
This
can
4.90%
a
tive
Also
How Can Retail Market Be
How
on
send
for
new
salesmen
issues,
into
margins
the
field
ation.
of
in
(Continued
on
page
17)
THE
Convention Number
COMMERCIAL and FINANCIAL CHRONICLE
Harold Backus, McLeod, Young, Weir & Company,
17
Dominion Securities Corp., Montreal; G. Saint-Pierre, Dominion Secu¬
Corp., Montreal; A. E. Tomasic, Thomas & Co., Pittsburgh, Pa.
A. S. Keator,
Limited, Toronto; Frank Evans,
McLeod, Young, Weir & Company, Limited, Montreal; Murray Cox, Greenshields
^'i
& Co., Montreal
■.
rities
■
ilmpoitance of Greater Profit Margins to Dealers
This is
a
approach
Mr. Williamson calls attention to
than from the
the
of
desire
of
members
industry
our
increase
to
their earnings.
It
that
are suc¬
we
cessful
the
along
lines
propose
I
to
discuss the re¬
sults
should
benefit
Shaw's
Bruce
our
in¬
dustry.
Referring to
Alan H. Williamson
higher overhead and operating costs
retail distribution of securities.
follows,
however,
if
intensified competition in
as
rather
excellent paper
on
the
has changed
that formerly
comprised the retail market has
largely disappeared and has been
replaced, through the distribution
of wealth which is going on, by
probably 10 times as many people
having capital of from $1,000 to
$10,000 or $15,000. *
r
the
vened
situation
financial information expected as
of
immense
benefit to
borrowers
day function of the in¬ and that the cost of securing it,
vestment dealer has very mate¬ represented by increased margins
rially increased the cost of oper¬ that our industry would have to
ation. This phase of the subject have to develop it, would benefit
the
could be expanded at considerable the borrower materially in
length, but suffice it to say that long run and, in addition to this,
the cost of operation of investment it would enable us to give serv¬
ddalers has increased very mate¬ ice to this very broad group of
people who, more than anyone
As Bruce Shaw has pointed out, rially.
else, need expert and experienced
there are infinitely more holders
Intensified Competition
guidance in the investment of
of securities in Canada of a much
so
that
this
group
an
every
disappearance of tne retail
While the trend of costs has their funds.
market, 1 can recall a period when greater aggregate amount and a
continued to rise, the competition
Having,'1 I hope, justified by
there were probably 100,000 peo¬ 50% increase in savings accounts
in the business has intensified and these remarks the effort
by the
ple in this country who comprised in the banks in the past 15 years.
with it profit margins have con¬
Bruce has ably discussed what can
industry to search for some meth¬
the retail
market for
securities
tinued
to
narrow.
It
is
only od of increasing profit margins,
service this market
and who, as a group, were well be done to
informed because they were thor¬ and, having in mind the subject through the volume of business I will now discuss how this may
handled that investment dealers be brought about
by proposing
oughly well serviced by invest¬ allotted to me, I would point out
have been able to balance their some questions for consideration
ment dealers. When this situation that the cost of carrying on busi¬
!
existed underwriting firms could, ness has increased
substantially Dudgets and earn a reasonable re¬ by the meeting.
witn
during the past 10 years through
sues
two
confidence, purchase new is¬
of good securities for dis¬
tribution
without
being largely
dependent on institutional money
for the success of the selling cam¬
paign.
In the years that have inter*A
talk
by
Dealers'
of the
Association
In¬
of
their efforts.
vestment business is
As the in¬
subject to the
ebb and flow of volume the same
How Can It Be Done?
At
ties.
convention
our
Overhead
items
obviously
in¬
clude
In addition to
cedure for some years.
Would
it
be
possible to alter
give a wider
spread?
For example, could a
change be made so that one-three
year maturities would be traded
on
spreads of .05 in price; and
three-five year maturities on, say*
a .10 spread with longer than five
year maturities on, say, a spread
of y4?
Immediately, of course, a
these regulations to
number
mind
difficulties
of
but
ficulties
and
sion. may be
suggestion.
There
tions
have
the
by
some
doesn't bind under the
How
to
arms.
these, the regula¬
economy
of
service that is
been
on
this
recommenda¬
Business
Conduct
Committee of the Central District
this subject and recommenda¬
tions by a Special Committee of
on
But how
the Eastern District on the possi¬
can
our
so
tentialities.
think
I
all
would be true
that
if it
I
have
were
said
not our
duty to try and be of service to
tions of the Dominion and Provin¬
this great group of people that are
cial
Companies Acts and the Se¬
curity Acts of the various Prov¬
not
of
now
the
advice
only
to compare an an¬
prospectus or a re¬
port issued by a financial service
on
any
individual company for
necessary
nual report, a
1948 and
1938
1928 to obtain a
low
as
a
fraction of 1%
on
short-
Victory Bonds.
From this
small margin all expenses of op¬
erations must be met and if a
dealer had a net return of Vs of 1%
term
and execute
on his total volume, I think most
an execution profitably and
striking illustration of the extent
of us would be happy.~
economically is the $64 question. to which the presentation of fi¬
I believe that a good broad re¬
This is where I get rid of the ball nancial information has developed.
This broadening of the scope of tail market would be ultimately
to you.
promote
such
to
useful discus¬
developed
,
ting from a standard pattern and
hope
that
the
finished
article
rides neatly on the shoulders and
come
phase of this
problem is beset with similar dif¬
every
being given the benefit
and experience of
the members of our industry.
If
selling operation as simple as pos¬
it is true that without vigorously
sible. Perhaps we have something inces have necessitated prepara¬
to learn from them. We may have tion of
voluminous prospectuses attacking this great responsibility
we require a better profit margin
to develop means to bring the cus¬ which require not only more time
in
order
to
fulfill
our
proper
tomer into
our
shop and make and labor but also higher legal
him want to come back. The re¬ and printing costs. Year by year functions, it is even more evident
that this is necessary if we are to
tail operation under present mar¬ the business becomes increasingly
service clients who will be in¬
gins or profit, may have to be ap¬ complex and involved. It requires
proached from a mass standpoint. better trained and abler staff to vesting in small amounts only oc¬
casionally.
1
handle day to day business.
To
go
from groceries to the
While the public generally is
Investment service has also be¬
men's clothing business we may
and more extensive aware that the mark-up on retail¬
have to pay less attention to cus¬ come more
tom tailoring, be less of a Levy and intensified. More detailed in¬ ing most lines of merchandise is
from 25% to 50% or more, there
Brothers and more of a Tip Top formation is expected by investors
are
probably very few people in
Tailors operation.
We will have on new offerings and also on se¬
Canada who realize that our busi¬
to
be sure that we have
good curities already held. The analy¬
ness
is operated on a very small
materials,
make
our
measure¬ sis of investment portfolios takes
ments carefully, but do our cut¬ time and capable handling.
It is gross margin of profit, running as
themselves and make their whole
years
considered
approach
which
is tions under which The Invest¬
country the really beyond the scope of the ment Dealers' Association of Canimportant to the time allotted. Let us look first at
continued on page 25)
growth and development of a
young country with its great po¬
the
The Retail Market
(Continued from page 16)
20
it might have surprised those
present if they had been told that
such a regulation would come into
effect among Canadian investment
dealers and yet it has now been
in practice and a recognized pro¬
ago
ist and render to investors and to
Higher Overhead Costs
higher rent, higher cost of
Canada Annual Meeting, Minaki equipment and stationery, higher
wages and salaries, higher travel¬
Lodge, Ont., June 23, 1949.
ing expenses, higher printing and
advertising expenses, and higher
legal expenses.
vestment
turn for
At
trading is carried
on in spreads
of .05 in price for
one-five year maturities and V*
spreads in price on longer maturi¬
guaranteed issues.
profit margins be bility of establishing minimum
as other businesses, careful atten¬
widened? This is probably one of profit spreads. It may be that the
item in
an
investment dealer's
tion must be given to the matter the most difficult questions that meeting will wish to discuss these
overhead, and, second, through
of profit margins if the invest¬ faces
our
Association
subjects, but I do not propose to
and
one
the more extensive service ren¬
ment dealer is to continue to ex¬ which
requires a broad and fully make this approach. The regula¬
dered to investors.
the increased cost of almost every
Williamson at
Mr.
Forum Discussion
the
developments—first, through
and
the present time
as well
This has been
accompanied by lower profits margins caused largely by established maximum
spreads and other marketing restrictions. Calls for more freedom in market¬
ing of securities and larger profit margins to dealers on new issues. Holds
there should be more active market if present profit margins were increased.
borrow¬
ers,
direct
Wood, Gundy & Co., Ltd.
public of Canada and to prospec¬
tive
the trading of Dominion of Canada
By ALAN H. WILLIAMSON *
subject which I wish
from the point of
view of its benefit to the investing
to
or
CALVIN BULLOCK, LTD.
507
Place
d'Armes
Montreal 1,
Quebec
THE
18
Len
COMMERCIAL and
FINANCIAL
Brooks, Gardiner, Wardrop, McBride, Ltd., Toronto; Bill McAlpine, Brawley,
Cathers & Co, Toronto; E. R. Pope, Milner, Ross & Co., Toronto
v-;
CHRONICLE
Thursday, July 14, 1949
J. R. Murray, A. E. Ames &
Co., Ltd., Winnipeg; S. B. Kimber, A. E. Ames & Co.,
Montreal; Joseph W. G. Clark, Executive Assistant to the President of the Investment
Dealers Association of Canada; R. A. Gray,'James Richardson & Sons, Winnipeg
en
Bank Exhibits Canadian Progress
Pamphlet issued by Canadian Bank of Commerce
reveals Canada's important position in
world econ¬
Agriculture, Forestry, Min¬
ing, Industry, indicating Dominion's role as a leader
Furnishes data
omy.
on
in economic
The
Canadian
Bank
of
ucts
which
.axes
mankind
the
world
whose head office is in over requires.
Toronto, has recently issued a
Economic
diversification, says
pamphlet,
entitled
"Canada, A the pamphlet, has long been re¬
merce,
Modern
omy,"
data
which
on
ress.
Leader
in
World
garded
elaborate
contains
Econ¬
teristic
Canadian economic prog¬
distinguishing charac¬
great nations, particu¬
as a
of
larly in the division of labor and
specialization of industry,
and
■■
The primary object of the Bank
these have been foremost in Can¬
issuing the publication is to
give Canada its proper setting in
world economy. Canada is worldrenowned for certain outstanding
achievements—the production and
export of high-quality bread
wheat; the mining of the largest
supplies of nickel and asbestos;
ada's development in the last few
in
decades.
In order to demonstrate the po¬
sition of Canada in world econ¬
pamphlet outlines the
historical background of several
of the most important Canadian
products, and the major sources
the
manufacture
of
sufficient from
which they are now
ob¬
newsprint paper to print three of tained. This part of the work has
every five newspaper pages pub¬ involved, of course, a selection of
lished around the globe; and for considerable basic
material, drawn
a splendid war effort in the-1939largely from the Bank's own ex¬
45 period of hostilities; as well as
perience extending over a lengthy
for contributions to European eco¬
period (most of that since the es¬
nomic
have
reconstruction.
All
omy,.
these
Canada prominence
abroad.
In
fact, these great
achievements may have obscured
other progressive movements, no¬
tably those of an industrial char¬
acter, which have made Canada
one
tries
tity
of
the
most
advanced
economically.
of domestic
drawn
from
an
A vast
raw
natural wealth goes
dian
mercial
in
conditions
under
of
the
spirit
work
the
of
and
possible
not
an economy
only
on
a
which is
high level of
ductivity but is, also,
many
best
a
balanced
in
the
one
and depreciation allowances
that
entered
into
the
goods and services,
ment
subsidies.
and other
cost
of
less govern¬
The
itself covered
come
national
salaries,
in¬
wages
earnings of employees,
with military pay and
together
allowances,
sundry
corporation
and
returns
profits
invest¬
on
ment,
as well as the net revenue
of farmers and others in business
on their own account.
The value of the Gross National
Product
increased
by about 14%
1947, most of the
being due to higher prices,
although it is estimated that there
that
over
wa£
some
gain in physical out¬
1948
was
of
larger
yields
the
more
even
distribu¬
income, owing mainly to
and
uniform
more
throughout
agricultural
of
most
domain
crop
than
the
were
harvested in the preceding year.
altogether they have not the
flexibility as that which is
and
should
come
million;
rose
and
by 11% to
the
net
in¬
of agricultural and other
un¬
Investments
certainly be created.
ber of
of last week at
not remain as
committee
permanent threat
a
The. second condition should be
that the
political structure of the
would-be
borrowers
should
be
third
The
that
by
various
one
condition
way
or
in
countries
should
be
another the
the world
try to command again the respect
of
other
nations
as
it
was
cus¬
between first-class com¬
munities in the old days. It is not
tomary
to be forgotten that all
taken
to
of
the
have
free
not
led to the creation of confidence
in foreign
investments. There has
been too much of
exchange
con¬
now
incorporated business by 27% to
trols, and too many balances fro¬
$2,995 million.
zen
of the
The value of the Gross National
and valuable supply of prod¬ Product of Canada in 1948, is giv-
;:
The
was
national income last
about
three
year
greater
bery
by
disguised rob¬
expropriation
and
na¬
a new
Foreign Investments" be
submitted to the attention of the
governments,
well
as
as
of the Economic and Social Coun¬
cil of the United Nations. The In¬
ternational Chamber of Commerce
that this
suggests
immediate
be
sible in
be
code
consideration
incorporated
new
soon
as
given
so
as
as
agreements between
countries.
But
1
already
spread
to
pos¬
a
the
over
hope
new
world
.
has
in
that
connection.
Again it comes from
United States. It is already
known as the "Fourth Point" of
the
President Truman's Inaugural ad¬
dress where he stated that the
United States must embark
bold
on
a
for making the
their scientific ad¬
new program
benefits
of
and
industrial
progress
higher.
tionalization with indemnities far
available for the improvement and
growth of under-developed areas.
from representing the counterpart
The
President
of the true value
price changes, probably two-
thirds
has been too much
invest¬
It recommends that
vances
times
than in 1939 and, after
adjustment
for
by non-transferability. There
its
of
foreign
ment for
meas¬
counteract
capital
conclusions
for
"International Code of Fair Treat¬
various
secure.
the
approved
ments,
to all long-term programs.
pro¬
world.
Commerce, in its Congress
Quebec, has just
first condition should be
that the fear of war vanish and
The
ures
$2,590
foreign lenders and too
investments trapped into
many borrowing countries.
I realize that, it is
In order to contribute to the
only too logical also to see the
would-be
lenders
hesitating in restoration of the conditions re¬
front of the chaos still prevailing quired for a
large movement of
in the world. A better atmosphere
capital, the International Cham¬
movements
investment income
the
Of course,
Wages and salaries increased by
$7,000 million;
of
many
ICC Recommendations for Foreign
given by private capital.
about 14 % to
over
can
only be
temporary measures
as
same
put. The most notable feature in
tion
loans
government
considered
of
rise
com¬
Canadian
people whose efforts have made
substantial part of the most neces¬
sary
institution
All these records,
no more than pres¬
are
entations
of
become
the
economic
however,
quan¬
area
of
in which it has had Cana¬
constant study.
coun¬
through
forms of refinement to
1867)
materials
immense
the
tablishment
given
Outlook (or ixftt'l Investments
come, to which was added indirect
development.
Com¬
as
$15,400 million, was the
highest in this country's history.
The valuation, made
by an official
organization
;in
Ottawa,
was
(Continued from page 15)
based on the market prices of all
the business taken over by the
goods and services furnished by omies short of capital as the
the enterprise, capital and labor wealthy
countries of the 19th public authorities. And, finally,
Century engaged in equipping the there has been too much disre¬
of the Canadian
people and in¬
Continent?
Furthermore, gard for the rights of capital and
cludes, of course, the national in¬ New
we
should
incorporated in
added:
make
"I
believe
available
to
peace-loving peoples the benefits
of
s
store
our
edge
in
of
order
technical
knowl¬
to
help them to
realize their aspirations for a bet¬
ter life. And in co-operation with
other nations we
should foster
capital investments in areas need¬
CANADIAN
ing development."
As it is, this Point Four is bound
X
to promote throughout the world
W
a
Government, Municipal and
Recent
our
oil
a
a
thorough field investiga¬
tion. His extensive
report
\
problems
private foreign investments.
You will
impressive oil discoveries in Canada prompted
specialist to conduct
sound approach to the
of
Corporation Bonds
,
certainly allow hie
as
European to rejoice at the idea
that
after
meant
to
the
meet
Marshall
Plan,
short-term
prob¬
is available
on
request.
in
Oil"
LEADING
NEW
YORK
STOCK
STOCK
AND
EXCHANGE
COMMODITY
AND
OTHER
TELEPHONE:
DIGBY
F. B. Ashplant & Co.
Two Wall Street
NEW YORK 5, N. Y.
4-3600
Bell System
TORONTO —STAR BUILDING—TELEPHONE: WA-4871
Rector 2-1545
EXCHANGES
36 WALL STREET, NEW YORK 5, N. Y.
comes
difficulties.
solve
long-term
now
And I feel hopeful for the future
Write Department C-13
BACHE & CO.
MEMBERS
lems, the Point Four
to
"Canada—A New Frontier
Teletype—N Y 1-69
when
the
I
see
that
generosity
once
of
again with
thought,
with
the efficient methods and with the
experience
vailing
tic,
on
peace,
sound
which
are
now
pre¬
this side of the Atlan¬
prosperity
international
might spread
over
this Continent.
.
,and
investment
the world from
/
THE
Convention Number
Carl Falkenberg, Carlile & McCarthy,
Ltd., Edmon¬
COMMERCIAL and FINANCIAL CHRONICLE
19
Gerard
Gingras, Rene T. Leclerc, Inc., Montreal;
le
Commerce et VIndustrie, Paris, France
Nickle of "Oil in Canada," Calgary, Alberta,
demonstrating his miniature oil drilling equipment
Carl
ton, Alta.; Sam Sharpe, Gairdner & Co., Toronto
Alfred Pose, La Banque Nationale pour
Significance of Alberta Oil to Canadians
(Continued from page 13)
their
limit, found
boom collapsed.
Pincher
That
no
oil and the
has
boom
sequel. In 1941 Gulf Oil Corp.
began a geological " study of the
region, followed up with a fouryear geophysical survey, and then
to
dS*ill. <20
months
ago
Gulf discovered gas and light oil,
12,000 feet down, and is now
over
embarked
on a
multi-million dol¬
lar program to determine whether
or
not a major field has been
Pincher Creek is at least
tapped.
great "wet gas" field. It might
also become a large crude oil field.
a
Alberta's next oil boom started
because of "Fried Eggs." Legend
has it that, back in 1911, W. S.
"Bill" Herron noticed seepages of
coming out of fissures in rock
gas
formations
studding
surface
the
of what is now called Turner Val¬
Rancher
ley.
that
of
gas
Herron reasoned
could mean a lot
perhaps a lot of oil
seeps
and
gas
in the rocks far below the surface
Bill Herron came to Calgary tc
persuade businessmen that drill¬
ing for oil should be done. He
success, until one
day he persuaded two Calgarians
met with little
to visit Turner
onstration
on
Valley for
the spot.
dem¬
a
They ar¬
Bill Her¬
rived at the gas seeps.
ron hauled out a
match,
fire
set
to the
escaping gas, pulled out e
frying pan and a pair of eggs
broke the eggs into the pan and
to fry them
casually proceeded
The demonstration convinced. The
Calgary Petroleum Products
(we now know it as
Co.)
Co
Royalite Oil
drilling
and
formed
was
started.
In
May, 1914, at a depth of 2,700
feet, the well famed as the "Dingman Discovery" reached
produc¬
tion.
It
came
tive.
with
in
a
heavy
flow of natural gas, saturated
with
straw-colored light o^l so pure
and clean it was used straightway
duced nearly 100 million barrels
of oil and about 1,500 billion cubic
feet of natural gas.
It still has
upwards of 25 million barrels of
oil
and
gas to
billion cubic
400
feet
of
In 1942 Turner Valley
reached its peak of 30,000 barrels
of oil daily and then—as all fields
must —began to age, and com¬
go.
long, slow decline. Today
mence a
equipment
drilling possible.
Better
deeper
So far Turner Valley has pro¬
Creek
a
decided
opened up a major oil pool down
the west flank of the structure.
By
1946
major oil
for
hopes
discoveries
reached
made
low
a
ebb.
Alberta
the
on
Plains—at
Princess, Taber, Conrad, Vermil¬
ion, Wainwright and Lloydminster
but none very big.
A lot of gas,
however, was found—and several
major
oil
companies
started
thinking seriously about using gas
to create synthetic gasoline for
the Valley puts out between 12,-
use
000 and
perial, Shell, California-Standard,
McColl Frontenac, Union of Cali¬
fornia
and
smaller
companies
opened up large natural gas re¬
serves with synthetics in mind.
13,000 barrels daily, serv¬
ing Calgary area refineries. The
Valley's gas serves Calgary, Lethbridge and other
communities.
south
Alberta
During World War II, Turner
Valley played a vital role in sup¬
plying aviation gasoline require¬
ments
the
for
British Common¬
wealth Air Training Plan, and part
of the civilian needs of the prai¬
ries.
As the field
aged and pro¬
duction
new
declined, exploration for
fields in the prairies was in¬
tensified. '
Turner
■
Valley marked the Al¬
in the Prairie Provinces. Im¬
Then
Feb. 13, 1947, a new
dawned. Imperial Oil brought
era
on
in its Leduc No.
barrel
1
as
from
gusher
thousand
a
Devonian
a
formation of 20 miles southwest of
Edmonton.
California-Standards,
back in 1941, had first found oil
in Devonian at Princess, over 200
miles southeast of Leduc, and had
started the industry's widely scat¬
tered probing of that formation.
Leduc's
discovery
the
"hottest" objective
made
berta production start for many of
the companies active in Canadian
Devonian
oil
of
Canadian. Pacific Pete, Common¬
ada, for. the Leduc find rapidly
emerged as a major oilfield larger
than Turner Valley. Leduc's core
today—Imperial Oil, British
American, Royalite. Home, Anglo
wealth,
General Pete, Herron's
Okalta Oils, Brown's Federated
and Coastal, and many other.
Exploration of Canadian
American
It
seemed
Oil
Companies
to
Canadian
—D3 zone—is
lific
source
serve
good
million
veloped,
Guess¬
ting out
finding
proved
difficult.
work gave way to
ogy
and
were
Terri¬
cubic feet
for
mile deep
is
re¬
250
billion
500
of natural gas.
field, rapidly de¬
now
over
of
upward
plus
or more
oil
an
capable
automobiles
operate
then
at
called
to under 30,000 barrels
on
in
increasing
structures
the well-site.
degree
in
that might
or
be produc¬
a
rapid
very
measures
in
oil industry spendonly about $12 million
were
That
gary.
and
miles southwest of Cal¬
field
had
uos
many
They mounted to an
estimated $25 million in 1947; $50
million in 1948; and are expected
to reach $100 million this year.
Revenue
Leduc's discov¬
only 20 drillingTigs were op¬
erating. Now some 90 are at work.
When Leduc was discovered only
15 geophysical parties — seismo¬
graph, gravitymeter and magneto¬
meter crews—were working. Now
over
70 geophysical parties and
dozens of geologists are in the
ery
field.
At
Leduc's
of
about 20 million
expansion
of
intensifed
The
exploration
—brought material results. Today
it
may
be
reasonably
said
development of fields already
and of recent discov¬
eries may boost total proved re¬
serves
to
around
1,000 million
barrels.
How many more millions or bil¬
lions of barrels will be added to
by further discoveries is
anybody's guess. Odds favor, how¬
ever,
that the present reserves
are little more than a drop in the
reserves
of
ultimate
the
Alberta
The
eight
months
have
oil
discoveries.
certainly coming.
past
brought
More
seven
are
Natural
gas
in
reserves
Alberta
exceed
northward
billion cubic feet, between 70 and
600
over
miles, from
the Rocky Mountains on the west
to Saskatchewan on the east.
This
80 times Alberta's annual
ments,
exploration and land play
also spread to other sections
of Western Canada where oil and
has
gas
possibilities
million
acres
freehold
miles
of
exist.
of government
rights in
36
Over
and
the south 400
Saskatchewan
have
substantial
increases
consumption.
The
in
gas
serves
figure—
actually established by de¬
velopment drilling.
(Continued
re¬
It does not
on page
20)
<5
Quinlan
members
MONTREAL
drilled
below
shallow
the
STOCK
EXCHANGE
MARKET
HArbour 2201
BONDS
oil,
and
the
discovered
Limestone—the
Madison
first
KING 8T, WEST
Collier Norris &
TORONTO
sands
where Herron and Dingman
found
25
MONTREAL
ELGIN
1341
PLATEAU 8751
WINNIPEG
MEMBERS
same
The
formation later tapped at
Creek.
Madison
"wet
"Bob"
Pincher
Until 1936 Turner Valley's
was
gas"
classed
source.
Brown
and
as
a
Then
major
R.
A.
Calgary asso¬
ciates drilled to 6,800 feet at Tur¬
Valley Royalties No. 1, and
Quinlan
Limited
923-385
Investment Dealers Association of Canada
Investment Bankers
Milner, Spence & Co.
MEMBERS OP
THE TORONTO
STOCK EXCHANGE
Montreal
Aldred
Building
25 KING ST. WEST
HArbour 2201
TORONTO
ELGIN
1341
for
Alberta
large as it is—includes only re¬
Collier Norris
ex¬
4,200
require¬
allowances
making
full worth
gradually became
apparent. In 1924 Royalite Oil Co.
now
proved
MUNICIPAL
CORPORATION
es¬
tablished
spread from the American border
ploration and development in Al-
GOVERNMENT,
that.
Alberta's proved oil reserves ex¬
ceed 700 million barrels, and that
and Prairie Provinces oil reserves.
of
oil rights in Alberta were under
exploration, reservation or lease.
Now, in Albert, over 56 million
acres are being actively explored,
Mills, Spence & Co. Limited
and
in
Albert has—as might be expected
Aldred Building, Montreal
rocks below the Valley,
the
of
Already
downs before it reached ma¬
into
ner
dis¬
acres
com¬
Manitoba
Over 700 Million Barrels
bucket
time
the
covery
been
southwest
Proven Oil Reserves
sales—gross
value
before
operating
costs,
royalties and taxes—amounted to
about
$14.5
million
in
1946;
climbed to about $18 million in
1947; exceeded $36 million in
1948; and will probably reach $60
million this year, despite market
proration of production.
At the time of
have
acres
in
and in the Peace River Block
oil
from
of
northeast British Columbia,
MONTREAL CURB
turity. As oilmen dug ever deeper
the
lions
mitted
1946.
beginning grew Tur¬
ner Valley—the British Emoire's
first major oil and gas field, lo¬
25
American oil interests. Other mil¬
Estimated
ings
From that
cated
of the
down
daily.
With the Leduc discovery came
the
search for subsurface wrinkles
few
a
40,000 barrels daily.
Market pro-ration holds it
a
to
are
of put¬
Geol¬
science.
geophysics
Wells
Norman
Northwest
barrels,
the
however,
world, including
Today Leduc is rated
For
time,
coral reef—a pro¬
a
and
Texas,
The
long
Can¬
of oil and gas in sev¬
Canada's
given Turner Valley should con¬
tain many other oil and gas fields.
a
Western
tories).
American oil companies who car¬
ried the exploration burden until
1947 that
a
province
that had
in
eral parts of the
(in
and
the
oil-seekers
West
and
Here
growth:
Several small oil fields had been
found
cently been taken under commit¬
ment, to start off a long-range,
and perhaps large -scale explora-,
tion program by Canadian and
berta, and beginnings of major
pipeline and refinery expansion.
Association of America
Toronto
Canada Permanent
Building
WAverley 2984
20
THE
A. E.
Oliver, Wood, Gundy & Co., Toronto; Howard
Hunter, Fairclough & Co., Ltd., Toronto
COMMERCIAL and FINANCIAL
J.
A.
M.
Belshaw,
CHRONICLE
Thursday, July 14, 1949
Pierre C. Bonvoisin, Banque de la Societe Generale
Cathers
Brawley,
Fred Embury, A. E. Ames &
& Co., Toronto;
Co., Toronto
Belgique; Gerald G. Ryan, L. G. Beaubien & Co.,
■de
Montreal
Significance of Alberta Oil to Canadians
(Continued from page 19)
include
estimates
Alberta
by
single
wells, which were caped
for
doned
market.
adding
lack
The
more
forty
over
where gas has been
areas
discovered
for
of
wildcat
or
aban¬
or
more.
brief look at
a
other oil areas.
In
Oil
of
discovered
Leduc.
Anglo-C.
1948,
Imperial
Woodbend-Devoa
few miles north
Recently
&
E.
team
the Hometapped oil
between the west edges of Leduc
and
Woodbend, to indicate
between
ago
the
two.
a
link
Eight months
Continental Oil
of Canada—
Calgary independent—tapped light
in
crude
tion
east
sizable
oil
the
Cretaceous
of
Woodbend,
Actual
pool has
with
wells
&
initial
flush
flows
Redwater
producers
Imperial Oil, the Home OilAnglo Canadian team, Royalite,
are
the
and
a
devel¬
Pacific
Pete-Sunray-CalvanPrincess-Atlantic
group,
British
American
Hudson's
Bay
team,
Western
Leaseholds,
Canadian
Gulf Oil Company and the Barnsdall-Honolulu-Seaboard-Los Nei-
Imperial's
Devonian
Leduc
production
and
field
Leduc-West
has
reserves
In March and
as
Oils,
Globe
British
April, this
year,
sevenl discoveries, all
to be evaluated.
Imperial Oil dis¬
Golden
west
of
still
Spike,
Woodbend,
with
flush
flow
to
545 feet
of Devonian reef D3 pay.
A
ma¬
jor discovery is indicated.
and Leduc-Calmar
rial
also
zone
oil strike at Bon Accord, ten
Oils, all Cana¬
independents.
In
September,
1948,
Imperial
discovered Redwater—a Devonian
reef
field
Leduc
a
50
which
reserve
miles
northeast
has developed
larger than any
yet found in Canada.
of
into
other
Redwater,
made
D2
a
miles southwest of
a
Cretaceous
mud,
Alberta,
midway
about
outlets to
new
the
ease
cutback
Lloydminster
is
Alberta
Saskatchewan.
stretching
pools
from Leduc.
out
Gulf's Stettler well,
drillstem tests, indicated a po¬
tential
exceeding 3,000
barrels
on
Impe¬
Devonian
Redwater; and
discovery at White-
several
miles
east
of
the
Woodbend Cretaceous pool.
Around
60
miles
northwest
The
Stettler
strike
has
heated
broad stretch of territory in
and central Alberta, and
has assured expanded exploration
up a
on
the Plains
the
cities
of
reaching east from
Red
Deer
Cal-
and
gary.
important feature of
prairie oil play the past two
has been emergence
years
Lloydminster
region,
east of
is
Edmonton,
"Black
of
serve
as
molasses-thick
unlike
the
Redwater
light
and
large
a
Oil."
crude
oils
Leduc, Stanolind Oil & Gas Com-
as
dis¬
or
ship
oil.
Processed,
any
on
the
as
it
good
continent.
The
barrels, and
of
some
geologists believe the sands
give
up
barrels.
NESBITT, THOMSON i COMPANY
Limited
from
100 to
,
300
«
at
may
million
Partly because of the rapid
ex¬
pansion of light crude production,
ability to pro¬
are
placed
production they will come in
duce.
on
for
As
or
wells
new
share of the available
a
result
The
ket.
will
be
mar¬
reduced
production quotas for individual
wells.
To
the strain of transition,
ease
will
steps
allow
probably be
fair
a
light crude
volume
to
reach
of
taken to
Alberta
the
Pacific
Coast and Eastern Canada by rail¬
Negotiations are under way
special rail freight rates to
make such shipments feasible.
way.
ing capacity for light crudes. In
1948 the capacity was 46,000 bar¬
rels, having been boosted by the
completion of first phases of Im¬
perial's Edmonton refinery, the
first refinery in the vicinity of
rels.
In
1948 production climbed
to abdht 11 million barrels.
This
^ear total production will likely
be
between
large
ure
19
20
million
year's increase—
it will be—is not a meas¬
as
of ability
brings
and
This
to produce, which
to market proration, the
us
transition period, and the expan¬
sion of markets ahead.
In recent weeks oil production
of
flood
peak of about 58,000
a
daily.
oil
By that time the
from
fields
Alberta
had swept across the Prairie Prov¬
inces,
displacing
American
oil,
filling storage tanks at refineries
The first natural
and fields.
keting
area
of
mar¬
had been made self-
in
petroleum,
its current
to
refining
the
ca¬
pacity. The day of prairie satura¬
tion
came
faster
than
largely because of the
expansion
-
continued growth
a
potential,
tion amounted to 7.3 million bar¬
limit
reserve
of oil
Meanwhile, during the next 2^
have
proved oil
there will be
years, there will be an increase
of at least 50% in prairie refin¬
sufficient
a
period
was
Cretaceous Sands of Lloydminster
least 30 million
transition
lagging along at about 19,000 bar¬
rels daily.
During 1947 produc¬
barrels
In its crude
the
During
there won't be any great
increase in oil production, though
for
Climbing
of the Leduc
Leduc,
Valley,
In
prairie oil production
climbed to
state, Lloyd oil makes good rail¬
way
the time
At
which,
of
Turner
yields little gasoline.
re¬
Lloyd oil
to
impor¬
more
Oil Production
of the
straddling
a
asset
pains"—market
ahead
winter.
and
rich
a
will play
it
barrels.
Another
the
and
covery,
sections of Devonian,
fall
tant role in Canadian economy.
daily of light crude oil from about
100 feet of pay zone in D2 and D3
yields asphaltic products
of
time
this
"growing
proration.
came
seasonal
between the original Devonian oil
find at Princess, and the several
date—12,000 «the Alberta-Saskatchewan border
barrels daily rate—from
American, Home Oil, Okalta Oils,
dian
central
several
initial well showing Canada's
big¬
gest
Madison
south
tos team.
came
heavy crude in the, which has cut into prairie mar¬
Limestone, on a farmout kets that could be served by
block of land secured from Im¬ Lloyd,
and
partly because of
perial. Twenty miles east of Le¬ freight rate and fuel tax inequal¬
duc, the independent team of Su¬ ities (as compared with the com¬
perior
Oils-General
Pete-Kroy petitive fuel, coal), Lloydminster
Oils-Jupiter Oils made a promis¬ is suffering growing pains.
This
ing discovery of light crude in the summer Lloyd is producing from
Viking sand at Joseph Lake, also 4,500 to 5,500 barrels of oil daily,
on a farmout block from Imperial.
during the seasonal peak, while
its many small independent pro¬
In recent weeks the "hot news"
ducers and its major marketer
was made by Canadian Gulf Oil
Company, at Stettler, in south (Husky Oil & Refining) press for
found
nany
Devonian
daily.
Leading
forma¬
been
expanded by such firms
Oil
has
already
climbed to around 30,000 barrels
daily by completion of over 60
miles
tapped
may
potential
southeast
been
Actual reserve
barrels.
covered
strike,
mil¬
prove
oped. West, southwest, south and
of
now
300
ranging from 500 to 2,500 barrels
January,
nian reef field
least
at
considerably higher. Redwater production rapidly built
up
this spring to over 10,000 barrels
daily, and is being held around
that figure by market proration.
is
such gas discoveries
Let's take
for
aver¬
lion
oil
already referred to LeTurner Valley and Pincher
Creek.
good
D3
feet, is
immediate
I have
duc,
combined D2 and
age Leduc pay of 70
rated
for
an
search
of still unknown worth. This year
alone has already yielded half a
dozen
whose D3 oil pay has a maximum
thickness of 150 feet compared
with
tion,
of
discovery.
months
As
rapid
produc¬
Redwater
within six
field's
expected,
very
a
the Leduc-Redwater fields.
to
tions
to
Imperial-Edmonton
re¬
finery and North Star's Winnipeg
plant.
In 1950, capacity will in¬
crease to at least 61,000 barrels
and in 1951 to at least 70,000 bar¬
rels, by construction of McColl
Frontenac's first prairie refinery
at Edmonton, and expansion of
Imperial
and
British American
plants at such refinery centers as
Calgary, Moose Jaw and Regina.
There may be a Winnipeg refin¬
ery built by Imperial.
Refinery
projects
by
pected.
others
can
be
ex¬
,
Such refinery expansion—nec¬
essarily fairly slow, and highly
costly—is needed to meet increas¬
ing demands for all types of pe¬
troleum products on the prairies.
Overall prairie area demand in
1948
58,000 barrels daily.
was
that
timated
result,
average
of
This
capacity is being stepped up
at least 54,000 barrels, by addi¬
year
demand
this
Es¬
will
year
about 65,000 barrels daily.
It will continue to grow in years
follow.
By 1958 prairie de¬
to
mand
UNDERWRITERS and DISTRIBUTORS
is expected to reach
100,000 barrels daily level.
It
is
reasonable
now
that
few
Government, Municipal,
Alberta
years,
oil
Issues
all
of
Dominion
is
with
large
a
a
per
a
Canada
in petroleum.
consumer,
Public Utility & Industrial
expect
could, within
make
self-sufficient
to
the
Our
petroleum
capita de¬
mand not far short of that of the
United
PHONE
(MONTREAL) HARBOUR
that
9221 ♦
States,
of
any
and
far ahead
nation
outside
of
of
North America. This year Canada
is using around 290,000 barrels of
355 St. James
TORONTO
QUEBEC
oil
Street, W.
HAMILTON
LONDON, ONT.
VICTORIA
-
Montreal
daily.
Demand is growing
steadily.
It has nearly doubled
the
WINNIPEG
OTTAWA
past
decade.
By
1958
econ¬
CALGARY
VANCOUVER
omists estimate Canadian demand
SAINT JOHN,
N. B.
will exceed 400,000 barrels
As
far
produce
as
is
Alberta's
concerned,
daily.
ability
it
is
to
now
THE COMMERCIAL and FINANCIAL CHRONICLE
Convention Number
R. G.
Editor, Canadian Finance, Winnipeg; K. S. Blair, James Richardson
Sons, Vancouver; Syd Stephens, James Richardson & Sons, Winnipeg
Les Rowland,
&
estimated that under proper con¬
existing wells
methods
servation
could put
out at least 80,000 bar¬
daily.
By the end of this
year potential will probably ex¬
ceed 100,000 barrels.
By the end
of 1950, making due allowance for
decline in potential of older wells,
completion of more wells in ex¬
isting fields, and for new discov¬
eries, potential might grow to
anywhere between
150,000 and
250,000 barrels. Beyond 1950 is
anybody's guess.
rels
outlook
That
requires markets
beyond the prai¬
ries.
That
means
pipelines, to
lower costs of transport and thus
permit competition in a broader
market.
Large
pipelines
can
transport oil for as little as oneoil
Alberta
for
third
the
rail
of
cost
transport.
In
effect, they eat up two-thirds
of
the
and
distance
outer
move
oilfields
between
fringes of market, and
distant
more
portionately
markets
pro¬
closer.
The first
most economic and
major oil pipeline out
by Interprovincial Pipeline
Company, a unit of Imperial Oil.
Planning for a line from Edmon¬
ton to
Regina was started as soon
it became apparent Leduc was
major field. As more discov¬
came, and oil reserves ex¬
the pipeline plans also
expanded. Until a few weeks ago
the plan called for a 16-inch line
a
eries
panded,
Refineries must be built by some
one in such States as the Dakotas
and
Minnesota, which now are
largely served with refined prod¬
ucts hauled in from other Amer¬
ican
Nineteen-fifty
will
completion of
a
1,000-mile pipeline, from Alberta
the
to
Pioe
see
head
of the
20-inch
of
Great
Lakes.
diameter,
with
ultimate capacity of over 200,000
barrels daily, will orobably be
laid
far
east
Regina.
The
16-inch
pipe
will probably be
used from Regina to the Great
Lakes.
The cost of the enlarged
project is now estimated at $100
as
million.
This
as
also
must
reserves are going to be ade¬
quate to provide for export both
to
Pacific
the
East. Such
Coast
and
and
have
to be fitted into
refinery
projects in both British Columbia
the
American
Northwest
A Pacific market for Al¬
oil is logical, if our oil re¬
serves
warrant, for the present
major supplier along the Pacific—
outside
Canada—involve
several
hundred
far
natural
as
export
gas is con¬
also being made
are
from
Alberta.
West-
Transmission
Company,
sponsored by Pacific Petroleums
and
its American partners in Al¬
berta
line
exploration,
north
across
proposes a gas
central Alberta
and British Columbia to Vancou¬
with ultimate terminus north¬
California.
Gas
Ontario refining
during the months of
It
will
also
cen¬
Northwest Natural
Company,
Al¬
berta crude to break into the great
sponsored
are
found—will also call for, dur¬
ing the
of
years
fact, it is ouite possible that
the bulk of Alberta crude pipe¬
lined east beyond the prairies will
to the United States.
of the Ontario
Canada's
and
The bulk
Quebec
accounts
for
Oil
and
a
linking Alberta
and
by
fi¬
line
to
network of lines
gas fields with an
from
southwest
Seattle, Portland,
Vancouver.
Prairie
a
business
of
found
by "risk capital," pro¬
vided by men or companies who
ground who want to take risks for high
and
stakes,
Canadians who
investments, it
for
to me that oil offers oppor¬
seems
tunities
far
greater
dians have yet taken
If,
in years
should
to
raised
be
than
—
would
foreign
would
come
closer
to
petroleum self-sufficiency "in bal¬
a
trade of oil with the
Cana¬
advantage of.
the cry
come,
that
American
dominates the Canadian
oil and gas industry, it will only
capital
border
our
were
friends across the
alive to, and
more
willing to risk and share in,
responsibilities and opportuni¬
finding of ma¬
exploration and development pro¬ jor reserves in Alberta.
Oil is a fascinating business. It
grams.
Production revenues of
today—plus the profits now being has gone a long way, and become
derived by some integrated oil even more fascinating, since Koo¬
companies from their pipeline, re¬ tenai and Lafayette traded a horse
fining and marketing operations- for a Pincher Creek slough, since
fall far short of meeting the "in¬ Bill Herron fried eggs in Turner
vestment capital" requirements of Valley, since Bob Brown drilled
the major pipeline and refinery the deep Turner Valley oilwell in
projects made necessary; by the 1936, and since seismograph found
more
the
ties created by the
recognize the odds against discov¬
the wrinkle that became Impe¬
ery and are still willing to shoot Alberta discoveries.
in the knowledge that
There is plenty of room, and se¬ rial's great Leduc discovery 2Vz
when long shots pay off, they pay
curity, in Western Canadian Oil years ago.
off
with
profits
commensurate for
"investment
capital"
from
You—key men in the Canadian
with the risk.
Canada's Banks, Insurance Com¬ investment field—would perform
There's plenty of room in Can¬ panies/private groups, and indi¬ a valuable service to yourselves
ada's West for more of that kind viduals.
and to the nation by taking a
'
close look at, and keeping well
of "risk capital." The bulk of it
Alberta Oil, from humble be¬
informed on, the Alberta oil boom
now is being provided by a score
ginnings, has grown into one of
and its allied projects.
or more
of American major and the
The old
great Canadian industries. Its
big independent oil companies, role in the West's, Canada's and familiar rule appliesi—'Investigate
before you speculate or invest." I
and some 15 Canadian major and the world's
economy is still small,
feel sure that if you investigate,
established independent oil com¬
however, compared with the role
panies. The balance is being pro¬ it appears destined to play in the Canadian capital in future will
vided
by small new companies future.
exploration syndicates, which
American
Al¬
Trail
Pipeline
Western
Canada,
lightly touched
and
as
have only
gently invested, after
a
Winnipeg,
proposes
Calgary
area
a
line
from
to feed natural
oil
and
a
Underwriters and Distributors
great Canadian indus¬
perhaps
share
in
the
GOVERNMENT, MUNICIPAL
Since 1922
A
of Canada's
picture, the East's "Risk
growth of
try,
one
and welcome, most vital industries.
Intelli¬
capital" could do much to aid the
interests of
necessary
study of
the
Nanton
vestment,
play a much greater role in the
capital, risk and in¬ development of
yet the great
"risk capital" of the East.
Company, sponsored by the Osier.
Complete Over-the-Counter
Public
Service for
Utility and Industrial Issues
BROKERS and DEALERS
in CANADIAN
STOCKS
Government
Bank & Insurance
Industrial
Industrial
Public Utility
Real Estate
Public
Utility
Mining Shares
And Western Canada Oils
of
through existing channels.
ance" by
is
Reserves of oil and
its broad base. These must
Hammond &
the
the
Credit
Interprovincial Limitee
Members Montreal Curb Exchange
Members Investment Dealers'Assn. of Canada
consumption
continue to be served with
Canada
gas
phases.
many
mar¬
70%
oil
dollars.
BONDS
In
ket—which
ahead, the spending
hundreds of millions
more
and
export
in
at the surface.
be because
have raised most of their funds in
berta
reserves
more
and
ests, proposes
oil market that exists in the Mid¬
west United States.
oil
revenues
ments of today. Many, however,
and will need more capital than can
gas reserves.
This be secured from immediate
pro¬
continuing exploration—and the duction revenue, if they are to
development of reserves as they carry out at desired speed their
in discovering
oil
more
nancially strong New York inter¬
open
permit
turn
into
the works
cerned, plans
coast
total
of
sums
and the continued success of that
program
be
for
"wildcatter's" objective.
want to make safe
gas are
So
every
Many companies operating in
ready found in Alberta ensure
Alberta have already created real
completion of several of the great
values in terms of oil and gas in
capital-investment projects.
the ground, which will be turned
The balance is dependent upon,
into cash as the reserves are pro¬
in large degree, continuance of the
duced during the decades ahead.
present vast oil and gas explora¬ A
few
are
now
drawing out
tion program in Canada's West,
enough to meet capital require¬
to keep pace with its own grow¬
lumbia.
in
millions
dol¬
The oil and gas reserves al¬
lars.
the State of California—is unable
ing needs, let alone those of Ore¬
gon, Washington and British Co¬
"commensurate profits" which are
ment the Canadian capital that
Discovery brings need for great
of "investment capital," for pioneered the Alberta oil indus¬
the development of oil and gas try/
apolis and St. Paul.
fields as they are found, for gath¬
The capital needs of our oil in¬
ering and transport pipelines, for dustry have changed in a short
Capital Investment Projects
oil refineries, absorption plants, space of time from terms of mil¬
These
projects—oil
and
gas storage
facilities—and
all
the lions to terms of hundreds of mil¬
pipelines, refineries, within and other items which are needed to lions of dollars. For Canadians
sible ultimate objective such Mid¬
west American cities as Minne¬
pipeline will permit
other
crude
the
to Regina, Saskatoon, Winni¬
and other Saskatchewan and
gas
,.
east
water.
en
to
westward line would
a
Alberta crude to move by tanker
through the Great Lakes to Sarnia
ters,
be
oil
ern
plan has been further
There
Several oil companies are seri¬
ously
considering
a
westward
pipeline—convinced that Alberta's
the fall of next year.
expanded.
orobably
States.
major additions and revisions to
refining capacity in the Eastern
Canadian Provinces, as well as
further additions to refining ca¬
pacity on the prairies.
ver,
Now the
logical market.
Lakes
Great
pipelines
alone, however, won't end the
transition period for Alberta oil.
stretching for 475 miles to Regina
capacity of 50,000 bar¬
rels daily and ultimate capacity
of up to 140,000 barrels daily.
It
was to be
a
$45 million project,
to be ready for delivery of oil by
with initial
has been pouring in by the scores
of millions of dollars—-to supple¬
Manitoba communities with pos¬
The
berta
year
as
peg
States.
of Alberta is that to be built next
McCulloch, Osier, Hammond & Nanton, Winnipeg; James Duncan, Wood, Gundy
Mcintosh, Pemberton & Son Vancouver Limited, Vancouver
& Co., Vancouver; H. B.
United States designed to let the
of both nations serve the
reserves
and
Provision of Pipe Lines
21
Kippen & Company, Inc.
Members
Investment Dealers'
Association
of Canada
Imperial Bank Bldg., 610 St. James St., W., Montreal
LANCASTER 5101
Direct Private Wire between Montreal, Toronto and Ottawa
210 Notre Dame St., W.
65 St. Anne St.
MONTREAL
QUEBEC
Telephone Lancaster 9241
Telephone 2-1852
COMMERCIAL and FINANCIAL
THE
C.
E.
Times, Toronto; Jack Kingsmill,
Ertl, Financial
f..
Secretary and Treasurer of the Investment Dealers Association of
-
Canada, Toronto; Strathy R. Mackellar,
Co., Toronto
Hagar
t
Ontario.
on
Boundary Falls, located
Winnipeg River,
three
the
miles
from
the
Manitoba bound¬
rom
page
3,479
10)
miles
of
vided
ary, is
tential
to
new
26,036
lines
rural
rural con¬
Those figures represent
new
estimated to have a
po¬ sumers.
capacity of 112,500 kilo¬ a substantial increase over 1947
watts (150,000 h.p.). Kettle, Oak when 1,007 miles of line and 20,691
and Manitou Falls, on the English consumers were added, and 1946
River below Ear Falls, should pro¬ with 1,188 miles of rural line and
duce well over 75,000 kilowatts
16,802 consumers.
The 1949 rural
(100,000 h.p.).
program, to the end of the present
Another important part of the
year,
calls for the building of
Commission's operation is in the 5,314 miles of new line to serve
field
of
electrification.
rural
has always been a policy,
the
duty of Hydro to
It
in fact,
furnish
to
electrical
consumers
throughout the province on an
equitable basis according to their
power
needs.
Farmers
sumers
must
well
and
as
be
and
rural
provided
con¬
for
as
manufacturing industries
urban
consumers.
In
42,820
new consumers.
A substan¬
tial inroad has already been made
on these totals during the present
fiscal
with
year
the
completion
of
2,071 miles of rural line pro¬
viding service for 17,103 new con¬
sumers.
Today the Commission
has
approximately
in
consumers
1948,
The
use
of
the
higher standard of living on the
But it goes much further
than
rural
239,226
province.
that.
It
a
Investment in Canada
Expands
A prosperous and progres¬
(Continued from page 12)
sive
agricultural
; on
so
industry
is
essential to economic balance. At
the present time Ontario farmers
are
of
not
only meeting the demands
the
domestic
contributing
of
needs
market
but
are
substantially to the
Great
Britain
countries of the
the
and
Continent.
Elec¬
trical services
are a great incentive
keeping the farmer and his
helpers on the land by bringing
them similar advantages to those
enjoyed by city folk.
in
While the Commission is accel¬
erating in every
construction of
transmission
cilities
to
possible the
plants,
way
new
lines
power
other
and
fa¬
keep pace with the
expansion of Ontario,
attention is also drawn to the role
used in
other parts of this
conti¬
nent.
The Commission has established
organization
an
made
direct
the
of
its
personnel
engineering
own
to
up
of frequency
progress
conversion
and
already prelimi¬
nary surveys are being made in
a number of areas.
An important
step designed to expedite progress
of the change-over was taken with
the
retention
Comstock
of
the
consumer
Canadian
Company to undertake
initial
the
stages of
equipment.
converting
Statistics of the Dominion Gov¬
ernment
show
Canada's
leading
that
Ontario
is
manufacturing
province, being first in number of
establishments
salaries
and
and
wages
employees,
naid,
cost
of
materials and net and gross value
of goods produced.
It is esti¬
mated that
sons
are
more
than 860.000 per¬
employed
in
industry.
Assuming the population to be ap¬
proximately 4,000,000 that is an
average of one out of every five
and clearly reflects the all im¬
portant contribution that industry
of all kinds is making to the eco¬
nomic development of the prov¬
ince.
!•;
sizable deferred needs. And so on.
But this is
a
rich and favored
Hydro is doing its utmost to sus¬
the tempo of that develop¬
by making available the
to keen Production
employment at the highest
power
Joachims
power
development,
Des
be the
great
developments for which probably
more
than a billion dollars and
be
which, when completed, will
second largest source of power operated by The Hydro-Electric Power
Commission of Ontario. Situated on the Ottawa River some 38 miles
sible level.
At the
Commission
same
is
time the
employing
upstream from Pembroke, Des Joachims will supply 358,000 kilowatts thousands of men in skilled and
(480,000 hp.) at 60 cycles, to serve Hydro's Southern Ontario system. unskilled categories for work on
Power from this development will be transmitted for a distance of some
its
200 miles
over
230,000-volt steel tower transmission lines. Actual
own
numerous
projects.
Thus
con¬
the benefits to the people and in¬
struction at the site began in the Fall of 1946 and it is expected that
the first four units of this eight-unit plant will be ready for operation dustries of the province are real¬
by
1950
with
the
remaining
four
scheduled
for
service
by
many workers will
during the years to
of
labor
the
required
1951. ized both directly and indirectly.
staffs
own
our
able
and
to
well
are
skilled
Asso¬
give
ment business.
Some 400 students
at
present enrolled for these
courses,
which include exacting
tests of knowledge of the funda¬
are
future
holds
much mentals of government and corpo¬
promise for Canadians who have rate finance, analysis of financial
enough faith in their country to statements, investment policy and
further its continued development other subjects considered required
and enough judgment to perceive reading for the competent invest¬
over-all progress despite the ups ment dealer. This program, now
and downs inevitable in business in its second year, is operating
enterprise. I am not, of course, most successfully and is a source
urging the indiscriminate buying of justifiable pride to our in¬
of
speculative securities.
As a dustry.
matter of fact, most of the money
In addition, our Association has
required for the initiation of great on various occasions submitted
The
come.
industrial
undertakings is
sup¬ the investor's viewpoint to Royal
plied by the direct investment of Commissions, the Departments of
private capital and, in the case of Finance and National Revenue,
established companies, out of cor¬ the Bank of
Canada, the Foreign
porate resources, rather than by Exchange Control Board and a
the public flotation of security is¬ number of the
provincial govern¬
sues.
My object, as an investment ments, and in doing so has, I feel,
dealer, is to emphasize the need served a most useful
purpose. This
adequate venture capital in a
economy
and the value to
this country of the alert and well-
for
*ree
informed investor.
Since
last
our
with
forces
meeting,
formally joined
Canada.
brings to the Dominion many
valuable assets in fisheries, for¬
ests, mines and water power, as
well
as
undeveloped
mineral
wealth of great potential value in
As
Labrador.
wish
fellow
every
good
Canadians,
to
fortune
this latest comer, whose entry into
Confederation
promises substan¬
tial and mutual advantages.
When I reflect upon the hap¬
penings of the past 10 years and
the complicated problems of or¬
ganization and production which
we, as a nation, have successfully
resolved, my confidence in the fu¬
ture of this country takes on new
strength.
has
been
think
a
Invaluable
experience
acquired and with it, I
more
assured approach to
certainly
our
be
Association.
it has
years,
this to
feel
own
importance
acquired
true
Of
a
I
of
recent
growing
articulate
and
closely-knit body, anxious to
pro¬
mote
high
as
an
ethical
standards
and
capable of effective leadership in
the protection of the investor's le¬
gitimate interests.
An
One
tecting
the
the
best
attention of
members of the Association.
Statistics
the
on
disposition of
personal income show that the
personal savings of Canadians ag¬
gregate vast sums in years of
prosperity. For example, the in¬
dicated total of savings for 1946,
1947 and 1948 amounted to $961
millions, $650 millions and $1,146
millions, respectively. A high pro¬
portion of these savings is paid
to insurance companies under life
insurance
and
endowment poli¬
cies,
ways
investor
is
of
the employ¬
large sums so
received is subjected not only to
legislative restrictions but also to
the rigorous tests set up by the
Now
benefits.
ment
the
of
very
institutions.
individual
It
to
make
is
personal belief that if these
ings
use,
broadening of the field of
investment
particular,
more
vestment
stocks
are
tion
my
sav¬
put to their best
be
to
are
a
institutional
a
in
of
promising
Canadian
essential.
in
in¬
common
corporations
A larger participa¬
insurance
by
and,
extensive
companies
in
the development of commerce and
industry
to
pro¬
kin¬
contracts and
annuity
dred
is
required
in
tional interest and should
Education Program
of
technical mat¬
reserved for the
ters
Newfound¬
land
we
aspect of our work is perhaps not
generally known and I thought it
worthwhile to touch briefly upon
it before turning to
annual
Newfoundland has
and
pos¬
trained
graphical position. Recent discov¬ able to the staffs of its members
eries of oil, iron ore and titanium- detailed instruction in the princi¬
iron ore mark the beginnings of ples and practices of the invest¬
ment
the
that
sure
country:
rich,
amongst
other service. Accordingly, our
things, in natural resources and ciation has instituted an Educa¬
technical skills; favored in geo¬ tion Program which makes avail¬
the problems that lie before us.
'v
tain
on
Ltd., Vancouver
Vancouver
tario.
are
taking is completed the 25-cycle
in the province will have
been changed to the more stand¬
ardized
60-cycle power widely
rapidly
Daly
the mixed
typical of On¬
especially
areas
proceeding
A.
that
tasks,
future. When this gigantic under¬
is
R.
of many
frequency conversion program
occupies in this planning for the
work
Pemberton & Son
Robinson,
farms
economic
electricity fosters
times and la¬
save
the performance
in
the
Construction
& Co., Winnipeg;
Co., Toronto; W. J.
Glasgow, Peter D. Curry
W.
Borrie,
C.;
farm.
bor
constructed and service pro¬
were
B.
E.
Robert
Jim Joyce, Financial Post, Toronto
Increasing Ontario's Power Needs
(Continued i
Victoria,
Investments,
Thursday, July 14, 1949
Edward
Doug Colvey, Canadian Dow Jones, Montreal; Warren Sellers, Telegram, Toronto; Lou Williams,
S. R. Mackellar &
'
CHRONICLE
feasible
be
me,
the
it
na¬
seems
within
the
bounds
imp9?ed by present legis¬
lation,
"
-
"
*
•:
" "
v ^
•
THE COMMERCIAL
Convention Number
and FINANCIAL
23
CHRONICLE
HP
*
";v
*%. v
;
HP**pjSfjgljj^
ill
'
.
Calvin Bullock, New York City; J. K. Hughes,
Geo. Beves,
Kenneth P. Duggan, D. M. Duggan Investments,
Montreal;
E. D. B. Magee,
Royal Securities Corp.,
Ltd., Edmonton, Alta.
Dominion Securities Corp., Toronto; F. B. Poutney, Houston, Wil-
loughby & Co., Ltd., Regina, Sask.; A. W,
McLennan, R. A. Daly Co., Toronto
&
Europe's Problems
Canada's Role In
will
(Continued from page 14)
mained
far of little if not neg¬
so
a
inevitably be
plunged into
social and industrial crisis even
Such
a
complement Europe will
land that is very
find in Africa, a
to
order
As you play in this situation?
develop Africa.
I know
well, Gentlemen, that Can¬
ada is still, in a large part, a
new country,
and thai she must,
therefore,
make
heavy invest¬
very
modernizing
industry, the United
view
in
know,
of
European
than the one they sparsely populated, for the most
States has chosen, in the Marshall
in the period after part still untapped, and where
Plan, a system in which tne Amer¬
1929-1930.
It is therefore neces¬ Europe has gained strong posi¬
their own territory goods which
ican taxpayer makes the principal
tions.
Thus the development of
could no longer be found on the sary both for the European na¬
Africa becomes a vital question contribution, since the payments
tions and for the industrial pro¬
world market for the reason that
to American industrialists in re¬
ducers of the entire world that for Europe, and the effort that is
former suppliers of these goods
turn for sending supplies to Eu¬
now being made to give the Euro¬
had been compelled to withdraw. Europe, admitting its unity, should
rope, come out of the budget of
rationalize its industrial possibil¬ pean countries the modern equip¬
the United States.
But, for the
After the war, European indus¬
ment necessary for the utilization
ities, eliminate all duplication and
of the undeveloped
of their natural resources, must equipment
try was kept busy for several
organize itself in such a way that
years, both restoring rains and a division of labor is established be accompanied by a similar ef¬ countries, President Truman con¬
templates calling upon American
rebuilding stocks which had been
between
countries
henceforth fort to investigate and then util¬
consumed by countries only in¬
ize the economic possibilities of private capital. And, in order to
united. The various branches of
terested in destroying each other.
Africa. But, if Europe cannot by give private initiative an incen¬
industry must be localized where
tive in this field, the United States
However, when all these excep¬
itself even supply the modern
they can best develop, and this
Government pians to guarantee
tional needs had been dealt with,
equipment it needs, how can it
can be achieved only if free cir¬
when
keen
competition
again
find
the
enormous
capital re¬ whatever capital is invested for
culation of manpower, goods and
this purpose. No guarantee of this
made itself felt on the interna¬
Here,
capital in the various parts of quired to exploit Africa?
sort was given to the European in¬
tional market, the world, due to
gentlemen, we are confronted with
Europe, is assured. In other words,
vestors
when they financed the
overprpduction;* suffered a crisis in a world where the interna¬ a problem which, in some degree,
which revealed in a clear light the
is analogous to that which the industrialization, of the new coun¬
tional division of labor is tending
countries that were not yet indus¬ tries, and tnere is no doubt that
disruption of the prewar system. to
disappear, where each nation is
such an arrangement would have
It became obvious that a new
becoming an independent unit, not trialized, the so-called new coun¬
equilibrium of economic forces
tries, have had to solve during spared the small European share¬
only politically, but also economi¬
holders many losses. > The condi¬
had to be found.
But Germany
the XIX Century.
cally, whereiconsequentlyj eco¬
was
determined to achieve this
You know the role played by tions under which American pri¬
nomic exchanges between coun¬
vate capital will operate in the
equilibrium by means of war. Be¬ tries
are
becoming
more
and European capital in the industrial¬
cause of her aggressive attitude,
ization of these countries. Euro¬ undeveloped countries today, will
more restricted, the old countries
therefore be much more favorable
there remained for the rest of the
of Europe, whose entire economy pean people, especially the Eng¬
than those under which the Euro¬
world no choice but to devote to
lish and the French, did not hesi¬
was
formerly based upon inter¬
the preparation of another war,
tate to put large savings at the pean savings were invested during
national trade and who, for that
the XlXth Century. That is why
then to throw into its abyss the
disposal both of the governments
reason, depended upon the out¬
we hope that President Truman's
of these countries and of various
overproduction which found no
side world for their very exist¬
outlet on the world market.
>
private groups engaged in the ex¬ appeal will be heeded and that
ence, have no choice but to unite.
American private initiative, fol¬
This second war has wounded
ploitation of new discovered re¬
Europe far more cruelly than the Looks for African Development sources. And these sums—which, lowing the example of European
first one
and will
Even this union, however, will incidentally, were not always put investors in those times when the
undoubtedly
bear
far-reaching consequences not be a sufficient answer to the to the best use—enabled the new old Continent had an excess of
importance
industrial
ligible, '
strove in order to manufacture on
more
serious
experienced
problem, for the entire territory
of Europe lies in the temperate
zone, and the old Continent, there¬
fore, lacks the agricultural prod¬
ing us now. The trend toward in¬ ucts that grow only in the Tropics.
dustrialization which had sprung It also lacks some of the minerals
which I do not propose to exam¬
countries to pay for
However, a problem of
the utmost importance for the im¬
mediate future of Europe is fac¬
which
ine here.
up
in the new countries during
World
First
the
War,
grew
1939 and 1945:
many
more
countries developed
industrial activity. Therefore, less
than ever may Europe hope
to
stronger between
the
reestablish
division
old
essential
to
its
industry.
To
re¬
gain its equilibrium, it must, then,
find
a
complementary continent.
turers
gave
the
the machinery
manufac¬
sold to them. Thus, Europe
the
European
to the new countries both
machinery which they re¬
quired and the means of paying
for
it.
We
should
resort
to
Europe's
for
the
industrial
which
ered.
the
are
faces
are
the question
what role
it requires.
Indeed, Euro¬
nations with their dense
population and growing needs,
have been driven into a deadlock
any
service.
the Marshall Plan offered the Eu¬
nations the means of sur¬
viving during the length of time
necessary to modernize their in¬
dustries and to start their recon¬
it
struction.
But
that
nations
is
quite
Underwriters and Distributors
of
view
there
utilizing
and
sources
are
for those
your
satisfying
own
who
wisn
to
start
be invested in your own country.
It is quite possible, though, that
in
order
to
commodities
obtain
and
for
Canada,
foodstuffs
world
wanted their
the
exploitation of certain new
countries, would be advantageous.
You can, indeed, invest in Central
and South America, and, as well,
in certain countries of the British
Commonwealth.
it
be
not
However, would
profitable for Canada
to remain in contact with Europe
and to
seek
opportunities to co¬
with her in a common
program of action.
I, for one, be¬
lieve that this would be your real
operate
interest, for, among the countries
of the Western Hemisphere, Can¬
ada is
one
of the closest to Europe,
if
only because of that large group
of farmers of French origin whose
I do think that, to
complete your
industrial expansion in
the great-
continued on page 24)
—
products
and
to reconstitute their
our
complete facilities are at your
Consult
us
—
we
help
can
you.
Wire Service to
&
CO—MONTREAL
Ross
Members: The Toronto Stock
&
Co,
Exchange
and The Investment Dealers* Association
of Canada
man¬
provided
them, in exchange, with rawT ma¬
terials and foodstuffs. If they try
economy
ac¬
cording to obsolete patterns, they
require information or quotations
Canadian Industrial, Mining or Oil
liner?
330
OTTAWA
QUEBEC
SHERBROOKE
TORONTO
Hamilton
that
not
produced here, the par¬
ticipation of Canadian groups in
are
Canada
507 Place d'Armes, Montreal
re¬
new
enterprises. You uo not need to
seek a profitable outlet for your
capital, in distant lands: it can
Montreal Curb Market
clear
cannot be
re¬
needs,
still broad possibilities
your
GOODBODY & CO.—NEW YORK
Members Montreal Stock Exchange
of Canadian Security Issues
the bases which were
at the time when the rest
ufactured
m^de a great industrial effort in
consid¬
GREENSHIELDS
Greenshields & Co
and
already
mentality has remained so much
Direct Private
Greenshields & Co Inc
upon
the
located
have
Needed
The generous step taken by the
United States of America through
of
been
you
like that of our French peasants.
can
Security,
•
New Patterns of Industry
sound
have
though
Securities and Service
on
built
a
even
which
or
When you
is revealed by the scarcity of
these
of your national terri¬
still almost uninhabited.
small part of your mineral
resources
CANADA
products
stuffs
ropean
Vast
materials and food¬
war
the dollar.
the
being tried
riches.
solutions
problems
and
and
discover
own
are
Only
I would now like to discuss
pean
as
tory
countries.
Such
to
order
her
stretches
capital, will take their turn in
providing assistance to the new
Europe
in
exploit
of
labor which allowed the exchange
of
a
somewhat analogous procedure in
ments
TORONTO
BAY STREET
Brantford
Brampton
Windsor
THE
24
W. Harold
Robertson, Mills, Spence & Co., Toronto;
Herbert Bell, W. C. Harris &
COMMERCIAL and FINANCIAL CHRONICLE
G.
R
Co., Toronto
Thursday, July 14, 1949
D. N. Knight,
Wood, Gundy & Co., Ltd., Winnipeg;
H. R. Farnsworth, Royal Securities Corp., Calgary
Roberts, Dominion Securities Corp., Toronto;
J. D. Bulgin, Dominion Securities Corp., Winnipeg
I
.
fending itself with so much dif¬
ficulty. Permit me, however, to
people
does
this is
constantly
increased consumption. Our mis¬
action, intoxicated by it.
abled
us
zling
truth,
Communism
and
despotism, of living which has become his
willing to only reason for existence.
point out to you that your indig¬ avoid all evil eventually arrive at
Our misfortunes have made us
nation stems from the fact that the worst.
This is unfortunately
(Continued from page 23)
Europeans realize not only the
you might not realize the dangers true in America
as
it is true
est possible harmony, you should
precariousness of worldly goods,
certainly be approached very often
remain
in
contact
with Europe in the future by leading groups which threaten you.
everywhere else. And, frankly, if but their inadequacy. We know
You may be sure that Europe's a crisis as serious as that of 1930and oase yourself on some of its
of
that in order to avoid ruin, in
European industrialists who
illness is that of our whole civ¬ 1935 occurred again, this trend
formulas, for these formulas are wish to establish branches in the
order not to lose everything—in¬
undoubtedly more in accord with New World and are attracted by ilization, and, if its symptoms are might develop in America more cluding a certain amount of ma¬
more
acute in certain European
the genius of your country than the
dangerously than in many Euro¬ terial comfort—we must have an¬
integrity, wisdom and spirit
Countries
than
the
enormous
industrial
struc¬ of
elsewhere, this pean countries.
The reason for other ideal than that of
Canada.
Such
groups
can
tures of your neighbors. In my
view, the best method of ensuring
such a
contact
would be joint
participation in a common enter¬
prise.
But there is
no reason
why
provide technique, patents, tech¬
nicians and, sometimes, machines.
But
they usually lack capital.
Why would not Canadian finan¬
ciers
welcome them, once they
this common action should be lim¬
have
ited
merits of these European firms. I
the
to
exploitation
of
new
countries. I can very well imagine
Canadian groups
profitably in¬
am
it,
themselves
assured
of
the
that they will not regret
sure
the economy of their own
as
vesting in certain large European
country will thus be enriched not
enterprises, the latter giving Can¬
only with
ada the benefit of their tried and
with
very
fine firms, but also
technicians
who
are
often
tested techniques.
rather
In our Europe, crippled as it is
by inflation, most business con¬
cerns have insufficient capital and
tomorrow in Europe, whose role
in world economy will be less
it
is
more
find
and
difficult
more
to
complementary funds in the
Therefore, those coun¬
public.
which
tries
maintain
a
have
been
able
to
sound currency are in
exceptionally
to
acquire
favorable posi¬
an
interest in
European firms of long standing
whose stock exchange quotation
is, at present, out of all proportion
to their replacement cost. Pro¬
vided they made a judicious selec¬
an
tion
tion,
Canadian
groups
could,
such investments, reap
through
the
benefit
many
as
of the experience of
first-class European firms,
well
their
as secure
the assistance of
managerial
and technical
personnel to aid them in complet¬
ing the industrialization of Can¬
ada.
In
will
been
while they may be too numerous
many
not
instances,
have
c
of
n s
i s:t
Europe
e n
t
might
Intervention
Even in the greatest industrial
country of the American conti¬
nent, the belief in the absolute
perfection
of
a
system
of
com¬
plete economic freedom, is dead.
At the slightest sign of a
slump,
politicians of every shade
opinion
becoming
worried,
studying how best to avoid the
we
see
of
social consequences of an economic
crisis,
end in
cooperation
with
feed
present
your
can
for
economic
development, I should
like, even though I may be going
beyond the scope of this meeting,
to say a few words concerning the
moral
advantage to be gained
from an intimate, spiritual and
and
advocating, with this
view, that the State inter¬
upon
of their
rors
the
somehow
own
are
illusion
escape
mistakes.
likely to
that, on this young conti¬
nent, people are carried away by
With all
the dynamism of your youth, you
have accepted the ideal of our
takes and
that
man
civilization, of which the primary alone.
objective is the multiplication of
needs and demands and the satis¬
faction
mands
of
these
through
needs
ever
and
de¬
greater pro¬
duction.
sufferings have en-,
in all its daz¬
great principle
the
does not live by bread
salvation
of
our
The
threatened order requires that we
awaken
within
possible
standard
But what do we
mean
of
ourselves
the
is
frenzy to
once
more
to fall victim
living. its hour of
grief.
by this
ex¬
A
new
phase
in the
that
tion disorients him to
men
the results
Such
lead
er¬
toward
where he
is
everything,
order
to
the point
willing to sacrifice
even
his freedom, in
maintain
that
standard
perilled civilization.
peoples. This statement may
surprise some of you, for it is
quite common, in the New World,
to speak of Europe as of a very ill
person
breathing his last. Your
healthy attitude toward life and
your
faith in effort and the spirit
are quite naturally
enterprise,
ism, against which Europe is de¬
individual
implied
in
Commun¬
Underwriters and Dealers in
Government, Municipal and
Corporation
Securities.
Members
of
The Investment Dealers''
Association
Gairdner %
320
of Canada
Gompani) Limited
Bay St., Toronto
ELgin 2301
Montreal
Kitchener
Quebec City
Hamilton
develop¬
New World, our old Continent
must and will find the road that
leads to the rescue of our im¬
repelled by the capitulation of the
such
to
Europe
discovering this in
consume.
pean
in¬
have
other
aspirations, that we make a serious
effort to simplify our lives, not
allow ourselves
Of course, it is important that
the people should have the high¬
est
our
to grasp,
The Noranda Mines
intellectual union with the Euro¬
already
will most
make
and
our
though
pression? Man must consume to
ment of our world is now opening
live, but he must not live to con¬
vene in one form or another.
In
and Europe, because it is older,
sume.
For, if this becomes his is
Gentlemen, I could very well America, as in Europe, people
further advanced in this phase
sole purpose in life, any restric¬
have a tendency to believe that
stop there.
But since I have al¬
than America. Saved from despair
tion imposed upon his consump¬
luded to the benefit that close and governments can do
anything, and
by the generous support of the
Canadians
to
They
approached
that any country
culture, is immune.
mean
Trend Toward Government
considerable than in the past.
of
vestments.
in young countries,
scarce
not
which has
who,
Town
of Noranda with
Smelter
Stacks
of
Growing Noranda Mines in the Background.
THE
Convention Number
COMMERCIAL and
FINANCIAL
Harry Gassard (putting), Investment Dealers Association of Canada;
N. H. Gunn,
Bell, Gouinlock & Co., Toronto; A. D. Hunt, W. C. Pitfield & Co., Montreal
CHRONICLE
Charles W.
Goodeve, F. B. Ashplant & Co., New York City; Gerald G. Ryan,
Montreal; J. B. Ridley, A. E. Ames & Co., Toronto
L. G. Beaubien & Co.,
U. S. Direct Investments in Canada Increase
STATEMENT
(Continued from page 9)
have not been included
resent
minor
a
which
firms
smaller
the
while
only
Businesses by Types
part of the total
Value of United States Investment
the
however,
which United
fluences
have
Canadian
industry
Animal Products
through
are
Textiles
1939
1946
f 1947
1,041
984
1,366
1,438
94
9-3
146
160
18
38
47
42
46
_*
Vegetable Products
upon
1930
818
69
Manufacturing—Total
in¬
States di¬
investments
rect
chief
1926
Type of Business—
In many
shown in statement 4.
(Continued from page 17)
(Millions of dollars)
appreciable number of businesses
respects,
in All Canadian
of Business, Selected Years 1926 to 1947
investment, they do constitute an
as
Importance of Greater
Profit Margins to Dealers
2
Value of United States Direct Investments*
rep¬
_
_
_
18
20
20
29
32
Wood and Paper Products
256
334
281
350
383
outstanding feature disclosed
Iron and Products
180
199
188
283
312
the analysis in Section II is
the varying proportion which
Nonferrous Metals
83
113
130
208
219
109
126
112
138
148
Chemicals and Allied Products
60
86
88
134
147
Miscellaneous Manufactures
25
31
22
141
210
198
249
423
399
366
89
122
119
-165
58
136
126
232
the smaller number of
covered in this
An
larger firms
special analysis.
by
United
controlled
States
compa¬
in different branches
Canadian
manufacturing ac¬
automobile
the
from
variations
These
production
Utilities
range
controlled,
United
States
to
__
___
__
_
_
41
245
253
345
178
-
221
Total—All
'Direct
:
Companies
61
48
...
54
55
1,993
1,403
—
include
investments
f Subject to revision.
limited
are
United
which
in
perience and have established an
outstanding place in world pro¬
duction.
In
the
aggregate, the
United States
controlled
companies constituted 30% of the
capital invested in Canadian
larger
value
the
duction.
trolled
of
manufacturing pro¬
of
United
All
'2,544
controlled companies,
-i<
con¬
well
as
large, represented some 37% of
Canadian
investment in
total
the
manufacturing in
STATEMENT 3
Number
investments
controlled companies
United
in
vestments
No. of Subs.
ir
Kind of Business—
Controlled
Companies
Total
Branches
Number
107
1,022
;;r:-
...
Textiles
103
42
■
10
2
44
52
Vegetable Products
4
The value
controlled
in¬
Cana¬
31%
of
dian
16
The
131
Nonmetallic
Chemicals
influence
direct
Canadian
of
United
rather
investment
industry
specific
than
the
upon
greatest in
is
industries,
in
in mind the
kept
be
and
in
,
clients
market securities
as
this
a
Accordingly,
subject are
to the
and how they
their
my
views on
this
Allied
Miscellaneous Manufactures
—
Mining
securities that they take
for the
in exchange on
to
essary
we
must have
distribution to the
trades made nec¬
reduce
excessive
this
I
am
afraid that the
member¬
ship, Mr. Chairman, will feel that
218
type of retail client I have been
this is
8
3
125
discussing and that
with
■W'T
38
230
7
53
11
84
15
107
117
192
Products
reducing
of
spread through paying more
really restricted liability.
thought that
much wider
own pro¬
provided for by the
necessity
restrict apparent
the freedom of the membership to
feel necessary for
net profit
1
199
,19
,
59
Minerals
and
own
spread in the business without the
92
i
t
62
Utility,
Total
f;(
11
Other
-
-
13
alize that
we
we
must re¬
will have to be well
remunerated for such service.
I
am
afraid that my
a
very
an
feeble effort to deal
important subject, but I
hope that what I have said will
form
the
basis for
an
interesting
conclusion discussion here today.
94
50
392
73
Utility
2
81
Railways
13
Financial,
Total
191
2-34
Insurance
—
;
10
184.
194
19
Investment Trusts
States
must
and that we will never succeed
46
v'
Metals
manufacturing establisla¬
ments.
thereby obtain for themselves
be
com¬
value of
total
distribute to their
to
73
Products
its
panies represented something like
the
can
and
56
93
115
Wood and Paper Products
and
if
successful over
tection.
Iron
spread
long period of years this basic
proposals which try
Number of
Unincorporated
915
913
Manufacturing, Total
Animal Products
that feels that for our
profit
to limit their liabili¬
these new issues to the
amount
which
they themselves
owned in
owned
States
all
one
Association
principle
of Canadian Concerns Controlled in the United States,
342
Canada and elsewhere.
the
am
net
were
1946, including
the value of minority
of
I
the
in
ties
.
a
Nonferrous
States
small
companies,
prove
dealers
59
2,428
1,881
branches, subsidiaries and
States
manufacturing and about 20%
in Govern¬ in tho market. I would suggest
Corporation that it would substantially im¬
selling - and dealing
ment, Municipal or
Effect of Market Restrictions
manufacturers have had long ex¬
in
_
36
>
particular industries, often in¬
dustries
as
_
_
-
Miscellaneous
to
an
control
States
_
__
the purpose of affecting the increasing
their margin by the
price of Government, Municipal school of hard experience which
or
Corporation securities, nor to will soon prove that only in times
enable the members of the Asso¬ of great volume and advancing
ciation to form or effect combines, markets is it possible to pay over¬
agreements or arrangements tend¬ head on the margins which some
ing to affect the price of Govern¬ of us have been trying to use in
ment, Municipal or Corporation recent years.
securities, nor shall the Associa¬
There
is one portion of our
tion at any time discuss or take
business, however, where I feel
action upon questions which would that an
improved profit can be
in any way interfere with free and obtained
by the dealers and that
fair competition among its mem¬ is
on
new
issues of securities
bers in the business of buying, which have been properly priced
for
securities."
entirely Ca¬
are
example of
which is sugar refining.
Instances
where there is a predominance of
nadian
_
operate contain in paragraph is that attempts to set up mini¬
three of the constitution the fol¬ mum profit spreads are doomed to
lowing: "It is expressly declared failure and that the dealers will
that this Association is not formed have to work out this problem of
ada
in firms con¬
are
industries which
-
Financial
industry
United
the
in
trolled
_____
Merchandising
where almost all of the investment
and
-
Mining and Smelting.
cording to such criteria as the
value of investment, the value of
production, employment and other
factors.
-
Nonmetallic Minerals
nies occupy
of
25
19
Other Financial
44
7
131
15
146
*1,626
389
2,015
Miscellaneous
'
51
therefore,
total
of
all
'Includes 232 wholly-owned
Canadian industrial activity.
STATEMENT
Book Value of
1
subsidiaries of Canadian companies.
;
1
\
United States Direct Investments* in all Canadian Businesses,
by Forms of Investment, 1926-1947
(Millions of dollars)
1926
1939
1945
1946
fl947
1,329.4
1,271.6
1,289.2
1,613.0
1,691.0
1,796.0
187.6
Other Investments
—
Total
investments
1336.3
338.3
305.8
292.0
320.0
327.0
323.4
285.9
399.0
417.0
448.0
1,992.7
include branches,
ADelaide 9161
300.0
214.9
1,402.5
Bonds
•Direct
1933
1,000.0
Capital Stock
1930
Dominion Bank
1,933.3
1,880.9
2,304.0
subsidiaries and controlled companies in Canada.
2,428.0
2,544.0
tSubject to revision.
Building
Toronto 1, Canada
COMMERCIAL and FINANCIAL
THE
A.
J. M. D. Wood,
Fry & Co., Toronto; A. R. Aylsworth,
Cochran, Murray & Co., Toronto
CHRONICLE
Thursday, July 14, 1949
Swindell, Wood, Gundy & Co., Winnipeg;
Kirby & Gardner, Winnipeg
Gerry
B.
Massey, Mills, Spence & Co., Toronto; C. A.
Gallagher, Mills, Spence & Co., Montreal
Rod Copland, Oldfield,
invades every sphere of business said that his country could not be a simple one: We must work
decision; where too the State ex¬ survive half slave, and half free. not to reduce but rather to en¬
pands by preponderant weight its Those words can be applied to large our ability to deliver the
own
forms of economic activity; many countries in which the dis¬ highest standard of living to con¬
the
whole
world
over.
and business or labor accept the tributor tries to do business today. sumers
are makbad example by enforcing or ask¬ Yet it is not inevitable that we Governments instead of making
Consumer's Interest Comes First
(Continued from page 6)
the
United
States
origin which
devel- ;■ ernmental
also
are
similar Trade Fairs as an ing incursions into the free do¬
effective way of disseminating in¬ mestic market for business, even
formation on what manufacturers more important 'are the devices
the world over have to offer in which are restricting international
trade.
I
shall
the way of consumer goods.
only
enumerate
Aside from this, within Can¬ those which are paramount in the
oping
American
retailing, minds of businessmen on this con¬
techniques
have been tinent. Interference in the opera¬
further
developed such as ac¬ tion of the international money
counting and merchandise controls markets of the world to the point
adian
the Government to institute
special measures to lessen the risk
of competition. This is not, I sub¬
mit, the way to a higher standard
of living.
Abraham Lincoln once
ing
retailers should surrender all our
of business decision to cen¬
tral authority, whether of govern¬
mental, industrial or labor origin.
power
creed
Our
should
distributors
as
regulations in the
more
"security"
should
name
laws
which
store
of
those
enforce
effective competition.
designed
are
to
re¬
and
scientific
or
warehouse
and
build¬
service
all
where
currencies
con¬
are
ings to meet special needs. Those, trolled, cannot but have a decisive
gentlemen, are the developments influence in adding to the pres¬
in
the
which
interest
the
of
consumer
unbalanced
towards
sure
world
Unrealistic maintenance of
being hammered out by trade.
are
the status quo in currency valua¬
What tions is not the means by which
are the road blocks?
Europe
can
restore its prewar
There
are
those
which
stem trading position with the North
competitive forces. The other side
to
this
is
less
promising.
from governmental sources. Fore¬
American
most is the (burden of taxation it¬
with
self which lies
sumer
dollar.
growing
heavy
element
of
the
on
There
is
con¬
also
a
vice
of
United
—
or
States.
resort to
Canada
Instead,
amoral de¬
the
import restrictions in al¬
most every
country. That, gentle¬
taxation, which we
men, is not in the interest of con¬
over
here no longer regard with sumers generally.
complacency.
The
cooperative
Import
restrictions
substitute
principle as applied to some forms the decisions of a small group of
of
business
enterprise
may
be administrative officers as to what
laudable, provided the State does our citizens want to buy, at a
not
dole
fiscal
out
inequity
find
we
Continent
the
in
distributors
dispensation
price
intended
to
ration sunply.
thousands of
unfair to other business. Discrim¬
for
inatory tax advantages bonus high
cost operations.
The seeping ex¬
importers who directly reflect the
changing wants of their custom¬
tension
enter¬
ers.
prise is itself not to be regarded
lightly. For every time the era of
taxed enterprise in our respective
and
of
untaxed
countries is
burden
ing
State
made
those
In
such
by
circumstances
regulations
while
they too limit the movement of
goods across national boundaries,
reduced, the remain¬
are
trade suicide which
secondary to this method
of
by responsible
many coun¬
taxpaying enterprise grows at an tries have adopted.
It
is
not
accelerating pace.
government
alone,
Beyond the sphere of taxation however, which is to blame for
itself,
governments
have
been weakening competition. Some in¬
making increasing use of wartime dustries and labor groups have
so
precedents for further limitations
adopted
restrictive
practices
business can be done. which it is difficult to defend. Re¬
Compulsory standards legisla¬ sale price maintenance in some
tion, no matter how palatable it countries is carried beyond the
on
the way
may
sound,
flexible
is
usually
of
an
in¬
way
ards
to improve any
affecting
the
or
all stand¬
sale
of
article
is
set
for
all
by
an
out work
real ele¬
operations
charge against
earnings. When this concept is
accepted, as it should be, our net
railway earnings in the real eco¬
capacity is
in
ment
the
should
and
nomic
sense
duced
and
a
further
still
are
for
a
of
cost
be
the
past
re¬
several
almost to the vanishing
point. This problem is the child
years
of inflation. For many
businesses,
the illusion of profits
greater than those which have
actually been earned.
it has given
New Railway
Capital Needed
There
further aspect
is
one
of
the earnings problem which I am
sure
will understand and
you
preciate
ap¬
you
own experi¬
is, the need for new
capital to expand facilities and to
modernize plant and equipment.
The
railways
are
affected
by
growth and changes in the na¬
tional
economy
in exactly the
same
way that you are affected.
Technological improvements have
ence.
from
That
become
available
to
limited
ducers
Statistical
studies
have
those
in
shown
coun¬
that
higher
from such
prices
usually result
chandise. There is also the threat practices.
of minimum and maximum price
The retailer may in a few cases
legislation. It, too, cuts down the gain
something of value from
part which competition can play. them, but unless he is able to
Again, the application of govern¬ lower the price of what he sells
ment
resale
price maintenance to the consumer, he is not able to
whereby the price for a specific discharge his full responsibility.
mer¬
cost
the
tries where price competition and
market
distribution
is
severely
point of social value, when indus¬
places a trial agreements are formed to
clumsy bureaucratic hand on com¬ decide not only for how much an
petition. The processes of crim¬ article shall be sold, but who shall
inal
law, if properly enforced, sell it and where it shall be sold.
Competition is, I submit, the best
that
prudent management
of restoring worn
by
cepted
they
have become available to you. The
railways must keep pace with the
times if they are to serve indus¬
try, agriculture and commerce in
the way and to the degree that
they should be served. The rail¬
ways form a link, an indispen¬
sable link, in the chain of manu¬
facturing and trading processes
that take place between the pro¬
character which
should stamp out cases of mis¬
and
representation
malfeasance.
vl ^(Continued from page 8)
original cost. In any healthy busi¬
ness
concern, it is generally ac¬
tariff
customs
borne
Canadian Pacific Railway—Master
Work of Private Enterprise
I
indi¬
was
interested
to
read
that
of
hand
one
finished
More
raw
and
as
materials
the
more
the
on
consumers
products
and
us
the
on
you
of
other.
manufac¬
turers, your suppliers and your
customers, are demanding com¬
pletely reliable and ever-faster
scheduling
from
one
need
for
in the flow of goods
place to another. The
timing
vidual agreement between retailer
the Council of Economic Advisers
has
and
to
expedition
and
modern business.
of
supplier, strangles the efforts
distributors
to
give their
tomers better values.
on
the hours of sale
able
basis
cus¬
Legislation
on
a
reason¬
the
States
President
has
economy as
and
defined
of
the
the
United
American
"A congery of private
government
efforts."
That
is
socially desirable could also be applied to Canada.
but, unfortunately, it too may be It is recognition, gentlemen, of the
carried to the point where it is distance
we, on
this continent,
not
in
the
munity of
interest
consumers
of
as
the
a
com¬
whole.
have
covered
trolled
towards
the
Con¬
State, where either statu¬
Besides these influences of gov- tory law or administrative power
increased
with
the tempo
of
railways
can
meet
the
challenge of these growing and
changing transportation demands.
is in
the national
they do
so.
the
in
required
amounts,
our
position in the
security
markets must be restored. That
credit
in
is
turn
dependent
But to
interest that
do
that
ade¬
our
upon
earnings position. No industry is
in a sound
condition unless its
earnings
to
fair
at
only
not
sufficient
are
labor
hire
and
wages
for materials, but also to fair¬
pay
ly recompense the owners of the
property so that investors may be
induced to put their savings to
work in that industry.
It may be
learn that
there are, as of May 1 this year,
93,827 individual owners of the
Canadian Pacific enterprise, more
by some thousand than all of the
employees required to manage,
operate and staff all of our facili¬
ties for public
service. It is a
startling fact, also, that of the
of
interest
total
to
mentioned,
less
to
you
number
of
70,632,
than
shares
us
not
only to
a
science
common
sense.
The first
principle, with which
already dealt, is that the
general level of tolls and charges
should be high enough to pay all
operating expenses, maintain the
work capacity of plant and equip¬
ment, and return a yield to in¬
I
have
vestors
sufficient
to
attract
new
capital into the enterprise in the
amounts
this
needed.
principle
vidual
is
A
corollary to
that
each
indi¬
freight rate should return
commodity. Unless transpor¬
of
the
such
number of in¬
equal and
fair consideration in our attempts
large
a
dividuals
should
have
resolve
to
the
problems
industry.
beset the
*
r
which
Investors' Lack of Conference
Current i stock
market
quota¬
tions for Canadian Pacific
indicate
the
confidence
tion.
a
I
the
realize
shares
lack
this
of
situa¬
partly
present
that
is
reflection of the rather cautious
view
of
investors'
in
which
the
investors
investment
taking
are
market
ally. But that is by
full explanation.
gener¬
no means
the
Nor can the poor earnings of
railways be attributed to a lack of
demand for rail transportation or
to a lack of patronage. The situa¬
tion has been caused by artificial
restraints which have prevented
rail
transportation
finding
their
prices
from
economic
natural
levels.
in the
the general
inquiries which
interest
are
cost
of
transportation,
such transportation is
economically wasteful and the re¬
used
sources
in
taking
achieved
are
when
rates
reason
set at
are
come
on
these
that
score.
We wel¬
inquiries and
we
are
is
Canadian
no
conflict between
Pacific
Railway
moving
For that
levels cal¬
to induce volume traffic
where that is possible— consistent
with the principle that rates must
be
compensatory to the railways.
It is this desire
on
the part of the
railway
to stimulate and main¬
large volumes of traffic that
tain
establishes
the
essential
commu¬
nity of interest between the
ways and the shippers.
rail¬
Within the framework of these
principles,
however,
many
factors which
into
taken
the
and
there
have
consideration
ing freight rates.
few words
it
culated
have
to say a
me
is
it
large volumes of traffic.
place into the freight rate struc¬
expect
providing
The
second
principle in rate
making arises out of the fact that
the railway is an
agency of mass
transportation. Its greatest effi¬
ciency and lowest per unit costs
ture,
you may
then
obviously
should be turned to the
provision
of some other service or
goods.
.
there
enable
art and
an
requiring long years of constant
attention and study. There
are,
however, certain fundamental un-1
derlying
principles
that
make
capital stock. Surely the interests
prepared to assist them in every
reasonable way, for we feel that
will
which is both
the
the
of years.
tures
pert
in the intricacies of
the
freight rate structure, the man¬
agement
and understanding
of
each
of
quately, we must make substantial
capital exnenditures over a period
Many of those expendi¬
any
transportation policy.
I do not profess to be an ex¬
something more than the actual
out-of-pocket cost
of
handling
75%,
or
100
interest in
matter of
have
I
owners
national
real
the
tation enhances the value of
goods
by an amount at least equal to
own
In view of
The
It
improve and expand services, but
also, ultimately, we hope, to re¬
duce costs. To obtain the capital
been
in
are
been
mak¬
Numerous rates
established
reflecting
varying force of these factors
the rates are by no means
uniform.
certain
With
rates
the
which
exception
are
fixed
of
by
the statute, notably the rates on
grain
and moving out of Western Canada,
THE
Convention Number
COMMERCIAL and FINANCIAL
F. J.
Brennan, F. J. Brennan & Co., Ltd., St. John, New Brunswick; M. F. Newman,
Cochran, Murray & Co., Toronto; J. Frank Austen, Nesbitt, Thomson & Co., Winnipeg
all
rail freight rates are subject
should not be allowed unless made
the Board of universal. This is due to misun¬
Transport Commissioners which is derstanding. The railway, in mak¬
charged with seeing that rates are ing a competitive rate, does not
fair and reasonable and free from thereby create a
transportation
unjust discrimination or undue advantage for shippers in a given
part of the country, but simply
preference.
Notwithstanding the general low recognizes that this advantage al¬
ready created, exists. In offering a
level of
freight rates, enjoyed
competitive rate to a shipper who
throughout Canada for many
enjoys that advantage, the railway
years and the supervision
over
takes nothing from the shipper
those rates by a competent and
who does not already enjoy such
impartial tribunal, there is a feel¬
an advantage, nor is the handicap
ing in the Western Provinces and
increased under which he operates
in the Maritimes that these sec¬
in
comparison with the other
tions suffer from economic and
geographic disadvantages that shipper. On the other hand, if
the railways were denied the right
may be corrected by some revi¬
to
seek
remunerative
revenue
sions in the freight rate struc¬
from competitive traffic, then in
ture.
the long run other railway traffic
It is true that these sections are
would simply have to bear the
far removed from the major cen¬
to
approval
by
ing
of
D. S.
CHRONICLE
Beatty, Burns Bros. & Denton, Toronto; J. E. Jennings, Jennings, Petrie & Co.,
Ltd., London, Ont.; Harold Stanley, Royal Securities Corp., Ltd., Toronto
Canadian
businessmen.
marching forward to
Canada
is
become
a great industrial country,
taking her place proudly among
the leadings nations of the world,
Canada
is
have
our
have
our
basically
of
the
economic set-backs, but
nation is sound. We
Canadian
forward.
go
build
in
strong and free. We
problems and we may
our
Pacific
We
want
to
want
to
help
bigger and better Canada
a
the
future
believe
such
as
and
cheap land, climate,
soil
compensated in some other
either
In
wasteful
event,
possible for fee natu¬ transportation would result;
to be turned to
No doubt all these matters will
has made it
ral
way.
advantages
good use on a much larger scale
and with far greater benefits to
the
concerned than other¬
have been possible.
areas
would
wise
be
thoroughly dealt with in the
inquiries
now
trust that
a
taking place and we
sound understanding
transportation has partially of the facts will enable wise deci¬
overcome but not eliminated the
sions to be reached.
Rail
distance.
There is a feeling in the Prairie
Provinces, too, that they are at a
disadvantage in not having com¬
petitive forms of transportation,
particularly water transport. That,
also, is true, for water carriage is
cheaper than rail transportation.
Here again, this disadvantage has
been reduced but not entirely eli¬
minated by the provision of rail
disadvantage of
In
closing, there is
one
we
be
We ask only
given that freedom of
opportunity which will enable us
to operate our
business in such
a
that we will be able to pro¬
way
vide
the
kind
I should like to stress
and
strongly
think it is
I
as
am
as
sincerely
able, and I
particularly appropriate
to do so at this
important gather¬
annually. Since the recipients are
mostly low income groups, they
are
spent largely on consumer
goods. The recent tax reductions
and the distribution to farmers of
war
new
for
and
to
established indus¬
Discoveries of
expand.
and
natural re¬
have already
important
such
sources,
I
as
cannot remain
and will need
Private enterprise
in the future.
healthy without the
If it remains
an
it
healthy, it has
excellent chance of survival.
languishes for long in
and
capital nature were of necessity
postponed during the war, and
the high level of private demand
immediately after the war made
it advisable for governments to
refrain from competing with this
demand. Some expenditures could
not be
avoided, - of course, but
they have been kept to a mini¬
mum.
Consequently, there is a
large back-log of demand of a
public nature.
Consumer demand
mained at
a
If
starved
has also re¬
high level, although,
naturally enough, it is not as in¬
sistent
as
a
it
was.
Demand
for
housing is far from satiated, and
there has been no slump in hous¬
transportation ing
of
Canada needs today
tors.
thought
plants in Canada to be
converted to peacetime produc¬
for
mentioned, require enormous
tiers, just as anxious to develop capital expenditures, which should
new and
better methods and just continue
to
keep
demand for
as capable of solving the problems
capital
goods active
for some
of modern transportation as were
time.
Public expenditures of
a
faith and the aid of private inves¬
Canada Marching Forward
volves payments to
enthusiastic to explore new fron¬
that
Demand
for
in most
construction.
durable consumers' goods
lines
lines
exceeds
supply.
In
many
import restrictions have
to reduce the supply of
tended
goods available to satisfy back¬
log demand. The great expansion
Federal
the
of
program
Social
Security
during the war, includ¬
ing Family Allowance Payments,
the great divide into the
hundreds
of
Age
millions
dollars
of
Canadian Wheat Board have had
much
the
sumer
effect
demand.
same
on
Competitive Rail Rates
to the
competitive rail rates.
Stocks
question of
Sometimes
reduce
us
Oils
the railways are obliged to
in order to meet
rates
the
In short, the Canadian economy
not only come through the
war
and
immediate
postwar
period stronger than ever before
but it is still in a dynamic phase
of development. Hence the confi¬
dence about the immediate future
which
I
expressed at the begin¬
article and which
general financial
policy of the government.
this
of
ning
underlies
the
longer-term
outlook
is
given a reason¬
The
obscure. But
more
ably sensible
in
trade
structure
which
Canada
of world
can
of
terests
themselves,
obtain
and
which
thus
expense
Within
been
limits,
regarded
of
makes
practice. But there
idea in
these
some
the
this
as
yields
out-of-
than
contribution to the overall
stant
these
through
rates
more
costs
they
frequently
traffic
something
pocket
unremunerative to
but
competitive
offer
to
railways
the
rates which are
can
Mines
other
of
a
or con¬
railway.
has
always
good
business
seems
to be an
parts of Canada that
competitive
rates
are
un¬
justly discriminatory and that thy
Bonds
-
-
for confidence. In common
reason
with other countries, and
to
be
shall
policies
conditions
in the
domestic
remains buoyant, and if
and
United
States.
economy
your
removal
of
your
our
are
to
means as
the
barriers,
such
trade
continue
which
as
If
government encourages
world trade by
can
perhaps
greater degree, we
affected
by economic
even
an
we
pursue
policies
in your interest as well
own.
Grain
Commodities
McLeod,Youhg,Weir & Company
LIMITED
MEMBERS
Offices at:
The Toronto Stock
Members of The Investment Dealers' Association
of Canada
Exchange
Vancouver
Montreal Stock Exchange
Montreal Curb Market
Victoria
Calgary Stock Exchange
Calgary
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W innipeg
Edmonton
Regina
Saskatoon
Moose Jaw
Lethbridge
Portage la Prairie
Swift Current
Kenora
Kingston
CANADIAN SECURITIES
Winnipeg Stock Exchange
Winnipeg Grain Exchange
.
Canadian Commodity Exchange Inc.
The Investment Dealers' Association of Canada
Direct
private wire
The First Boston
Investment Bankers Association of America
v.
to Montreal and
Corporation, New York
Stock orders executed
on
all Exchanges
.Head Office
James Richardson & Sons
ESTABLISHED
50
King Street West, Toronto, Canada
1857
Toronto
Montreal
DEALERS IN ALL
o
Branch Offices:
367 MAIN STREET
WINNIPEG, CANADA
Offices from, Montreal to Victoria connected by our own direct private wires
Montreal
take
of her demonstrated
productive capacity, there is every
advantage
of the bureaucrat.
com¬
carriers. Ob¬
viously it would not be in the in¬
petition
-
-
con¬
has
transportation.
This leads
the
by
accumulated
surpluses
Unemployment Insurance, and in¬
arms
Old
our
sickly condition, it will surely
pass over
Pensions, in¬
individuals of
resources of
North America made it profitable
productive
the
ity
tries
seek to become one.
page 4)
creased
tion,
ruinous to the railways unless they
were
(Continued from
of demand which taxed to capac¬
we
we
that the
fertility, mineral and other natu¬
ral resources. Rail transportation
Canadian Budgeftaiy Policy
And Economic Trends
The offi¬
cers
and - employees of the Ca¬
nadian Pacific today are just as
as
have helped in the past.
our predecessors in the company
share of railway expenses which who built the
railway and set it
formerly were borne by this com¬ in operation over 60 years ago.
goods they exchange with the
petitive traffic, and the burden of This summer we inaugurate our
rest
of the world have to be
rail transportation would be in¬ trans-Pacific air services to the
moved long distances.
That, ad¬ creased upon those who were still
Orient and the-Antipodes.
That
mittedly, is a disadvantage. The
obliged to use it. To extend com¬ symbolizes our faith in the future
very fact, however, that economic
and our still-venturesome spirit.
petitive rates to large volumes of
activity exists and even flour¬
The time has long passed when
ishes in these sections indicates traffic where the conditions I have
the Canadian
Pacific could be
that this disadvantage of distance mentioned do not exist would be
called a monopoly and we do not
is
compensated
by advantages
population
of
ters
27
Ottawa
Hamilton
London
Correspondents in London, England
New York
V.-;: ;
V
28.
;
J:.
i
J*
;
.
\
V1* fi
•
+
y.
7 •"'*
*■
THE COMMERCIAL
CHRONICLE
and FINANCIAL
Thursday, July 14, 1949
caQ/tfouv
10 NEW POWER PROJECTS
DEVELOPING OVER 1,500,000 HP
Since 1945, Ontario has
for electrical
the Province.
To
experienced
a
growth in demand
without precedent in the history of
energy
meet
and future needs, The
present
Hydro-Electric Power Commission of Ontario is
speeding
it has
to
ever
power
now
completion the greatest construction program
undertaken.
supply
to
Ten
new
plants will swell the
industries, homes and farms by approxi¬
mately 1,135,000 kilowatts (1,520,000 hp).
A
frequency conversion
Province is also under
will
—
be
the
NEW POWER
PINE
DEVELOPMENTS
capacity, 60,000
kilowatts, (80,000 horsepower).
Ultimate
(160,000
capacity, 120,000 kilowatts
horsepower).
In
service
December, 1950,
River,
East.
Ont.
''■'■-'v jV:
119,000 kilowatts (160,000
horsepower). First six units scheduled
for service in 1951.
a
section of the
UNDER CONSTRUCTION
WINDSOR
Windsor,
(240,000
for
STEAM
Ont.
—
PLANT-
180,000
horsepower).
kilowatts
Scheduled
completion in 1951
LA CAVE—Ottawa
CHENAUX—Ottawa
:
for
that ultimately 60 cycles
frequency throughout Ontario.
PORTAGE—Nipigon River,
N. West, Ont. Initial
iT"'
standard
program
way so
Remaining
two
River, East. Ont.
153,000 kilowatts
(204,000 horse¬
power).
Scheduled for completion,
1952. Six initial units with
for additional
provision
two.
units in 1952.
^DES
,
JOACHIMS—Ottawa River,
East.Ont. 358,000
TUNNEL
G.S.—Mississagi
N. East.Ont. 42,000
kilowatts(480,000
horsepower). First four units sched¬
horsepower).
uled for 1950,
early in 1950.
remaining four in 1951.
River,
kilowatts(56,500
Scheduled for service
@FedFRASER