Full text of Commercial and Financial Chronicle : July 27, 1950, Vol. 172, No. 4928

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BUS. ADM.

LIBRARY

ESTABLISHED 1X39

Commercial

an

<L

Reg. U. S. Pat. Office

Volume 172

New York, N. Y.,

Number 4928

Price

Thursday, July 27, 1950

t '

M

EDITORIAL
»

'

VSiA '

»

.

As We See It
Financing the Korean
involves

fundamentals

some

all

Administration

Asserting there

if such

obviously defense-connected ex¬
penditures as payments to veterans, interest on
war-swollen
national
ciebt,
and
large sums
"loaned" or given to foreign peoples, are entirely
omitted from consideration, national defense ex¬

does not

the middle

since

penditures
fallen far

short of

by

very

50 billion

of 1946

have not

dollars.

This

much fail to equal all such

ex¬

such

exceeds

if World War I

State with objective of providing

system is indigenous to

essential to free enterprise,

associations that will survive under Welfare State would

to

be pressure groups

Stresses value of free markets, and asserts

the

the proposals

some

such

these

of

problem in

do

about

years,

page

issue

Richberg

Donald R.

advance

debate

is

is:

the
the

free-enter¬

then debate

the

What extent

or

government regulation
will be most effective to
the* general- welfare? In this
can

improved living standards, we have more and more tak¬
our economic system for granted—have lost sight of

en

its origin and underlying
As confusion and

assume

that the

ac¬

for supporting

Richberg, Beebe, Landa
& Richardson, at Conference on the Welfare State, Harvard
Uni¬
versity, Cambridge, Mass., July 24, 1950.
address by

troversy

foundations, it becomes
increasingly apparent that we must

threaten

our

develop understanding as to "whence
came, whither we are going and
we are going to get there."
Such
understanding
cannot
be
accom¬

we

must work

tal

sweat

We

must

individually and in men¬
our
right to teach.
discuss and debate many
earn

issues and analyze

them in their rela¬
Louis Ruthenburg

tionship to the common good. Beyond
we must lead and inspire others
to do likewise.
I have been asked to talk to

this

enterprise

free
♦An

philosophy.
co;

plished merely by making and hear¬

cepted aim of our Society, and our reason

from

a

you

about

of

view.

point

manufacturer's

Mr. Richbeig, of Davies,

Continued

22

and activities relative

Franklin

21/4% Bonds
January

On page 16

on

page

by Mr. Ruthenburg before the Indiana Workshop
Economic Education, BJoomington, Ind., July 17, 1950.

♦An
on

address

Continued

24

on

page

26

tentative program of

will be found the

to the Annual Convention of the National Security
will be held Sept. 26-30 at Virginia Beach.

Traders

which

1,

Custodian

State and

Funds,

inc.

A. Mutual Fund

1973

Municipal
STATE AND MUNICIPAL

yield 2.15%

rtA500 Branches
^

BONDS

COMMON STOCK FUND

Priced to

in our

of

we

generation has succeeded another
increasing national wealth and constantly

ing speeches or by publishing or
reading newspaper articles or through
the medium of moving pictures. We

we

which

climate of

good if we
aim of both

and

if

and

a

American

government in the

common

this

in

one

OF

Philadelphia

Due

that

progress

As

how

the dodo.

as

more

socializers

limitation

Association
CITY

the

the

"survival of

of industry

GOING TO NSTA CONVENTION?
events

assume

real

spending in general which has permeated
on

the

dead

as

of

prisers;

and the fallacious philosophy
Continued

is

service
the

certainly

are

and

efforts to develop

event, but the com¬

that be

to organize a nation

We will make

greater by reason of loose fiscal policies

recent

propose

economy"

of the funds may not
be, actually disbursed
year, presents a real
would, doubtless, be

thus laid before the powers

of

not

On the

world.

modern

practices erosive forces.

force

assured

an

merely for the profit and glory of a
favored few. That concept of a "free

proportions in defense

any

not

modern free-enterprisers

other hand

plexity and the difficulty of the task which is
much the

of the

tators

fittest"

increase

equ.table distribution of its benefits.
freedom, com¬

investment and good wages are all
factors in our economic system. Calls diver¬
of income through taxation and short-sighted labor

sion

of Hitler, Mussolini and Lenin. These are
uie proposals of all socialists and dic¬

expenditures.
An

an

necessary

for universal service to the general

which, in turn, are not very much
peak of World War I annual war

spending even though all
be, and probably will not
during the current fiscal
financial problem.
There

bring about

are

while management is required

petition, profits,

merely because it proposes to organize a nation
welfare. These were

for good

in recent years,

of

is

State

Welfare

so-called

The

ing in general preparedness do we find ourselves
today, that the President regards it as essential
in light of the Korean situation to add another
ten billions to appropriations for this purpose,
which is almost equal to annual defense outlay
short

Points out incentives and rewards

dividual freedom.

do better for themselves individually or
Contends only private

can

Mr. Ruthenburg holds free enterprise
U. S. and is integral part of in¬

union

over this period
omitted. Yet, so lack¬

are

they

attacks upon it,

individuals with services

indications of

encouraging

through voluntary associations.

expenditures

outlays

recent

more

working for government, and these
could not be "private" when organized and maintained
by political aid and government regulation. Holds fiscal
program is exhausting financial resources.

sum

are

general understanding of free enterprise despite

Asserting a Welfare State must become either totalita¬
rian or insolvent, Mr. Richberg likens it to the Police
which

penditures from the turn of the century up to
the date of the attack on; Pearl Harbor, and it
far

Enterprise

Chairman of Board, Servel, Inc.

Formerly Director of National Recovery

often

too

1

By LOUIS RUTHENBURG *

By DONALD R. RICHBERG*

overlooked.
Even

At Free

Doomed in Welfare State

and Rearmament

war

Copy

a

A Manufacturer Looks

Private Associations

HtMnijlH

30 Cents

across

Bonds

Canada

Monthly Commercial Letter
upon request

PREFERRED STOCK FUND

Bond Department

BOND FUND

UTILITIES FUND

White,Weld&Co.

INCOME

Prospectus on

40

Wall Street, New York 5
Chicago

Boston

THE NATIONAL CITY BANK

The

(BALANCED) FUND

OF NEW YORK

request

Head

FRANKLIN DISTRIBUTORS, Inc.
64 Wall Street,

New York 5

Bond Dept.

Teletype: NY 1-708

Investors

canadian
Underwriters and
Distributors of

Second Fund

Municipal

and

Stocks and

Office: Toronto

New York Agency:
Seattle

Massachusetts

Canadian Bank
efEomm&ice

THE CHASE

NATIONAL BANK
OF

Prospectus from

authorized dealers or

Ill

A* CO.

OTIS & CO.

CANADIAN

Central Vermont

bonds & stocks

Public Service Co.
COMMON

bonds
Analysis

Devonshire Street

Established

BOSTON
Los

Angeles




New York

Cincinnati

Chicago
Columbus

Denver
Toledo

DoxcnoTi Securities
Grporatiott

MEMBERS NEW YORK

STOCK EXCH.

40 Exchange
Dallas
Buffalo

115 BROADWAY
NEW YORK

105 W. ADAMS

CHICAGO

Place, New York 5, N. Y.

ST.

Members

New

other

WHitehall 4-8161

request

York

Stock

Boston

Exchange

Principal Exchanges

11% Broadway,
WOrth 4-6000

Teletype NY 1-702-3

upon

IRA HAUPT&CO.
and

1899

CLEVELAND
Chicago

New York

Goodbody & co.
ESTABLISHED 1891

(Incorporated)

CITY OF NEW YORK

Portland,Ore. San Francisco Los Angeles

Corporate Securities

VANCE, SANDERS

THE

20 Exchange PI.

N. y. 6

Teletype NY 1-2708

Telephone:

Enterprise 1820

2

(338)

The Commercial a.,d Financial Chronicle

MARKETS

TRADING

The

IN

American Power & Light

in the investment and

Puget Sound Power & Light
Water &

Federal

&

Metal

which, each week, a different group of experts
advisory field from all sections of the country
reasons

GEORGE A. BAILEY

Corporation

Partner, George

A.

Lorain

Bailey &

Co.,

Established

funding 3l/>s, due 2000)

1920

120 Broadway, New

The

York 5

Teletype NY 1-583

BArclay 7-5660

it

the

qualities:

be well secured.

must

be

following

paying

It must

regularly at least 6%

present

on

have

equity and at
same time,

Rights & Scrip

it

ities

for

price.

PONNELL & CO.
Members
,

120

York Stock Exchange

New

York

REctor

Railroad

sex

First

2-7815

Re¬

&

George

A.

Bailey

funding
3V2S
due 2000, appear to combine
of these requirements.
It is well secured

American Air Filter Co.
Common

water

rights, etc. of the railroad.
placed a valuation

the property of

on

Capital Stock

$93,235,469 be¬
depreciation, while there are

fore

Consider H. Willett

but

$35,000,000 of these bonds out¬
standing.

Common

in

Early

Incorporated

Bell Tele. LS 186

Morns

&

&

Western

i-ssex

merged
assumeu

ana

financial

Separate

V

The

D.

L.

been

^«,ak,u,601 in lyjz

U. S. THERMO

W.

&

has

or

approxi¬

the present

on

annual fixed charges of about $4,-

900,000, th
have

Request

★

from

about $4,912,-

10

mately 40%. Based

income available
these requirements would

to meet

★

reduced

4C0 at the end of 1949

CONTROL

3

been

net

earned

on

an

average

of 1.62 times in the past 20 years.
In 1949 fixed charges were earned

★

about 1.56

times, indicating
margin of safety.

good

a

Further adding to the road's ef¬

ficiency

148 State
Tel.

^

CA.

St., Boston 9, Mass.

7-0425

:

is

N. Y. Telephone WOrth 4-5000

^

miles

National Utilities

Northwestern Pub. Serv.
Southern Production
Toledo Edison

although

months

of

the

duced

WHitehall 4-2530 Teletype NY 1-3568

| Mexican Railways

face

amount

The

re¬

and

since

1942.

La Salle St., Chicago 4

RAndolph 6-4G96

Tel. CG 451




sell

the

creased

has

Construction

of

is the acquisition of 60,000
stock

Chicago &

(Nickel Plate).

first

of

St.

the

Louis

This

is

step in the "eventual
of the two roads which

had

some

the Nickel

gains
of

a

the

a

working

time.

By

agreement

buying into

Plate, the Lackawanna

voice in

the

Wheeling

Railway Company,

management

&
as

Lake

well

as

Erie

the

the

but

proven

Nevertheless,

Direct

The
San

in
in

this

under

well-secured

&

To select

Juan

Co.,

14, Calif.

critical period

a

On

pause.

selected
offer

is

The

successful

discovery well

a

is

another

Completions

area

ther

the

evidence

of

New

that

Delhi's

43,000

acres

contains

tically

all

small

tax

tion is
of

ideas

face

today,

adopt

of

the

peace¬

circumstances

I

the

Vsth

the

a

Although only
holdings is
are

ma¬

To

find

myself

To

aid

the

a

we

royalty

treated,

gas

produced

proposed

from

San

contingency

sale

Telephone

Stock

York City Tel.:

New

Exchange

St., Phila. 9, Pa.
Bell System Teletype

PEnnypacker 5-2857

PH 771

BOwling Green 9-4818

TRADING MARKETS

*Plywood Inc.

all

lease.

*Douglas & Lomason

pipeline,

which

upon

^Winters & Crampton

on

plus

that

Juan

a

*Lea Fabrics

tnis

was

predicated, was approved
by the FPC on July 14, last.

forced

Phila.-Balto.

South Broad

*Copeland Refriger'n

a

reasonable

tax

shelter. To

accomplish this program, I would
a
security like Delhi Oil

and

Members

123

of

hedging position in¬
This appears to be the
pattern
stead of going all-out for one se¬
for future contracts.
Delhi plans
curity.
In order to straddle, at to
develop an area, then sell the
least to a large degree, the cur¬
lease for cash, to continue explorent
economic
complexities
I ration
work, and an over-riding
would wish a natural resource of
royalty. Under this plan, the pros¬
a

Henry B. Warner & Co., Inc.

the

execution

over-riding

natural

the oil
The

Common

s

of

total

keynote.

son

Dan River Mills Common

principal activity is explo¬

continual

perhaps a view
toward temporary deflation.

to

In

Gas Co. for $3,000,000 cash and

warfare, in¬
again cali

would

vehicles

the

Toledo Ed

or

this program, Delhi sold its Barker
Dome holdings to El Paso Natural

time nature with

Under

reserve

Penna. Power & Light Common

Philadelphia Transportation Co.

our

ration.
Warren H. Crowell

wide-spread

different

of

Company Common

Philadelphia Electric Common

Phila.

is

of

The

resolved without the igni¬

vestment

Tele. BS 142

West Penn Power Common

knowledge, the com¬
pany currently has 85 oil wells
(mainly small producers in north¬
ern
Louisiana) and 16 gas wells.

yet

the

for

income
best

rea¬

situa¬

a

in

importance; long-term de¬
velopment for future consistent

war

If

esti¬

interest

Current earnings are not of

se¬

shelter.

north¬
is

gas and oil are substantial and

materializes,

sonable

in
it

estimated at

part

terial

Korean

Ins.

Allan Wood Steel Com. & Pfd.

proven, Delhi's reserves of natural

war

a

HUbbard 2-5500

Warner

exam¬

offer fur¬

undedicated.

is

full-scale

offer

Dealers

Open End,Phone to New York Canal'6-1613

trillion cubic feet of gas, prac¬

reserve

the

and

Tel.

Johnson

company's

Mexico,

mated

growing.

work

Securities

(Socony-

the

County, Wyoming,

dollar. Now, if
the tragedy of

from

of

in

Hagist Ranch (Texas) field Delhi

purchasing

benefit

Delhi

good

in

a

would

Assn.

drilling

by

Petroleum

trillion cubic feet.

a

example.

Nat'l

75 Federal St., Boston 10, Mass.

Enterprise 6800

continued loss

which

J. B. Mogniie & Co., Inc.

Enterprise 2904

tection against
the threat of

need

the

Quoted

Hartford, Conn.

one

basis,

security would have

curity

one

in

—

Portland, Me.

western

pro¬

of

field

knack of selection.
In the Blanco
area,

causes me

pre-Korea

a

Dome

Basin

Magnolia
Vacuum)

security "I like best"

a

Bought— Sold

The

country.

(Delhi Oil Corporation)

we

branch offices

the Lindrith Field "farmout" from

par.

Los Angeles

power

our

Delhi in this field rank among

of

Plate.

Partner, Crowell, Weedon

Barker

four-gas wells brought in by
the
largest natural gas wells in the

WARREN II. CROWELL

of

to

Spinning

Members

ment.

ple.

to

wires

Associates

un¬

themselves to substantial develop¬

be bought at more than

can

points

the

NY 1-1557

La. - Birmingham, Ala.
Mobile, Ala.

man¬

an

ability of acquiring interests
lively situations which lend

in

"eventual

Nickel

low-priced

Another important factor in the
future development of this com¬

is

acreage

Lackawanna

the

the

company will not have any major
maturities falling due until 1973.

common

Personal

and the prospects for
improvement are in¬

through

merger"

to

St., New York 4, N. Y.

HAnover 2-0700

through New Mexico, Colorado,
Wyoming, Montana and into Can¬
ada.
Only a small portion of this

The

company is now
financial
position

Corp. for growth, in

of

regis¬

The

in such

Exchange

"the

of

over-the-

the

of

of

many years
still further

40

Exchange

Cvrb

Vechten, Vice - President,
Lee Higginson Corp., New York
City (Page 23)

growth characteristics and I would

request

zippin & company

Free

best

issue

Stock

York

Van

Nickel

form.

coupon

Mortgage bonds falling due 1955.
Upon
completion
of
this
plan

have

Tele.

debt

as

bonds

operations

choose

for

£

its

Essex

York,

25 Broad

York

New Orleans,

Speer Carbon Company—Schuyler

usual

the

bors New

arrear¬

mortgage bond is in a strong¬
er
position today than any time
in
the
company's history.
The
property is indispensable to the

Morris

Railroad

Thralls

first

wish

&

completion

'

Berkshire Fine
well

as

approved com¬
pany's plan to refund $19,356,000

the

1208 South

of

stocks

ICC

the

Authority

Thralls,
Jr.,
& Co., Inc.,
New York City (Page 23)

complete

the

on

York

Jerome

—

President,

then apply

may

ifcfcmoers New

New

agement has demonstrated

tion
op¬

the company has paid
$24,000,000 to the credit of

merger"
on

85%.

as

its overall tax obligations.

New

Analysis

this percent¬

1940

shares

Bought—Sold—Quoted

closing

stocks amounting to $2,335,030. It
has
bought in over $13,000,000

pany

BONDS

diesel

by

the

year

high

ton-

gross

thereby steadily
increasing the equity back of the
bonds. During 1949 the D. L. & W.
purchased bonds and leased-line

about

Wall Street, New York 5

in

an

annually,

Since

37

of

pro¬

1949

Through the sinking fund
erations, the funded debt is

leased-line

V0GELL & CO., Inc.

year

handled

was

power,

age rose as

National Gas & Oil

dieselization

the

of 66.13%

average

Teletype BS 259

:

the

During

gram.

W.

of

Bonds

the

of

steadily
strengthening
its
capital structure in that its fixed
charges have

to

is

It

as

Steiner, Rouse &Co
'

Port

Property tax in Pennsylvania, this

Morris & Essex operations are not

available.

&

L.

for

3Vfes.

statements

been

on

representation

Delaware,

terest of the Morris & Essex

Kentucky Home Life Bldg.

Analysis

for

payment of both principal and in¬

LOUISVILLE 2, KENTUCKY

Long Distance 238-9

the

1945

Lackawanna
the

"I BANKERS BOND

D.

system.

first lien

a

In 1943 tne ICC

Churchill-Downs Inc.

1st Floor,

by

all

the entire properties, wharves,

on

soon

able

the

counter.

Es¬

&

(Page 2)

the preferred stock, that

on

registered

to

e

is

as

This bond is available in

The

Morris

Exchange

BROADWAY, NEW YORK 5
Tel.

i b 1

p o s s

Plate

6,388.79.

of

that

readjustment plan for

tered

im-

find?

New

Curb

issue

an

total

a

anticipated

in

such

Is

2,417.01,

Bought—Sold—Quoted

merger."

en¬

hancement

den

3,971.78, and by the Lackawanna

forts

good possibil¬

Since 1917

Crowell, Partner, Crowell, Wee& Co., Los
Angeles, Calif.

of

Plate board and make further ef¬

offer

must

miles

1949 by the Nickel Plate was

ages

the

The

Chicago.

to

Louisiana Securities

Delhi Oil Corporation—Warren H.

operated at the close of the

year

its

stead¬

a

increasing

ily

The merger of the two
a direct East-

boken, N. J., opposite New York
track

Nickel

prices. It must

Specialists in

funding 3y2s of 2000—George A.
Bailey,
Partner,
George
A.
Bailey & Co., Philadelpma, Pa.
(Page 2)

Virginia Railway

system extending from Ho-

City,

Security I Like Best must

combine

West

Company.
West

(Morris & Essex RR. First & Re¬

Corporation

&

Morris & Essex RR. First and Re¬

particular security.

a

Thursday, July 27, 1950

.

Alabama &

Participants and

Their Selections

roads would create

Philadelphia, Pa.

New York Hanseatic

for favoring

.

This Week's

Forum

participate and give their

Gas, Stubs

Thermit

Security 1 like Best

A continuous forum in

.

discount

peace or war,

bonds,

preferably

*

Information

Corporation
111

income,

WOrth

allowing

material

divi¬

request

AETNA SECURITIES

pects for future earnings are. sub¬
Inasmuch as possible big

stantial.

on

Broadway, New York 5
4-6400

Tele. N. Y.

1-2494

dend payments, is still an item of
the future, current increase in tax
fates is not

a

significant factor.

'

bonds, for
Delhi's
natural

taking

second-grade
my tax

a

with

oil

$1

now

production

secondary position.
shares of

par

For

temporary

would divert

shelter.

principal interest is

gas,

1,289,647

rail

The

value,

ond-grade railroad

ume

work

the sole

taxes, (interest

capitalization,

pre¬

by bank loans.

Delhi holds leasehold interest in
excess

of

600,000

acres,

extending

from the Mexican border in Texas
up

to

northeastern

Louisiana

the

on

follow the pattern of the last

share at this writing, repre¬

ceded only

bonds

I

sec¬

war.

The combination of increased vol¬

traded over-the-counter at around

sents

shelter,

funds into

Over-the-counter

assumption that tax increases will

$25

a

tax

some

of traffic
and

earnings)

accruing from

the

immunity
a

for 37 Years

war

from

prior charge

improves the

Quotation Services

on

marginal

National Quotation Bureau

status of such discount issues with

consequent

Incorporated
Established

betterment in market

values.

46 Front Street

Continued

CHICAGO

on

page

23

f

1913

New York 4, N. Y.
SAN

FRANCISCO

Volume 172

Number 4928

.

.

.

The Commercial and Financial Chronicle

(339)

The Presidents

INDEX

Economic Blue-Print

Articles and News

llCHT£H$TEIi]

B. S.

In his mid-year Economic Report, Mr. Truman calls for
unity
to meet realities of Korean
conflict, terming our human and
resources

credit and power

deficit

WASHINGTON, D. C., July 26—
President Truman

times

call

for

when

eco¬

budgetary policy
budget or a

balanced

a

"Further

pressing
nfidence

that the

Business

of

careful

adjustment of

and

foreseeable

omy

can

deal

with

the

cur¬

other

e m e r

give

-

the

he

same

at
time

for

full

time

war¬

these

and

occasion

the

people

character which

other
be

economic report to Congress.
Warning that the present re¬

sponsibility facing the nation will

heavier' before

ing

is achieved,

peace

ident

facts

equally

should

time

We

for
not

are

peaceful

now

world

usual.

"living

under

conditions.

neither

are

eral

widespread

in

as

States is

engaged in a gen¬

we

will

a

war.

a

normally.

It

that

The

urgent to make some s..iits
in economic policy now.
We must
all speed up our preparation now
take

to

drastic action

more

if it should

Controls

essential

cate

substantial

and

materials.

increases

in

our

of

those

mili¬

frain

business, labor and

inadequate steps

are

taken at once

an

immediate $5 billion
individual

porate income taxes.
enactment

vital,

is

measure

and

this

but

tax

this

be necessary,

necessary

studies

be

can

com¬

our

and when the extent of
new obligations can
be more

people

determined, to

additional

justice

to

- re¬

avarice."

or

be

must

.

.

Debentures

Bell Denies

1

George Putnam Urges End of $35
GMd

Ounce Price

an

production

The

.

.

is

Much

18

More Is Needed!

61

(Boxed)__

____

Revaluation Premature

Commercial and Industrial Real
In

are

commodities
with
can

33

AIRCRAFT

We

See

It (Editorial)

Business

Man's

Canadian

.Cover

____

Securities

.

the

doubly
international

of

tension

should

of

markets

and

plentiful

and

of
are

some
now so

allocation

have

no

the

19

,_

NSTA

Funds

14

Notes
Banks

and

Bankers.^-.;

Our

Reporter's

Our

Reporter

Prospective

Security

Public

Utility

Railroad

U.

Salesman's

Securities

Now

The

Corner

28

Registration—

in

34

Security I Like Best

Tomorrow's Markets

FOR BROKERS AND DEALERS
5

(Walter Whyte

To Western markets ia

Says)

30
LOS

Washington

measures,

page

*See article

of

6

You

and

Published

on

page

Twice

40

fTILLIAM

Park

S.

U.

DANA

B.

1

Weekly

Office

COMPANY,

Drapers'

2-9570

to

ary

Gardens,

Spencer Trask & Co.
York

DANA SEIBERT, President

RIGGS, Business Manager

2-4300

,

'

'

Hubbard

Teletype—NY

2-8200

-

Chicago




-

Glens Falls

-

'

Schenectady

-

Worcester

Eng.

the

at

Y.,

under

post

the

B.

Dana

Febru¬

matter

office
Act

at

of

New

March

Dominion

In

United

Territories

Pan-American
of

Union,
Canada,

Countries,

$42.00

States,

and

$35.00

U.

8.

Members

of

per

$38.00
per

year;

per

J. A. HOGLE & CO*

w

ESTABLISHED

Members

year.

New York Stock Exchange

(general news and ad¬
and every Monday (com¬
issue — market quotation

corporation

and

Other

city

news,

Offices-

Chicago 3,'

111.

news,

135

bank

clearings,

etc.).
South

(Telephone:

.

Other

'

Bank

and

Note—On

State

Salle

St..

2-0613);

Publications

Quotation

$25.00 per year.

the rate of
La

1915

year.

'

state

Albany

N.

Possessions,

Other

records,

1-5

C.,

Thursday, July 27, 1950

vertising issue)
plete statistical

CITY

Subscription Rates

Every Thursday
HAnover

E.

by William
Company

second-class

Subscriptions

Curb Exchange

50 Congress Street, Boston 8

London,

1950

as

1942,

25,

9576

SEIBERT, Editor & Publisher

WILLIAM D.

SPOKANE
LAKE

1879.

8.

N. Y.

-

WILLIAM

•

SALT

Edwards & Smith.

c/o

York,

Publishers

Place, New York 8,

REctor

•

and

CHRONICLE
Patent

ANGELES

DENVER

5.

COMMERCIAL

FINANCIAL

Members New

Piantpi Wine, Semuce

2

critical

great that

on

SAVINGS

BONDS

18

our

HERBERT D.

Exchange

S.

23

_.

Securities

preferred stocks

Stock

BUY

:

36

Securities

Record—Monthly,

50

and other

Principal Exchanges

'

Broadway, New York 5

(Foreign postage extra.)

account

of

the fluctuations

In

exchange, remittances for for¬

eign subscriptions ""d pd-0--.cements
ue
made in New York funds.

.

■

y.

-

12

—

Offerings—

Securities

Inc.

i

Exchange PI., N. Y. 5

■■■■■■■■■■■■■■■■■■■■■El

38

,

Governments—

40

*

:—____

Report

on

Eng.j

Teletype NY 1-1825 & NY 1-1826

21

Observations—A. Wilfred May

25

York

HAnover 2 0270

16

News About

j 1

j

MACKIE,

&

32
a

.

Singer, Bean !'

6

-

•

h.

Lear Inc.

-

offerings of

Street, New York 4

Engineering & Mfg.

Continental Aviation &

11

.

Indications of Business Activity
Mutual

v

>8

From Washington Ahead of the News—Carlisle Bargeron.

grow¬

assurance

Continued,

Machine!

the

has indicated that

High Grade Public Utility and Industrial

New

Texas

12

Dealer-Broker Investment Recommendations.-

i

Liberty Products

12

_______

Coming Events in the Investment Field

Einzig—"Rearmament in Britain?"...-

I

1

Foote Bros. Gear &

17

___________

Bookshelf

:

EQUIPMENT

MANUFACTURERS

__

Bank and Insurance Stocks___

Reg.

Members

Teletype NY 1-3370

Estate Transactions Continue

Regular Features
As

„

Broadway, New York 6

20

r

Volume

Large

Reentered

25 Broad

Incorporated

17

Copyright

interested in

J.F.Reilly&Co.

Hits Proposals for Consumer Credit Controls

land

are

Quoted

—

16

17

;__

now

experience

years

"Shortages

avoid

Sold

Foreign

on

Purchases

The State of Trade and Industry

even

—

16

FHA Announces Credit Restrictions

The
We

11

Textiles.

Shortage of

production

upon

Production Controls

raise still

to

revenues

called

ing."

we

clearly

Those

consumption requirements of

when the

pleted,

develop,

Forces,

effort

domestic

will not be enough."

"It will

con¬

excessive for peacetime use

five

our

pro¬

interim

Place

Banks

Ray

sacrifices

in

Armed

international

last

"The imme¬

of

of

great

which
because

subside.

cor¬

Liberty Products

fears that capacity would be¬

if

.

Jack & Heintz 1 ;*

3

Bought

W.

public
influence

not

hoarding

more

come

Taxes

The President repeated his pro¬

in

buying

tensions, should not be held back
by

V

■.

BO 9-5133

The

as well.
not now

are

the

from

urgent

curbing of infla¬

increase

&

rule applies to

The

certainly,
in

duction,

tion," he said.

posal for

FIC

Holds Canadian Dollar

United

exparsion of certain types of pro¬

adjust private and public poli¬
cies and programs to our supply
needs and to the

will

concentrate

and

V.l

'■

make

"Our main
to

and

to

gram

in¬

of

Production and More Production

con¬

moderation,

practice

sumers

Mi:
~

.

15

_

President's Economic Blue-Print

under condi¬
now developing.

buying

to

"The

complete set of economic controls

diate

Labor

the

shortages

who

us

upon

should

Engineering

an¬

to follow is to buy
The current outlook is

need.

allo¬

tary forces in supporting activities
now under way do not call for a
now—if

The

general

are

goods

business

credit

W. Babson__

7

they are created artificially
by speculative or panicky acqui¬
sition of goods far in excess of

The President repeated his pre¬
vious
request
to
Congress for

limit

and

Higgins, Inc.

stoppages

important

serious

sumer

later

**

Continental Aviation

Pettengill__ 15

unless

become necessary."

to

12
13

6

best rule

actual

controls

Higher Interest Rates in Offing?—William Witherspoon

economy

which

site extremes, and economic pol¬
icy should be guided accordingly.
is

the

an

the

tions

STREET, NEW YORK

Remington Arms

Truman Requests Increased Corporate and Individual Taxes...

Consumers

in

consumer.

of

be

upon

9

Irving Olds Says Drastic Controls Means Permanent Socialism

something
afford under

of

person

practices

We are
situation between these oppo¬
or

WALL

11

a

are

cannot

Responsibility

"Every

But

1__

_____

of

conditions."

current

This is not

business

(

8

;

The Stock Market, If War Comes—John Duncomb_____

*

a

Telephone: WHitehall 4-6551

5

against easy indifference

and sensational alarm.
the

all,

Work

industries

simply

we

us

warn

pay

i

Investment Powers of N. Y. Trustees Under New Law Analyzed

should

consolidation

peace.

vital

in

the Pres¬

spiral

Above

further

tne

his message thus:

keynoted

"The

Currency—Frederick G. Shull___"________

War in—Roger

today—we

the

port;

of Irredeemable

Problems of the Small-Scale Investor—Harold G. Frame

World

in

your

-

7

Inflation—Lesson

it out

of

join with management in

dustrial

last¬

a

might lead to

inflationary

avoided.

should

use

Wage demands of

manpower.

Revolution

Dig

obsolete

corner

good price for it.

99

_

that

bottom

whole

effective

even more

giving

to

the

Labor should continue
its contribution to¬

for

transmission of his mid¬

become still

Baruch

hide

you

darkest

Price, Wage and Rent Controls Called For
M.

Did

folio?

The Current Misinterpretations of Dow's Theory
—F. P. GoodrichFrench

PLACE"

4

5

Who Is to Blame for Boom and Bust?-r-Samuel BL

increasing productivity, and

toward

seri¬

more

year
'

nation

enlarge

ward
grow

conclusions

the

the

,

of

course

economy.
President Truman

economic

was

*the

upon

situation si.ould
The

which
."

.

Kerby__

Analysis of Wartime Behavior of the Bond Market.
—George F. Shaskan, Jr., and A. Wilfred May

bilities, rising in proportion to its
increasing strength and influence

ask

powers

ous.

.

Responsibility of Labor

if the political
or

can

"Labor also has great responsi¬

sharp
warning
that
will

adjustments,

the volume and kinds of

us

needs.

issued

he

market

production

gency
under
"limited" con¬

trols,

F.

capacity and investment to current

econ¬

conditions, com¬
bined with restrained pricing and

rent

"IN A LONELY
Cover

4

—Bernard

Responsibility

Cover

__

International Investment Problems—Frederick R. Gardner

Immediate

surplus."

Ex-

Enterprise

Disseminating Stock Market Information—William

worsens.

Korean

conflict.

c o

during

nomic policy and

today gave the
country his economic program for
dealing with the "Realities" of
the

if political situation

necessary

Manufacturer Looks at Free
—Louis Ruthenburg

Private Associations Doomed in Welfare State
—Donald R. Richberg

adequate to do the job. Urges controls on
to allocate essential materials. Warns full-

time controls will be

page

AJND COMPANY

A

material

3

must

Telephone WHitehall 3-6700

Teletype NY 1-1856

-

•

4

The Commercial and Financial Chronicle

(340)

including
Highly
As

Market Information

far

handling of
tend

Wall Street Journal"

Mr. Kerby descr

be^ melhods and objectives in disseminating
financ.al news as exemplified by the Dow-Jones

business and

For

for

three. Most important, of course,
is what we call and what the
Street calls the Dow-Jones Broad
Tape. That is a
news
service
where
the
emphasis
is
very
heavily on financial news. Inci¬

organization

an

is; I think, in many ways
unique. We have only one busiand that
disseminating

gathering

is

ness,

and

and

business

financial
news.

\

w e

i

'

what

call

we

Out of

been

ve

doing
since
is

this
It

of

1882,

we

have

we

is

duties

have

obvious.

We

department

and

are

utilities

a

it

is

is

;

we;

have

Canadian sub-

a

sidiary of Dow-Jones where nat-

,

j;

by

•

wm. f. Kerby

In

an

enough the emphasis is
mews of Canadian origirr, and
affecting

news

Canadian

is

ness

the

on

fme

basis

of

There

what

are

organizations

the

in

supplying
business
Dow-Jones, I think,
one

operating

basis

and

field of

but

tne

only

is

broad

a

all aspects of

covering

economic

very

news,

such

on

Dow-

many

news.

economic news has a very
formidable sound as a term, but

definition that

our

we

interested

are

about

how

people

that

means

in

everything
a

living,

they spend that
after they get it.

money

and

how

A
as

earn

word

about

organization.

an

Dow-Jones

and

Company operates electrical
telegraphic news services—I put
the
in

"s"

on

there

deliberately

340-odd

some

cities

in

—

the

United States and Canada. These
services

nancial

supply

business

and

fi-

to

news

brokers, bankers,
companies,
industrial

insurance

companies,

newspapers, and
everyone who needs news quickly
to run his business
properly.
*

•"•s

*A

sai">

lecture

services

given

"\yan

also

Street

on

July

we

14,

have

1950, the

3rd

in a series of 17 on the The New
York Securities Markets and their
Opera-

has

national

0f

cept

it

methods

of

gathering

The

"Wall

today of something
150,000 subscribers,
not tremendously large
of

excess

which

is

mass-circulation
newspapers
§°> but which, I think, is very
large in influence and prestige because of the type of its readership.
xt circulates on a verticle basis
throughout industry and finance,
jnor
instance, in the case of a

would

the

be

President

the

of

the Vice-President, the
Treasurer, the Purchasing Agent,
company,

the

Plant

Director

Sales

the

Superintendent,
the

and

Labor

have

We

is

business

magazine

is

facets

magazine,

and

the

financial

and

magazine

a

difficult,
of

a

weekly economic

a

if

management,

money

It

third Operation

a

"Barron's"

as

of

will.

you

matter of
one of these

a

any

Dow-Jones'

organi¬

for all

news

large staff

izations

go.

partment

RH 83 & 84

I

counted

organ¬

de¬

news

men,

yesterday, and we
223
employees, full-time
actively engaged in gather¬

ing,

editing,

have

noses

the

disseminating

They
around

regional

Stix & Co.
J

INVESTMENT SECURITIES
509 OLIVE

STREET

5

*

St. Louis 1, Mo.

1.
MEMBERS

\
i

'j

"

telephone:

New
and

literally

are

the

world.

news

England
we

have

scattered

We

offices.

office
news

have

We

in

19

have

Boston,

offices

in

land; Ottawa; Toronto and Mon¬
treal, Canada; Los Angeles; San
Francisco; Portland, Oregon;

Houston;

Dallas;

Paris;

London;

teletype:

This

news-gathering and
seminating organization is
by

one

of

the




45

knit

largest

leased-wire networks operated by
any

organization

anywhere.

the

after

12

United

had

that

item

through
the
and a minute or

as

know,

you

had

we

of the most active stock

one

11

At

seconds

15

all

States,

later,

minutes

noon.

—

at

We

wire,

purposes.

When capital goes abroad it runs
risk and raises more prob¬

lems, political and social, than it
does at home.•

background

foreign
in

the

against which

investment
few

last

has

operated

has

been

decades

that

capital

on

at the White House. We also have

direct

a

the

telephone

White

ington

House

office,

line

tie
to

and,

of

course,

pick

That

dramatic.
real

is

That

not

get

a

news

a

be

to

has

word

utility around

because you

world

had

probably

this

During

very

service

clear wire im¬

a

"flash"

a

word

don't

you

Everything
hear

So

a

that

flash

the

dictated it to

a

our

is

a

On the New

Truman

in

Korea,
by

our

House
A

to

desk

office

to

New

York

news

desk the

was
dictated orally to the
telegraph operator who was trans¬

mitting

news

over

the Dow-Jones

News Service circuits. The net

sult

was

that

the

news

over

the

That

isn't remarkable;

country

in

moved

re¬

all

15. seconds.
it is quite

In the Western

Hemisphere eco¬
development has been ac¬

nomic

would

same

speed.

I

don't

mean

and you will

pride

sound

boastful

have to pardon

'1

our

Coiitimled

on

page

22

tre¬

in the

J During this period
Change,

the

emerged

world •

of

United
the

as

has

States

great

industrial;

nation." Th'e U.tS. has become the

leading

of

source

technology/

scientific research, advanced man¬
agement.
By the inevitable logic
of events the U. S. has acquired a

position of leadership comparable
in many respects with that Brit¬
ain held in the 18th and 19th

turies,

when

advance

Britain

the
industrial

the

of

guard

revolution

cen¬

was

coming West.

this vast continental market,
the machine and technology have
In

Today,

the

to

present heights.

government,

as

as

has the problem

join

with

transmitting

country

of how

friends

our

indi¬

as

this

groups,

we

shall
in

abroad

techonolgy
and science.
We recognize as an
elemental principle of economic

among the American peoples has
evolved.
It now looks as though

development that nations rise and
fall together.
Our welfare, inter¬
nationally and at home, is inter¬

by the two wars.
A
great inter-American system of
trade, cooperation and intercourse

events

may give still greater im¬
pulse to hemisphere development.

locked
all

Hemisphere development prob¬
lems

to

came

the

fore

in

dra¬

a

matic way in the 1930s and 1940s,
before
and
after
the
fall
of
France.

In that

sity

the

of

being

period the neces¬
brought into

times

institutions

the

of

some

in

Washington which tended to put
foreign investment increasingly
the

hands

During the
such

of

the

as

Board

which

Affairs

problems of economic

on

The

development of the hemi¬
speeded during World
in
various ways.
And

was

II

International

science to what

developed

there

was

ended,

discussion

much

whether

II

postwar

as

to

development

should be carried out at the gov¬

define

debated

mainly

come

sources.

at

That

In

"under¬

an

is

a

technology abroad
matter of raising

particularly risk

capital,

not

area.

transmit

To

primarily

is

phrase
shall

I

Technology

is

have

first

capital.

the

skills

people
special

and

knowledge.

And, secondarily, it
machine, the equipment, the
paraphernalia of modern industry
is the

and

agriculture.

omy
so

International

Corporation

far

I

as

Basic

am

company of this nature;
of organizing center, to

Continued

♦

Econ¬

into being,
aware, as the first
came

as

a

sort

bring to-

on

page

18

from pri¬

question

length.

to

developed"

level, with capital com¬
from
sources
like
the
Export-Import Bank, or whether
should

at¬

an

call "under¬

This

undertake

ing
it

areas."
and

ernment

vate

is

to
transmit
management,

some

controversial

The
War

Economy

brief,

nership
enterprise
capital, technology,

period.
World

Basic

in

tempt to set up channels of part¬

who

development in Latin America.
sphere

We

the

Corporation,

had
of

Warfare and the Office

American

worked

government.

government

war

agencies

Economic

of

interdependent.

and

have

modern

problem of working
together for the common good.

the

was

Established

1856

Pan-

American

meeting at Bogota the
accepted principle was that Latin
American
to

should

look

capital

for long-range

private

primarily

H. Hentz & Co.
Members

economic development.

Washing¬

New

York

Stock

Exchange

ton

with

the

New

York

Curb

Exchange

preoccupied

was

Marshall

Plan

and

of foreign aid.

other

principle, our
policy of

the

private

aspects

a

*.A
a

lecture
series

sponsored

of

given
17'

on

on

York

Chicago
.New

July 14, the third

N.

Y.

Exchange

Exchange,

Board

ot

Orleans Cotton
And

Securities

Cotton

Commodity

enterprise.

With that background, Interna¬
tional
Basic Economy
Corpora-

in

New

funda¬
government
encouraging

And, as

my

organization, but I
do think we are pretty good, and
the
interesting thing-to me is
1'1

in

to

expe¬

the

celerated

had

the

on

-

viduals,

efforts to solve.

nouncement

significance
have moved at just about

i>lace

based

adaptable to

change which has taken"

and

mental

any

mendous

flourished

routine. A corporate dividend an¬
of

and

brought up problems which
certainly merit the best thought

When

teletype circuits.

York

And these years

power.

investment

United

great in¬

war

you

telegraph operator

leased

as a

and

down

it

the

period

emerged

war."

War

White

transmitted

"cold

those trends carried into the post¬

Washington office.
in the Washington

our
man

have

we

literally.

phoned

was

so-called

this

have had

Now

casually.

President

at

We

work

abroad

—

intervention

reporter

to

have

pin drop.

when

ordered

had

has

say

stops

Everybody quiets
can

that

because

unsettled

capital went
wars.

States has

mediately, but it had really better
be

since

most

sizable scale.

a

two

into

thing our man did was
the telephone and call

up

"Flash."

a

Wash¬

private leased wire from
ington to New York.
to

from

Wash¬

our

the

Hemisphere Development

reporter from that
stationed permanently

broad
rience

more

kets since the fall of France.

a

specific

Raising capital for investment
abroad usually is more difficult

The

has attempted to put into
action, as well as into
principle, concepts of for-:

group

.

for domestic

new en¬

ton
during the war working on
hemisphere problems.
The IBEC

turmoil, changing, technolri eign

it is

1947

in

work

terprises abroad. The IBEC group
headed by Mr. Nelson A.
Rockefeller, who was in Washing¬

in
raising venture
capital for domestic development;
that is, the problems of taxation,

than

to

is

encountered

world

existence after the

went

and

financing and developing

Economy Corporation faces
essentially
the
same
problems

ogy, and so forth.

into

came

war

Basic

mar¬

-Well, how do we move that
quickly? We have a Washington

tion

tapping the great reservoir of
capital in this country and mobil¬
izing risk capital.
International

an¬

out

10

at

later—Dow-Jones

two

That

handed

House

disseminated

'

have 52,000 miles of leased

that

Korea.
was

seconds al'ten

minutes

dis¬

0514

SL-80

recall, the

you

flash
a

Philadelphia; Washington; Pitts¬
burgh; Chicago; Detroit; Cleve¬

together
GARFIELD

and

over

and Frankfurt.

MIDWEST STOCK EXCHANGE

White

who

news.

Telephone 3-9137

as

in

the

three, and it is quite
as newspaper

this

in

operate

United States armed forces would

The first

Then

little

a

particularly

announced

is

a

RICHMOND, VIRGINIA

President

bureau

zation without grouping them all
together. The same staff gathers

CRAIGIE&CO.

27,

typical

there

Raising capital for foreign in¬
and
particularly risk
capital, gets into the problem of
vestment,

dustrial

June

and

fact, to talk about

■F. W.-

On

Bureau

readership

not

business.

small industrial company, a

quite
for us

tell you

to

to

necessary

intervene

as

VIRGINIA—'WEST VIRGINIA

MUNICIPAL BONDS

is

in
and

circulation

in

national

CAROLINA

the

lustrate

has

Journal"

Street

tivities in Brazil and Venezuela.

under

but which might il¬
speed with which it

nouncement

weekly. It is

Bell System Teletype:

news;

in¬

Quickly

is

remarkable,

it is national in its circulation.

which

NORTH and SOUTH

national

is

which

story

in this

newspaper

news;

Move

I would like

is

C0Untry. It is national in its con-

Economics.

Specialists in

which

is the only

"\yau Street Journal"

Relations Manager,

Since 1932

We

It pubiishes the

Journal,"

tions

sponsored jointly by the 'New York
Securities Industry and the
University of
Vermont's Department
of Commerce

second

a

automobile

Basic

channelling technology, management
undeveloped areas. Describes I. B. E. C.'s ac¬

,

prjnted jn three cities, New York,
£)auaS( Texas, and San Francisco,
j
think
you
can
say
that the

a

organization

our

also

gtring to its bow

truly

Now,

by

Dow-Jones

the

to

dustry; in Pittsburgh/the steel in¬
dustry and coal mining; Los An¬
geles, the moving picture indus¬
try, and Houston, the oil and cot¬
ton industries, and so on.

their money
Jones says.

specialization.

news

Detroit, for example, our re¬
- obviously
pay .a -lot of

attention

com-

industry, and finance, al¬
though a great deal of news of

people actually spend1 an international nature
and run their busi- carried on that service.

some

porters

merce,

trouble.
see,

forces

\ urally

infinite possi¬
bilities
for

fYou

Then

v

sur¬

rounded

on

financial

service/but where
because a smaller news bureau/ is
emphasis is particularly on
apt to encounter a little of every¬
commodity mews.
:
*•
thing.
G e ography
naturally

a

business
which

department,

goods

consumer

heavy engineering and so on. : ;
Outside of New York, the staff
tends to not specialize so much,

good deal

a

material carried

same

a

foreign invest¬

matters of

cover

and science in

and

research

a

development department

whose

have another

we

but also

sub¬

a

to

Economy Corporation, established in 1947 by group headed by
Mr. Nelson A. Rockefeller, to assist
hemisphere development.
Says problems involved not only relate to placing of capital

transpor¬

our

i the

ing / business,
to me, at least;
and

the

1 trie

fascinat¬

a

Chicago

service which carries

■

Having in view the greater difficulties attached

manufacturers; automobiles,
buses, trucks, bus lines; ship lines,
shipbuilders, and so on.
new

Corporation

ment, Mr. Gardner describes work of the International

department. That de¬

news

Then

Economy

ratner

•

dentally,
ha

By FREDERICK R. GARDNER*
International Basic

craft

dentally, that is edited and opera ted out of New York City.
'
'

Inci¬

is concerned, we

the
coverage and analysis of news in
the field
of
transportation—rail
roads
and
railroad
equipment
manufacturers; air lines and air¬

good." Tells of system of group journalism on nation¬
wide basis and gives illustrations of news gathering.

work

news

partment operates under
editor
and
its objective

pretty

I

organization and

example, in New York

have

tation

per.odtcais and services. Says work is highly departmentalized
and stresses speed in operations, in which "we think we are

which

be

to

i

the

hignly depart¬
mentalized,
especially
in
New
York, for obviously the staff is
larger there than in other cities.

By WILLIAM F. KERBY*
Executive Editor "The

International Investment Problems

Departmentalized

as

Thursday, July 27, 1950

.

transcontinental

four

wires.

Disseminating Stock

.

.

other

Cotton

Inc.
Trade

Exchange

Exchanges

Exchange Bldg.

NEW YORK 4, N. Y.

Analysis

jointly by the New York Se¬
Industry and the University of
Vermont's Department of Commerce and

CHICAGO

DETROIT

PITTSBURGH

curities

Economics.

■

GENEVA, SWITZERLAND

/o.rT\

Volume 172

Number 4928

.

.The Commercial and Financial Chronicle

.

Investment Powers of
Carloadings
Retail Trade

New Law

Commodity Price Index

s

and

Auto Production

Industry

Total

industrial production

received

longer merely a matter of con¬
sulting the "legal list" of securities
approved by the State Banking
Department; The new obligations

a

prudence"
technical

for unemployment insurance.

mid-April high record as more mills stepped up>output with 4he
return of workers from their vacations. The increase, in the oper- !
ating

rate amounted

week

preceding.

;

Under

3.4

to

points above

"'"..'v /'v*/-v

stimulus

of

the

Korean

'

•

capacity

'V".v*

v

'

•

;

I

heights and

new

under

"rule

the

discussed

are

language

in

in

rate, thus maintaining

of

(This is the third in a series of articles on the facts

non¬

and

significance of the stock market's behavior dur¬
of the current
post-Korean and previous market performances tpill
appear in next week's issue of the "Chronicle")

booklet

a

ing past war periods. " Comparison

Street* New York City 5, N. Y.. '
•permits

trustee

a

equities,

to

•

invest tin..

to 35% of a trust
fund's value. Further, it has lib¬
eralized : the range ; of securities

situation

consumers are

up

permitted for the remaining '65%,
particularly in the case of revenue
.and fntipicipal bonds, the booklet
points out. The law was intended

In the two previous- instalments of this study we traced: the
price behavior-of stocks during ithe initial stages as well as the
entire duration of the two World Wars^In the present article we
show the course of fixed ^interestt securities.
h
The bond market

greeted thej outbreak of World War
slight declin^. During the
.
.

•

•

hold

to

quotations in

view of

the

threat

of

should prices get out of line.
Some

slight reduction

control

government

.

V

bonds went down

the

previous

law

restricted

investment of trust funds.

ferrous
total

it

metals.

of

of

Because

6,600.000

the

very ' well during this
period,
the Dow - Jones
composite Bond Index reg¬
istered a decline of a little

up

the

.*

seems

the projected
"ambitious" forecast,

an

declared.
>•:

Of
Gas

interest

the

Association
in

revenues

first

that total

like

was

revenues

1950

quarter

were

the

release

by the American

$614,000,000,
Revenues

an

increase cf

from

revenues

9.9%
<

:

over

31.

further states

1950,

$1,742,000,000,

were

an

total

that

revenues

in

the

from

increase of 9.4%
■f

try

phenomenal

during

the

tive

#

of

for

July 1.

the

amounted

sales

ago

over

12-month

utility

which

had

a

revenues

of gas
of $1,593,-

INDIANAPOLIS,
Y.

Denham
with

are

ris

slow

motion

There

that substantial advances

over

a

Davis

probing of the Administration for

a

business from offices at 916 Union

orders

have

been

slow

BOSTON,

their

steel

is

V" Consumers are projecting their production on the basis of what
steel they can get, ordering all other items going into their products

in

proportion to the availability of the tightest steel item,
Iron Age" points out.

"The

are

Mass.

—

Royal

W.

members of the Boston Stock Ex¬

change.

-

.

.

J. H. Goddard Adds

-

(Special to The Financial Chronicle)

BOSTON,

Mass.—William

Robertson has

been added

H.

to the

staff of J. H. Goddard & Go. Inc.,
85 Devonshire

Street) members of

the Boston Stock Exchange.
•

:

.'

■:

».

-

as

in April,

initial period of Word War L a few bonds rose.
largely concentrated in secondary rails, apparently
in anticipation of the wartime conditions of heavier travel and
motor-and-gasoline curtailment, which. subsequently stimulated
the broad rise in the common stocks of the carriers.
Sugar bonds
concurrently with the shares of that industry's companies.
early period industrial bonds in general did not hold as
well as they had at the outbreak of the first war.
Over the entire course of World War II the bond marketrose

In

this

Thus, nine secondary rails rose by more than 300%,
issues by more than 100%.
Similarly, secondary
industry groups (utility, sugar, transit and coal)

grade issues.

of such

47

and

issues

in

other

up 50% or more.
High-grade bonds acted much better during the second

were

world

they had during the first war, the Standard & Poor's
Index of High Grade Bonds rising by 2% during the latter period.
(This rise was highly selective, however; for example, 40 of 47
high-grade utilities) all six petroleum issues, and 8 of 42 rails actu¬
ally declined.)
Sharp Inter-War Contrasts

r

contrasted his record with the United J

monetary management," he

Continued
4From

.*

on

paga

PROVIDENCE, R. I.—Ralph- K.
is associated with Ed¬
ward Er Mathews Co., 53 State

tary

Morgenthau, July 2t, 1945;

Sj

•

'!

f

;
WE

ARE

PLEASED TO ANNOUNCE THAT

d

iiiiiiiiiitiiiiifiifiiiihiiiitiiiiiiiiiinr

MR.

Markets

Alabama-Tennessee

HAS

BEEN

GRON1CK

SAMUEL

ADMITTED AS

GENERAL PARTNER

A

Natural Gas Co.
Dan River Mills

specialized items not needed for three to five

Garfield & Co.

months.

government request, according to this trade authority, Kaiser
Industries, Inc.. filed with the National Security Resources Board
and Munitions Board a plan to raise its annual capacity at Fontana
At

by 700,000 ingot tons.

The project would cost about $100 million.

steel mill in New England
encouragement from Washington.

Those striving for a

are

also getting fresh

Rich., Fred. & Pot. D. 0.
60

Scott, Horner &
Mason, Inc.

ing steel companies reported huge capacity expansion plans.




9-8420

members

stock

new

york

new

york cocoa

.

/

on

Their

page

29

commodity

Lynchburg, Va.
Tele.

LY

83

LD

july

33

VllllllMfllllllllltllllllllllllllllllllllllll

21.

exchange;

1bso

inc.

inc.

*

4

York
,

..

.

chicago boaro op 'trade'

exchange

exchange.

.

new

york produce

new

orleans

*

While this news was still in the making, 13 of the nation's lead¬

Continued

New

Street
Telephone BOwun& green

v

•

Beaver

*

^

27{

Secre-J I

rAnnuab Report to Congress by<

"The War's Financing," from

Jennings

ng

!

previous wartime accompaniment of weak bond markets.
is a succinct summary of the strikingly contrasting
inter-war record.
On June 30, 1914, just before the outbreak of

States'

(Special to The Financial Chronicle)

TH'fd

*

Here

.<*

Street, Boston, Mass.

s

market's major decline
in the first war and its strength during the second conflict seemsascribable to the following major factors:
J,,
(1) The second World War was fought on a controlled low
interest rate pattern while the first was not.
The primacy of j
this aim was stated by wartime Secretary of the Treasury Morj
genthau as follows:
,
"One of three principal objectives of the Treasury in its war <
borrowing program has been to finance the war at a reasonable !
level of interest rates."*
Ascribing his success to "the art of j
The notable contrast between the bond

selling out their complete stocks in all standard

some

t

1917, most bonds declined, the Dow, Jones Composite Bond Index
losing about 4%.
The utilities fared particularly poorly.
How¬

With E. E. Mathews Co.

:
Heating,". ventilating and air conditioning industries report
record-breaking orders, and hand tool manufacturers had their
best month in history during June. Rural dealers in agricultural

in

Bonds in World War II

the four weeks following Pearl Harbor,

During

,

going and for what it is to be used.

now the gray market operator's best source. Here
current gray market prices: Cold-rolled sheets, $180 to
$2TO per ton: hot-rolled sheets, $160 to $200; ingots $75 to $80.

Geo. F. Shaskan, jr,
TV

de¬

conflict than

Leith, Jr., has joined the staff of
Burgess & Leith, 30 State Street,

in

are -some

and

is

Hopkins

A.

are

Foreign steel is

items

Robert

.

associated with Mr. Davis.

of

Although price resistance is disappearing the gray market is
expected to bloat to its 1948 proportions. The big mills have
been maintaining very tight control over their outlets and
they

equipment

ORLEANS, La.—Alvin J.

(Special to The Financial Chronicle)

set

suffered

sharp contrast to its behavior during World War I—rose sub¬
stantially, with the Dow-Jones Composite Bond Index up some
17%. The largest advances, of course, were centered in the lower-

is engaging in a securities

Street.

not

where

Inc.,

Reed,

(Special to The Financial Chronicle)

NEW

to Vacations

coming, this trade paper
a sizable military
buildup is definitely on the way.
Steel producers and
consumers are correct in anticipating:
(1)
Allocations and priorities,
(2) further inflationary trends,
(3)
chronic shortages of materials and products for months to come,
and (4) a continuing onslaught of orders for finished goods.

know

&

With Burgess & Leith

Slightly Lower Due

market

and: uniform

in

year

plenty of takers for anything that looks like
steel, and price consciousness is fading fast.
Military
asserts, but

Ind.—Eugene

Harold A. Smith

and

Waddell

Alvin Davis Opens

"painless" controls has turned the steel market into a whirlpool of
frenzy and uncertainty, "The Iron Age," national metalworking
weekly, states in its current summary of the steel trade. Steel
consumers are frantically trying to build
up and balance their in¬
ventories.

investor.

Merchants Bank Bldg.

gain of only 2.6%.

Steel Output
The

"prudent"

bond

sharp

cline, with only two of the 147 Stock Exchange-listed issues show¬
ing a net advance.

ex¬

(Special to The Financial Chronicle)

period

sales

set by the building construction indus¬
five
months
of
1950
was
maintained

notes

the

Wilfred May

ever, unlike the
These rises were

all of the geographical regions exceot New
showed a loss of 0.9% and the South Atlantic

which

England

the booklet

Witf: Waddell & Reed

reported in

were

the

govern

to

also

agency

law,

Residential

$568,023,104, or less than 1% below the alllime high of $568,904,044 recorded in May.
Compared with the
June, 1949, total of $394,056,002, the rise was 44.1%.
The

new

plains the principles which should

according to the latest survey by Dun & Bradstreet, Inc.
total valuation of building permits issued in 215 cities last

month

of the recent law, effec¬

pace

first

period of
participation: in the
first World War, however,

been explicitly

never

r:

-

our

80

Besides reprinting the full text

in June,

The

than

more

than 3%.

Over the entire

New York statute until

a

passage

000,000 in the previous 12-month period.
The

it has

for

up

year

March

York

New

14.7% and commercial gas revenues gained
earlier.

were

Association

The

ended

a

more

recognized legal precedent

a

years,

14.2%

industrial

represented the highest percentage gain, rising 16.0%.
gas

in

sales and

gas

from sales of gas by utilities

1949.

of

been

a

it reported an increase in
quarter of the current year.

quarter of

the

over

past week

full

grant

now

While the "rule of prudence" has

stated in

sjs

in which

the first

It noted

the

$

states

discretionary powers to trustees.

situation,

supply

for the year

cars

Twenty

sltehtly/

the industrials held"

While

motive

output, according to "Ward's Automotive - Reports," with
this; agency predicting that, even Without imposition of direct
government controls, passenger car production for the rest of the
year will be restricted by shortages of steel and essential non-

Aprib

did transits and utilities.

as

declining yields of
! fixed income securities to which

•

occurred the past week in total auto¬

following ouf actual- entry;
6, 1917; practically all rail

the

and

I with a
:- vv

immediately;

into shooting^wairrm

relief "to beneficiaries squeezed
between rising taxes and living

as

costs

weeks

four

,

*

financing last war on a low interest
remarkably strong general bond market

monetary management" in
.

The new law for the first time
••

inquiry tor steel is
seeking to build inven¬
tories before government distribution controls are applied.
In
many products, mills and distributors are deluged with, requests
for i tonnage, "Steel," national, metalworking magazine, states this
week.
J'v'\
'.?>•' ";.,r
' v.i(' •
: vA strong tone prevails in the market* butifinisked sieel prices
are
holding except for isolated -increases, this trade - magazine
asserts;. Indications are producers will make a determined effort

reaching

great contrast
World Wars.

Just issued by the investment firm
of Kidder,. Peabody & Co., 17 Wall

the

output of

trustees

of

In the steel industry output rebounded last week close to its

Study of past performance of fixed-interest securities shows
of their price action between the first and second
Demonstrates results of Treasury's "art of

re¬

no

fillip the paist week as
industry-wide vacation periods terminated.
Output for the
country at large showed a modest increase in the week and was
considerably higher than the level for the comparable period a
year ago.
Latest reports also reveal a continued slight contraction
and continued claims

law, the investment of

MAY

FART HI

stricted trust funds in the state is

some

in both initial

By GEORGE F. SHASKAN, Jr., and A. WILFRED

Since the passage of New York's
modified version of the "Prudent

Business Failures

Man"

•

Of the Bond Market

Analyzed

Food Price Index

J
,

Analysis of Wa; time Behavior

N. Y. Trustees Under

Electric Output

State of Trade

5

(341)

Steel Production

The

u

exchange

cotton exchange

-

.

0

(342)

The Commercial and Financial Chronicle

information

I

July

Harry S.
addressed

25

Senator

Walter

Truman
letter

to

George

of

a

F.

comprehensive

on

soon

as

program

First

to

eliminate

the

tax reductions and other

losing provisions,

loopi.ole-closing

dividend

holding and lire
pany provisions.

insurance

to

the

in-

Second

to

but

retain

adjust

the

the normal corporate rate from 21
to 25%. Taking into account the
20% surtax contained in the pres¬
ent bill, and the $25,000
exemp¬

The

text

of

tion

the President's

letter

follows:

My

The
creased

i

n-

on

military appropriation re¬

together with
other requests I shall transmit at

July

24,

later

a

1950,

date,

entail

will

Federal

increased

We embark

on

sharply

expenditures.

these enlarged ex¬

penditures at a time when the
Federal budget is already out of
balance. This makes it imperative
that we increase tax
revenues

promptly
create

lest

new

detrimental
We

must

iinance

growing
inflationary

make

I

must design

which

prevent

distribute

and

burden

ferent

expenditures

we

methods

profiteering
tax

effort to
possible

every

greatest

needed

by taxation, and
taxation

the

fairly among the dif¬
our people.

groups of

that

appreciate

ment of

develop¬

tne

comprehensive

a

a

ing

revenue

program adequate for our

rates to

the

the

reductions

rate

the

from

schedules

involved

The

in

the

rates

applicable

were

consideration

of

corporate
in¬
should be made

beginning

ing bill would do.

with

With

income

beginning with
taxpayer's

would

the

be

income.
increase

an

15%?

to

18%,

beginning

reviewed

alternative

ap¬

with the last quarter of 1950.

year

most

at present

comprehensive tax pro¬
gram could not be completed for
a

In

the

present

situation, how¬

is of the essence, and
delay would be costly.
ever, speed

I recommend
revenue

that, as an interim
measure, action should be

will

revenue

a

and

not

action,

tax

bill

pending

now

Committee,

your

tax

so

collections

as

to

substan¬

tially for the taxable year 1950.
Specifically, I suggest that the

In

addition

would

and

rates.

the

increases
individual

This

could

interfering

in

sup¬

in

the

income

be

done

any

way

development of

a

more

am

system.

ture

and

This

is

make

of

the

rev¬

revenue

recommending
The

of

it

more

equitable.

desirable in
higher tax rates in
prospect, which would surely in¬
crease
the
incentive
to
exploit
present tax loopholes. Moreover,
the corporate income-tax
struc¬
the

will

"notch"
on

be
substantially im¬
eliminating the present

rate, which bears heavily

smaller corporations. This will
the effect of increased

moderate
rates

COMMON STOCK

I

on

business incentives.

believe

that

prompt

interim

legislation

Price 40 tents per
Orders
your

r

own

executed

share
by

investment

dealer

or the undersigned

Broadway, New York 4, N.
Tel.

Dlgby 4-4500




capital

financing of

new

which

pri¬

does

undertake.

not

Production, Wages, Profits and

President

picture

painted
nation's

the

of

achievements

the

on

our

na¬

manner,

It will

major step toward
to

develop

a

program

carefully
suited

to

I

expect to transmit further recom¬
mendations to the Congress con¬
a more

recent

his

on

the

head.

Republicans

comprehensive tax

about

duction,

peacetime pro¬
employment
and
real

incomes

were

middle

of

the
Reasonable

year.

prices
The

for

on

the

ward

the

this

of

balance

reached

had

outlook

of

been

in

stability

mid-

and

new

basis.

sound

a

end

Korean

by

June,

To¬

however,

outbreak

brought

rapid changes."
"

Administration
He

had

Carlisle

Bargeron

said

been

ists,

this

Hitler turned

ator,

policy but

Cliveden

was

would

kill

Stalin

as

at

about

production
on

a

11%?

is

about

capita

per

above

and

average;

the

65%?

greater

ident continued.

to

a

seasonally adjusted annual
of $139.8 billion, about $4.6
billion higher than a year earlier.

rate

Rising

employment
rates

wage

trend.

both

and

Manufacturing

reached

a

high

new

higher

influenced

this

wage rates

$1.45

of

an

Referring
ident

since

the

Pres¬

have

risen

In

the

second

quar¬

1950, corporate
taxes

profits be¬

were

running at a
seasonally adjusted annual rate
of $31 billion, 17% higher than a
year

earlier.

after

taxes

increase

higher
level

of

The level of profits

permitted

liquid

plant

substantial

assets,

dividends
of

and

and

despite

higher
equipment
a

financing."

was

in the second quarter of 1950

15%?

below

that

of

a

year

earlier."

one

to

be

our so-called

called

appeasers.

isolation¬
" The

day

each
was

as

accepted
he, too, had denounced
brigand when he originally joined Hitler.

a

Came the end of the

and

war

the

But the

Administration—Truman having

succeeded Roosevelt

now

—insisted that the freedom
loving people had triumphed and by
agreement, installed Stalin's troops in
Austria, Bulgaria, Rumania,
Yugoslavia and Eastern Germany.
They were also installed in
Manchuria and Northern Korea. Our so-called
isolationists set
awful

an

up

appeasement.

"Who

the

are

now?"

appeasers

Coupled with this it developed that Communists had
into

our

own

into

government,

labor

our

unions

to

colleges,

our

an

Dealers had asked, aren't

we

civic

our

alarming extent.

charged by Republicans and anti-New Dealers
but their charges had fallen upon deaf
ears. (So

years

New

of

cry

infiltrated

pursuing the

This

for many

what, the

goals?

same

The heat from disillusioned
Americans

strongly
the

was
beginning to beat
Czechoslovakia went into

the Administration when

upon

Communist
force

There

camp.
or

that

he

is

record

no

violated

that

Stalin

agreements.

any

Well, when Czechoslovakia
tellectuals

were

Stalin and

Communism

shocked

and

went into the Soviet

they

were

even

any

we

orbit,

are

these

wean

our

in¬

suddenly to insist that

came

serious

more

used

Oh,

assured, and no doubt he did, prill off some tricks to
people away from their "democratic"
moorings.

threats than the

Republicans and isolationists had contended,
though they haven't

yet

become

alarmed

about

our

domestic

Commies.
It had only
10 or 12 years to see this.
The heat on the Adminis¬
quit appeasing Stalin now became
intense, and Jimmy

taken them

tration to

like to get

sure

the Commies out of the State
Department if he knew

how.

From that time
on, the Republicans have been
hollering more
about the New Dealers or the Fair Dealers
being Communist fel¬

low travelers.
have

been

not.

are

Simultaneously, the New Dealers

taking

one

"bold

action"

after

Fair

or

another

to

Dealers

show

First the Truman

they

Doctrine, then the Marshall Plan and
subsequently the Military Aid Program. Since the domestic Com¬
munists deserted them for
have even quit

Henry Wallace in 1948 the Fair

speaking

to

them

and

have

whooped

Dealers

their
denunciation of Moscow. Even the
CIO, an affiliate of the Fair
Deal, began ousting Communist unions,
showing the darndest in¬
gratitude because the Commies gave it birth.
In the

"Farm income at a
seasonally
adjusted annual rate of $11.6 bil¬
lion

along with

now,

came

Byrnes told the Senate plaintively that he would
profits

"Profits

1949.

of

fore

to

said:

how

However,

so-called isolationists, with
lots of other
people, in our country, wondered just what had been
accomplished by disposing of Hitler for Stalin to
take his place.

physical

"Wage
and
salary
payments
rose
during the first half of 1950

proven his

see

so.

ally, notwithstanding that

him, in effect

industrial

basis," the Pres¬

to

possibly done

other off.
But he reckoned without the
three years later to run as
Vice-President
to succeed to the
Presidency. This man

was

an

capita

1935-39

Set

with whom he

and whom he

tion

mated

have

Stalin, in 1941, President Truman, then a Sen¬
qouted by the New York "Times" as
hoping the two

had been

esti¬

anything has been

impossible

on

civilian

is

is

Britain, v/ho believed in playing Hitler
Stalin. Playing one
country off against another with
maintaining a balance of power had long been Britain's

view to

a

example,

1950

mudslinging that has

doubt that

it

leave
with

meantime, Yugoslavia left the Stalin

him
the

just

where

he

was

before

Republican continuing to

up

seeming to

camp,

Czechoslovakia

fell.

But

the Administration of
Commie tendencies and with the Administration
coming to shout
louder denunciations of Communism as a counter
offensive, and
to increase its
spending in behalf of the "free world."
accuse

Stalin's

Stressing the need for national
unity on an optimistic basis, Mr.

"Our..economy has the human
job

material

resources

ahead—if

we

to

do

best."

us

stature

the

to do

■,&

as

world

a

has grown

menace

Chronicle)

CLEVELAND,

Ohio — Gardner
Abbott, Jr. has joined the staff of
Gordon Macklin & Co.,
Inc.,
Euclid Avenue.

1010

are

right.

Stuck

in

the

midst

of

the

war

news

the

other

day was a
story of the capture by Americans of a Russian made truck. It
was made
mostly of wood and the Americans pondered whether it
was an example of Russian
production. I My guess is that it
over
us

(Special to The Financial

We

be

the production of this all
smart, all

Joins Gordon Macklin Co.

tremendously.

said
fighting his Satanic genius in Korea now when more likely
it is that of the Chinese
bandit, Mao Tse-tung, a confederate but
hardly a satellite. He's too big a shot in his own
to

the

achieve

a

off against

organizations and

in

I

with

neither has the Senate sub-committee
created
to investigate his
charges sought to do so.
Instead, they have
devoted their time toward
ruining McCarthy.
Now, let's go back a few years. Before Pearl
Harbor there
were quite a few
people in this country, and earlier there was the
so-called Cliveden Set in

standards of living are very much
higher than before the war.
For
per

and

Communists

issue of it.

an

Certainly McCarthy hasn't

could

man

coddling

know about the

charges and

they asked.

consump¬

its

making

followed

"Eyen allowing for population
increases, output per capita and

food

to

proven.

bandits

on

pre¬

longer-range requirements.

cerning

than

We

man

"New records

our

required to make.

tax

rosy

front, stating:

we

balanced

a

economic

unity which will enable

necessary

Communists,
down

nothing
saying for
He was not an important
Senator.
His speech was not
generally circulated.
But
apparently the Administration had been lay¬
ing in wait for the next bird to make this

very successful

Prosperity
The

consistent with the national effort
a

rec¬

Congress
of loans and

processes

and

our

Y.

vate

and

determination to conduct
tional finances in a sound

venting inflation during the time

42

plants

recent

program

Truman said:

are

with

pounced

more

use,"

He

that

for

along these lines will
provide tangible evidence of our

also be

TELLIER & CO.

a

guarantees

ter

loophole-

particularly

of

proved by

CORPORATION

I

speech

a

Wheeling, W. Va., several months ago
charging that the State Department was loaded

crack

hour in June."

increasing

of the pending
bill will strengthen the tax struc¬

ture

TELEVISION

sub¬

closing provisions

view

SIGHTMIRROR

very

improve the soundness

tax

our

to

enactment

enues,

pending bill be retained and
by

face

deficits before any addi¬
tional taxes
could
begin to be
collected.

legislation

plemented

would

we

revenue-raising provisions of the

with

in¬

an

inflationary

stantial

without

long-run

As

forces generated by
increased de¬
fense, expenditures. Without this

immediately to revise and

tax

our

financial preparedness. It
will serve to restrain

the

corporate

meet

requirements.

our

taken

before

full-

a

step, however, it will have
timely effect on tax revenues

enact

increase

on

income levels. Clearly,

terim

time.

some

this

revenue,

basis, by about $5,000,000,000

proaches
such

authorize

growth

one-quarter

1950

require

his

repeated

the
applic¬

withholding rate from the

present

surprised

in

3

page

declared.

ommendation

respect

government's

and

Truman

achieved.
June was

taxes,

increased rates should
each

1950

the pend¬

as

These adjustments in the
pend¬
ing tax bid would increase the

explored.
Under
the
auspicious
circumstances,

from

there¬

adopted in 1945

corporation incomes,
individual

more

making

yours,

Mr.

fore

familiar

are

present
require careful Con¬
gressional consideration. Our war¬
time experience will need to be
will

needs

Nobody in tne world was
than the Senator when after

TRUMAN.

S.

secur¬

pres¬

increased

come-tax

in

sincerely

enough supply for military
ity and essential civilian

1948.

This

of

Economic Blue Print

remov¬
those

Congress, since they

the tax reduction

of

Committee

see any relation between Senator Joe
McCarthy and Korea but there is. He is the victim of, and Korea
is the result of, the Administration's
becoming highly sensitive,
politically, over being pictured as associated with the Commies.

view

law, and the present personal
exemptions of $000 per person.

able

the

Representatives,

HARRY

ent

These

to

this

of

The President's

"tentative"

come-splitting provisions of

and

of

know, participated in

Continued

levels made in 1945 and 1948. This
would leave
unchanged the in¬

to

copy

up

a

jevels adopted in 1945, by

forces

defense effort.

our

the
of

amount

deficit

a

to

in

come-tax

quests transmitted to the Congress

of

Very

corporation's income,
and a 45%; tax on the balance.
Third, to increase individual in¬

President Truman

Mr. Chairman:

prompt

surtax, this would re¬
25% tax on the first

$25,000 of

Dear

a

pending bill by increasing

from

sult

By CARLISLE BARGERON
Most people would not

this letter.

revised

expenditures

'

.

months.

occasioned

crisis.

earn-

out the procedure for
action
recommended in

-

in

Korean

as you

working

com¬

corporate rate structure contained

the

who,

the

military

by

I

Chairman

Means

and

with¬

creased

the

the

to

House

revenue-

lined his pro¬
posals for tax

sending

am

the

be

excise-

which he out¬

proposals.

early o.ate.

Ways

practicable.

as

interim

an

I

adjustments
would
required in the pending bill:

Georgia, Chairman of the Senate

meet

at

Three

Finance Comm i 11 e
e,
in

increases

these

letter

revenue

Washington
Ahead of the News

estly hope tnat they will be favor¬
ably acted upon by the Congress

1945 and 1948, and an increase in
corporate
levy to 45%. Seeks $5 billion more revenue.

President

From

your coopera¬

working out arrangements ;
the prompt consideration of

for

Thursday, July 27, 1950

.

of our

extent

tion in

President, in letter to Sen. G?orge, Chairman of Senate Finance
Committee, asks for elimination of individual income tax reduc¬
income tax

the

grateful for

am

.

have additional

we

on

needs.

Corporate and Individual Taxes
tions made in

when

program

Truman Requests Increased

.

here, if

with

the

we

don't

bomb

was,

powerful

man

who is coming

spend untold billions of dollars, and

which

we

produced;

take

it

away

bomb

from

us

and throw it at us, so to
speak.
I

sometimes wish

ministration's

nothing had

absurdness

in

World

ever

War

been said about the Ad¬

II,

nothing

about

their

Communists.
Because apparently all we
accomplished is to push them to compound their felony.

have

association

with

,

✓ OATV

Volume 172

Number 4928

.

The Commercial and Financial Chronicle

.

.

(343)

merely

tion

and

sooner

Contending situation is sufficiently grave to warrant overall
ceiling across entire economy, former war mobilization chief

Far from

imposition of price, wage and rent controls. Says no
systm of priorities can work effectively without price control,

have

left

us

We have to mobilize.
young me.i are

ualty
issue
us

lis-*

choice.

Already

against

-

the actual denials

\

to

this

f

e

of

people
vided

how

did

well

If

is

bilization

Shall

know

have
done

we

thus

has¬

the

vic¬

shall

fumble

Bernard

M

Bj«ruch

we

ana

idlter

and

invite

de¬

feat?

The League of Nations, already

;

dealt

fection

the

of

actually

Japan

United

wrecked

invaded

world stood by.

Korea

overrun

United

Nations

wrecked.

1931

China

live

was

remain

the

America

parts

committee
of this bill
major

one

bill

does

not

of its
far

go

been

ignored,

would

have

the

has

point
taken

of
its

taught

that
into

us

Government steps

home

at

The

Neither is that

are

called

situation

the

been

and

so

on,

to prevent

gun.

stand

all

bilization.

is

peace

to

before

against

by Mr. Baruch before the
Senate Bank'ng and Currency Committee,
Washington, D C., July 26, 1950.

is

this

to

come

mo¬

a

.

This

bill

priorities

proposes

system

a

'

as

of

and

other

price

price

ment

with

control

may

—

the

In

urging that, I do not

creasing

with
no

fixed

traced

Govern¬

were

and that proposed Defense Production Act

pro¬

pressure

group

gentlemen, is

an

vitation to inflation.

statement made at

to

.

.

Much

.

the

today :

fact

that

our

with

a

257

billion

cannot

on

or

particularly those with;-

fixed

bill

less

Senate

ROANOKE

•

FEDERAL

NEWPORT NEWS

•

DEPOSIT

to

offset

the

reduction

voted

would

an

control law.

CONDITION

:

Continued

,

•

NORFOLK

JUNE 30, 1950

9,052,799.53
21,319,726.54

$
'

288,565.47
1,075,000.00

$ 6,578,459.83.
23,036,621.98

(1)
(2)

Individuals

(Repayable Monthly)

7,728,199.81

Mortgage Loans to Individuals (3)
(Repa)able Monthly)

Discounts

37,343,281.62

Banking Quarters

1,827,987.23

Total Loans
Investment in

and

Interest Earned but

not

106,666.38

Collected

123,133.20

Other Resources
Total Resources

American
industry,
private management and
through voluntary allocations
and
other
means,
could and

.$ 71,137,159.97

(4)

would meet the demands of
all-out war,
that

and also

on

JLlahhtu£

an

Surplus

his be-

the

proposed controls
could "convert this great democracy into a socialistic state."
Mr. Olds cited the record of- the

,

*

....;

*.

Undivided Profits

1

—

Other Liabilities

pending Defense Production Bill

Time
as

"a grant of au¬

thority by Congress to nationalize American indus¬
try in whole or in part," for which, he added, "there

$

4,212,385.10
595,431.42

Deferred Income

Dividends

-

412,385.10

Unallocated

under

the

1,800,000.00
2,000,000.00

Total Capital Accounts

Reserves

Reserve for

and criticized

$

?

steel industry in World War II under a system of
voluntary allocations and priorities administered

government supervision,

1.

Capital Stock.....

"

27,000.00
.

$37,537,561.49
26,463,041.84

Deposits (5)
Deposits (6)

1,692,041.04

476,496.61

Taxes, Interest, etc

Payable July 1, 1950

Demand

Total Deposits

133,202.47

•

.....__64,000,603.33

Total Liabilities

(4)

;

$ 71,137,159.97

justification whatever."
nation,

skill and

over a

mies that

Mr.

Olds

stated,

has the facilities,

ability to produce enough steel to insure
potential

enemy, or any group

might be encountered.




of

ene¬

(1) Represented by

1.647

accounts

(2) Represented by 49,889 accounts
(3) Represented by 1,801 accounts

(4) 168,418 accounts of all kinds are being served
(5) Represented by 42,535 accounts, not including 27,089 Christmas
(6) Represented by 39,510 accounts
At

THORlttP"

asms

•

.

desperately

■

to

,

Everywhere cities and states
searching

i2^eiontcci

•

pur->

effective price'
.

SISTATEMENT-OF

in

Colleges Undermined

PORTSMOUTH

•

a.'

be nullified by your'

failure to enact

CORPORATION

INSURANCE

passed

raising all social security pay-:
and pensions for the
aged,,

chasing power since 1939.
These c
higher payments which you havei

essential

in¬ works; a reduction of unnecessary
public and private expenditures;

incomes.

the

ments

sentials where necessary; the posG

all

is»

about-

so

many,

low

go

of

•

when Hitler-

Living costs have:
high
that
serious;
hardship already is being inflicted,
climbed

alone.

stand

dollars,

was

or]

invaded Poland.

priorities

with priori¬

go

may

six times what it

iteering; higher taxes; effective
price, wage and rent controls;
power to ration scarce civilian es¬

MEMBER

Loans

sandsJ

shifting

of inflation is not

about

Other Investments

press

now,

becomes

erating at full blast, >with little
no
slack.
Our national debt

priorities
and
allocations
the elimination of prof¬

must

PETERSBURG

•

that

Greater Danger

THE BANK OF VIRGINIA
RICHMOND

Still,

taken

be argued that the men*;
so frightful
today, since we are not yet at war.-.
Actually the danger is greater.
Today our economy already is op¬

be

can

It

,

ace

Recently,

under

victory

a

on

that

tion

The

if

and

Inflation

t

hands needed to do the job. Along

Commercial Loans

no

is

general mobiliza¬

foundation built

automat¬

instituted without doing the

ponement

bill,

a

Surely, the least that should be
lay a sound foundation"
A system. of priori¬
ties
without
price control is a',

They must be seen as a part of the
whole, as one finger of the two

them..
This

be

too,

efforts

Priorities

represent

to

when,

ties.

have

who

or

tion,

Municipal Bonds

now

gathering on July
25th, at the time the United States Steel Corpora¬
tion released its quarterly statement of earnings,
Irving S. Olds, Chairman of the Corporation, ex¬
pressed his opposition to drastic
controls of industry as proposed
in the bill now pending before
Congress. Mr. Olds based his
opposition both on his conten¬

was

why Govern¬

priority is discussed,

things that must

The

incomes

a

considered

defense

delay and ever-in¬

prices.

as

propose

pending in Congress is unwarranted.

Olds

is

controls must

ically

get what it wants, but

needless

fit into

for the future.

hap¬

of the waste and confusion of

costs.

Should this bill be enacted—with¬
out

soon

U. S. Government Bonds

S.

this

one

priorities cannot be wholly

Cash and Due from Banks

Irving

When

to

as
a
priority is discussed—
(May I emphasize this sentence)

over

prices

action

must

necessary.

soon

production, yet no¬
where is provision made for con¬
trolling

denials
entails.

peace

disagree when these

ties.

private management is ready, able and willing to

lief

the

who has been dis¬

That

.

.

Chairman of U. S. Ste?l Corporation holds American industry

a

whatever

effective without price control. As
before

bill

the

accept

Some may

to go around, he will
higher price to get what he

a

ment

Must

the

drawn

to

winning the

actions should best be taken.

seek to replace his
If the total supply is not

uncbr

In

discipline
which

sufficient
bid

now.

Price Control

organized self-restraint among
people—the enlightened self-

the

will

wants.

now

produc¬

the

done is to

man

position.

easier

be

never

placed

we

won,

with high enough taxes
profiteering and to pay

defense

Olds Says Drastic Controls
Means Permanent Socialism
vide for war,

an

Currency
19, 1941. I

giving

means

another.

the

pens

necessary.

It will

than

to do

>

costs, and an all-em¬
bracing, effective system of priori¬

*Statemcnt

and

Sept.

on

increase

7

conservation of what is
scare, and

for¬

learned

before

ago,

Banking

Committee

War,

upon

sufficiently
grave to warrant an over-all ceil¬
ing across the entire economy,
overall prices, Wages, rents, fees

coun¬

a

has

only to have less comforts.

Had the efort to

All of us—in this

at

this

the young man who has to go
to battle. He risks all. Those who

when

and

House

the committee defeats itself.

of

abroad—would have had

try and
to

States,

in

World

if

the

have

As

it through, the

There is

pleasant outlook.

near-fatal blow by the de¬

a

years

would have

public will
be left to compete for the re¬
the market with such enormous:
mainder—with the fattest pocketdemands
requiring
such
quick,
book, not the greatest need, de¬
priority,
you
must
control
all
ciding who gets what is available.
prices,
including
wages,
rents,
The cost of every defense item
food
and
other costs, eliminate
will
be
needlessly
increased;
profiteering
and
ration
certain
profiteering encouraged; cruel in¬
scarce
essentials. This is
not
a
justice
inflicted
upon
millions
the

when

tory of peace?

we

,

Itself

destroys much

This

Experience

later—

and

Or

<

.

enough.

be

ten

which

value.

will

to

see

Many

excellent.

fault

what

now

to

are

vital.

is

are

carried

out?

Defeats

legislation before

to

-

we

shall

through—pro¬
told what is ex¬
.,

learned
was

what bitter cost, in World
War'II. Must we persist in repeat¬
ing the mistakes of the past, even

it

see

are

Bill

how

the job of mo¬

we

they

the

American

pected of them and why.

o r e

quickly

do

will

third

a

aggressor,

any

interna¬

the

sure

to

I

tial is ready to be thrown

commit-,

tee—is

be

feel

be

had

-

Whatever

blackmail.

I

cost,

It

gotten

by
quote:
serving notice to the world that
"Priority
our
tremendous economic poten¬

defense costs.
and

during World War I.
and

without

was

anew, at

It would reduce the

undergo.

risks

mobilized and taxes

aggression

tional

our

being called. Cas¬
coming in. The

before
b

—

are

no

long,

to

•

development of substi¬
tutes for
things in short supply;
control of all exports and
imports;

a source

the mobilization

Before

Events

,

for
That

effort

every

tion;

of hard¬ to inviting disaster?
envision
This is what 1 had to say on the
substantially
strengthen relation of
priorities to price con¬
this country.
It would minimize trol nine

danger of inflation in present crisis is greater than ever.
Holds L mistake to curb price rises without wage control and,
if inflation is to be halted, price controls must be immediate
cover

being

Learn?

would

and

economy

brought

is

economy

We Can Grow Stronger

,

ship,

;

^

urges

Wants whole

our

Never

effectively or
price control.

the

that

means

under control the better.

_

universal.

cost

We

No system of priorities can work

struggle of such uncertain dura¬

a

Chairman, War Industries Board, World War I

high enough to eliminate profiteering and

Will

production

sake of curtail¬
fact that we face

the

for

The very

ment.

By BERNARD M. BARUCH*

and

civilian

curtail

to

Immediate Price, Wage and
Rent Controls Called For

15

Club

accounts

on

for

page

are:

the.'

28

8

The Commercial and Financial Chronicle

(344)

The Cunent Misinterpretations
Of Dow s Theory

initial

also

and

"re-affirmation,"

a

but
of

identification

correct

a

between

chart

strated

interpretations is illu¬
the

in

fourth

to

1932

-

the

spelled

Primary movements in the 1942-

decline—as

Bear

when

market

that

difference

85%

between

.

Thursday, July 27, 1950

.

note—in the decline from the

can

in

top

1946—how

the

Secondary

Trend gave the "signal" of a Bear
market at the point marked "A"—

solvency and bankruptcy in some- late August, 1946. That Bear mar¬
cases.
The Theory has often been ket signal appeared within:
(1)
a
target for criticism because of 9% of the top 212.50 in the lnd.
this

"tardiness,"

cisms

but

unjust

are

degree

actually

criti¬

sucn

because

of

that

tardiness

acknowledged

an

Furthermore, in

in¬

and
in

The

(2)

12%

the Rail

illustrative

portrays

use

In

the

the

of

top

Index.

also

pattern

instance of the appli¬

an

cation of the art of

refined

a

Index
68.31

is

gredient of the Theory.

fifth

to

total

disastrous

tiie

moderate

unfolding plottings.

Another important point on cor¬
rect

ultimate

the

in

further

"confirmation"

each in the

of chart patterns.

clarification of lh- iecnmcal meaning

:

differentiation

only

an

refinements allegedly necessary for
practical use, and tells why he regards
criticisms levelled against it. Offers

the

1929

much

subsequent

Market analyst lists certain

unjust some ot

how

not

By F. P. GOODRICH

as

of

ithe
Major
Trend would carry. Correct inter¬
pretations of this Precept require

Harris, Upham & Co., Members of N. Y. Stock Exchange

puciing Dow's Theory to

changed its direction. It conveyed
assurance or implication as to

no

.

dwarfed

"anticipating."
(1)

to

recovery

Theory by an expert such lnd. 204.52 and (2) Rail 63.12 there
pattern:
Even
the modest as Robert Rhea, there is demon¬ was justification for selling action
and unemphatic move by the Rail
in anticipating the next decline
strated a faculty of
"anticipating"
Index to 68.31 against 68.23 served a confirmation
signal and thereby might carry the two Indicators
to "reaffirm" the direction of the
down
is
the
"tardiness" almost
com¬
through lnd. 195.22 and Rail
Major Trend and to "confirm" a pletely eliminated. True of course 60.41 (a confirmation of a Bear
fifth Primary movement. Some the act of "anticipating" a
market). That is exactly what did
of Dow's

1946

This
Dow

propounded

Theory

Hamilton

and

classic

a

vised wnich has been proved, un¬
der

of
es¬

sentially

out-

The

sphere

in¬

of

under¬

impressions gained
may

..egree

upon

by

depend to a large
the choice of words

other

hand,

there

•xample—I quote in part from a

are

various

ecently

standing.
the

On

published

interpretation
Theorist—"This point

Dow

Commentators

jy

who

confirming by the Rail Average)
iuplicates similar action by the

purport

write

to

and

itatively
D

on

ndustrials 10 weeks ago and, uner Dow methods of analysis, con¬

author¬

speak

Theory
As

F. P. Goodrich

on

firmed

w's

o

intense

student

Theory and its applications to the
stock market movements for
many
years, I believe it can be stated
correctly
J

that

thority"

the

on

professed

no

subject

Hamilton-has

displayed

ever

"mastery" comparable to that
quired
and
demonstrated
Robert Rhea. His

finesse

which

convey

in

was

enabled

his

•

Prefaced

to

refutation

a

of

defects

of

expose

in

pretations

by some
styled authorities.
Alleged

the

of

;,ctlon J?* thf. companion Indica.
[°r aJ? confirmed (') that the

an

acquired

the

self-

than

more

has

superficial

a

understanding

of the
tals of the Theory.

cited

the

from

"reaffirmation"

may

that

the

fundamen-

can

how such

see

choice

a

possessed by the Theory. It is not
unnatural that the "public" who

of the subject should
impression that the

study

entertain

justifying

tors;

Theory

possesses a power to prediet price movements in the stock

demonstrate

sucn

virtues. Tuat is

pression

for

informed

can

But

-

for

can

an

messed

which

continually

the

justification from

of correct

a

stan

interpretation

pjint

the

tops

of

the

fourth

proved to be very modest in scope
nd in duration—so much so that

—

purporting to have an intimate
knowledge of the subject—there is
no

lnd. 206.97

Primary movement. The ensuing
rifth Primary movement however

under-

Commentator

a

to

mounted

im-

perhaps be excused.

any

fourth

Primary move(2/2/46) and
Flail 68.23 (2/5/46). Thereafter
the dual Indicators jointly sur-

J^ent

predictatory
erroneous

interpretation

any

veyed

ior their

'new

which

con-

intimation favorable to
buying" was open to conan

attempts to embellish the Theory

demnation

in

with

subsequently
Bear

decline

attributes

and

possess

to possess.

which

never

One

it

not

light

°f

tended

very

shortly

attribute such

some

was

can

coes

i

distortions by miny c nh
horary
self-styled "authorities" to a desire

to

the

public

impressions

of

Theory.

Some

these

of

to enaow the

tues

tantamount

gone

so

a

geratea and
tions
tion

erroneous

frequently
Critics

for

eager

to

interpreta-

furnisn
who

condemn

virtues

in

Robert

Rhea—Dow's

are

any

amuni-

always
alleged

Dow's

Theory.
Correctly interpretated—as

sesses

very

he

limited

Theory
virtues

posof

a

strictly predictatory nature. Never




would

affirmatively

first

an

valid

upward

seldom

did

.tatement or
.imation" at
~f

plottings.

that

"imply"
state

in

or

his

that

"confirmation"

Major
he

Trend.

convey

even

such

of

Very

such
an

a

"in-

subsequent point
"re-affirmation." Correct and
a

professional

Technique requires
ifferentiation between the significances of: (1) an initial "con-

firmation"

and

reaffirmation."
hat

(2)

in

the

a

The

differentiation

constitute

the

the

direction

pattern

the

final

movement

and

of

the

It is understood that the
send

interested

considerable

extent,

unfold

with

the
may

some

degree of me¬
precision — the
Minor

chanical

Bear market

point where

Major

This form of

Continued

Trend

a

is

"anticipat-

on

page

39

Airlines

in

a

World

War

HI—

of the Secondary Trend and
Secondary movements in turn
prescribing the direction of the

we

orthodox.

There

even

ical

the

Banks—B ul 1

e

t i

utive quarterly comparison—New
York Hanseatic

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

the

pattern

as'

recurring
plottings depart

unorthodox.

At

pattern in which the Secondary

Trend is "fused" into the

Primary
contemporary in¬

A

movement.

Buying

Spot—Advice

on

the

pattern

witnessed

after

June, 1949, when the Sec¬
ondary
Trend
was
completely

Over-the-o»anter Index—Book¬
let

showing

an

parison between

up-to-date
the

com¬

thirty lister

ndustrial stocks used in the Dow
Tones Averages and the

thirty

five

over-the-counter

itocks

used

industrial

in

the National QuoAverages, both as
yield and market performance
>ver an
eleven-year period—Naional Quotation Bureau,
Inc., 46
ation

Bureau

o

*Yont Street

New York 4, N

Y

-

"fused" into
and

extended

an

Primary

orthodox mechanical "con¬

an

firmation"

"Prudent

Man"

Investing—An

Outline of Present Investment Re¬

not witnessed dur¬

sponsibilities of New York Trus¬

ing the entire Primary movement.

tees, together with the Full Text

These
cal

was

variations

departures

or

from

radi¬

even

orthodox

an

pattern demonstrate the Empirical
qualities inherent in Dow's The¬
ory—as

blance
From

contrasted
of

the

important

with

in

Dow's

to

note

a

the

un¬

orthodox pattern is less apt to oc¬
when a Bear market is in¬
itiated and more apt to occur in a

Bull market.

It

fully noted—in

also be

can

help¬

orthodox

an

mechanical

pit-

confirmation

of

a Bear market will occur wit' in 15% of the top of the
preceding

Bull

market.

For

that

historical

discernment we are indebted to
the extensive studies conducted
by
Robert Rhea.
Related

tardy (by
tant

to

that

some

point

protection

against

the

Also

at

Foods,

Inc.

Report

—

—

available

are

a

study

of

Allied Stores Corp.,

on

Bank of America, H. H. Robertson
Co. and Scovill Manufacturing Co.
Iowa

Power

&

Light

—

Memo¬

randum—Auchincloss, Parker &
Redpath, 52 Wall
Street, New
York 5, N. Y.

Fiduciary Law in New

State—Brochure

Peabody

Kidder,
Wall Street,

&

New York

Co., 17
5, N. Y.

—

fact

in

15%).
the

and

the

The impor¬

Theory

afforded

is

the

to

potential

volved in the balance of

Kearney & Trecker Corporation

—Analysis

Quarterly Comparison and
Analysis for 19 Leading New York
City
&

Bank

Capital
losses in¬
some

85%

in

&
Co., 225 East
Street, Milwaukee 2, Wis.

Missouri Pacific Preferred—Bul¬

letin—Ira Haupt & Co., Ill Broad¬

New

way,

available is
dated

York
a

Vulture

Riverside

N.

Y.

on

Also

Consoli¬

Aircraft.

Cement

analysis—Lerner
Office

6,

bullletin

&

Co.—N

Co.,

10

e w

Post

Square, Boston 9, Mass

Also available is

a

brief review

Cement Industry

Schenley Industries—Memoran¬

120

Broad

New

Mason

Street, Chicago 4, 111.

dum—Ha.yden,

Broadway,

of

Mexican Railways — Analysis—
iippin & Co., 208 South La Salle

Stocks—Laird, Bissell

Meeds,

issue

current

"Business and Financial Digest"—
Loewi

sem¬

Theory, it is
that

of the New
York

Stone & Co., 25
Street, New York 4, N. Y.

York 5, N. Y.
Standard Oil of Indiana—Memo¬

cur

tern—a

Bank

San Diego Gas & Electric Co. and

if the

mechanical
precision.
point of view of prac¬

value

National

Walston, Hoffman
&
Goodwin,
265 Montgomery Street, San Fran¬
cisco 4, Calif.

memorada

Next

timing in current Bulleting, in¬
cluding 37 War Market selections

Building,

memoranda

are

Dallas and Republic National Bank
of Dallas.

Hunt

Leading Banks and Trust Com¬
panies of New York—73rd consec¬

Southwest

Bank

available

Mercantile

on

First

1, Texas.

Also

n—

—

Mercantile

Dallas

the

radically from such mechan¬
precision and we then term

is

Co.,

however

are

when

stance

5,

mechanical

times, the plottings may be so ex¬
tremely unorthodox as to present
a

Memorandum

plottings —$1 for current issue and next 4
per¬ weekly issues — Bondex Incorpo¬
term the pattern as rated, 654 Madison Avenue, New
York 21, N. Y.
Wnen

of such

First National Bank in Dallas—

&

Comparative Values of 36 Rep¬
resentative

tion

partake

firms mentioned will he pleased

prescribing the direc¬

indigenous in Dow's Theory that
the confirmation "signal"
may be

relatively
small
before the Major Trend

a

one

parties the following literature:

Sec¬

Trend.

others above cited is the
principle

from the 1942-1946
Major Trendwhen that "reaffirmation" marked

the

note

"exhaus¬

Recommendations and Literature

Minor

for

exemplicited above

initiated.

We

Paine, Webber, Jackson & Curtis,
determina¬ 25 Broad Street, New York 4, N. Y.
the

subsequent
reasons

are

in

"an¬

when

the

at about the

reversal

we

refinement

correctly

tion" of the force of
—even

movements

plottings of the three Trends

tical

.

fied
did

Rhea

true

of

"buying" of
stocks could be
safely initiated on

of

prediction" as
to
future
stock
prices in respect to both (1) direction and (2) degree or
scope of
the
Major
Trend.
Such
exag-

market

generally

Interpretations

far

"power

was

even

Theory with virto

a

the

thereafter and
considerable severity,

Robert

commercialized

mis-conceptions have
as

It

"capitalize'^ commercially

these

on

of

of

of

can

matter

signal,

a

Dealer-Broker Investment

an

namely,

is about to

by the

in

of

times
so

point

discerns

this

on

Empirical

vs.

movements

Trend

tion

new

be

he an instance which illustrates
he importance of that particular
-^t: in the upward trek of the
942-1946 Bull market, we wit-

inten-

an

market and that it

type

Further

ticipating"

pattern

of the Secondary Trend in the re¬
lated plottings of the two Indica¬

formance,

stated as to convey an incorrect
ntimation to the reader. Let us

sive

almost

orthodox

occur.

a

perfect "mechani¬
performances typical of the

cal"

Application of Dow's Theory is
portrayed of course by

the reader to derive an "intimaLion" as to an extensive further

No interpretation should

allegedly

no

visible

visually

Major Trend.

of

made

reduced

nil.

to

to

Mechanical

of words and sentences by Robert
Rhea would give no grounds for

purchases.

have

be

can

closeup view of the plot¬
tings by the dual indicators just
beyond the top in 1946, there is

tion.

the

Many of the more usual criticisms relate actually to the matter

admittedly

the

a

in its direc¬

change

a

during the Line formation.

upward movement

virtues

Major

carry

own,

Major Trend

in

engage

•

"prophetic"

the

1942-1946

"implication" of its

movements

One

reader

"reaffirma¬

a

to

In

—the modest degree of betterment
furnished by the Rail Index in a

direction of the Major Trend was
' upward and (2) that reaccumulation had been taking place

Defects

space—that

and

respect

virtually

error

ex¬

proved

Furthermore—as in the instance

™nce to 56.96 close, the Rail In- ondary
To a
,x COI?
"?ed w'th the previous

I shall assume—because of lim-

ited

Rhea were he mterpretath,e
Pomt- J" lts, f"

tlnS

inter-

the

possible

by the reader

?npifipressio\c0fTXtr™tQy

J?'

the

of

some

Theory and

such

inferences gleaned

a

'

criticisms of Dow's

with

determined

contrast

us

to

by the foregoing, the
herein offered relate

comments

tion"

of

Trend:

k

n?"+ge,
Let

or intended by Mr.
should possess

it

"reaffirmation"

chance

an

.

by the Theory
that

up-

a

Rhea

use
of
charts
showing the Special review—John H. Lewis
ward movement because of-"replotting?^ of the two Indicators. Co., 63 Wall Street, New York
SU"1P ,?,n
*
oiw The direction of the Major Trend New York.
a
" f therefor is

a

maximum of the virtues possessed

Dow

further

extensive

an

of

Robert

the

by

him

ds

as

Actually the fact

a

"confirmation"

Ye
7
from an intimation that he should

ac-

interpretations

,

incur error, but Such

pert

though the degree may be
unemphatic. There again is a fine
point of differentiation between a

[,eader n?1®?1* well
expect

acquired

an

which

^roij? the above choice of w

since

—

the

of

and the •p^asin?1 °}

"au-

^

resumption
kull
market

staTted IfJ Ju«e,

this

of

their

pr*mary

its interpretations.

ana

an

a

may

even

the

framing of sentences on
he part of the "interpreter." For

validate

to

point

prone

full

a

"validation"

for

"reaffirmation."
can

are

least

at

upon

penetration

the

signal

Technicians

modern
insist

Interpretations

of

reader

md

test,"

"time

such definite attributes.

Wording

their

timate

appropriate

an

possess

o

con¬

cept—but
side

Major Trend movement. There is,
incidentally, no theory yet de-

the stock-minded

as
as

something

it predict the ultimate scope
duration to be attained by any

Joes
or

wide-

century ago i as come to be
lv recogmze^ by
"nnhlir"

by
half

some

Arrow-Hart
tric

Co.

—

&

liegeman

Elec¬

&

Church

Street,

Goodwin,

New

Inc.,
257
Haven 10,

Conn.

on

available

are

memoranda

Colts Manufacturing Co., Hart¬

ford

Empire

Co.,

New

Bri.ain

Machine Co. and Safety Car Heat¬

ing & Lighting.
Central Vermont Public Service

Co.—Analvsis—Ira
111

Haupt & Co.,
Broadway, New York 6, N. Y.

Coca-Cola

Bottling
of
New
Analysis — Elder & Company,
James
Building,
Chattanooga, Tenn.
York

—

New

York.

Memorandum—Barnes,

Bodell

Also

randum—Shearson,
Hammill
&
Co., 14 Wall Street, New York 5,

Transamerica Corp.—Memoran¬
dum—Hirsch

&

Co.,

25

Broad

Street, New York 4, N. Y.
U. S. Thermo

Control—Analysis

—Raymond
Street,

&
Co.,
148
Boston 9. Mass.

State

Universal Winding Co.—Memo-

randum— Reynolds & Co., 120
Broadway, New York 5, N. Y.
Zonolite
Hill

Company—Analysis—
& Qo., 621 South

Richards

Spring

Street,

California.

Los

Angeles
■

14,

✓

Volume 172

Number 4928

The Commercial and Financial Chronicle

..

.

.

French Revolution Inflation

(345)

"In

craze,'

1876, during the 'greenback
General Garfield and Mr.

S.

B.'

of

the

Crittenden; both members

House of Representatives
time, asked me to Tead a
paper on the same general subject
at the

before

By FREDERICK G. SHULL

audience

an

of

Senators

and Representatives of both, par¬
ties in Washington.
This I did,

Connecticut State Chairman for Gold Standard League

Asserting tampering with

and

inflation and

assemblage of

currency is one of the surest roads to
disaster, writer reviews disastrous experience in

also

the

French Revolution with issuance of paper currency.

Cites de¬
as "an act
of treachery on the part of our leaders/' and says late Presi¬
dent Roosevelt resorted to that action because he felt obliged
"to do something." Contends our present currency system is
proof United States does not practice what it preaches.

it later before

gave

Union

an

,

of business at

men

League Club in New

York."

parture of United States from redeemable currency

It ndw becomes evident that Dr.

White

was not only regarded
as
great statesman by many of our
Presidents—he was also held in

a

high esteem by prominent legisla¬
tors and businessmen

as

a

recog¬

nized
Various
vanced

the

have

reasons

to

explain

been

just

of inflation.

cause

ad¬

what
Some

is
at¬

tribute it to shorter working hours
and

livres to those of
it

de¬

to

of

ume

pro-

i

t

c

o

of

n

caused by in¬
efficiency and

slow

down

-

amazement, all too few
generation appear to be

my

our

the part of

printed several times in this

niche in

still others, to

For

deserves a larger
Hall of Fame—as the

man

our

following facts amply bear out.
He

ac-

cruingto
nagement.

m a

there

But

be

must
ed

G. ShuII

add¬

this

to

Frederick

list:

the

inordinately

high cost of government in these
days.
Now, regardless of whether any
all of the above theories are

contributors
inflation
there

to

in

present-day
States,

our

the

United

is still another

factor—thus

far little

emphasized, and perhaps
only a few adherents—
in all probability, is to

having
which,

appreciable degree at the bot¬

an

of

tom

trouble.

our

I

ref¬

have

to the fact that after many

erence

of successful operation

years

Homer, N. Y.,
in 1832; was educated at Hobart
and Yale; served in the New York
Senate, where he had the good
fortune
to
meet
Ezra
Cornell,

un¬

friendship resulted in the
founding of Cornell University.
Dr. White became its first presi¬
dent. Prior to that he had taught
history at the University of Mich¬
igan; at Cornell—in addition to
being president—he held the pro¬
fessorship of history for a span of
nearly twenty years; and, in 1884,
he was chosen as the first presi¬
dent

months
was

of

matter

President Roosevelt

after

inaugurated in the

year

1933.

It is

possible to draw on factual
information of
indisputable au¬

thenticity to prove — by actual
known experience of other na¬
tions—that
tampering with the
currency

surest
aster

nation is

a

that

terest

has

one

of the

inflation and

roads to

And it

after

of

been

ever

dis¬

devised.

ought to be of general in¬
to the public to see that,

fashion, history is repeat¬
ing itself—that the issuing of ir¬
redeemable
money
invariably
a

leads
In

to

ruinous

bear

to

order

inflation.
out

will be based on
the experience of France—late in
the eighteenth century—when she
resorted
to the
issuing of irre¬
deemable paper money: whereby
proof

claims,

she
of

with

started

only

within

initial

an

issue

400 million francs, and,
eight years, increased the
"money"

ology," his

all

to

with

"Seven Great

The¬

States¬

White says:
before

our

France

own

words

from

to that book,

Dr.

"As far back as just
Civil War I made, in

and

elsewhere,

a

large

reports,

speeches,

lustrative

pamphlets,

material of every

il¬

sort,

specimens of nearly all the Rev¬
olutionary issues of paper money
—from

notes

of

ten

thousand

Quotations
in

are

France"

from "Fiat Money In¬
by
Dr. Andrew
D.

copyright 1896 by D. Appleton
tnd Co. Reprinted by permission of Ap>leton-Century-Crofts, Inc.
White,




book

a

in Canada,

once

regarded by bankers

presenting expert views

fi¬

on

The

Andrew

name

not

"Who's

Who"

only

Dickson

in

appeared
it

—

the

the

lions.
weak

lacies
trite

.

.

and

appears,

truth

field

of

But

it

was

in

the

diplomacy that he fairly

shone.

President

Grant

him

sent

to

Santo

Domingo in connection with
its annexation; President
Hayes
appointed him our Minister to
Germany; President Harrison sent
him

Minister

as

Russia—from

to

which post he made all

rations to

return

his prepa¬
when the

home

Democrats elected Cleveland. But

President

Cleveland insisted that
with the Russian

signment; and,

as¬

the close of
his Presidential term, Mr. Cleve¬
land appointed Dr. White to serve
the

on

the

investigating
boundary

Venezuela-Guiana

line.

There still followed his ap¬

pointment by President McKinley
as

Ambassador

our

where

he

he

served

to

Germany,

from

1897

to

during which time (in
was

made

chairman

of

White's

first-hand

knowledge of
affairs in the European capitals.
At that time, being well past his
eightieth year, Dr. White rounded
almost

out

fifty

tant service for
In

study

years

our

of

impor¬

Presidents.

commenting further on his
of the French documents

Dr. White had this to say:

"Some
later, when there | began to
be demands for large issues of
paper money in the United States,
I wrought some of the facts thus
years

collected into
of

tne

speech in the Sen¬
State of New York,
a

White's

that there

are

knowledge

matter of

a

for

with,

in

such

dealings

necessities.

with

care

financial

In the

genera¬

inflation,

a

early days of this French
some "had insisted that

Continued

leaders in

our

sound

theory

of

representing
a
hundred
livres
would, a month later, have a pur¬
chasing power of ninety or eighty
or sixty livres."

paper

to have been

close

the

1791,
"no
one
knew
piece of paper money

on

page

20

was

certain natural laws

which must be followed in finance
if

calamity is to be avoided; that
paper money tends
strongly
toward
calamity;
and
that this will always be true. On
this high authority, therefore, the
dangers inherent in the use of fiat
money are with us just as much
today as they were at the time of
irredeemable

INTER-COUNTY TITLE
GUARANTY

France's

trouble

AND

THOMAS

road

to

Cash

for;

said

was
were

they chose to

and

A "short

to

looking

meet

the

situation by the issuing of an irre¬
deemable paper money to which

they

the

"assignats"
—a
form of franc.
It so
hap¬
pened that the Minister of Fi¬
gave

name:

Necker,
who
was
"ac¬
knowledged as among the great
bankers of Europe," tried his best
to
prevent the issuing of irre¬

nance,

deemable

without
tional
to

money

paper

avail.

For

Assembly

confiscate

the

had

the

—

erty

"Na¬

determined

vast

French

the

of

but

real

prop¬

Church—the

pious

accumulations
of
fifteen
hundred years."
And it was these
real values that

were

intended to

support the paper currency to be
issued.

French

others,

statesmen,

said

were

and

to have recog¬

nized the difficulties and dangers
of

a

currency

COMPANY

QUINN, PRESIDENT

of Condition

ADMITTED

to

appears

prosperity"

MORTGAGE

H.

Condensed Statement

the French Revolution.

as

of June 30, 1950

ASSETS

Hand and in Banks—General Funds

on

.

$

Banks—Agency Funds
.

.

429,366.73

298,680.21

U. S. Government Bonds

220,000.00
.

11,969.96

.

Accrued Interest Receivable

First

4,142.31

Mortgages Owned

30,546.06

Real Estate Owned

1.00

Title Plant

1.00

.

Statutory Title Reserve secured by:
Cash in Banks

$ 44,836.39

U. S. Government Bonds

265,000.00

.

.

Total Admitted Assets

LIABILITIES

309,836.39

$1,304,543.66
AND

CAPITAL

Agency Accounts
Accounts Payable and Accrued Expenses
Commissions Payable

.

.

.

$

292,158.21
20,879.21
6,423.50

Reserves

(For Statutory Reinsurance)

$309,959.53
113,460.52

423,420.05

Capital Stock
.
$300,700.00
Surplus
256,837.69
Surplus Reserve
4,125.00
Total Surplus to Policy Holders
....

561,662.69

(For Taxes)

Total Liabilities and

Capital

....

$1,304,543.66

"not well based and

And it may be added
emphasis that "few more
keen-sighted legislative bodies

controlled."

with

have

The

than

met

ever

French

this

first

Constitutional Assembly."

first

issue

of paper money

"assignats"—four hundred million
francs—"were notes secured by a

pledge of productive real estate
and bearing interest to the holder
at three per cent.
No irredeem¬
able currency has ever claimed a
more
scientific
and
practical
guarantee for its goodness and for
its proper
action on public fi¬
nances."

It

was

declared

that:

"These assignats,

bearing interest
they do, will be considered bet¬
ter than the coin now hoarded,
and will bring it out again into
circulation."
As compared with

JNTfil-

as

our

own

current irredeemable pa¬

French
issue
would appear to have possessed
more attractive features
being
both interest-bearing and secured
by real estate; but that French
currency failed to bear out such
per

money,

CouNTy
Manhattan, Bronx, New City,
White Plains, Newark

TITLE

Brooklyn, Jamaica
Floral Park,

Riverhead

this

—

showing the need of especial

whether

large issues of
at par with

before

And

year

White's Theory

near

commission

the

Notwithstanding the fact that it

be tampered
Dr.

ment."

no

tions that currencies cannot safely

greatest Americans.
Dr.

mil¬

various

and

never

developed that as "paper
had increased in amount,
prosperity had
steadily dimin¬
ished";
and
"vast
numbers
of
workmen in all parts of the coun¬
try were thrown out of employ¬

specie."

common

our

laws

no

keep

can

Was

as

exhibited

that

irredeemable

appears

Who,"

hundred

four

He

were

money

points in the inflation fal¬
and presented forcibly the

will remain for all

time, in "Who
identifying one of

of
.

emissaries

It

possession of the nation

issue

those

—

found.

landed estates of the
Church, and he had supported the

first

quality of
and

money;

the

hoarded"

was

But

great

decrees

nance.

White

into

high

paper

places where
but, instead
"specie disappeared more and
more."
Some tried to explain this
by saying that "British emissaries
were in the
midst of the people,
instilling notions hostile to paper."

who,

bishop—

the

out from

come

any

than any other, had carried
extreme
measure
of taking

be what her leaders

education.

ate
1

flation

and

former

of

French

this admirable, guaranteed paper,
and
therefore
that
coin
would

a

was—a

was

theorists"
as
hav¬
ing predicted "a time when gold
was to lose all its value, since all
exchanges would be made with

more

the

the NRA

as

among those "eloquent
he
quotes
one
man

other

it

favor

this

it

important than

more

of

collection of documents which had

appeared during the French Rev¬
olution,
including
newspapers,

try and at least

re¬

coun¬

in

Dr. White had this to say :
"Far

freely

as

As Dr. White points out, there
were
men
who advanced views

inflation

to

Accounts Receivable

1899)

his

leads

money

deeply involved in debt.

time had be¬ the American delegation to The
come practically worthless.
This Hague Peace Conference. For full
became a strong factor in bring¬ measure, it should be added, he
made frequent trips to Washing¬
ing on the French Revolution.
Our authority for these facts will ton during the First World War,
be
"Fiat
Money
Inflation
in at the request of President Wil¬
in order that Mr.
Wilson
France." by Dr. Andrew D. White, son,
published and copyrighted in the might gain the benefit of Dr.
Quoting

called

that fact—for

discarded.

ed evidence that this form of so-

Cash in

to more than

his introduction

"Fiat

about

fiat

a very

have started back in the year 1789
when that country had become

—and which by that

1896 by D. Appleton and Co.1

that

questionable me¬
dium of exchange, Dr. White says
that "a very thoughtful article"
appeared "in the leading paper,
the 'Moniteur'"; and that article
stated: "It is, then, evident that all
paper money which cannot, at the
will of the bearer, be converted
into specie cannot discharge the
functions of money." And as addr
is

money

been

quite un¬
they threw
gold standard overboard just

aware of

\. ,v

evidence

Unreason," and his "Auto¬
biography."
With such a back¬
ground no one would dispute Dr.
White's high station in the field

1902—and

year

ably presented
Money
Inflation
in
so

France"—a book that has been

in the Warfare of Humanity

volume of that so-called

45,000 million francs

Science

of

he continue

these

addition

In

wrote

Warfare

with

a

he

Historical

extensively — as
evidenced by his "History of the

ard,

within

American

Association.

men

stability of the gold stand¬
we
were
taken
off
that

the

of

this,

der the

standard

in

which

modern

or

born

was

in

as

excessive

profits

of the facts

decades

of the last century.

our

political leaders in the 1930's ap¬
pear to have been entirely oblivi¬
ous

the

surely rto

workmen: and

why

exceptionally high
station in public affairs occupied
by Dr. White throughout the later

of

aware

further

most radical French statesmen. He

ex¬

It is hard to understand

To

the

was

have

we

self.

sonable .vol¬

tfon seem to have

France, forever/*--

cent

as

this country in re¬
decades; and his aim was to
help America avoid those crises.

rea¬

to halt this paper-moneyprogram
"sent in his resignation and left

As

»

And the Mijiister of FiV JYa&hihglori jn the early stages of
Mr. Necker; being *. unablb Mr. ^Roosevelt's First Administra-

perienced in

financial crisis

first—more about Dr. White him¬

a

values.'
nance,

argument against inflation
speech of Talleyrand.
He
had been among the boldest and

a

to

lack of

on

able

was

velop
his
masterpiece:
"Fiat
Money Inflation in France."
But

some

u

White

Dr.

authority on the subject of
finance.
In fact, he was able to
forsee the possibility of just such

higher

pay;

d

the basis of those studies

was on

that

And

sou."

one

is-

o*r*V

/

10

The Commercial and Financial Chronicle

(346)

To the Stockholders:

The results of the operations

of

Com¬

your

and its subsidiaries for the fiscal year
April 30, 1950 and their condition
shown by the

pany

ended

the close of that year are as

at

Balance

statements—Consolidated

-vnnexed

and Statement of
Consolidated Earned Surplus—prepared and
certified, as usual, by independent auditors.
At the beginning of the fiscal year re¬
cently closed there was an almost utter lack
of activity in the buying of railroad equip¬
ment.
At that time your Company and its
subsidiaries had on their books unfilled or¬
ders amounting in dollar value to approxi¬
mately One Hundred and Thirty Millions,
subject to possible increase in dollar amount
by operation of the "escalation' provisions
contained in practically all our manufactur¬
ing contracts. During the first half of the
year our plants, some but not all, were kept
moderately busy, but principally in the production of work previously booked and in¬
cluded in the "carry-over" from the prior
year.
As these old orders were filled, the
Sheet,

Account

Income

small

of

volume

booked

work

new

natu¬

rally reduced the rate of operations of our

whole, with the inevitable
from profit to loss in
the production
of the plants actively en¬
gaged—a condition which was forecast in
the Earnings Statement submitted to our
plants taken
of

effect

as a

reversal

a

stockholders
of the

there

was

half

first

the

of

close

the

at

Toward the close of the year
moderate resumption of equip¬

year.
a

Company entered
upon its new year with orders on the books
amounting, in dollar value, to approximately
Forty-Two Millions—an amount which has
been
substantially increased by business
and

buying

ment

your

close of the

booked since the

year.

not-unexpected lessening of
year, as shown by the ap¬
Sheet there has been no
impairment of the sound, strong and fluid
condition of your Company.
Its cash po¬
sition is entirely satisfactory and sufficient
for all our needs present and prospective.
Despite

the

earnings for the
pended Balance

Inventories
volume

not

are

work

of

out

line

bank

Our

books.

the

the

with

Millions—and this

shortly be paid.
Your Company's plants
and

maintained

in

are

were

amount

been

have

well
high

condition of

a

Our Valve Division,

operational efficiency.

manufacturing a line of valves used in the
011 industry and in many other lines, has
.been expanded and is now organized as a
separate division, showing quite satisfactory
results by
way
of earnings. Our Miscel¬
laneous
Products
Division,
producing
a
of cast iron, forged, and pressed
steel products, has also been
and is a substantial contributor

great variety

^and

welded

expanded
!to your

Company's earnings. The operations
of our subsidiary Companies—Carter Car¬
buretor Corporation and Shippers' Car Line
Corporation—have been entirely satisfactory,
both as to earnings and otherwise. Shippers'
fleet of

than

more

thousand

ten

cars,

a

ma¬

jority of ihein of modern construction, have
been steadily

engaged

at

satisfactory rentals
a
highly desirable

long-term leases to
chemicals and other manufactur¬
ing concerns. Our Carter Carburetor Cor¬
poration has also had a year satisfactory in

«on

list of oil,

all

respects. It is the largest manufacturer
of carburetors in the United States, and its

products

>

AMERICAN CAR AND FOUNDRY COMPANY

presently realizable value, besides
being a recurring source of argument with
the taxing authorities of several States as to
its being an item subject, in whole or in
part, to taxation in those Stales.
During the year, two of your Company's
wholly-owned subsidiaries, American Car
and Foundry Investment Corporation and
American Car and Foundry Export Com¬

FIFTY-FIRST ANNUAL REPORT-YEAR ENDED APRIL 30, 1950

out

any

pany,

fulness

far

so

the

concerns

as

ot

interests

Company, were liquidated and
dissolved, thus measurably—and desirably—

their

parent

simplifying the corporate structure of your
Company.
the

In

found

letter

stockholders

the

to

only in

April 30, 1949, attention was called to the
rights of the holders of our noncumulative preferred stock, as those rights
have been determined by the rulings of the
Courts of New Jersey, under the laws of
which State your Company is incorporated
and

by which rulings your Company is of
course
bound. Briefly, under those rulings,
the holders of our non-cumulative preferred

but only out
of that year's earnings calculated on a nonconsolidated basis, to such amount by way
of dividends, as are warranted by the year's
shares,

entitled each

are

Company has

developed

now

fuel

a

to

the Carter line.

rants

The present outlook war¬
the belief that the satisfactory volume

of earnings
continued

of both these subsidiaries will be
for

the

year

and

current

now

thereafter.
The
in

"Talgo Train," properly described
year's report as "a new concept

last

our

railroad

in

months
in

of

regular

between

service

passenger

Madrid

Although
been

transportation," after several
trial runs, has now been placed

booked

and

actual

no

in

this

both

Irun,

business

line,

the

on

in

has,
have

we

run

Spain.
as
a

yet,
great

number of inquiries by railroads in various

of the world all showing a strong in¬
terest in this development.
It will be vigor¬
ously followed up, but it is still too early
parts

to

form

of its

It

a

definite

opinion

as

to

the

extent

possibilities.
will

be

noted

that

gibles" heretofore carried
Consolidated
inated

Balance

as

Sheet

item

an

has

asset

"Intan¬
on

been

our

elim¬

therefrom—and

against Earned
action

the

of your

its amount
charged
Surplus. This was done by
Directors in April last, fol¬

lowing recommendation to that
by your Company's auditors.




effect made

The

item

Ca.h

in

banks

and

hand.,.

on

(less

Marketable Securities
U.

S.

and

Accrued

Escalation

Inventories

cost

at

less

and

1,151,810.50

.

*—-

1,100.000.00

—

reserve

10,520.808.49

...

Charges

less,

or

$14,940,280.49

_

,

cost-

at

Receivable,

Accounts

Unbilled

T

Market Value-

at

reserve)

Government Securities

Notes

PREPAID

DEFERRED

AND

1,402,239.43
29,435,273.64 $ 58,550,412.55

—

in

not

of

excess

market

present

prices

771,801.36

ITEMS

SUBSEQUENT

RECEIVABLE—MATURING

NOTES

MISCELLANEOUS
DEPOSITS
PLANT

OF

SECURITIES,

CASH

and

ACCOUNT

YEAR,

ONE

54,038.53

COMPENSATION,

FOR

Note

(See

INSURANCE,

$ 6,797,361.37

$110.742,bl6.76
Depreciation

for

Reserve

and

Patents, Trademarks,

260,842.82

ETC

It:

and Equipment

Macmaery

Amortization

742,030.45

RESERVE

LESS

Improvements

Buildings,
Less:

TO

RESERVE

LESS

SECURITIES

AND

PROPERTY

AND

Land

55,898,130.03

—

54,844,486.67
61,660,017.57

18,169.53

etc.

$122,039,143.23

of the

earnings,

up
to seven percent
of such shares.

amount

Calculated

the

on

basis stated,

shares

such

held,

$1.19

of dividends on the shares of your
Company's non-cumulative preferred stock
outstanding.
During the year there has beeh. no dis¬
turbance of our friendly relations wifh labor
condition which of

—a

should

course

of such

practically continu¬
ous
negotiation during the year with labor
unions at our several plants. In so far as the
matters in difference between your Company
and labor involved questions of wage in¬
creases, hours of employment, working reg¬
and

acceptable
certain

the

like, solutions

both sides—but, of

to

increasing

cases,

your

the

product, but in the highly
competitive conditions prevailing in our in¬
dustry this is not always possible and in
many
cases
is impossible.
As our stock¬
holders undoubtedly know certain, of the
unions are now insisting upon the setting
up of a "pension plan" for the benefit of
price of

their
been

insistence

which

has

met

interests

of

Company, has

your

plants, an agreement (which, to
come effective, requires the
approval of
stockholders)—whereby there will be

by

those

to

sions

workers,

DUE

Company
agreement

proper

Company due

Dividends

Board

—

SUBSIDIARY

CONSOLIDATED

IN

$ 3,825,000.00
2,900,000.00
2,020,000.00

—

——

8,745,000.00

10,186.84

—

Plan

——

——

when

be paid

to

$ 4,386,117.44
7,074,629.73

—

—,

——

Directors

of

Note 2)

(See

Capital Stock,

Common

on

and as declared by
12,196,491.91

735,744.74

—

__

Preferred:
Authorized

issued

and

value $100.00

shares—par

300,000

of

shares

lC,a50

Eess:

Stock--

Treasury

share

per

$30,000,000.00

—

23,945,000.00

1,055,000.00

—-----

—

Common:

Authorized
Less:

issued

and

shares

600

of

shares—no

600,000

value

par

Stock--—

Treasury

$30,000,000.00
30,000.00

——.——_

—

—

29,970,000.00

SURPLUS:

CAPITAL

Excess

of

acquired

Excess

of

par

equities

(or stated i

SURPLUS

EARNED

over

of

cost

value of

ACCOUNT,

investment

Treasury Stock

in
over

consolidated subsidiary $ 2,397,790.63
cost of acquisition-551,600.25

Statement—

See

2,949,390.88
24.275,463.81

———

$122,039,143.28
Note

The

2:

tax

STATEMENT
Sales

Gross

and

Car

allowances
Cost of

Rentals,

ERNEST

and
$147,470,153.89

■—__

142,620,963.90

To

Income:

Other

Cash

and

444,147.01

Royalties
Discounts

249,555.99

——

902,576.29
$

1,867,835.26

with generally

Provision

and

Income

Federal

for

Taxes

$

——

Deduct—Provision

for

Federal

Net Earnings Carried to Surplus

of

Statements

consolidated

results

of

Balance
and

Income

thur

financial
Foundry
30, 1950,

operatioas

year,
in conformity with gen¬
accounting principles applied on
consistent with that of
the preceding

fiscal

accepted

basis

a

.

the

erally

119,568.22
$

the

for

555,761.12

(See

Taxes

Income

Note)

related

and

accompanying

the

opinion,

our

Surplus present fairly the consolidated
position
of
the American Car
and
Company and its subsidiaries at April

1,312,074.14

72,763.74

___

before

In

Sheet

272,309.06
72,787.16

Retirements——

Property

Earnings

Surplus

examination

cumstances.

Miscellaneous
Net

Our

893,714.18

$

Interest

Royalties
on

and

ended.

and

Charges:

Loss

Income

ance

56.508.56

Miscellaneous

Other

as of April 30, 1950
Consolidated
bituements
of

subsidiaries

its

remted

tne

for the fiscal year then
was made in accord¬
accepted auditing standards,
accordingly included such tests of the ac¬
counting records and such other auditing pro¬
cedures as we considered necessary in the cir¬

47,172.60

—

of

and

pany

105,192.13

$

-

Company,

New York City

examined the Consolidated Balance
the American Car and loundry Com¬

have

We
Sheet

1-

York

New

Foundry

and

30 Church Street,

965,258.97

"

Dividends
Interest

Car

American

3,883,931.02

S

—

Street,

Stockholders of

the

$4,849,189.99

Operations

from

COMPANY

and

accountants

public

Beaver

25

but before Depreciation—_

Expense,

BELL

W.

certified

including Administrative, Selling

Depreciation
Earnings

ACCOUNT

INCOME

CONSOLIDATED

OF

discounts

less

l

Operations,

General

and

during the year, been charged with the
on account of employees' retirement cost

services.

past

to

Welfare Plan has,
benefits) of $161,191.51

Employees'

(after

amount

net

for

Reserve

applicable

year.

ERNEST

436,192.90
New

STATEMENT
Balance, May 1,
Transfer

connection

Exchange Commission.

the operation of the

submitted

will

be

reflected

and

holders is

as

now

submitted

favorable

as

to

York,

June

W.

29,

BELL

COMPANY

and

1950

April
On

Federal

Note:

furthered by the

Contingencies

to said

and

you

prior
it

was

46,439,556.65

1,522,352.63

$ 1,519,612.50
1,798,200.00 $ 3,317,812.50

—

$3.00

share

per

Intangibles

taxes

22,164,092.84

18,846,280.34

-

_.

$

1950
shown before

are

benefit

tax

of

$98,359.48

24,275.463.81
—•

a

as

reserve.

are

urged

give

to

it

30,

our

1949—

the
your

holds,

a

fifty years of its corporate
Company has occupied, and
commanding position in its

particular field of operations. As
of railroad

turer

highly

cyclical

and moving
our

tion

equipment, i its

in

a

manufac¬

business is

dependent

nature,

upon

sympathetically with the welfare

railroad

great

of this

situation

tion of activities with

such—always with

The

systems.

calls for
a

view

dependence for earnings
care,

to

upon

a

correc¬

diversifica¬

lessening

our

the railroads

however, that such

diversification shall

t

only be within the eompetencv
of our experience and facilities,
Your Management is keenly aware of this
need

and

already

plished along
tion."

letter)
of

the

much

has

been

indicated line of

accom¬
correc¬

locution

a

the

of

Company

to

earlier in the present

has been accomplished

much

diversification

a

additionally

existence,

of

for

said:

still

Already (as referred

approval.

such

fiscal year—that ending April
"During

as

approval of the agreement

S

capital stock publicly held, viz.:

on

In the letter accompanying the report

ex¬

will be

44,917,204.02

of charges made to the Reserve for Employees' Welfare
Plan. This saving has been applied as a reduction in the charge

stock¬

It is the
Management that

paid during the year

$
436,192.90
1,086,159. .3

| result

the

us.

considered opinion of your
best interests of our Company

the

for

1950-

of

April 30,

Balance,

agree¬

well could be

30,

Common,

Write-off

many

similarly placed with

$

year—

Reserve

30,

instances, more favorable
the terms accepted by other con¬

pected—in

SURPLUS

EARNED

—

Preferred, $3.50 per share from earnings for year epded April
1949 and $1.75 per share from earnings for year ended

On

your

in

our

from

Dividends

Deduct:

therewith.

and possible, the cost to
to

CONSOLIDATED

OF

1949———

Net Earnings for

Add:

selling prices of its products. On the whole,
the
agreement
so
worked out with the

are

—

CAPITAL STOCK:

effect, the agreement so worked out is
amplification of your Company's Em¬
ployees' Welfare Plan approved by our
stockholders at their Special Meeting held for
the purpose of its consideration on April 16,
1947 and presently effective. To such extent

cerns

A

—

——

—

—

—

1963

Welfare

Employees'

Contingencies

an

than

1,

INTEREST

For

In

Unions

685,000.00 S 14,947,609.84

CORPORATION,

LINE

CAR

1961

1962

For

with

in

Securities and

ment

1,

1,

APRIL

For

in¬

is referred to at length in
statement" submitted to our

"proxy

is

SHIPPERS'

OF

ACCOUNTS:

RESERVE

stockholders in compliance with the rules of

as

174,750.31

SUBSIDIARY:

APRIL
JULY

DUE

MINORITY

appropriate provi¬
for the protection of the interests of

Such

the

DUE

3%

3>/»%

our

your

your

the

3%

be¬

Company a program for
granting of pensions and other benefits

the

1,003,031.89

securing

after

our

stituted

8,084,827.64

—
——

with

compliance on the part of
practically all the great industrial organiza¬
tions of our country. In these circumstances
your Management, having in mind only the
best

Expenses—

Local Taxes

and

DEBENTURES

CONSOLIDATED

our

members—an

State

$ 5,000,000.00

!——,

—_

Accrued

and

Federal,

FUND

SINKING

Company's

operating costs. Normally such increase in
our
cost of
production would be added to

included at cost.

payments received on sales contracts
,
Sinking Fund requirements due within one year under indentures
debenture issues of Shippers' Car Line Corporation——
——

in

course,

inventoried

were

Advance

found

were

Banks

to

Payable

Accrued

relations has necessitated

ulations

Payable

it is desirable

The maintenance

continue.

valuations

above

in

1913,

LIABILITIES:

Accounts

18, 1950 to the holders
the. close of business July

additional dividend complet¬

1950—this

included

Company

Colpitts, Consulting Engineers,, as of April 30, 1939, on the
with subsequent additions at cost. Plant and Property

&
1,

March

LIABILITIES

share

per

Parent

Coverdale
at

Subsidiary Companies are

Notes

payable July

of such shares at

11,

of

rale

of

Property
by

values

of

CURRENT

the year's

a

the

at

basis
of

and

valued

and

par

dividend payment to the
holders of our preferred shares at the rate
of $2.94 per share held. Such holders have
already, by payment made in December last
received out of the year's earnings, a divi¬
dend at the rate of $1.75 per share.
Your
Directors accordingly have, since the close
of the year, declared a further dividend on
earnings warrant

Plant

I:

Note

year

of

pump which is meeting with an excellent
reception from the industry, and gives every
promise of becoming an important addition

1950

30,

dividend

of your

a

APRIL

SHEET

ASSETS:

CURRENT

panying the report for the fiscal year ended

protracted negotiations worked out with the
Unions representing the workers at several

not

BALANCE

ASSETS

accom¬

majority
of the automobiles in our country but as
well in tractors, buses and. agricultural ma¬
chinery. The Management of this division
are

CONSOLIDATED

both of which had outlived their use¬

payment

the close of the period

Five

to

will

i

by, and merged into, your Company at the
its formation in 1899—and is with¬

time of

of the year, at

reduced

.

a,c,f;

ing the payment out of the year's earnings
of
the
amount
thereof applicable to
the

on

Thursday, July 27, 1950

.

represented the then "good will" value, as
distinguished from the value of the physical
assets
of the several companies taken over

loans, Thirty-Five Millions at the beginning

of

.

.

of

problem

in the line
We

activities.

our

of

the

have

number

and

manufacturing plants.
Your
formed in 1899 by the merger of

our

was

number of

car-building plants located, and

not

always strategically, in various parts of our coun¬
try.
A number of these plants have since been

disposed

of—but

even

so,

we

today

have

a

number of plants, representing an investment of

millions of dollars, the facilities of all of

many

which

cannot

operation.
equipment

at

all

Because

buying

times

of

by

he

the

the

kept in profitable
sporadic

railroads,

nature
as

it

of
has

developed in recent years resulting, so far as
equipment-building companies are concerned, in
a

condition

one

such

have

that

properly he described as
famine," the earnings of
plants
may be profitably engaged
of necessity had imposed
upon them the

of either

of

may

"feast

or

(Continued

on

our

following page)

Volume 172

Number 4928

.

T1

.

.

e

Commercial and Financial Chronicle

(347)

11 •

(Continued from preceding page)
burden

of

has

ment

under

designed

gram

this

development

to

a

pro¬

evils of

the

correct

Dr.

such a
plants and man¬

ufacturing facilities
sonable

whose

tirely

plishment
volve

our

of

railroad
facilities

this

The

will

naturally

but is

necessary

the

profitable operation of
pany as a whole.
In

the

letter

stockholders,
referred

to

last

of

world

in¬

for
Com¬

our

to

year

rearmament

national political

outlook, and it

especially

difficult

to

making.

Notwithstanding this condi¬
Management remains of the

tion your

realize

are

opinion that there is
for

valid

no

in

It

with

is

regret

agement announces

the close

that your Man¬
the resignation, at

voted

will

and

efficient

service.

Secretary,

as

the

retain

experience and

of

While

Company

your

benefit

Mr.

Wick's

knowledge of the af¬

fairs and business of your Company by
his continuance as a member of your

Hoard of Directors. Mr. C. Allan
for

many

Mr.

years

Wick's

Fee,

assistant

Secretary, has succeeded to the
position of Secretary made vacant by
as

the

resignation of Mr. Wick.
On the whole, the year has been a
difficult one, but not more so than
have

been

pany's

other

history.

sound and
condition

Your

well founded.
assured.

is

coherent

is

Com¬
Company is

in

years

your

Its financial

Its

organization

and

capable. Difficulties
apparently insurmountable in the past
nevertheless

have

been

successfully
met and overcome—and your Manage¬
ment has every confidence
that such
will continue
we

be the

to

future without fear
It is

'

once

that

thanks

to

and

for

devoted,

misgiving.
pleasure to your
make of record its
the

service

Company and its stock¬

to your

throughout the

by the

years

various members of your

For the

of

appreciation
and efficient

loyal

holders

or

a

more

Management

given

and

case

fully warranted in facing the

are

organization.

Board of Directors:

Dr.

June

at

least

prices of several

far the

so

man

in the

com¬

street

has

is

confined

the

to

Far

East

Government's

armament

long

so

reluctance

there is

as

flict is understandable from

to

successful

debentures

of

sue

offering

Intermediate

of

of the

Credit

is¬

an

Federal

Banks

was

made July 19 by M. G. Newcomb,
New

fiscal

York

the banks. The
of

$60,855,000

for

agent

the

financing consisted
1.40% consolidated

debentures dated Aug. 1,
due

May

1,

1950, and
The issue was

1951.

placed

at par.
Of the proceeds,
$53,030,000
was
used
to
retire
like amount of

a

turing
000 is

Aug.
new

1,

debentures

1950, and $7,825,As of the close

money.

of business Aug.
of

amount

ma¬

1, 1950, the total

debentures

outstand¬

ing will amount to $569,255,000.

■

•

(Special to The Financial Chhonicle)

,

DENVER,

Adams

has

Colo.

—

joined

Willard

the

staff

L.
of

relatively little

scope

secure

income

to

revenue

of

He

case

has begun

mere

a

drop in the

on

Bank

Building.

the sake of avoiding their increase through the
of a budgetary deficit.
Yet this is at present
declared

policy in

The alternative, to
sooner

MIAMI,

Fla.—Paul

S.

Wooley

controls.

D.

Newman

&,

Co.,

Building.




Ingraham
•

Government's

which the Government is bound to resort-

ensuring equal distribution.
policy has changed
in favor of a removal of restrictions.
This policy continued even
after the beginning of the Korean conflict.
On July 11 the Gov¬
ernment announced the derationing of soap.
Beyond doubt this
was fully justified by the supply of soap available in the
country,
all the more since the newly-invented "detergents" which can be
used for washing were not subject to rationing.
Nevertheless, in
many quarters the decision was viewed with misgivings.
For it
During

is felt
rearm

however,

tho

official

that, owing to the strong possibility of an early decision to
on
a large scale, the Government should
revert to controls

rather

than

continue

de-rationing
the

months,

recent

was

to

the

It

seems

the

latter

de-control.

last

move

in

probable that soap
direction, and that

all

will

now

probability

be

as

was

recently under

postponed indefinitely.

soon

as

rearmament

assumes

substantial

proportions, it will be necessary to revert to the rationing of cloth¬
ing and various foodstuffs which have been de-rationed, also of
petrol, and the wide variety of building materials and industrial
raw

materials which have been de-controlled will have to be made

subject to license
will

the

-and,
Oct.
for

once

chances

before

realize the

need for rearmament

to

that

assume

according

to

It would

17.

the

Parliament

"business

i^

present

actio".

powers

about

as

to

long the Government

very
on

substantial

a

usual"
rise

scale, it is

policy will

for

its

soon

summer

be

recess,

will not meet until
however, if the need
required by
It is true, the Government has

arrangements,

it

be little short of miracle,

recalling it in order to

national defense would

tate

that

to

pass emergency

not arise;

take

the

necessary

measures

steps

by

administrative

Even so, rearmanent on a really large scale would necessi¬

Supplementary Estimates and other measures that would have
to Parliament. *
V
*
:

to be submitted

securities;

of

flow

to

either

an

market.

Thus, when

buys securities at a price
than reasonably dis¬

more

tneir potentialities in the
expectation tnatethe market will
move upward to levels which are

counts
,

even

unreasonable, he is

more

speculator rather than
As

to

a

large

sum,

Over

in

.

the

it is a growing
long-term
trend

and
a

,

;

increase of 3%

an

year

investor.

an

haraly defend drawing

a line at
saying that
mis Side of the line an in¬

any

place

one

upon

is

vestor
the

on

and

"small-scale"

other

scale."

For

side

the

and

is

he

just

"large-

this

of

purposes

discussion, I consider that person
investing less than $5,000 annually

'

less than

$100,000 falls within
designation. Such an investor

our.

not

could

live

that amount
vested

fund

this

discussion.
sale

a

size

of

live

depend
the

if all of

easily qualify

this

not

income

the

on

it

were

of
in¬

safely. An investor whose
is not more
than
$50,000

would
of

is still

whose investible fund

and

they too have been considerable.
Savings are of course necessary
to finance such

core

of his
a

Such

other

upon

must be

of

if

he

got

income

fund,, he
it.

on

subject

as a

Even

rate

still

a

must

activities

for

income; investment

somewhat incidental

ac¬

tivity.

the

over

heen

plowing back from

15%

of

their

income

decades

10%

into

to'

new

productive facilities.

"The benefits of such increases
in

productivity

fourfold

since 1850. The proportion of incomes which wage-earn¬

ing families have available
to
spend for food, clothing, and shel- *
ter, has almost tripled. This is a

truly remarkable accomplishment
when

reflects

one

in

the

rate

in

the

centuries

The
of

of

living

the

in

1950."i

standard

dependent upon the

was

translation
ventors

prior to

rise

great

the slowness

on

economic progress

of

the

into

ideas

labor

in¬

of

saving

ma¬

chinery; This formation of capital
dependent in turn
and investment.

was

ings
Of

the

great

Keynes did
the

stiess

tions

of

Not

investment

less

to

work

our

and

equality

variables

savings.

failure

temporary

maintain
two

and

the

terminate

But

sure.

Lord

than any other

importance of the func¬

one

toward

sav¬

economists,

more

only'1 could

either

upon

of

progress
lei¬

more

failures

between

to

these

could

precipitate
unhealthy booms and depressions.
I

like

to

touch

a

point

nection

in

on

this

con¬

was

de¬

that

veloped in

an

unpublished

manu¬

script

the

economist

Melvin

by

Reeaer. it is that you might have
a

disequilibrium due to

a

malad¬

justment between investment and

savings

even

when the total flow

Importance to the Community

of savings

Let

is equal to the demands by
capital
producers for investment funds.

consider

us

in

possible

importance

munity

To

do

touch upon the

passing his
the com¬

to

that

let

first

us

importance of the

Savings
to

the

pressing for investment,

Investment

Some

considerable

Stahrl

Edmunds

"The

from

Financing

Formation"

his

of

article

Capital

in

the January num¬
ber of the "Harvard Business Re¬
view"

tion

serve

to

this

as

a

good introduc¬

point.

"Only 100 years ago production
in the

United States

almost

arose

labor

and

domestic

animals.

only 6% of the work
was
supplied by fuel and
Today 28 times as much

power.

work-

is being applied to produc¬
sup-

of the most

back-breaking
labor which he has done, this il*

An

address

by

Prof.

University - ofCalifornia,
July 6, 1950.

F»*a:ne
Los

are

income

at

the

Angeles,
...

-

as

are

risk

if

the

of

rate

in

return

for

the

assur¬

of

ance

safety. Demands for capi¬
tal funds also lack homogentny
with regard to the risk involved

Some
sure

rate

would

uses

return;

chance

of failure.

of

give

others

return,

almost

have

a

Even at

some

a

high

a

high

savers

will

forsake

safety for risk. Con¬
the supply of savings

sequently
available

for

consist of

a

investment
might
high proportion avail¬

able only for safe investment and
ai

one

same

promises to be high. Others
willing to take a low rate oi

energy

tion, and 93% of this is being
lied by fuels and power. If
thinks

savers

the

safety required.
willing to take

return

not

1850

energy

In

all

not

are

amount of

lew

function generally. A
paragraphs by the economist

a

apparent. Per

are

capital real income has multiplied

on

could

man

capital formation.'

Americans have

"small-scale," one could

solely from the energy of human

more.
are

(b)

or

the

person

on

de-rationing of various commodities which

increase

of

double

to retain these controls for the sake of

extensive
has been added the staff of Frank

the

later, is a return to the wartime system of rationing and
Until recently it was the Socialist Government's policy

or

abandoned.

Frank Newman Adds

inflationary effects

of rearmament.

case

formation

years.

sum.

(a) well-secured interest and

vviiicn

lar

always refused to admit the extent to which in existing circum¬
prices. It would be of little use to
prices, wages and costs by means of additional taxes for

•safe

(Special to The Financial Chronicle)

a

ocean.

Cripps stated recently that he also expects to disthrough increasing indirect taxation.

of rearmament

ownership

tnis

tions

really

a

increase in wealth from

an

intrinsic worth than upon abbera-

situation if and when it should

rearmament

person who ex¬

a

appreciation
in value that depends more upon

this time for raising income tax fur¬

once

An

is

me

dividends

taxpayers, so that it would be possible to
£600 million by restoring the income tax

But

take the words "small-scale."

and

some

to its wartime level.

"investor"

we

iiom

For it has only been reduced since 1945 from 50 to
45%, and
large incomes it is still 95%. It is true, some concessions have
made

Fraine

before

outright

ther.

been

Harold

take

us

word

pects

financed largely through raising the rate of income tax
-to 50%, and in the case of large incomes to 95%.
There is, how¬
ever,

capital

of

in the expenditures for
equipment. The expenditures
for new plant have not shown ^
quite so consistent a growth, but •

upon

investor to

was

Since

Frederic A. Adams, U. S. National

the

The trouble is that taxation is already so
high that it could not
reasonably be raised even higher. 7 World War I was financed
largely through raising the rate of income tax to 25%. World

for

of

goods,

per

in¬

Dr.

Let

arise.

War II

be

progress

development.

there has been

him.

*

Unless there is a corresponding degree of deflation of
pur¬
chasing power the fall in the volume of goods would result in an
inflationary rise in prices or a rapid depletion of the none too
plentiful stocks of civilian goods.
r*
" - * "
-

sup¬

will

mechanization, reflects the de-

a

may

pendent

necessarily mean a more or less corresponding re¬
output of goods for civilian requirements. Even a
relatively moderate degree of rearmament would result in short¬
ages in many kinds of manufactures.
The question is, how would
a

industrial

and

energy

It has taken capi¬
valued at' nearly $400'
billion at 1929 prices to make this
application possible.
This
is
a)

creasingly de¬

duction in the

the Government deal with such

human

past 100

.

They most certainly cannot have both, For owing
employment in Britain, any increase of arms production
any increase in the number of men and women in the
fighting

services would

mechanical

vivid evidence of the
our

tal

unity

e come

how

multiplied

new

full

and

planted

gree

as

of

which

butter to guns.
to

In

t

c o m m

though it is open to criticism from the point of view-of national
security. For the present the Government and the country prefer

consideration

With Frederic A. Adams

members

on
large-scale re¬
hope of avoiding a major con¬
purely economic point of view, even

increase

A

to al¬

of

has

energy

of

of

'capacities

embark

stances taxation tends to affect

FIG Banks Place Debs.

concern

b

lustration

him¬
are

pros

"The application of energy to
production, which is the process

most all of us,
in our various

some

a

small-scale

con¬

self but

control.
The

prob¬

some

merely

to

cern

sumption unless and until that possibility be¬
This means that there will be no

perceptible accentuation of rearmanent in the
meantime, no noteworthy increase in stockpiling purchases of strategic raw materials,
no reversal of the
recently adopted policy of de-rationing and de¬

relief of large-scale

as

of mutual funds.

snoula

of selfish

there

on

the

to

cons

investor, I should like first to
cie.ine him and
secondly to argue
that his prob¬
not be

by the crisis.

touching

peculiar

lems

probability.

a

Sir Stafford

1950

30,

Einzig

inflate in

Chairman.

.

Paul

comes

Respectfully submitted,
v

wholesale

large scale, that amount would be

CHARLES J. HARDY,

,

Government considers it inexpedient to
adjust
its economic policies on the basis of that as¬

as

resigning

Before
lems

failed

would be no need for
disorganizing the coun¬
try's economy through the adoption of drastic
steps of war economy. Although the possibil¬
ity of a general conflict is not overlooked, the

of the

Wick,

which

loans

The Government has adopted a "business as
The view is taken that if the

conflict

or

year, of Mr. Howard
Secretary of your Com¬
pany—he having given to it a lifelime
(forty-five years) of loyal, de¬

C.

and

usual" attitude.

spirit of despondency.

a

the

not been affected

reason

viewing the future, immsdiate

remote,

in

modities,'but

the

in

now

Government

wsll

as

brokers, banks and investment counsellors, and d.scusses

by the announcement of favorable
quarterly gold figures. There was also a sharp

importance

an

in

capital formation

in July the dangerous possibil¬

benefit

to

rise

of

of Wisconsin

investors from current progressive dividend taxation.1 Points
out need of giving
proper advice to small investors by dealers,

complacency about the inter¬
with a shock that Britons had

was

of

means

ities of the Korean situation. The result of this
realization was a fall on the Stock
Exchange,

our
were

Since the close of the year that
condition seemingly has become in¬
events

FRAINE*

Slressing dependence of our future economy on risk capital
coming from small-scale investor, Dr. Fraine considers other

well laid.,

are

Berlin blockade there has been much

otic.

tensified and

drive

LONDON, England.—The Korean conflict came to the British
public as a bolt from the blue., Ever since the termination of the

the cha¬

upon

G.

Professor of Commerce, University

possibility of an increase in British taxes, but points out
country is in sound economic condition and foundations for

to realize early

conditions

verging

as

accom¬

By HAROLD

btile

en¬

whose

engaged.

cost,

given

are

building

of

some

of

rea¬

profitable
facilities, as well

those

as

otherwise

give

Small-Scale Investor

Einzig contends though British Government has adopted a
as usual" attitude in relation to Korean
crisis, spread
conflict may lead to restoration of wartime controls. Sees

"business

the

activities

the

to

equipment
are

of

assurance

operation of all
those

will

as

Problems of the

By PAUL EINZIG

,

condition—this involving

rearrangement of our

,

Rearmament in Biitain?

carrying the plants not so
situated.
Your Manage¬

fortunately

small

risk

proportion

investment

at

available
a

Continued

time
on

for

when

page

30

} Starhl Edmunds, "Financing Capital
Formation," Harvard Business Review,
January

1950,

p.

34.

12

The Commercial and Financial Chronicle

(348)

Our

Reporter

By WILLIAM WITHERSPOON
Statistical

&

By JOHN T. CHIPPENDALE, JR.
Increased

Mr.

activity with larger volume, but without too impor¬

price

Analysis—Report of Com¬
on
Economic
Policy—

mittee

bases conclusion

on
probable large increase in supply of bonds
financing and inability of Federal Reserve or
Treasury to stabilize interest rates in period of heavy deficits.

Chamber
United

the

of

Commeice

of

of America, Wash¬
C.—Paper—1
to
4

D.

copies, 25£ (lower rates on quan¬
tities).
)ti.t
t

Man"

"Prudent

Investing

An

—

Outline of Present Investment Re¬

sponsibilities
Text

of- the

New

in New York

Fiduciary Law

State—Kidder, Pea17 Wall Street, New

body & Co.,
York

the Full

with

together

Trustees,

York

New

of

of

rest

the

that

group.

From

War

Earliest Taps
'■

i

»

'J

<

i

J

>

.

The

,,

>

i

.

.

.

,

r

.

.

Fifth

come

have

to

seem

—

New

Avenue,

York

11,

Right to Organize and Its Lim¬

Comparison

The—A

Pol¬

of

icies in the United States and Se¬
lected

tions, which

Countries—Kurt
Brookings Institu¬

—

The

Place,

Jackson

722

C.

6, D.

Washington

W.,

N.

time

building
would

Ohio —Jack

Harold

Kibbe

E.

with

of

the money

Building,

Tower

Midwest

the

Stock

Engler

Ohio —Frank

The Samuel & Engler Co., 16 East
Broad Street.

E.

Coster

Wilmerding
Wilmerding

died

of 72.

to his retirement he

at

Hollister.

Hathaway Weekes,
New

York

change, died July 25 after

Implications of Credit Restriction
butter and

credit

instalment
similar

old

to

authorities
and.

more

guns

in the offing, comes

mem¬

a

Ex¬

long

something

probably

limitations,

market the focal pointl in credit
wjdl be appreciably lessened.f|V ;-

This

does

dis¬

too

not

regulation W. Thus by the direct action method
will have greater control over the whole credit
the need for making the money market and the

limitation

government

not

necessarily

from the government

that

mean

as

in

is

With

be

high

a

debt

large

as

lower rates?

or

as ours,

affair

be

can

will

believe

that

income

issues

much to the existing pattern.

interim

market with

could

advance

take

in

quotations

They look for

place.

of
a

the

more

slightly higher range than has been the

a

The

case

the

the

The

might

CERTIFICATES

The

have

with the need

gone

The

demand

Tightens Reins

for

Aubrey G. Lanston
6c Co.
*!

INCORPORATED.

Street

NEW YORK 5

BOSTON 9

WHitehall 3-1200

H Ancnck 6-0463

'




-

with

about

shrewd

money

market

has

it

that

the

differences

and Federal have been reconciled.

evident

going to rise.

between

the

bond

It

is

false

a

security, therefore,

for investors to feel that in bonds
or

securities

money-rate

have

an

they

of safety.

assurance

make drastic inroads into its pur¬

chasing
cline

but the actual de¬

power,

the

in

securities

prices of money-rate
another

under

war-

operation will actually
dollar
value from
capital

l'inancing
erase

invested

in bonds.

With Shaver and Cook
(Special

ST.

to The

Financial

PETERSBURG,

Chronicle)

Fla.—Carl

Shaver

Theater

and

Cook,

Florida

Building.

existed

postwar

need
of

of

war

ex¬

re¬

New
New

at

less of

a

bal¬

supply and demand.

financing, the price

money-rate securities will de¬

advance.

Thus,

will therefore

the overall debt

as

increases, bond prices will decline.
A
false
impression has
been

generated
persons

Board

in the minds of

many

and

the

Treasury

magical

interest

Depart¬

powers to con¬

rates

through

regu¬

latory measures and open-market

operations. '
some

'

These

effect

controls

v

upon

extended period of deficit

operation.

followers

annual

outing at the
Club, Travers

Island.

Sept. 8-9, 1950 (Portland, Ore.)
Pacific Northwest Group of the
Investment

Association

Bankers

annual meeting at

Gearhart Hotel,

Gearhart-by-the-Sea, Ore.
(Philadelphia, Pa.)

Sept. 15, 1950

Bond Club of

Philadelphia Field

Day at the Manufacturers Coun¬
try Club.

Sept. 26-30, 1950 (Virginia Beach,
VaD

Examining
we

find

some

National
sociation

Security
Annual

Traders

ernment.

•

Oct. 12, 1950

; Dallas

(Dallas, Tex.)

Bond

'3;

Club Annual Fall

Meeting.1
Nov.

of

26-Dec. 1,

1950 (Hollywood,

Fla.)

that

Restrictions ' might
upon

consumer

other private debt to
but

If this should be the case, it is

of

past

.

..

.

...

.

■

-

,

-

at

Investment Bankers Association

(1)

posed

Treasury

it*isn'tagoing-to be done at increasing cost To the gov¬

As¬

Convention

the Cavalier Hotel.

do

the minor

fluctuations but will be ineffectual
an

York

York Athletic

that the Federal Reserve

ment have

have

Security Traders Association of

potential

economy

(New York City)

Sept. 8, 1950

securities

or

our

the yield

Field

Investment

In

some

Hence, it is

more or

between

EVENTS

years ago.

and

in

COMING

a

the

reduction

in

total, would

be

im¬

credit

and

ease

this
be

convention

at

the

Holly¬

wood Beach HoteL

credit,

element

far

annual

Dec. 8, 1950 (New York City)

offset

•

-

:

New York ^Security Dealers As¬
increase in the Federal debt. sociation
Silver Anniversary Din+v»o WaMorf Astoria
(2) The open-market operations
Hotel

by

an

.

finance.',

Not

only will the further depreciation
of
the
dollar
through inflation

the

supply of bonds is now sub¬
stantially enlarged through the

trol

happenings that interest rates are not
If the Treasury is going, to have bigger deficits to

from

would

decline in

a

prices rather than prevent it.

Thus,

half

If the

are
paying more than passing attention to the 62/67s. Consid¬
erable switching is being done within the group. i ;
;.

quite

pre¬

compared

for money rate

these controls

most

defer

about

or

which

beginning of the last war has
been virtually eliminated so

ance

the

the

This

period.

postwar

with

that the slack

the moment

Rumor
45 Milk

as

are

over

of

doing the past five years in this
merely

10%

about

level

1933

the 59/62s, the 62/67s and the 63/68s have the best market tone
in the whole restricted list. While the 59/62s are the favorites at
some

war

W. Grobert has become associated

billion

$430
the

that there is

Ineligibles

on

sys¬

of the

they have been

emergency, just as

that

$190

up

ineligibles continues to- expand and
Federal again had to let out a fair amount of these issues in order
to keep prices of them from advancing.
The shorter taps, that is,

the conclusion

at

their

banking

the

debt

war,

cline and

partially-exempts have been quoted

Federal

'

now

to put

and very few of
the higher coupon bonds have changed hands because present
holders do not want to sell them, at least not until more is known
about what taxes are going to be.
Also, the strength in state and
municipal obligations has not had an adverse influence upon
yields of the tax-sheltered Treasury issues.

BONDS

-

the

the economy on a semi-war basis.

NOTES

15 Broad Street

which

The fear that the longest eligible issue

seems'to

tem

could,

find

would

during

to

to be manifested.

so

off again

into

back

way

monetary

firming tendency in interest rates

demand

slip

thus sold

bonds

it

if

war

through

fully

Even

private

only

wartime

vealed

September 1967/72s.

expected that the

financed

be

method.

country

$172 billion

prevailing rate of 17

very

not

for
had

During and since the

rates

money

promising for other forms of investment,
those deposit banks that must have higher income issues to keep
earnings up, have not been hesitant in putting surplus funds into

BILLS

substan¬

our

and

in

bank

outlook

un¬

prevailed

the sixfold increase in gold.

re¬

Importance

this

during
the

this

hand,

around

vailed

higher-

buoyant

into

public

times

2.5

fairly good-sized blocks of the longs have been available
they have gone at prices above current market quotations. With

★

financ¬

war

of

of

during the 1930's but

other

around

to

where

TREASURY
★

in

res¬

tion of additional credit. However,
could

this total debt has been expanded

issues, the shorts and the last three taxables have
good demand and there is no doubt about this
being real investment buying. Quotations have not advanced ap¬
preciably because there have been some bonds around.
Yet,
been

★

Added

the

In

pansion of debt has caused

Gain

II,

pattern

declined

increased

billion.

A IV\%

But here again, there are not a few who

Bank Issues

u. s.

the

On

and more to come, will there

or

moderate

a

ex¬

War

which

increased

which

and more sizable
going to continue

at least until the whole international
accurately appraised, it seems as though money

more

the

levels.

because

gold

fi¬

of

means

growing debt, thus
shift in the ownership

this

it cannot be

gold stock (including the revalu¬
ation of 2/1/34)
almost sixfold.

had

conform pretty

monetary

to

potential
demand
rate securities which

of

flow

from

rates

our

fully employed. This demand was
created by the unprecedented in¬

be lifted

will

>

time being,

by

By that time, money rates

been erected

obligations. But, with the changed conditions,
there is not likely to be the same pressure to push quotations of
government securities down in order to influence the trend of
deficits

courses

might be

abrogated

was

war

another

be

nancing

eral accounts rather than the crea¬

during

already

money

selected Treasury

to rise?

would

which, at that time, had not been

pressure

Also, with enlarged spending
it probable that interest rates are

the

effecting a
of deposits from private to Fed¬

huge

a

market or Federal will cease to be sellers of

rates.

di¬

sev¬

customary

condition

the Reserve System.

(3) The sale of Treasury bonds
outside
of the
banking system

tially, Having been in that gen¬
erally downward trend ever since
about 1933.
However, there was

cently.

illness.

which
last

had

and in the very near future there will be

restrictions of housing

Federal wants it to be.

Stock

ing
the

shift of Government

a

bonds from the commercial banks
to

seems

this trend will

rates

interest

merely

Hence,

of

World

higher

war

the

urrect

usual

certificate rate appears to be the top to be expected in the shortend of the list with the longer end being kept pretty much where

Harold H. Weekes
Harold

instalment buying, both of
bit to keep the inflationary

little

a

of

event

or

Prior

partner

was a

in Pyne, Kendall and

than

more

little less

a

For the

ber of the

of

be

securities?

Treasury

alterna-

Contrary

toward

is

To be sure, this also affected

be

be¬

government or

during

perience

requirements

ap-

this definite trend in interest rates

upon

in 1940.

With

interest

his home at the age

market

mortgage

Market

H.

Vogel, Jr. has joined the staff of

E. C.

influence

an

moving at top speed.

the past

(Special to The Financial Chronicle)

COLUMBUS,

the

helped

structure

&

securities has had

markets and bond yields.

down

which

the

Samuel

authorities.

degree the return on other credit instruments, but it does not

a

Witherapoon

such

could

raised without member banks sell¬

spite

t^e

out of order.

been

by the Central Banks on interest rates through the

Pressure

as¬

Exchange.

With

the

taken
William

vide funds for this purchase. And,
how

eral

that

A.

Saunders, Stiver &

Terminal

members

1

s a

t i v e

Federal has done

point where some form of more direct action

a

have

continuous sale of Treasury

and Jo¬

seph M. Strayer have become
sociated

to

up

not

forces

(Special to The Financial Ch..onicle)

CLEVELAND,

unexpected, certainly not those

means

no

good job in retarding the expansion of credit under peace¬
conditions.
But even at that, the inflationary forces were

slow

Cloud,

an

ai

definite in

very

to

Three With Saunders, Stiver

by

were

that will have to do with the limiting of credit.

European

Braun

make

rection

is bringing with it controls and regula¬

The part-war economy

in¬

rates.

can

cause

Lionel

decline in bond
requirements

a

reserve

ing

p r

Controls Seen Welcome

but

would have to be increased to pro¬

the effect of this operation would

of

such

well bought. The longest taxables and partials have
the leaders in this group.

being very

dampen

to

prices,

ment

We

also been among

tend

This is the ele¬

terest

edge over the rest of the list,

an

time.

(

.

the bank
issues as well as the non-eligibles.
Among the bank securities
the shorts have been real market pacers, with the l%s of 1954

a

Co.,

.

^

been

ex¬

the

at

present

Setting the Pace

broad enough !So that almost every
in for attention although the earliest eligible tap
has

market

issue has
bonds

Company,

N. Y.—Cloth—$3.

tion,

be appraised to some

can

5, N. Y.

Reprieve

however,

economy,

trend

Gelber—The Macmillan

its,

our

factors

important

one

tent

Credit

60

uncertain

many

element of

driving these securities out of line with the

tive spot buying from

States

ington,

the

Of

war

facing us, there is

supply certain issues in volume in order to prevent this selec¬

to

Cook & Co.

Witherspoon, contending that contrary to experience dur¬

through

with commercial banks taking
on' a wide range of these securities, from the shortest to the
longest, the taxables as well as the partials. The restricted bonds
continue to find a home without difficulty and Federal has had

Business Management and Eco¬

Department, Newhard,

ing World War II, the interest rate trend is definitely upward,

has been powerful in the eligibles

nomic

Research

Members, New York Stock Exchange

changes, is the current picture of the government
market.
All types of Treasuries are moving out of the market,
with the demand just as good for the shorts as the longs.
Buying
tant

Thursday, July 27, 1950

.

Higher Interest Rates in Offing?

Governments

on

.

.

no-

of the

Reserve

Board

could

also

(Starlight Roof).^

Number 4923

Volume 172

.

The Commercial and Financial Chronicle

.

.

ures

The Stork

Market, K War Comes

:By JOHN DUNCOMB

V

.

.

„

.

.

.'..3'

Despite stock market decline since beginning of Korean episode, contends, because of large war preparation orders and\
other favorable concLtions to promote industrial activity, there
.
will be

lasting downward trend as

no

During the past week the stock
market
addect
something " more
,

occiirred after 1946.

$5,500,000,000. There¬
the ground
within a few weeks has been

clined

some

fore, well over half of
lost

made up.
The

;\

•

puzzling

to

whether

the

stock

some

start

the

at

in

the

been

people \ is
decline -in

.

severe

values

situation

has

that

question

Far

the

of

foresee

how

long

and

decline

in

In
Law"

July

1

v/
-

became

in

0

-.

Merrill Lynch

on

f;

Coast

1

Mass.

—

John.:

J Curtis, .' 24

&

'

Street.

<

recently

.

Great

be
in,listed

officer!;

Federal

"...

Taking all these facts and fig¬

a

Prior thereto he

Jackson-&

in New

was

York, where he
with

Tweedy,

an

was asso¬

Browne

&

!

Reilly and J. G. White & Co.

with

Curtis and Otis & Co.

j iTwo With Merrill Lynch '
Joins F. I. du Pont Staff

J

(Special to The Financial Chronicle)

1

CHICAGO, 111.

(Special to The Financial Cii o.vicle;.

BOSTON,

with

Import

F.

Mass.—William -<F;

..Devonshire Street,

cis

1.

La

Salle.Street.

du

Pont & Co.,

'(Special to The Financial Chronicle)

,

-

INDIANAPOLIS,

t-

Ind.—Charles

W. Jackson and( Joseph Gas tinea u

Ira J. Kauf¬

—

have

has joined the staff of Fran¬

man.

and

..

Goode is with R. W. Pressprich &

Preferred and Common stocks.

Export

ciated

With R. W. Pressprich
,

Lakes

Corporation, of which he was

New

will

$1 billion
released for investment

jPaul A. Ludlam With

-

H. Jones & Co.

1946

with Paine,. Webber,

is

Lawrence

York State which means that ap¬

proximately

T.

the

from

BOSTON,

Z.

Jackson

effective

John W. Reeve Joins

lasting

(Special to The Financial. Chronicle)

;

,;

Man

the""Prudent

a

Joins Paine, :} Webber

war

Trust shares.

many

difficult to

y. ;V- ;■'

Investment
than" $3,500,000,000 to the value Trust buying has increased enor¬
of listed stocks. At the start of mously due to the large increase
the war in Korea the market de¬ in the purchasing of Investment
last,

consideration

it ::Ts

concerned, it might be noted that
since.' the

into

occurred

writer
'

...

people believe

market,. such as t ...-(Special to The Financial Chbonicle;
\ | PORTLAND, Oreg. - Paul ^
to the early v
CLEVELAND, Ohio — John W. Ludlam is associated with the
part of 1949, could take place at Reeve has become associated with Portland office of Merrill
Lynch,
least at the present time even in T/H.'Jones &
Co., Union Com¬ Pierce, Fenner & Beane, Wilcort
face of war scares that may, from
merce
Building, members of the Building.
Mr. Ludlam was for¬
time to time, have a temporary Midwest
Stock
Exchange.
Mr.
merly in the investment business
effects
." "•'« "<* 'r
Reeve
has
been

...

..

13

(349)

been

Merrill

208 South

J Beane,

added

to the

staff

of

Lynch, Pierce, Fenner &

Circle Tower.

-

after

East,

constantly rising mar¬
practically no setback of
just a technical'

year of a

a

ket-with

F U

THE

T

U

OLD

H

E

R

G

S

R E A T

PROM I

S E

consequence, was
correction

fear-of

or-a

with

war

Russia, in all events the situation
in

Fat

the

East

the

gave-

bears

•a"

splendid opportunity to bite off
siMr.e •of the huge .proiits;the bulls
have been

piling

market started

;

since the bull

up

June 14, ,194$.

on

believed in some quarters

.

that

it

that

the

was

a

coincidence

only

the

situt

raid

bear

and

atiory ift the Far East
time

'same

that

and

at the

came

the Far

had

|East situation not arisen the
ket

due for

was

correction

lieve

bound

are

we

be^-

Others

anyway.

that

have

to

restrictions

wartime

'.severe

mar¬

large technical

a

gether with larger income
and

profit taxes.

excess

other

The

however

the

of

side

be

cannot

picture,

ignored.

President Truman's

request for

billion additional for defense

$10

that

means

firms

manufacturing
be taking

many

will

eventually

additional contracts. The

on

roads

far

than many of the

base

prosperous im.ustiiaiS.
of the poor earnings of

railroads

capitalization,
would

them

not

few

past

high
profit

relative

an

excess

fall

so

heaviiy on

it would on corpoi ations

as

with-

the

over

their

and

years

tax

ex¬

and

view

the

is

that they will have a

better tax

large

it

and

tonnage

greyer

rail¬

expected to carry a iar

are

pected

In

to¬

taxes

capitalization

small

large net earnings.
business statistics

and

most en¬

are

and it is generally be¬
lieved that they appear to be set
toJ continue,
not
only
through

couraging

1950, but to exceed any year since
of the last war.

the end

J

Board's

Reserve

Federal

The

quarter just closed
peacetime peak for
industrial
output
during
tt.is
quarter.
New
orders for non¬
durable goods and capital goods
have also reacbea capacity level.
This is the condition, therefore,

Index for the
show

new

a

the

at

start

situation

the

of

in

THE

the Far East.

week's

Last

business

is

also

a

PRICELESS ASSET

figures. Plants t at

series of hign
r

closed

been

have

are

now

re¬

opening. Employment is also ris¬
ing
out

and at the present time one
six men are now em-,

ployed.
I

It takes many

of every

It

„

you

that

overlooked

be

cannot

providing
arms,
ships, tanks etc. for our
own forces, Will largely manufac-

this

'trure

country,

war

beside

•'''

Indications

of

Reo Motors

began

received

an

when

for the

$24,000,000.

army

The

to cost some

other

day

the

also
received a large order for tanks
which it is stated will not inter¬
fere
with
their
production
of

Cadillac Motor Car Company

automobiles.

.

National

Purchasing

.general
and

pay

Association

Agents
are

far

as

the

report

at

stock



\

across

the country.

These

important.

are

>

It is

not

something

possibly do the job without the skill, loyalty
and courtesy

of telephone

.

men

and

women.

That is the vital human force that puts

of

this

marvelous

into

all

ment

and makes it work

life

telephone equip¬

smoothly and efficiently

new

that has

the

years.

It is

holds such

one

of telephone^ service cfor

market

is

sud¬

V'\
i f

of the

reasons

,

many

why the future

promise.

Telephone people, from top to bottom,
trained and
new

ready

as never

before

wonders of research and

into better service for

more

BELL: TELEPHONE

to

new

and

that

year's

come

denly into the business but # recognized anddistinctive part

But they could not

5

employment

production
rolls

buildings and almost endless miles*

of wires and cables

System.

"

of

.highest levels.
As

hoards and

telephone instruments and switch-*

order for

delivery of about 3,90U

immediate

The

are

people. That is the priceless

of the Bell

stepped-up

this

recently

'program

trucks

There

.

asset

good telephone service at low cost.

material for our foreign

allies.

for millions of

things, all put together, to give

SYSTEM

are

transform

equipment

more

people.

i

-J

j

14

(350)

The Commercial and Financial Chronicle

a

Group Securities Fund
in

Lies Low

By ROBERT R. RICH

Sales

|

your

request

from

investment dealer. or from

acceptance of mutual fund shares,
first

NATIONAL
RESEARCH

!

SECURITIES

&

half

funds

CORPORATION

of

1950

managed

curities

and

by

$14.390,000—an
the

over

for

the

National

Se¬

Research

tion, New York,

120 BROADWAY, NEW YORK 5, N. Y.

sales

like

Distributors

higher

reported at

were

increase

of

and

1949

history of the. company, ac¬
cording to Henry J. Simbnsdn,'Jr\,
tional"

funds

in

were

Net assets of the

of

excess

Public

$65

inclined

appears

by

in

Series,

the

"National"

common

Total

or

PHILADELPHIA

net

Management

2, PA..

of

Fund

on

$10,539,285

were

$10,234,712
value

the

investors

share

during

the

Wellington Fund Shows

Diversified

Wellington Fund today reported
$126,179,842 on June
30, 1950, for an increase of $50,375,025 over the same date
a

Investment

ago, largest growth
months in its history.

year

12

Fund

Net

assets

the

at

New

$17.80

York

a

share

descriptive

material available from
investment

dealer,

or

your

of

the

local

Wall

Company

LOS

$16.23

or

or

and

tion,

machinery,

railroad

and

dustries

ANCELES

and

in

added

to

its

to

207.73.

in¬

bett

t

of

Selling

e

mutual

funds

take

home

for

an

evening's

various

illustrates

sell

has

himself.

been

where

he

Once

aroused

will

-

mutual

funds

vehicle

than

vince

are

let

a

his

his
the

to

read

booklet, it seems that he can
readily
convince
himself

INVESTMENT FUNDS

and
very

psychology of letting the

interest

point

ex¬

funds

numerous

plans,

customer

Certificates of Participation in

the

that

salesman

him.

con¬

i

400,000 Women

(Series B1-B2-B3-B4)

Are
Paul

be obtained from

Going to Listen

Bartholet

of

the

Fund

Institute

said

women's

clubs

listed

for

this
who

the

program

fall.

Street

Boston 9, ^Massachusetts




Increase

Fla.—Wel¬

PETERSBURG,

lington

Getchell

C.

Waddell

&

is
Inc.,

Reed,

now

increased

Fund

re¬

117,718.54

on

This

assets

LEXINGTON

compares

of

$11,180,-

TRUST FUND

unit on 112,204.29
outstanding.

per

then

and

of

Fund

dividend

July 20,

back

3card

Stock

payable
holders

Prospectus

of
cn

Directors

has

declared

seventeen

cn

record

H.

K.

as

the

quarterly
p:r

sb?.''s

Fund's

1950, to share¬
of Ju'y 31, 1950.

BRADFORD,

Office

President

Principal Underwriter and

common

from

Investors

a

August 21,

Investment

its

c!

cents

be

may

from

obtained

York

New

from

or

to

up

55%

IRA HAUPT

Manager

Members New

investors diversified services

to

Established 1894

assets.

as

Investors

New

Syndicate

and

York

York

other

CO*

&

Stock

Curb

Exchange

Exchange

principal

exchanges

Minneapolis, Minnesota

derived

were

from

government

Fund

substantial

stock

111

cash

\

Broadway, New York 6, N. Y.

bonds,

Affiliated

trustees

reductions

holdings

in

31, 1950 to 67.5%

The

proceeds

{

used

.

Prospectus

lord

June

on

were

Fund, Inc.

in

the

upon request

abbett&co.

Investment Managers

to

investment
which

that

have

educa¬

will

listen to the

en¬

begin
women

lectures

is

400,000.

stocks, and, since these de¬
steps happened to have
prior to the Korean
news, they had the effect of less¬
ening the impact of the market
fensive

Lord, Abbett & Co

been

New York

courses

is expected

going

for

to

two

keep the
or

three

years.

Public

taken

the Fund's total assets.

on

This

was

the

trenchment
gram,

trustees'

since

initiated

a

first

similar

late" in

assets

increased

30,

holdings of

long-term investment

Atlanta

Los Angeles

—

,

1946,

bonds

Common stocks

not bought back in sizable
quantities 'until late in 1947.

were

It

is

trustees

understood
do

not

ently the need for
trenchment
1945-46.

so

that

as

that

anticipate
drastic

the
pres¬
a

effected

However, this is

a

re¬

in,

com¬

pletely managed Fund and chang¬
ing conditions may force them to
change their present plans in the
interests

Per-share
June

30

was

the $15.33

of

net

shareholders.
asset

value

$16.09—up 5%

net asset value

on

of

view is

A

Diversified Investment Company

Prospectus

may

be obtained from

investment dealer
on

200

from

or

your

local

The Parker Corporation,

Berkeley St., Boston 16, Mass.

Dec.

31,1949, and at the close of busi¬

understanding

—-

cut

of

by June

Chicago

pro¬

1945,

stocks back to about 53 %

total

—

re¬

common

best

The momentum which has been
up

holdings of cash, shortgovernment bonds and pre¬

break

with

of Kansas

FUND, INC.

ferred

•

today

The number of

will

built

(Special to The Financial Chronicle)

Mutual

estimated at between 250,000 and

Tke Keystone Company
of Boston

railroads

and

1.80%.

INVESTORS STOCK

Holdings

and

and

and cash to 38%.

5,000
tion

50 Con gress

30.

and

(Series S1-S2-S3-S4)

30

197.46

common

more

investment

-IN

COMMON STOCKS

June

England

made
.

term

Keystone's 40-page booklet,

well the

may

he

6.93%

stocks

ance

increase

plaining its

unds

equity portion, public
equities were 16.22% of
the total Fund; industrials were
23.32%; bank, finance and insur¬

June 30 of last year, equal

funds

March

which

the

In

The Fund is operated as part of

his

mula

Investing"

stocks.

England Reduced

New

•

obliga¬

other bonds,

in

preferred

about

invest

to

first few weeks of the June quar¬
ter—from 73.7% of total assets on

Plan

30.41%

and

is

the prospect if the latter is
given
a
booklet like Keystone's "For¬
can

Custodian

Prospectus

and

and

the

ness

July 19, 1950, net asset value

one

was

$15.96.

yy1
Z—.
T «

in

19.73%

Government

S.

which decreased from 25% to 19%
of net assets.

be

can

was

receivables,

U.

utility

Commons Before Break

reading.

(Series K1-K2)

on

the whole booklet.

net

hand

on

Selling

much easier for the salesman

PREFERRED STOCKS

a

During that time the Nes¬

Funds

invest¬

Fund

manage¬

mutual

investments

62%

the

to Aid

BONDS

sell

Fund

stock

motion picture,
equipment in¬

rail

tions
loans

portion,

protective
total

of $12,425,1950, equal to

30,

net

$99.64

1950, the Dow, Jones Industrial
closing
averages
declined
from

New

„

who

read

208.35

in

the
the

With Waddell & Reed

Life

unit

per

total

The

In the halfwere

of

and

entrust

worry

Common

Keystone Booklet

investing their capital

what

Between

30,

Of

1.57%
cash

Nesbett Increases

bank, chemical, in¬
surance, oil, telephone and elec¬
tric utility industries.

:yston

102

the

answer

should

in

$17.91

June

on

rities.

Dividend Notice

1949, and

period, stockholders

ments

K,

to

now

savings to the Fund's

should

formed, the Fund decreased its
holdings in the automobile, avia¬

Street, New York 5

micaco

$105,441,702

the first half of 1950.

INCORPOHATED

48

"Is

Putnam's
investor

People

Securities profits of $2,222,414 were realized by the Fund in

from

and

with

booklet,

answer

secu¬

annum

Life

outstanding units.

money.

1949.

year

Hugh W. Long

the

question,

with

protective-type

was

invest?"

the

when

for any

close

the close of

at

$75,804,816
other

its

ment, and let them

report,
equalled
share, and compared with

net asests of
a

and

in

June

on

$105.55

semi-annual

of

Stocks, Inc.

Prospectus

salesmen

Briefly,

half-year, according to the Fund's
A Series

Fund,

in

represented

assets

48.27%,

equities

City, Mo.

units

his

per

for

30, 1950, the portion

Fund's

the

51.73%

date.

Massachusetts

gives

that

net assets of

6.7%

Fund

medium

trusts.

As of June

by

Insurance

ports total net assets

to

time to

of

same

Assets

"The Investor's Hour of Decision"

prospect's

12-Month Record

yield
the

Massachusetts

months.

Putnam

1929

individ¬

The

trustee.

as

investment

the

ST.

Worrisome Question

six

is

Life

Hospital

such

of

provides

plan

for each

trusts

Company

"special situations."

Putnam Fund Answers

from $14.57 to $14.98.

rose

12

setts

Fidelity notes that it invests in

field."

last

the

erage

since

708

30

June

appreciation of 150%
high, and an av¬

capital

since

Bond
Fund, both of which, at
present prices, earned about 4Vz%

comparing with
31, 1949.
Asset

Dec.

per

months

Inquire about=

assets

of

Distributor's is sponsoring Rail¬
road
Bond
Shares and
General

Investors Fund Assets Rise

investment dealef

Associates,

Investment

The

trust.

investor, with the Massachu¬

ual

was

Inc., sponsored by Gammack &
Co,, claims no other mutual fund
can match its performance record

especially if he selects those

railroad

above-average income.
"prospectus from

Fidelity

on

Outstanding in this respect is the

Stock

fund of dividend paying
stocks
selected
for

a

charge

bonds
which
may
anticipate a
higher gross income before taxes.

fact

that about 54% of the above sales
were

prior

a

"up¬

Performance Record

computed.

are

come,

from

the

course,

the

on

Fidelity Claims Super

broad

a

E-istributor's states "the investor
will add to the security, of his in¬

maxi¬

income

evidenced

as

of

taxes

preference

toward

available

mum

stocks

is,

potential

big

side," Group Securities thinks its
fund represents real value today.

laxes

excess

earnings, payable before Federal

30, 1950
million.

investment

and

list of bonds, the interest of which

"Na¬

of June

as

corporate

decline of

invest¬

trust fund and a mutual

separate

Because of its hign velocity

10%.

probably

least part of his funds in

the

President.

ordinary

possible

the

on

break, the of¬

1950,

Dow, Jones Industrial

profits taxes,
Distributors Group states that the
farsighted investor will place at

143%

period and the
largest first half sales in

second

your

Fund, notes
participate in
from

of investment pro¬

type

combining the principles of

ment

recovery'

fering price of the Fund declined
only 9.4%
compared
with the

Views

Commenting

18,

23—July

Higher Taxes

Corpora¬

Jones

"Dow,

on

June, 1949, to June, 1950.
Consequently, during the June

primary objectives.

Mr. Bartholet said that 7,500 pro¬
gram kits have been ordered.

Up 113%

Indicative of the growing public-

i

the

of the course's

National Securities Funds
upon

reporting

Stock

that it did not fully

msmm'

Prospectus

Group Securities,
its Low Priced

Thursday, July 27, 1950

.

novel

gram
a

Mutual Funds

NATIONAL

Break

.

.

WEN T Y- Ff FT H

A N N TV £ R S A R

Y

YEA*

lX

Volume 172

Number 4928

.

The Commercial and Financial Chronicle

..

Roosevelt,

Who Is to Blame for
Boom and Bust?

It the

By SAMUEL B. PETTENGILL*

economic

our

do with boom and bust than

more to

of

business.

losses

rather have

with

than

least

business
These

fairly stable markets
famine.

and

and

tucts

also

So

professional
point

men.

the great
importance of the question—''Who
is

to

up

biame for boom

Despite

the

of

our

to

produce

capacity

proved

private

bust?"

and

property

beyond

system

other
system the world has ever known,
the Big Government boys charge
that our system leads inevitably
any

tries

to

property

make

have

do

the

System

profits

taking place? The people de¬

it

to

do

American

duce

full

at

buying, prices

will

speed

in

to

a

are

pro¬

falling

market, labor is laid off or put
short hours; business buying
slowed

v

thinned out in order to

cheaper

tomorrow.

loans made

on

on

is

and "* inventories

down

buy still

Banks

„

must

or

call"

1

ing

tne

last

roreign

ns

two

to

a

fluential

and

for
per

their

and
tuose wno
snoula spin mooa on

business

reasons,

bo

at

of bust—the destruction

cause

Vtaiui

anct

lives

in

ox

dom

Thisfacvhowever,

ia sel¬

look at the long de¬

us

men

insist

that

United

explained.

Now let

goods that are los¬

These

No count in the

system such as concentration
of wealthr exploitation of workers,
waste of natural resources.

or

We are

system

constantly told that

collapse; that
the

withstand

cannot

end

of

our

Government

the

control.

responsibility

bust

is

better

statement

theme
ences

boom

have

and

bust than

and

the

itself.

with

excesses

In short, that

political interfer¬

more

Socialism

—

do

to

more

but aggravate

will not

—

cure

the disease.

Every working
his

and
that

that

of the system

ences

boom

understood

come
true.
My
political interfer¬
with the workings of a free

market

more

for

Unless

may

is

to
choose his job;
farmer who values his right

to enrich his fields with his

sweat;

businessman who values the
opportunities our system gives him

every

must understand the pros

and cons

of this problem.

Against the testing time of cold
smokestacks, closed banks, empty
stores, and bread lines "knee deep
in

wheat,"

with

Christian

or

low

businessman

every

trace of either self interest

a

smooth

out

for

concern

do

must

man,

fel¬

his

he

all

to

can

the peaks and valleys

of the economic cycle.

And much

be done than is

more can

ing done to stabilize

now

be¬

our economy.

During
the
193G's
business
poured far more money from its
reserves

stream

into

economic

the

nation

the

of

Hopkins

relief

and

recovery

Ickes
It did

with WPA and PWA.
for

blood

than Harry

Harold

and

did
more

than the

Government humanitarians. Busi¬
ness

has

done

but it will ride the boom

oi

a

fair job.

But in

The Job to Stabilize Jobs

red

to

brigade, it must do more.
So far

provements; avoid fixed charges;
fight to keep taxes low; cease
acting as banker for its customers;
avoid
sloppy
cost
accounting
which accounts for
ness

a

third of busi¬

failures.

aside

Leaving

the human

fol¬

«

to

was

Europe
both

South

and

done

ana

en¬

States

by government as it is
A deiective money and

withstand

to

the pressures of the millions who

object to higher taxes
interest
rates to put
down

booms

on

or

prices or
the clamp

or

to

being

as¬

signed to distant public works in
periods of approaching bust, they
say "with us in command there
will be

no

more

boom

General

cess

Staff

bust." If

or

of

National
a

foreign

they have fortunate ac¬
gold-

to American treasure to

their

leaf

chariots

and

ride

tri¬

Europe into stopping the

must keep our own

business

Otner

will

inflexible

Western

today.

interests

were

as

of
purchasing
strongly opposed. Tne final deci¬
from the veins of a too
sion to raise tariff walls was made
optimistic
people.
Then,
when
by the government—the same kind
their unfailing nostrils smell from
oi government that is now adver¬
afar
the
stale odor
of an ap¬
tised as infallible in foreseeing tne
proaching decline, they will re¬
future.
verse all gears; reduce taxes, ex¬
The depression in 1937 was the
pand public spending; incur def¬
sharpest in history and was almost
icits; buy back Government bonds
entirely a political depression. The
from the banks with printing press
eifort to pack the Supreme Court,
money;
return the vibrant red
initiated in February of that year,
corpuscles of purchasing power to
shook confidence in Constitutional
the people's arteries, and engage
safeguards to their foundations.
in military conscription or colos¬
The sit-down strikes, condoned if
sal
perfectly
public works, all
not encouraged by governors and
blueprinted in advance, to provide
the
Secretary of Labor, raised
jobs for the jobless.
grave questions as to the security
With such omniscient wisdom, of
private property all over Amer¬
fortified
by a splendid courage ica.
and

or

Communists.

the

corpuscles

infiltration extend our influby appeasing, compromising
scaring
Southern
Asia
and

by

fence

couraged

power

country,

possible, business must
build up reserves; use periods of
recession to make repairs and im¬
as

off

drain

Business is in control of

Government

dollars

banKiiig system contributed. But
charge made by the
this ,was chiefly the failure of
Big Government boys. So, to cure
government, state and Federal,
the situation they
demand that
widen i.ecessariiy must reguiate
they be given the job to stabilize
this function. The policing oi com¬
jobs for everybody. They say they
petition—the very heart of our
will clamp down on a rising boom,
free enterprise system—is neces¬
which is always a very unpopular
sarily entrusted to
government
thing to do; they will increase
under our anti-trust laws,
if tne
taxes on prosperity despite the re¬
policeman slept at his post, it was
luctance of Congress and taxpay¬
tne lault of the policeman.
Tne
ers; they will raise interest rates
excessively hign tariffs preceding
to kill off borrowing; raise prices
19z9, were, of course, lobbied for
to kill off buying; and sell Gov¬
by some business interests.
But
ernment

the

Big

generated in government cir¬
unsound lending of billions

This is the

attack

the

cles,

America

the face of the terrific propaganda

by

long

as

it has customers.

as

bonds

who values

man

freedom

every

was

second 1929 means

a

our

value,

thinks the boom is getting out of
hand. No. It may grow cautious,

another

private property
system and the substitution of to¬

tal

ing

The
Board

National

Labor

Relations

packed with men—-such

was

Smith, Madden and Smith, who
were violently pro-labor. They al¬
most obliterated the right of free
as

speech
pages

by employers from the
of the Constitution.
They

condoned

violence,' and

that

criminals

even

instated

with back

vestigations
Committee
hostile to

by

were

insisted

must
pay.

the

T.

be

almost uniformly

business.

Added

this

to

we

people happy

by providing full employment.
At

first

thought

this

The steel in¬

hot war

cold

will be1

war

there either

until

or peace

unemployment

a

cowardly position for

us to take,
but it is believed that Russia also

is anxious to prevent war and is
willing to compromise to keep the

For

the

only

by
adopting

is

a

after which mass
be prevented,

can

a

S.

U.

more or less

"The market may have one more
big whirl upward, but I fear thai
large investors are becoming 'Bkt*

sheep being led to the slaughter',
through destruction of property,;
or high taxes or inflation."
In the meantime, the U. S. willrequire vast sums: (1) For defense> and especially for the rem0Val of basic industries from our

(2)
For subsidizing;
purchasing power toprevent
unemployment
in
the!
U. S.; (3) To bribe Europe and,
other nations to keep out cornmunism and
(4)
To help out
domestic
manufacturers
facing
destructive
foreign
competition
due to the absolute necessity of
cities;

big

seems

consumers'

instance, the United
get out of Korea,
while Russia might get out of
Berlin and East Germany.
A di- reducing tariffs,
vided Korea or Germany would
'
peace.

States

might

■

.

always

be

Russia

stocks to Avoid: Those of corn-

the

panies with most of their assets in

States; but the thought of

big cities; those having a high
proportion of labor expense and
thus very subject to labor pressure; and those which will suffer
froni foreign competition and imp0rted goods,

by

armies if

Europe,

can

be

looking

be

soon

may

face-saving

a

which

as

artillery
against
her
they attempt to overrun
makes
Stalin
hesitate.

sides

Both
lor

much

as

H-Bombs

new

used

suffer

not

bombing

United

Suggestions to Investors

war.

from

would

atomic
the

tinder box for

a

way

out.

to

Stocks

Those of

Buy:

com-

Panies which will profit from the

More Inflation Inevitable

great building dispersion and deThe high level of U. S. produclion should continue as long as
the

cold "war
to

comes
war

this

by peace, then will be the

or

time

When

lasts.

end, either by a hot

an

for

economic

an

Even then

automobile

the

thrown

out

and

the

at

on

to buy

10-year payments

low

a

are

New

that the government

loan people money

automobiles

Even

companies

work,

of

York guess is
would

inrWrips

stocks

of

the

cities.

biff

chain

stores;:

public utilities-

u citifis

,

{ the

Centraf

NEW

ing, "Why is not the government

37

the

But, although the effects of Newton's Law of Action and Reaction

be postponed, the law cannot

\

Reginald Graham
!
Opens in New Haven j

interest!

of

rate

West and South.

e.

may

the

especially the

nies
and

Congressmen are ask-

now

of

nut

industnes out ol tne Dig cities,
stocks of merchandizing compa-

be postponed

Assuming people then stopped
buying autos and the employees
of

centralization program in moving

period of unemployfurther.

a

ment could

crash.

re¬

The in¬
N. E. C.

)
*<

%_T

Russia Does Not Need War
To repeat: The

continued

and a vicious spiral pression oegiriiiing in iaza. iviany
iactors contributed to it. One was
Roger W. Babson
indictment against the American downward gets under way. Oh the
the long aftermath of war's red
side,
management
can
system attracts a larger or more boom
.harvest, here and abroad.
Then would result in destroying some of
receptive audience. There is more scarcely be expected to curtail
tnere was the synthetic optimism the larger cities of both nations
dynamite in this charge tnan in production in its own plant and
mat we were an a new and per¬
and millions of innocent people. To
the other charges made against lose sales to its competitors on a
manent plateau of prosperity. Tnis prevent this we must gradually
our
rising market simply because it

to boom and bust.

„

Government
socialistic,
n o r
Russia program.
Hence, Stalin figures
can
afford
a
that if he is patient he is bound
World
War to
reach
his goal in the end;
III at the pres- namely, the spread of communism'
ent
time.
It
throughout the world.
As one
certainly New York banker expressed it.

be cnargea to our private property
system.

by the government.

„

mo-

neither the

war—cannoc

creased

opinions

the

ment.

greatest

tne

:l

crease.

unani-

rhous

loreign fields aia so lor otner tnan

of

review

a

against

war,

we

a

1

enlarg¬

were

will result in

war

World peace ultimately! i
requires ''free trade."
Further-),
more, the government will some-4:
Well - informed day
not be collecting in pari
people whose payment so much as it does now J
names readers
When
that
happens
mortgaged
would recog- and other debts of individual^
nize.
This is will have to be extended and in-i

iio

wars

as

Eig'my

iraue.

businessmen

oi

is

of

Know

cold

not

oe

can

But war

war.

pusiuess reasons, sucn

purchases. tiiougnt

continue

it

tnat

or

in peace,

there will he mass unemployment, which
can he prevented only
by adopting some sort of a socialistic
program.
Makes recommendations of "stocks to avoid" and
"stocks to buy."
war

industry that lobbied to

into

get

peopie curtail
one

and

answer

piain

decision.

poiitiCcti

going

restimulate

tne

so

follow

ways

cent

no

■"

.

Contends whether

evitable.

hot

by moonngnt. f irst: tne big¬
Every two months, at least, I
gest booms always tane piace in "come to New York to check over
time.oi. war; tne oiggest Dusts al¬ ■the outlook with a few very in-

swings of the economic
When for any reason,

rectuced to

Babson, though stating unanimous opinion-of informed
people at present is that neither U. S. nor Russia can afford
World War 111, says if such war comes, more inflation is in¬

reau

pendulum.

As

.

We have

avoid

something

By ROGER W. BABSON

Mr.

to tnis question,

answer

an

write

that

and

World War III

Wars and Depressions

The sheer mechanics of

private

a

than wage rates, hours or
working
conditions.
Farmers would
also

for

how

home.''

Mr. Pettengill condemns price fixing
and other controls as
producing rigidities that prevent day by
day readjustments of demand and supply. Cites free market'
operation of oil industry as»case of gradual adjustment in
supply and demand through price mechanism. Concludes gov¬
ernment operating in red cannot forever
keep business in black.
security is rated more
highly by our millions of workers

the

biame

from

system,

Job

answer

to

'iney want to teel secure in tneir
joua. 'iney will support tne sys¬
tem
txiat
gives
mem
tne
best
or
continuous
"taAe
promise

free

a

excesses

hot
is

politicians can't prevent it,
can
any one prevent bust

mand

Contending political interferences with workings of
market have

does
Who

question:

boom and bust? What causes bust?

Former Congressman from Indiana

15

(351)

Conn.—Reginald!

HAVEN,

has opened

Graham
sherman

securities

Court

to

business.

offices
engage

Mr.

at]
ir*

Gra-

ham has recently been with A.
Kidder

prior

&

Co.

thereto

in

he

Fla.p

Deland,
conducted

sbomedayaled' Tr°Ub,e * """"h18

his;!

Norlftf

dustry was condemned for "overown investment business in
umphantly to reelection to the
expanding," as it has been re¬
seats of power. Thus, like filling
i asked, if under these condi- Haven> Conn,
.
cently threatened with the com¬
or
emptying a pitcher of water,
tions the automobile companies
J
petition of government steel mills
they would pour in or tax out
would be allowed to make money Securities Management
because it is charged with not ex¬
"purchasing power" from the eco¬
for their stockholders?
To this
panding enough. The tax on un¬
Corp. Formed in Dallas; .
nomic blood stream in just the
distributed profits took from busi¬ my friends answered, "Yes, be¬
right amount, at just the right ness
cause the taxes which the Federal
DALLAS, Tex.—Securities ManHj
managers the right to judge
speed, and in the v£ry nick of
Government collects are dependwhat to do with their earnings.
agemept
Corporation has been"
time.
ent
uoon
these auto companies ,b
*
From the White House in early
owa
m
forvf
on
formed with offices in the Kirby?
To this, it is a short answer to
and,
in
fact,
all
other
companies
1937 came the edict that prices
paying dividends."
Of course, Building. President of the ne\*£
say that it is not possible "to find
were
too
'

...

that

lies

infect

every

system,

it

must be admitted that on the point
of

boom

case

can

terprise
*An

and

bust

a

prima

facie

be made against free en¬
as

a

system

address

for

by Mr. Pettengill
the Chicago Oil Men's Club.




doing
before

high—particularly

master minds so

unselfish,

so

will¬

ing to decide unhesitatingly against
their own personal (or political)
interests, men almost god-like in
their

the

ability"—.

great

But this, on

authority

of

cop¬

such

per.

So
was

war

lated business to be

done, and de-

even

President

a

"stop-gap"

quires continued
despite the fact that there
borrowing
and
a
huge backlog of accumu¬
Continued

on

page

33

or

no

be all the

import

war.

more

re- organization is Charles L.
Moruzzij
taxes, more Mr Moruzzi was formerly an iri-^
more
inflation, ,ivijiml
noiiQC anH nrirt/

program

"high

Such

will

necessary

duties will

then

because

gradually de-

dividual dealer in Dallas and prior
thereto was President of Texas^
Arkansas Fund, Inc.

16

(352)

,The Commercial and Financial Chronicle

Denies
W.

holder,

National President, regarding commercial and cor¬
Will you please comply with his request and
immediately, the names of corporate officers that may be
contacted..
Surely this entails very little work on your part but

Shortage of Textiles

Ray Bell, President of the Association of Textile Merchants
York, says complaints of scarcity are unjustified. Holds
cotton cloth producers can meet any critical situation.

of New

our.

value

decline.

much to both

mean

affiliate.

.

our

National Association and

Reasonable

that

cur¬

increase, induces speculative fac¬

shortages will

tors, a..d involves deep uncertain-

assurance

prove groundless, and that com¬
plaints of scarcity except where

speculation
involved

have

lies

is

will

"little

have

been

pull,

he

of

strong.

the

For

reflects

wisdom

the

of

ply " he continued, "is still an
enigma" to be determined "by the

The

Asso¬

Textile

Merchants

uiu

25

ia

of

July
public

on

a

statement.
Production

be

of cotton cloth
at

near

question of military

The

sup¬

met

The

review

annual

of

textile statistics reported

ca¬

already

amounting to 9,391,573,000 square
yards or the lowest for any year

as¬

sured for the balance of this year,

textiles

cotton

Sept. 26

for

A

ond

panded <and

by

postwar peaks in

new

cotton

prices
government's
Reporting

raw

occasioned by the
low
acreage
esti¬
in

textile

cotton

the

annual

survey

of

Mr.

continued

over

tivity

suggesting an
in production

18%

a.m- -Past

9:30

a.m.-

period. The amount of goods made

already

since

taking

up the slack
by diminished cloth

which probably

ports,
exceed

yards

one-half

for all

would

billion

1950.

oc¬
ex¬

He

not

square

cited

the

for'

1949

registered

1938

The

of

Jan.

five

1

to

months of 1950 have exceeded the

decline

full year 1949, but held that these
would not affect mill operations
for the remainder of this year.

curred.

Most

immediate

and

difficult

problem of the industry, he said,
is

the

bull

recent

market

in

raw

cotton which presents the
industry
with a major raw material cjst

square

Beach

at

7:00 p.m- -Dinner at Beach

for

of

It

1, 1950,

240,000

spindles

noted that

was

no

oc¬

since the war. Partly
offsetting the spindleage decrease,
during

lion

however, were 858,623 new spin¬
installed, constituting a new

record in Association data

on

new

eouipment. going back to 1925.

Security

Traders

the

at

hold

its

York

New

work
and

Club

beer and prizes.
of

Notes

Men ill

of

ning to attend
vations

as

possible.

is

Fee

including gratuities.

C.O'Brien Murphy III

George Putnam, Chairman of the George Putnam Fund of
Boston, writes President Truman if U. S. support price of metal
is

dent

Truman,

just

dated

to

May

Presi¬

19

and

public, George
Putnam,
Chairman

of

the

of

Board

Trustees
the

A.

the

Darfler

Charles

G*®n.ls a fo™"ier President
.Vice-Chairman of
,r.

done

of

gross

fidence

that

he

can

than

any

have

not heard ot

produce

other affiliate.

»experience

with

as

our

That's

a

new

has

He

much

may
con¬

percentagewise,
large statement but to date I

Chairman

our Louisville
Club has had
Committee before and he is bound to do a

of

Convention

Issue

of

.How about it lellows?

You

should be represented in our
the "Commercial and Financial
Chronicle."

undoubtedly .have




received

letter

from

Frank

Burk-

no

doing

number of

foreign
means

two

George Putnam

of

keeping down
international

The

full

text

value.

of

Mr.

Putnam's

I

admired

raising the

has

vertible

become

silver

of

case

years,

and

com¬

accustomed

now

none

policy
of the

longer;
therefore,
nothing but an inter¬

commodity and

much the stand

of

gold.

sense

to

against
I

feel

up,

rebury
It

U.

is

S.

one

that

pay- someone

only to turn around
it in Kentucky.

probably true
price

support

that
were

to

conclude

hands

any

to

action

price

support

our

To

make

have

tional
a

protest

that

with clean

that

might take towards withdraw¬

to

oil

their
worse,

taken

put

American

for

matters

recently

steps

most

interna¬

our

companies at

great competitive disadvantage.

those

ish

area

oil

from

companies

which

a

oil

British

buy their

to

British-Dutch

or

so
long as they have
oil for sale. Only when that
given out, can they buy

has

from
A

American-owned companies.

proceeding such

entitle

from

them

that

Now

another
has

to

sympathy

gold has become just
and one that

few

American
maintain

price

any

commodity

very

the

this cannot

as

to

side of the Atlantic.

our

uses,

why

taxpayer

should

be

asked

artificially

an

it?

for

To

enable

high
other

countries to try various social ex¬

periments

and

our

to

fellow

hardly sufficient
Could

ation
would
way

leave

not you

by

discriminate

citizens

to

seem

reasons.

remedy the situ¬

executive

an

seem

me

that

edict?
the

It

best

would be to do this first and
any

talking that had to be

done about it

until afterwards.

Sincerely

and

yours,

GEORGE PUTNAM

if the
to

obliged

are

companies
any

against

same

much money, i

so

forced

come

high price in South Africa to dig
it

money,

to

any

make

to

President:

price

the

Why not apply the
to gold?
After all,

national

very

in

country has

has very few uses. It hardly seems

House

Mr.

gold

on

prices for the metal.

gold is

Washington 25, D. C.
dear

bid

world's major currencies are con¬

letter follows:

My

a

merce

produced gol.i

you took some months ago
a

maintain

to

that is mined outside the U. S. A.

for

White

industries that

but

been

President

many

of

discon¬

The

Tuocy has

an¬

step forward on the subject
gold.
What seems to me the

bid price of
$35-an-ounee

a

take

to

the $35-an-ounce price of gold for
all that is produced domestically,

The

he will receive from his
popular and most lovable former National
President, the original Senator Tom Graham. The State of Ken-

time

other

that

associate,

ever

appropriate

Boston,

fiood job with the promised assistance
our

so.

This is just what this

its

of

an

United

for

oppor¬

purpose

tinue its fixed

as

lineage,

acceptance of his challenge.

any

Charley King,

more

contracts.

Blizzard

you

this

sensible thing to do is to continue

States

Chicago affiliate and a
our National
Advertising Committee.
He has
splendid work before on the
Advertising Committee, placing

Chicago as one of the first three in
lead Philadelphia
though Herb

„

King

our

again

I

C.

take

Fund

proposes
Glen

real

to

of this letter,
however, is to suggest that this is

George

Putnam
of

like

tunity to tell
The

of

willing to take their payment
in sterling, purchasers in the Brit¬

reasoning and your con¬
clusions are altogether sound, and
should

have

Despite

that your
I

made

lot

a

are

withdrawn, its international value will decline.
addressed

is

have
really serious effort on

is

gold.

Urges End of $35-an-0unce Bid for Foreign Gold

letter

Hitler

entered

was

the British do not

they

a

agreement

any

drastic

In

that

deals

It is true that there

dollars

them

we

per

Our greetings this week to Glen A.

Chicago, 111. and Chas. C. King,
ville, Ky.

pacts
bilateral and

everyone's part at the time

One

LIBBING"

Darfler, Kneeland & Co.,
The Bankers Bond Co., Louis¬

agreements to

multilateral

from the

that

ing
person,
"AD

and

part of our British friends to

let

reser¬

$8

this

get

commit¬

live up to their side of the bar¬
gain. They prefer to devote them¬
selves to internal experiments and
to
laugh at the Americans who

All members plan¬

urged to make their

are

soon

as

outing.

to

certain

good deal of under-estimat¬

a

been

Charles O'Brien Murphy, III,

the

order

and there does not appear to

Lynch, Pierce, Fenner & Beane, is

Chairman

it

Nevertheless, as seen by the
oidinary American taxpayer, four

As usual golf, soft-

Friday, Sept. 8.

on

case

regard to Empire prefer¬

much.

on

the
Island

the

into.

Travers

at

In

towards

so

was

ing

dress.)

New

of

their

whether

see

made

discriminatory

ball, and horseshoes will be featured, with free

NSTA

it

away

used

outing and dinner

Athletic

and

sterling area)

Committee

Association

annual

taxpayer
for

into the

billion
will

South

(now enlarged to include the

that

The

doubt

in

so

examine

us

dollars.

ence

SECURITY TRADERS ASS'N OF NEW YORK

York

be

market

a

let

ments in

or

dles

British

no

American

England

money,

keen built either

cotton mills had

be

borrowed something over four bil¬

ft

(All scheduled dinners—informal

new

and

negotiations, as the
lawyers say, with clean hands. It
was
not so many years ago that
England came to this country and

6:00 p.m.—Cocktails
7:00 p.m.—Final Dinner and Dance,
Cavalier Ballroom

further

a

the

comes

Meeting
2:00 p.m.—1890 Bathing Suit Contest—prizes

In the period

years.

June

9:30 a.m.—National

its way

the

in

can

this

would

Now,

Club

Club

Tennis, Archery, etc.
3:00 p.m.—For the ladies; Style Show
4:00 p.m.—19th Hole Party—Cavalier Lawn
(Courtesy of Norfolk & Southern Railroad)

Saturday,
Sept. 30

find

channels

are

There

guarantees

9:00 a.m.—Calcutta Golf Tournament

ft

it does

principal export commodity.

(Sponsored by The Investment Dealers' Digest)

a

how

just

Africa, whose tax rate is low, be¬

8:30 p.m.- -Amateur Show—prizes

ft

of

world

cially

Dancing

ft

Golf, Swimming, Etc.
6:00 p.m- -Cocktails

yards.

and of 1.599,000 spindles in

year,

the past ten

in

ft

ft

a.m- -Trip to Williamsburg
Optional- -Chesapeake Bay Fishing

showed

oi

knows

one

that England would scream at any
such
proceeding as this.
Espe¬

Club

Beach

at

the

of

Empire.

prizes.

8:30

Sept. 29

be

Russia,

eventually into our coffers.
other major gold producers

cause

Friday,

would

international

The

7:00 p.m.- -Dinner at Beach Club

low

new

a

23,341,000
spindles in place Jan. 1, 1950, a
Joss of 410.000 spindles
for tne

danger of lowered tariffs and in¬

which

57.17

report

creased

imports,

with

No

some

thus

Municipal

months of 1950 from the like 1949

tne

available per capita of population

casioned

Meeting
Corporate
and

8:30 p.m- -Calcutta Golf Auction and

Sept. 28

year.

who

examine

us

into

Committee

6:00 p.m- -Cocktails

Thursday,

substantial

a

every

However, Russia does mine
gold, and there is no question but

Forum; Speakers to be announced.
bridge and canasta tourna¬

ft

him

de¬

are

taxpayer

much.

2:00 p.m.- -For the ladies

improvement
first five

Bell

a

costing

course.

Officers Breakfast

-National

ment

we

American

the

hurt by such a change.

2:00 p.m.- -Combined

into

resurgent home mar¬
ket demand for cotton textiles was

that

noted

and

Let

the

for

ceiving

that

8:00

Sept. 27

spindle hour ac¬
cotton
consumption

and

ing the world prices,

amount of money

6:00 p.m.—Cocktails—Cavalier Ballroom

1950, with both

Association's

markets,

market

psychology
coming at mid-year has since ex¬

mate.

nineteenth

in

reversal

pegging of the value of an
should not be indulged in by

Cavalier

Afternoon—Golf, Swimming, Etc.

1949

plus the demonstrated ability and of the decade, reflecting the pe¬
of the industry to meet any riod o':'
inventory liquidation and
crucial situation, are offsets, Mr.
inadequate buying to meet con¬
Bell said, to the powerful market sumer needs
early in that .year,

Security Traders Association,

Registration

Wednesday,

and any arti¬

get for it,

can

ficial

is worth only what

asset

an

serious people. In artificially rais¬

has been announced for the

program

National

we

keep

effect trying to

you

Breakfast

will

stimulants added in recent weeks,
first by the Korean War, and sec¬

the

produc¬

tion

of

of

9:00 a.m.—Arrival

cotton

pacity levels,

all,

Sept. 26-30 at Virginia Beach:
Tuesday,

stride."

in

following tentative

Convention

annual

of

course

e

have so much gold,
up its price.
Tnis
hold oneself
up
by one's boot straps, which
seems totally unsound to me. After
that

must

asset

political and mili¬
tary action. It is safe to say that
complete priority will be given
by the industry to any demands
for military textiles that may be
made, and that requirements will

New York, asseited

on

Pershing & Co.,
120 Broadway, New York
City.

TENTATIVE PROGRAM FOR NSTA CONVENTION

of

and

government control policies.
"The

■

S.—May I thank all those who have communicated with Johnny
O'Neill. He's doing better.

stated, "it adds to the
of competing fibers

Ray
Eell, President

SMITH, Chairman

NSTA Advertising Committee

*

P.

long

fact,"

W.

,

cotton.

justification in

ton

Bell

harvest

■
-

cloth merchandising

on

-

If this assumption is cor¬

rect, there will be those who will

is in

'

advantages

ciation of Cot¬

W. Ray

the

to

as

Its effects

-

:

metal would tenu to

of the

argue
we

HAROLD B.
rent fears of textile

local

your

,

international

withdrawn, the

porate advertising.

forward

may

i Thursday, July 27,k1950

.

.

be

May 19, 1950
50 State

St., Boston 9, Mass.

Volume 172

Number 4928

.

.

The Commercial and Financial Chronicle

.

(353)

Equally important it is

FHA Announces Credit Restrictions

ranted

President's policy to con¬
build.ng materials. Reports more than one-third of home
buyers have incomes under $300 monthly.

extended

to

types

credit that have

Housing

Franklin

D.

announced

tions

Commissioner

Richards

further

under

July

on

credit

FHA

18

restric¬

insured
programs.

quirement

to the

ever

effort

war

ing the sweepstakes in the politi¬

respect

cal

or

This

1950.

Presi-

dent's

in

a

letter today to
Raymond M.

Foley, Admin¬
istrator of the

Housing and
Home Finance

Agency

questing

re¬

the

of further

use

credit controls
to
Franklin D. Richards

c o ns e r ve

building
terials

be

may

needed

fense and

1

In

to

for

curb

executed

de¬

in

insuring

figures

offices

FHA

Aug.

1,

of

of

the

families

were

less

for

the

of analyzing property for
mortgage insurance or yield insur¬
purpose

shall be frozen as of
July
1,1950;
(2) Eligibility provisions of Ad¬

ance

Tnese

Commissioner Richards pointed
out that there has been

insured

the

of

use

an

increas¬

mortgage

system by moderate and lower in¬
families.
total

Only one-fourth of

number

of

FHA

new

home buyers in 1949 had monthly
incomes of $400 or more; and even

the

highest

one

had

cent

per

monthly payments averaging
der $100.
The

monthly

ments

mortgage

un¬

of

the

thumb

single

applied
a

cost

specified

salary to be spent for shelter. The

value

or

FHA

limitation

$200;

dwelling

is

re¬

property im¬

on

applications

requests

or

home

new

$41.54 for incomes under

$55.50

for

income

of

the

and

an¬

faithful

bu¬

national

with

gear, may
four cylinder

a

cylinders

are

raw

be

$300

$1,000

is

gine

terms

in

down

of

of

the

energy,

incomes,
or

Thompson
a

160,000
share

45-cent

share

of

stock

water
in

pay¬

taxes, hazard

mortgage
insurance
and any miscellaneous

for

ground

as

charges if they

rent

or

result

can

liens against the property.

$4.50

share.

per

The

Products,

"

.

preferred

is

to

redemption at $7.50
plus accrued dividends,
vertible

into

The

net

Hits Proposals for Consumer Credit Controls

controls."

Attacks

bureaucratic regulation

guise of

of family,

under

1 To make
face

of

major issue

a

credit

consumer

total

control

war

out
in

of
the

and

for what

ing dollars

be expended.

with

is

tack

a

the

or

"flicking

runaway

the

at

hammer

instead

Administration

for

such

interference.'

controls is not

essentially a prod¬
Emphasizing that efforts were
emergency," Mr. again
being made under the guise
Hughes said, adding that since the of
"emergency" to increase bu¬
of

the

cessation
II

been

made

mate and
over

the

hostilities

consistent
to

of

World

efforts

obtain

have

"such

inti¬

purely personal customs

family in the nation."

The government

power

regulation

to regulate,

of

the

American

family,
Mr.
Hughes
pointed out that government sta¬

far-reaching domination tistics themselves

and habits of every individual and
every

reaucratic

preted

in

such

a

are

often

way

inter¬

to

as

tric

and

already has the placed at $18,600,000,009

quantitatively,

30,

1950

and

this

is

on

was

April

of

electric
as

and

credit

"Through

the

right of levy

upon

t

the

of

individual

retain

for

an
or

earned
the

dollar

family

personal

Through further

can

disposal.

consumer

credit

control, the government drives the

entering wedge

as

of dictating




how

3% in 1939.

"On

the

other

hand,

personal

savings have increased from $2,700,000,000 in 1929 to $18,600,000.000

in

1950.

consumer

Thus

credit

regulation

would

into the hands of those

ready cash

or

only

of

play

who have

other liquid assets.

for

account

70%-75%

of

obligations,

exempt

tax

they

as

from a gain in earning assets
financing.

deficit

as

condition

of

the

stock

market

undesirable

it

makes

also

fairly obvious.
'

*

In other cases, a

in the

expansion of bank loans.

Another recent
to

fit

the

is

banks

After

a

the prospect

that Federal Deposit Insurance,

considerable period during which the bill was more ;

committee, the House last week acted to approve *

less buried in

the

development and of greater immediate bene¬

be reduced this year.

assessments may

elec¬
or

high level of industrial activity should result

This gave hope that something will

legislation.

necessary

to

and

set

While such savings in

com¬

and

the

Webber-Simpson Adds

^

^

ivr

U

for the

91

mrtn

$2,702,834 and net income for
was

111. — Arthur C.
Keene has been added to the staff

&

Webber-Simpson

of

"

g

„

bomn Lja &ane

£t

Co.,

208

Pierce,
Wayne

t

INSURANCE
STOCKS

ANGELES, Calif.—Dewey
Gruenhagen has become asso¬

Bankers

the

William R.

Staats Co.,

Spring Street, members

Los

Angeles

Stock

Ex¬

Members

NVw

York

as

Mr.

Assistant

Vice-Presi¬

Gruenhagen

was

merly Vice-President of Investors
Diversified Services.

Telephone:
Bell

for¬

Stock Exchange
Curb Exchange

ijj.

A.

5, N. Y.

BArclay 7-3500

Teletype—NY

1-1248-49

Gibbs, Manager Trading

Specialists in

in

Government

26,

Bishopsgate,

London, E. C.
in

Dept.)

Bank Stocks

and

Subscribed

Paid-up

Kenya,

Bank

and

Zanzibar

Aden
'

—

£2,500,000

every description of
exchange business

conducts

banking

and

and

.

£2,000,000

Capital

Trusteeships

•

£4,000,000

Capital

Reserve Fund
The

Kenya

Burma, Ceylon.

India.

Kericho.

Laird, Bissell & Meeds
"Members New York

the

Office:

Colony,

!'>(> BROADWAY. NEW YORK

change,
dent.

to

Kenyn Colony and Uganda
Head

Brunches

of

Fort

Beane,

Building,

ol INDIA. LIMITED

and

LOS

640 South

&

Fenner
Bank

NATIONAL BANK

BANK

Willi Wm. R. Staals

ciated with

to The Financial Chronicle)

FT. WAYNE, ,Ind. — Gordon
Nelson is now with Merrill Lynch,

$89,192.

Dewey Gruenhagen

F.

Joins Merrill Lynch
(Special

(Special to The Financial Chronicle)

CHICAGO,

months ended March 31,1950,

period

also

Tele-

Westinghouse.

Net sales of the company

were

assessments that would be made would

benefit to the banks would be direct;
help to maintain earnings.
taxes, the

tubes to a
manufacturers in¬

Stromberg-Carlson,

navox,

•

picture

cluding Bendix. Capehart-Farnsworth, Crosley, Hallicrafters, MagTone

to

public utilities would appear to be in such a position. :
have been particularly hard hit by the market
decline and second, they are likely to continue, and in some
cases increase, their plant expansion.
The use of bank credit to
finance the program under such conditions would
seem to be

subject to

The

a

all they

of

be

of

tax

result of

a

of 700 per day but expects shortly
to be in a position to produce 2,000

number

the
'

accomplished in the current session of the Congress.

supplies

earnings.;

reduce

can

be

automobiles, home

is 2.5% of the gross national prod¬
uct as compared with 2.4% in 1929
and

would

The

First

company

2,5C0 tubes per day.

o£

influence

usual amount

selling additional common stock. In'
fact several companies which had planned to do such financinghave had to postpone the sale indefinitely.

is currently pro¬
ducing television tubes at the rate

government's appliances and other articles. This

the individual

income it already determines what

proportion

such

the

the full impact of the increased taxes may be offset

obtained
to

all

out.

under

not given the

finance such expenditures by

cord sets, fluores¬
sockets, lamp holders
lamp holder adjusters.

pany

the

The statements appeared

was

were

for

an

the

figure
credit—commercial, agricultu¬ tossed to the
public as evidence
ral, stock exchange and consumer of its own reckless
squandermania.
—through manipulation of bank Actually,
only
$6,500,000,000
of
reserve
requirements, he pointed this represents 'instalment sale'

1949.

banks

.:

The

pay--

attachment

well

generally favorable

result of the recent developments.

a

tubes, alulamps, infra-red

and taps

City

were

pansion of plant facilities will in all likelihood be stimulated as>

be used to

starter

The

nine

"National Consumer Credit

caps

of

market

result

a

York

Possibly, of greater significance, will be the resort to longborrowing by many corporations for capital needs. ' The ex¬

:

extension

cent

pre¬

judice opinion.

line

full

the

New

period

term

lamps. The company also produces'
a

those

extent by the investment policy followed by the different,
The extent to which an institution holds tax exempt:

be

-

a

lamps,
spot
lamps,
flood
lamps and various other kinds of

war

of

War

'

on

heat

plus,

current

There

also

ft is con¬

receivers

of

the

above

dividends

course

partially

•

rectifier

minized reflector

in¬
"It is not paradoxical that some
target large
financing and banking cor¬
of
porations advocate su.ch controls,
wielding the sledge hammer blows in *©r out of war.
Such advocacy
of wage and price
controls," Syd is another manifestation of that
J. Hughes, Vice-President of the
peculiar hybrid evolution of some
Industrial
Bank
of
Commerce
business
and
industrial
leaders
said in a statement on July 25 sent
who proclaim for government con¬
to members of Congress and the
trol when it appears to their com¬
Senate.
petitive business advantage and
"Recommendation on the part conversely denounce
'government
flation

television

current interest

liability.

proceeds from the sale

manufactures

statements

of

cases

current

some

or

in
1935,
manufactures
cathrode-ray picture tubes for use

the public's remain-*

may

to

porated
in

paying

institutions.

for other corporate purposes.
Allied Electric Products, incor¬

emergency.

been

aspects of the

l'etufn

and

and price

has

s

instead

wage

months

most

Of

Inc.,

Syd J. Hughes, Vice-President of Industrial Bank of Commerce,
New York City, says it is
"flicking at target with tack hammer
wielding sledge hammer blows of

the

$1)

able, to purchase additional equip¬
ment and machinery and for addi¬
tional working capital to carry in¬
creased
payrolls and
inventory,

of

stocks

subject
share

bank loans and accounts

pay

bank

of the longer range

paying out only 60%-70% of earnings and theoretically if earn-'
ings remained the same and taxes were increased 18% to 45%'

per

stock

common

share for share basis. '

for

some

dis¬

is also the fact that earnings are in an upward trend
and this too Should help final comparisons.
Some benefit should

»

stock

of these securities will

uct

(par

posi¬
upset the balance of the

The current rate of earnings of most New York banks, even',

pre¬

at $7.50 per unit, and 20,000 shares
of
additional
common
stock
at

and

Electric

these

increase in taxes to the 45% rate, providesThus while highertaxes may reduce the operating earnings to some extent the pros¬
pective rates would not endanger dividend payments except pos¬
sibly in one or two cases. Most of the New York banks have been

(par $6) and one-half

common

Allied

Obviously
fundamental

the

ample coverage of existing dividend rates.

an

is

convertible

altered

place during the recent period of widely fluctuat-1

after allowing for

Co.,
Inc.,
offering
consisting of one

units,

of

ferred stock

general market

of attention.

&

which

group

expenditures.

prospects

market

during a period when
military events and as

en¬

Allied El. Prod. Slock
Hill,

the

operating

six
in

and

Hill, Thompson Offers

heads

the

they

outlook, there have been several items of

The

gineering principles still adhere,"
Mr. Hughes concluded.

more.

only mortgage interest
principal payments but also

by

of

basic

of

ing prices.

of the engine to other than

power

peace-time

while

that have taken

is to divert the

not

insurance,

current

fuel

purpose

reflection

a

The

Thus

first

tne

defense

and

considerable attention to

control.
'•if

was

readjustment in prices which occurred have
counted, in part, the probabilities of future developments.

en¬

These mortgage payments include

ments for real estate

market.

inflation,

the

increased

conditions

tion of different groups of securities and

then
supply is
called for through wage and
price
adjustment

the

nance

changed

If the

the

This

year.

were -only
slightly below the_prices existing at the start of the Korean crisis.
For the last few days they have once
again been under pressure.
The
dominating considerations in the market have been
military events and the certainty of higher corporate taxes to fi¬

engine. These
material, pro¬

slow

to

a

declined to the lowest levels in over a
year.
Last, week there was a sharp
recovery in the
and most bank stocks moved
up to a point where

a composite of wages, sal¬
dividends and other prod¬

purpose

of

irregular fashion for about

compared

ucts of the national income.

action

improvement in the operating outlook and the increased demand
for high quality investments.
With the advent of War iir the
Far East, there was a
sharp sell-off in all equities and bank shares

racing

economy,

high

of

premium,
charges such

eligibility statements received
the insuring office after July
18, 1950. The down payment re¬

buyers payments

$69.12 for $500 incomes, and $98.43
for

provement loans under Title I.
The action described in the first
three items are effective with re¬

"The
in

as

such

family

price control)
for

of

priorities,

family's

of

shall be required

to

be

of

to

duced from $16,000 to $14,000;
(4) Cash down payment of 10%

spect

can

proportion

5%

mortgage

haven

an es¬

avoiders

;

pay¬

undertaken

loan

Dollar

other

E. JOHNSON

bank shares during the
past month has fol¬
lowed the general trend of the stock market.
Prior to June 23 bank shares had been
moving higher in art

reaucratic retainers.

aries,

average

(3)
on

the

(allocation,

and

gine is

to

cost;

'reformers,'

for

wage

the analysis published in the FHA

rule

by

hatch

realities

Annual Report.

by reducing the ratios of loan
therein

forum for the

cape

H.

This Week—Bank Stocks
The

Whipping

The subject provides

than

gage insurance plans are amended
to

'Public

families

ministrative Rules under all mort¬

or

for

By

$300 duction, distribution and credit.
bought To tinker with any one of the
houses
with
an
average
FHA four,
without
coordinating
the
valuation of about $7,000 and the
timing and the firing of the other
monthly mortgage payment runs three, simply results in
mis-firing.
around $50 a month, according to
"The fuel that feeds this en¬

monthly.

by the various
income groups indicate that no set

value

contest

Boy No. IV

23,
new

FHA-insured

your

incomes

July

on

using

financing last
with

controls,

one-third

buyers

excepted

release of Com¬

a

Richards

than

home

the

used

after

or

expressly

new

missioner

come

cost

the

more

ing

instructions:

Construction

are

According to

sued

(1)

on

ma¬

inflation.

following

applications^ dated

a

from

offices Commissioner Richards is¬
the

all

to

Alaska

which

national

telegram to all FHA field

a

property

Military housing and housing in

policy

forth

set

inflation.

or

increasingly evi¬

ment loans is to be effective with

on

Bank and Insurance Stocks

Consumer

dent that consumer credit is lead¬

action is in ac¬

the

of

improve¬

loan

cordance with

unwar¬

individual

relation what¬

no

"It has become

Federal

an

of

rights when such credit control is

Outlines amendments in line with
serve

invasion

17

Executorships

also undertaken

,

The Commercial and Financial Chronicle

(354)

18

.

.

Thursday, July 27, 1950

.

industrial

Much More Is Needed!
"In order to

other

the

Utilities Corporation

General Public

General Public Utilities is
old Associated
form to the

Electric.

Gas &

As

holding

stantial
for

to the
of the final steps to con¬

successor
one

company

It

ing subsidiaries:
$23.7

Company..

Jersey Power & Light Company
Metropolitan Edison Company
Northern Pennsylvania Power Company..
Associated Electric Company:

Electric

Pennsylvania
Manila

Electric

and

4.1

40.4

Company

Service

Company,

small

a

company

in

the

Philippines.
A transmission

being constructed to connect PennsylMetropolitan Edison, which will make the
system interconnected with the exception of the

small Northern

Pennsylvania Power.

Hearings
Securities and
the

•

line is

entire domestic

vania Electric

:

now

set

up

within the next year.
Consolidated earnings have been improving steadily and are

be derived

from the domestic operations.

Thus the stock has been selling re¬
cently at less than 10 times the estimated earnings of the domestic
subsidiaries alone. While the Philippine earnings cannot be capi¬
talized market wise at this multiple, they are increasing rapidly
and should be accorded some value in the price of General
An increase

Public Utilities stock.

subsidiaries

warranted

the

of the Philippine subsidiaries were
with the dividend declaration.

»

The

stock

increase

1948 which

at the end of

was

that earnings

at

just before the recently completed

31% equity, it is estimated.

follows:

as

Do.me.stic Subsidiaries

Excluding N. Y. Cos.

Philippine

V*

Year

T

1949

$1.48

$0.52

$2.00

J

1948

1.17

.26

1.43

1947

1.23

.20

1.43

1946

1.13

.13

1.26

J,
,

GPU

the

has

holders

a

of

contingent interest
certain

old

Total

Companies

GPU

assets

common,

or

at

the

4.6%

in assets held for claims of

securities

of

end

of

the

of

the

Associated

Gas

&

1949

included

outstanding

352,000 shares of
amount, and small

portions of the
and

Florida

dividends

on

common stocks of South Carolina Electric & Gas
Power Corporation.
The cash representing accrued

all these stocks is also segregated.

these assets is estimated

The total value of

likely that GPU will require about $4.5 million cash

this year to take care of its construction program.

The company
1 is hopeful of obtaining some cash from Manila Electric, through
the conversion of certain senior peso securities (now owned) into

| cash. However, the Central Bank at Manila must issue the necesj sary exchange licenses to convert pesos into dollars and it is
; uncertain whether recent developments may prove a handicap in

I

this respect.

If the money is not moved to New York, GPU

I have to obtain
I

or

a

may

temporary bank loan around the end of the year,

(if market conditions improve) sell

a

small amount of

common

'

stock late this year or early next year.

•U

With Bingham, Walter

With Merrill Lynch Firm

(Special to The Financial Chhonicle)

(Special to The Financial Chronicle)

LOS

ANGELES,

Calif.—James

;R. Comeskey is now with

Bing¬

SAN DIEGO, Calif.—Charles C.
Leigh has become affiliated with

Merrill Lynch, Pierce, Fenner &

ham, Walter & Hurry, 621 South Beane, San Diego Trust &
Savings
jSpring Street, members of the Los Building. He was formerly with
Angeles Stock Exchange.




it,

It operated

years.

the

gether

entered
local

Wesley Hall & Co.

various

elements

of

cies

on

diversified scale by

on a

companies which have
into
partnership
with
individuals

and

groups

management

or

fees

other

and

considerations.

However, IBEC is
not
a
manufacturing enterprise.
It is not a service company.
It is
rather
a
financing company; a
nucleus of the risk capital which
has to be the spearhead of any
business development, at home or
Others have told you

risks

of

new

about the

enterprise.

other agen¬

And

of the world.

areas

The postwar
the

problem of assisting

economic

development

of

other

countries is the

task.

And that task is mainly

long-range

the
enterprise.
a logical place to apply
these concepts.
IBEC began its
work there, then extended it to
task of

Brazil is

Venezuela, and
I'll
out

digress
that

the

has

the

also

tional
non

-

now

to Ecuador.

point

moment to

a

Rockefeller
American

group

Interna¬

Association,
which
profit
organization.

is

a

AIA

similar

principles,
technology,
scien¬
knowledge and managerial
techniques abroad.
AIA 'is
in
on

transmitting
tific

services

and

in

needed

fields

like

rural

training,

research,

welfare.
you

interested in fi¬

are

I shall confine my discus¬
IBEC.

(3)

Select

definite

to

one

adaptable to coordination, as

and

investments
return

yielding

and

prospect

Some

are

and

the

of

country concerned

by such U. S. interests

contribute

the

best

(5)
the

nationals

and

train

and

managerial posts.

(6)
will

contribute
of

prise.

These
will

The

top risk capital in the IBEC

structure

has

come

Rockefeller family.

from

the

But the bulk

the

development capital
IBEC enterprises comes from

in
va¬

That, in my esti¬
mation, is interesting because it
represents a pioneering effort to
sources.

out

a

partnership

pattern

for raising capital and developing

enterprise to help solve one of the
great problems of today, which is

transmitting capital abroad and
assisting in carrying out the role
of the United States
source

as

the world's

of technology.

policy

in

developing a
constructive pattern for joint en¬
terprise applies these methods:
(1) Determine

the

economic

bottlenecks

which

back

development

sound

are

holding
in the
capable

goal

of

them

translate
so

you

into
vis¬

can

prise.
Risk

capital in the past has in

large part

come

from individuals.

Most people don't take long

until

they

minimum

get

over

level

a

of

risks

certain
security.

Therefore, it is not illogical to see
the top IBEC risk capital coming
from

family group.
However,
in some of the operating enter¬
prises, most of the capital comes
individuals,

international

making this an
of partner¬

pany

prin¬

ciples.

So I will go into that in
detail.

As

remember,
principles was

you

IBEC
terms
not

Brazil.

with

the

be

means

best

a

Brazil is

wide

on
an

Program

in
good place to

program

program

is

a

started

of economic

the IBEC
enormous

diversity

management joint business enter¬

tural and mineral

prises which will produce goods

zil

probably

the
in

stated
That

term.

approach at

an

of

one

bottlenecks.

of

may

But

some

it

cru¬

point
that is
holding up
development. For instance, Brazil
may

need

haps

are

their coal

coke.
lem

steel industry.
Per¬
handicapped be¬

a

they

isn't suitable for

That actually was a

there.

So

technological
want

to

that

bottleneck,
the term.

use

prob¬

becomes

if

a

you

have

You

tremendous leverage to accelerate

problem is solved.
IBEC
only undertakes enter¬
prises which are basic to the wel¬

fare of the country.
with overall studies
lems

of

start

it

the

narrows

principles

IBEC starts
of the

country.

enterprises.

down to

Since

is

prob¬
that

From

specific

undertake

to

its

of

one

proj¬

ects which

promise to make basic
contributions to the welfare of an
area

it
of

in

tends

which
to

they will operate,

select

enterprise.

corn

a

definite

type

hybrid

seed

The

this
principle as well as the matter of
transmitting technology abroad.
company

Hybrid seed
States

start

corn

in Brazil.
That
well illustrates IBEC

expresses

corn

is

of the

one

greatest advances made in United

Start of IBEC

IBEC

enter¬

seed

com¬

pattern

ship enterprise.

The

IBEC

hybrid

a

from various participating groups
and

first

a

development when the bottleneck

consumers.

ualize this work in specific enter¬

Brazil

under

and

distribution

ultimate

details

velopment

countries concerned.

(2) Establish

to

concrete

improve¬

good principles and I

are

try

that

standards

lowering prices to

the

was

company

cause

the

to

living

with

technical

for

enterprises

Develop

compiled by Dun and Braastreet
enter¬

prises

enterprise.

the

of

cial

Employ local nationals to
greatest
practicable
extent

costs

new

as can

managerial

and technical direction.

business mortality experience

indicates the risks of

One

some

Encourage financial partici¬
pation in the enterprises by na¬
tionals

turning out to be profit¬
are doubtful.
That is

some

normal experience in the develop¬

(4)

lower production and

And

reasonable
capital

for

appreciation.

cessful

otherwise.

bearing
another,

enterprises

relation

ment

and

breaking

dozen

are a

enterprises in the IBEC structure.

ment of new

big corporation is the end
product of a lot of ventures, suc¬

chief

For

Neverthelss, that activity was
largely tied to the war emergency.

beginning.
scrapping of New Deal
by the dozen!

The

average

work

consider¬

a

in similar activities

engaged

in other

these bottlenecks.

have transmitted their techniques

rious

impor¬

the

World War II.

in

Latin America.

nance,

Partnership enterprise has been

for

the

of

instance, the Office of American
Affairs sent many technicians to

President Truman

sion to

partnership enterprise.

IBEC

: 1

imagination

rationalize

able scale

4

page

busi¬
which

idea

an

.

able,

of

] be cancelled).
It seems

from

is

trend has been evolving for many

International Investment Problems

at about $1.10 per share of GPU.

This
i acquisition will automatically improve the cash position, the
:
equity ratio and the share earnings (since the GPU stock will

;

ventures

abroad.

Electric companies. These claims expire in August, 1951, at which
time any remaining assets will become the property of GPU.

Unclaimed

Deal

to

seems

4-'

*

many U. S.

years were

IV"

t he

Since

Continued

million

1949, and the 227,000 kw additional capacity this year (including
50,000 kw for Manila). Share earnings in the past four calendar

,F

Fair

practiced

System earnings have not yet fully reflected the economies
resulting from 137.000 kw new generating capacity installed in

?

a

a

which

of

tance of this proposal in the light
of world affairs.
The Point IV

goes!

But, really, it is hardly

of subsidiaries and reduction of indebtedness
Excluding all reported intangibles and the war
claims, the common stock equity would be reduced to about $108
a

it

For
the
long
other country

Now, in 1950, there

surplus

program of sales
was undertaken.)
or

the

What is really needed is
and

not considered in connection

consolidated

and

as

no

''Point Four" sense.

or

didn't

far

is

greater potential for devel¬

with

earnings of the

and

the end of
March amounted to $143,157,122 which represented 37.8% of con¬
solidated capitalization.
(This is an improvement from 24.5%
common

know

I

aid programs,

for

Excellent—so

in the dividend rate from $1

President Tegen stated that improved

8%.

domestic

that

works

to $1.20 per share was made recently, so that the stock now yields
over

force

world, and is
agricultural

an

country at a psychological mo¬
People sensed, even if they

purchases of motor vehicles, typewriters and other
equipment using critical materials.
Inventories
should be reduced to the lowest practical levels,
and excess supplies and equipment should be made
available immediately to the General Services Ad¬
ministration."— President Truman to 14 depart¬
ments and agencies of the Federal Government.

Company Act will probably be clarified or decided by the SEC

estimated at $2.20 for 1950, of which about $1.63 will

-

the

there

ment.

housing credit, other credit programs
should be tightened.
The only exceptions should
be those which directly contribute to meeting our
defense and international responsibilities.
"(3) Procurement of supplies and equipment
should be held to minimum amounts, especially

The questio.n of final compliance with the Holding

$5 million).

in

-

in

economy.

caught

programs

screened

of

from

"Point

"(2) Consistent with the restrictive policy already
in

have been in progress for some time before the
Exchange Commission staff to determine whether

as

t

be

its

accelerated

II
an

opment, either in the usual

works,

public

Federal

Amer¬

expanding econ¬
the most rapidly

range,

have

national situation set forth in my message.

with

complies substantially with the re¬
quirements of the Holding Company Act. The management would
like to retain the present domestic system set-up, with possible
elimination of
the sub-holding company, Associated
Electric.
Eventual sale or distribution of the Philippine properties appears
likely. There is also some question about retention of the gas
business of Jersey Central Power & Light (1949 revenues about
System

trial

objective, as far as practical, of
deferring, curtailing, or slowing
down those projects which do
not directly contribute to de¬
fense or to civilian requirements
essential in the changed inter¬

11.9*

Company.:.

Electric

Escudero

civil

g r a n

should

$115.5
"Includes

All
direct

both

27.3

Latin

in

into the earlier stages of an indus¬

ness

"(1)

8.1

New

needed

resources

Please

effort.

one

emerging

ing:

1949 Revenues (Millions)

Jersey Central Power & Light

of materials and other

defense

War

It is

expanding

giv¬
ing particular attention, to the
extent applicable, to the follow¬

retains the follow¬

now

omy,

and the heads of

you

re-examine your programs,

Utility Holding Company Act, the company disposed

of its three New York utilities in 1949.

writing to

am

agencies whose programs involve sub¬

use

the

World

growth.

adjust the programs of the Federal

Government, I

future

ica.

of

pattern.
country

agricul¬

resources.

has

the

de¬

Bra¬

greatest

agriculture.

Corn is

a

pilp

lar of the American
economy.
is The biggest crop, a source

animal food and human
is
In

It
of

food, and

industrialized
some

in many ways.
Latin American
countries,

corn
is even more a staff of life
than it is in the United States.

Brazil is
growers.

one of the

It is evien

largest

more

corn

impor-

Number 4928

Volume 172

.

($55)

The Commercial and Financial Chronicle

.

.

19

r

tant in Brazil

as

than cof¬

crop

a

country.

consulted

IBEC

hog

specialists in the Middle West for

provides

technical

source

growing in Brazil would be mak¬
ing a contribution to the basic

cessful in

from

except

in the United States, we

Here,

this

had

seed
large
States have

great hybrid
Recent

development.

corn

crops

in

the

come

in

part

United

in

advances

chines,

technological
fertilizers, ma¬

from

soil,

techniques.

managerial

But

certainly

was

one

hybrid

the

of

seed corn
important

most

aids to the expansion of food out¬

put

saving

and

of

manpower

in

The

IBEC

people went into
with some local
were
interested in

Brazil and joined

people

who

developing

Out of this

the seed-growing

came

Sementes

hybrid

commercial

a

enterprise.

seed corn

enterprise,

S.A., which
is far enough along to merit

now

Agroceres,

close look.

a

This

is

what

enterprise perhaps has been
it

but

still

call

might

you

a

inconclusive

up

of

lems

tion.

markets

into

this country

In

marketing

With that relatively large back¬
ing of capital, the Venezuela Basic
Economy
Corp.
has
developed

results

Brazil's

to

velopment.

this

And
IBEC

how

shows

make

would

enterprise

draws

nology and management.

becoming

successful enterprise

a

ting
about

it

year

is

put¬

into the Brazilian market
1,300 tons of hybrid seed
That

corn.

amount

tant,

This

is

substantial

a

but most impor¬

of seed,

believe, it has shown that

we

hybrid seed corn company can
be a sound enterprise in Brazil.

a

When

have

you

that,

done

per¬

haps you have started the ball
rolling
for
development
on
a
scale.
The

hybrid

seed

enterprise has
which

be

could

progress

another

bringing

in

the

know

local

history

porations

cor¬

Most
with

country.

small,

start

the long risk.

tax
tend to become
more
publicly-owned

and

enterprises,

now

What that amounted to in

engineers

managers and
train Brazilians in

and

a

eriterprise.

new

with

stock¬

many

holders.

which ex¬
presses IBEC principles, perhaps
more dramatically than the hybrid
seed

enterprise

grain

and

corn

companies, is the farm machinery

in

too easy any¬
where
these
days.
Most Latin
American countries do not have

country
in
the
application of
technology to agriculture. Census

capital markets in the U. S. sense.
Their surplus capital goes mainly
into real estate and land improve¬

people to the cities.
Out
of 150 million people, the United

ments of various sorts.

left

capital

is

in

bring

not

IBEC presumably would

company,

develop enterprises and then
broader

establish their investment.
enterprises grow to

prises

IBEC

As

maturity, and achieve investment
stature, they presumably would
attract

from

local

sources.

not con¬

campaigns.
substantial

stock-selling
IBEC
has
had

ducted

capital

coming

sources

in

other
oil
Venezuelan

from

in

Venezuela;

the

and

companies

from

Government, which had the com¬
mon
interest of solving the food

problem there.
Sementes

more

Brazilian

opment

some

Now that it

perhaps

power,

capital will come

enterprise.

into this

IBEC

has

Agroceres

earning

shows

has an

continued move¬

a

only about 27 million
the farms.
One food pro¬

has

States
on

feeds

The

farm

the farm.
company,

enterprises,

IBEC

United States tech¬
IBEC
people
studied

upon

nology.

machinery companies in this
and got one of the lead¬

tractors and
other
machinery bought in the
U. S. and offers its services on a
It is designed to expe¬

of

dite development

it

as

where

lowering costs of
farming.
And

clearing and

seeks

demonstrate

to

be done on

can

If

by

operates

areas

sound

a

this

this

that

profitable basis,

a

business

enterprise.

enterprise works out suc¬

other

people

may

be

encouraged to go into similar en¬

Then
the IBEC ball
The IBEC terprise.
Brazil fit together would start rolling up results on a
considerable
scale.
unified program.
These

into

a

include

a

hog

a grain
farm ma¬

company,

elevator company

and

a

chinery company.
Corn

and

hogs

new

fit together

as

and coffee at
The idea be¬
hind the hog company in Brazil
was to try to work out an enter¬
prise for raising hogs on lines
similar
to
those
used
in this
naturally

as

In

Brazil

minority

IBEC

also

has

participations,

some

in

as

a

fertilizer enterprise.
Venezuela




In
are

Venezuela
on

actual

vested.
tion

ar

enterprises

Venezuela

had

shortage

an

of

vast

Quebec-Labrador

fields

ent emergency as

war-emergency

result of pos¬
sibly
competitive
surpluses
in
both
countries, which gave rise
to consideration of higher rather
than

a

lower

tariffs, have
overnight. Every

peared
can

directed

be

now

maximum

In

production

could

towards
on

inflation.
em¬

coveries

and

na¬

pipelines and

absence of adequate

refineries; pipeline links to Alaska
and

i

i

n

o

in

S.

U.

the

exploiting

in

deposits in the
base
metals,

known

numerous
o m

scheme.

defense

cooperation

are

items in the North

vital

American

D

Northwest

Pacific

the

of

titanium,
and
other
metals would be still
extended. Likewise with

adjust¬

uranium,
strategic

automatic

oil

Alberta

of

tural gas cannot be utilized in the

previous economic
and exchange imbalance. Despite

for

step.

readily expanded in order to as¬
sure
a
stepped-up
output
of
vitally
needed steel. New
dis¬

notably

barrassing situation which pre¬
vailed prior to the recent inter¬
national developments, the way is
clear

a

as

Also, pro¬
duction from the existing Steep
Rock iron-ore deposits could be

disap¬
effort

place of the increasingly

undertaken

be

the

of

iron-ore

the

developed along
using machinery,

correct

its full im¬
plementation would have
been
impossible in view of its dislocat¬

domestic

quate population, cannot fully ex¬

Now, however, with the

ploit her enormous economic po¬
tential,
but- with the energetic
assistance of her great Southern

is

cartons,

paper

In

etc.

is starting a
similar

Ecuador, IBEC

farm

machinery

to the

the

being
lines,

company

in Brazil.

one

IBEC put up

age

the

of

chronic

the

influence

ing

economy.

world

to

short¬

dollars,

U. S.

of

designed

levels

highest

the

on

certainty of domestic production
ing on a credit from the Export- being taxed to its utmost capacity,
Import Bank for purchase of ma¬ a greatly increased volume of
chinery in the U. S. Again this foreign imports would serve to
top risk capital and is draw¬

combination

the

illustrates

of

government and private sources of

government and pri¬
vate, in an effort to get a pat¬
tern
of
enterprise
which
will
solve the multpile problems of op¬
groups,

erating

abroad.

When American enterprise goes

it is not a simple prob¬
financing and operating.

abroad,
of

lem

country

Every
has

its

and

laws.

different

is

and

traditions, economy,
Some Latin American

own

established

have

countries

gov¬

agencies to

ernment development

provide capital and to stimulate
enterprise and new industry.
specific detail, this brief pic¬
of the IBEC enterprises in

In
ture

own

one

investment

international

of

world.

unsettled

this

how

approached the prob¬

has

group

in

shows

America

South

In

its

in its attempt to work
practical system of part¬

way,

out

a

enterprise

nership

national scale,

the

of

on

IBEC is

an

inter¬

an expres¬

role
the
achieved
as

historic
has

States

leading industrial nation and
source of the new technol¬

the

chief

will

It

take

years

before any¬

appraise the significance
of this and similar work, either
in terms of finance or of trans¬
can

one

technology abroad.
is no question that

mitting
there

But
these

have a compelling ur¬
which call for the best ef¬

problems
gency

relieve the strain. What had pre¬

viously appeared
possibility under
tions

overwhelming

forts that can be put

forth

on

the

of
government,
private
groups
and individuals.
Out of
such efforts in time will come the
part

solutions.

Joins First California
(Special to The Financial Chronicle)

export bal¬
a
practical

through normal processes

acute U. S.
dollar shortage that has operated
so
effectively to prevent a na¬
the

problem

of

the

movement of goods and

tural

world

now

ex¬

the Western
at last within

throughout

change

appears

solution. As far as this
country is concerned this revolu¬
tionary
development
can
take
place without injury to domestic
interests.
In addition,
it would

sight

of

operate
force.

as a counter-inflationary
Hitherto
the .tremendous

the
the
high level of $5V2 billion in 1949,
export surplus which, despite

has

constituted

factor

almost

of

with

With King

during

During the week both the ex¬
and
internal
sections of

the

a

although
actual
still on a restricted

tone,
was

scale. Free funds
at

displayed

market

bond

stronger

9V8%

continued strong

corporate-ar¬

the

and

also firm at l3Vi%12%%.. Stocks in earlier sessions

bitrage
staged

was

to

golds
the

industrial

and

oils

Western

the

rally led by the

strong

a

basemetal

also

were

but

slower to respond

general market upturn. In

later sessions losses
in

issues.

advanced,

replaced gains

nearly all sections of the mar¬

ket, but the base-metals and
still met with steady

oils

investor de¬

mand.

of this

correction

The

portance.

inflationary
im¬

an

disregarded

imbalance would

contribute to an
the re¬

CANADIAN BONDS

invaluable degree towards

duction
The

of

inflationary pressures.

Government

forthcoming U. S.-Canadian
Provincial

meeting in Ottawa presents there¬
fore an early opportunity to take
a constructive step in
the desirea
direction. By reason of its un¬
potential

matched

Municipal
Corporation

de¬

for rapid

velopment
of
vast unexploited
natural wealth, the Dominion can

play an indispensable role in tne
coming mobilization of the eco¬
nomic resources of the Western

CANADIAN STOCKS

world. Unlike the European coun¬

tries, Canada's own requirements
in relation to her potential pro¬
duction

insignificant.

are

Conse¬

major proportion of any
increased
volume of production
would be available for immediate
quently

a

export.

Canada
moreover
situated as a source

is
of

ideally
Calif.—Fred A.
California supply in view of her proximity
Company, 647 South Spring Street. to U. S. industrial centers. The
is

recorded

diminishing trend, was still at

LOS ANGELES,

Zerman

Dominion
could
the
amazing

War II.

turnover

possibility.

S.-Canadian

U.

surpass

achievements

ternal

of

of

the

neighbor,
readily

the

S.

U.

stimulus

World

becomes

ance—now

further

virtual im¬
normal condi¬

as a

elimination

the

—

Thus

A. E. Ames & Co.
incorporated
Two Wall Street
New York. 5* N.Y.

First

Merritt Co.

sources

the

in¬

Okla. —William

infla¬

E. Rowsey, Jr.,

is connected with

food

Problems

collabora¬

development

joint efforts the Dominion's out¬
put of aluminum, forestry prod¬
ucts, chemicals and explosives is
capable of tremendous expansion.
Canada
alone, with her
inade¬

MUSKOGEE,

operations and capital

problem,

States.

S.-Canadian

U.

Earlier

that had arisen prior to the pres¬

accessibility

larger scale in terms of

tion.

the

Francisco.

San

Development
IBEC

United

closer

part

as

long-range economic planning on

Dairy

sugar

the breakfast table.

the

and

intents

Company of
This dairy enter¬

State

program.

enterprises in

of

all

to

will be regarded

Golden

ogy.

This company uses

cessfully,

integrated devel¬

trends

the

Dominion

purposes

ment

United

early stages, but
look encouraging.

the

of

single

a

dairy enterprise, local in¬
vestors joined with VBEC and the

operators to go to Brazil and
advise the company.
It is still in
the

embracing form. From the
it is probable that

economic angle

now

In the

sion

it

be taken by Vene¬

may

zuelan investors.

country

fee basis.

part of the stock in an

or

enterprise

lems

machinery

these

all

draws

farm

because
machines
increasing share of

an

the work on

like

several people in the

partly

doing

are

land

participation.

local

show

ment of

ing

IBEC enterprises have

But

capital

investment

more

figures

seek

participation as the enter¬

great

A

change has been going on in this

cities,

development and financing

a

Brazil.

in

company

ducer

View

Participation in

Broader

As

to

control

elevator

local
capital wherever practical.
And,
as you know, the problem of rais¬
seeks

IBEC

enterprise with the idea that

eventually, if it is successful, the

ous

Another

developing

manager,

capital and of working with vari¬

Machinery Concern

Farm

present

the

even

run-away

modern

technicians to

motorized

to

the

World

an

corporate

prise

part was calling upon Cargill for

of

economies
into

anything less will be achieved as
a result of the Ottawa meeting.
There are many Canadian in¬
dustrial and mining projects that
are now
in the planning or early
development stage, that could be
expedited as a
result
of
still

likely

Agreement

the

countries

7th

provides the toprisk capital and takes the role of

two grain

edge.

Park

welded

two

reper¬

Canadian

than

More

economy.

Hyde

entire

both
sides of the 49th parallel for the
meeting of military requirements
and for the purpose of combating

operating.

As they grow, es¬

pecially under
structure, they
more

great

individuals who take

and

groups

is

managerial and technical knowl¬

of

this

in

enterprises

enterprise

that of
capital.
You

principle;

supermarkets

new

illustrates

Agroceres

IBEC

com¬

investors.

Cargill

broad range

a

IBEC-VBEC

approximately one-third partici¬
pation
by IBEC,
one-third by
Cargill and one-third by Brazilian
The

The

company.

covers

gation.

highly

a

The fi¬
called
for

procedure

distribution

from

arrangement with them.

nancing

enterprises

fishing boats, ice plants and irri¬

ciple in the sense of IBEC joining
with U. S. companies which have

of

substantial

to

Sementes

the

partnership

a

the

through modern

These

technology

agricultural

of

the
of Brazil.

significance

into

entered

improve

to

fishing
company,
dairy
farming company and a

a

food

pany in this country, with a sys¬
tem of
elevators and terminals,
and

integrated

an

economic and defense boards vir¬

unit. It is not to be expected that

Aug.

far-reaching

the

on

War II will be revived in

company,

tech¬

handling

experienced grain

are

a

The company has built
elevators. But this en¬
terprise is still in what you might
call
the
fledgling stage.
That
illustrates the partnership
prin¬

type

corn

potential leverage

a

went to Cargill,

IBEC

aimed

technology.

de¬

on

of

reservoir

States

in

local food supply

enterprise

ness

financially.

in

spoilage and high cost.
So IBEC decided that a grain ele¬
basic contribution

companies

program

waste from

vator

cussions

Committee

Ottawa

in

meets

next will have

more

four

reached

be

the

development agency.

ramify

to

Mobilization

which

Government

and

which

bags

Venezuelan

grain

through
agriculture.
Grain is handled in
this country at relatively low cost.
In Brazil, grain has been han¬
in

the

conclusions

tually

set

and

which

The

by the Joint Canada-U. S. Indus¬
trial

in

Cargill,
companies

terminals

dled

IBEC

there with

in

come

By WILLIAM J. McKAY

development

up an affiliated
Venezuela.
It
is
backed by a substantial amount
of capital from the oil companies

bulk handling of

other

and

Inc.
have

to

company

grain is well established.

United

sense.

IBEC.

transporta¬

"Point IV" enterprise, in the

busi¬
It shows promise of

vited him

why IBEC got
elevator enterprise.

grain

a

and

So

war.

that is

And

Canadian Securities

Nelson

war.
a

in Venezuela before the
they knew him and in¬

company

going to happen to sur¬
corn.
This gets into prob¬

plus

Uhe

Rockefeller started

is

what

large

They

tackling the food prob¬

after

lem

of
of

production
the problem

the

a

foreign exchange.

of

terest

enterprise.

Improving
corn
brings

of

no dollar shortage.
Every¬
body there had the common in¬

a

as

Venezuela with

have

suc¬

transmitting technology

is

facilities

the United States.

hog

The

knowledge.

commercial

of the country.

economy

have

an

problems. Oil

and other economic

export
standpoint.
So you can see that
anyone who could improve corn

fee,

King Merritt & Co., Inc.

two
war

is

of

Canadian

further

intimate

facilitated

relationship

countries.

During

the operation of

of

the

WORTH

4-2400

NY 1-1045

re¬

by

the

past

various joint

Fifty Congress

Street

Benton ». Mans.

20

(356)

The Commercial and Financial
Chronicle

transaction

Holds Canadian Dollar Revaluation Premature

specie,";
fused

Current "Business Review" of Bank of Montreal

says imme¬
diate consequences of restoration of Canadian dollar to parity
would mean deterioration in Canada's over-all balance of inter¬

prove

of

in

the

with

Canadian

the

United

forecast in

ada,

the

view"

some

Bank

in

ments

its

States

much

parity

dollar,

Montreal

of

as

com¬

"Business

while

Re¬

"revaluation

premature

prove

time,

to

quarters in Can¬

July

that

might

dollar

be said for a
flexible rate, responsive to chang¬

ing

conditions."

dollar

is

(The

quoted

States at

Canadian

the

in

United

discount of around 9(2

a

cent.)

per

The

-

could

their

time,
funds

the

commented

that

a

sterling and other important

cur¬

rencies remained at present levels
in terms of American funds and
if business

activity in the United

States continues at its present high
level.
"However, a higher price

the Canadian

dollar

to impede

could

Canada's

be
ex¬

ports overseas," the Review added.
"But in the opposite direction the

return to parity, if unaccompanied

similar action

the

on

part of
automati¬

countries, would
the price of

cut

currencies

the

to

all

other

Canadian

im¬

porter.
"The

the

facilitate

goods

of

balance

creased

reliance

additional

incentive

purchases from

Continued

from

to

overseas

import

on

with

be,"

Monetary

Fund

measure

a

flexibility
allow

in

con¬

of

bargain

the

silver

and

to

produce

trusts
of

any

a

to

its

legislators the

of

On

this

resulting
from
relationship
to

country's
two

them

the

the

article in

every

of

de-

or

citizen."

every

high authority, might

the

not

that

our

may,

to

reasonable

seem

to

it

assume

present-day
inflation
large extent, be at-

a

tributable to our having gone off
the gold standard and adopted irredeemable paper currency in the
1930s?

An

affirmative

answer

to

T French Revolution Inflation—

this question gains additional sup-

Lesson of Irredeemable

(French)

patriotism

as well as enlightened
self-interest, would lead the
people to keep up the value of

money";

paper

that

there

class

in

but

"was

the

it

developed

vast

a

debtor

nation,

directly in¬
terested in the depreciation of the
currency in which they were to
pay their debts."
They saw that
this

where their personal

was

in¬

terest lay, and

they were "speed¬
ily joined by a far more influen¬

tial

class;—by

Speculative
stimulated
paper

by

into

the
and

money,

largely

that

class

tendencies

whose

had

been

abundance
who

debt,

had

looking

of

gone

for

it

is

vise in nominal values."

in

the

eighteenth

.

Committees

.

of

experts

were

appointed
to
study
the
subject of prices,"—some¬
thing that has a familiar ring in
whole

these
eth

recent

century in the United States

*—and

the

following "four rules"

adopted:

were

of

of the twenti¬

years

"First, the price of each article
necessity was to be fixed at
and

one

1790.

one-third

its

price

in

Secondly, all transportation
to

was

be

added

at

a

fixed

rate

orbitant

prices;

continues:

"To

cealed by
a

with

appeared
result

reward

the

that

"every

the

of

the

To

spread ter¬
Tribunal
at

ordered to destroy
of any one found

was

the

dwelling
guilty of selling goods above the

price

set

often

found

by

law.

The

that

he

farmer

could

not

raise his produce at
the price required

anything like

law, and

tried

back

them

when

his crops
he

could

at

the

he

by

the
to

new

hold

cattle, alleging

or

not

afford

to

sell

prices fixed by law,

frequently taken from

force

and

he

was

for¬

Notwith¬

indeed, if he finally escaped with

this

plan
first

means was

his

life."

is

It

therefore,
new

that

about

quite

there

apparent,
is

nothing

black

market opera¬
And while the French evi¬

taken to evade the fixed
price im¬

tions.

posed, and the farmers brought in
as little produce as
they possibly
could. This increased the
scarcity,

dently gave: it a
considerably
higher criminal rating than it is
given in the United States today

the people of the
large cities

and

were

put

on an

were

issued

bearer

to

prices
or

to
tt

its

a

allowance. Tickets

authorizing

obtain

at

official

certain amount-of bread

sugar or soap or
cover

the

the

immediate

wood

or

coal

necessities."

found that this
plan, "with
divinely revealed four rules,

was

could hot be made to work well—

by the shrewdest devices. In
the greater part of France it could

even

pot be enforced."

In other




words,

—even

of

cause

evils

these

tampering
with the circulating medium of an
entire

was

nation; keeping

all

values

in

fluctuation; discouraging enterprise; paralyzing energy; undermining sobriety;
obliterating
thrift;
promoting
extravagance
and

exciting riot by the issue of
irredeemable

an

seem

to

currency." We
experienced some

have

the

extreme

measures

cited above appear to have
been
unable to stamp it out in France.
All
of
this
merely proves the

point that the law of
supply and
demand
should
be
allowed
to
function in a normal
way—with
a
minimum of laws
interfering
with the economic
set-up.

during

the past few
quite possibly for the

encouraged, by the

States

and

years;
same

—inflation brought on,

or

reason

at least

of unsound

use

money.

then

Again in France: "The National
which

Legislative

Assembly,

1793
of

over

twelve

the

issued

in

three thousand millions

assignats,

poured

succeeded

and,

hundred
into

the

of

these,

millions

over
were

and

And

yet Cambon steadily insisted that
the security for the
assignat currency was perfect.
.

.

"Everything was tried.
Very
elaborately he devised a funding
scheme

which,

taken

tion with his system of
in effect what in these
be

called

issues, was
days would

By various

persuasion or
tine
looming

ground,

degrees

of

force,—the guilloup
in the
back-

holders

—

connec-

'interconvertibility

an

scheme.'

in

of

assignats

were

urged to convert them into
evidence of national debt, bearing
interest at five per cent, with the
understanding that if more paper
were
afterward
needed
more
would be

among

ranks

masters

which

now

of

most

finance

to

as

skillful

stem

the

when

headway;

and

how

ments

useless

which

against

the

all

are

they

enact-

underlying

laws

of

There
all

developed

kinds

of

erty"—which
garded

sign;
a

by

but

good

pay

seemed

many

to

as

it proved

trade

be

re-

hopeful

a

to

prop-

be

merely

"certain

cunning
willing to buy and to

were

erties

"brisk

a

permanent

where

case

people

prices"

for

such

prop-

"in

assignats."
"It
was
simply legal robbery of the more
enthusiastic and trusting by the
cold-hearted

more

and

keen.

It

the 'unloading' of the assignthe the mass of the

was

ats

upon

people."
What

had

system

started

whereby

intended

was

gold

franc,

point

to

to

be

in

be

worth

one

the

to

February,
was

a

franc

paper

deteriorated

where,

these

out

one

"one franc in gold

francs

1796,

worth 288

in

paper"; and, finally,
paper francs became worth

practically
nothing.
As
stated
earlier, from an initial issue of
only

in

alike,

assignats; the

general,

rich

plunged

was

ruin from

into

end

one

and

to

na¬

poor

financial

the other."

-

Late in the year 1795 and in the

following
the

prices

year

most

on

some

of

commodities

common

reached levels of which—"reduced
to

American

lowing
"A

coinage"—the
typical:

are

fol¬

pound of bread 9 dollars; a
of potatoes
40 dollars; a

bushel

pound

of

candles

40

dollars;

a

cartload of wood 300 dollars;" and

comparable prices obtained for all
common

products.

As further evidence of the seri¬

which Dr.

ousness

White attached

to this

nature."

in

tion

devise

can

Thursday, July 27, 1950

.

sand millions of

pe-

"how

proves

the

are

400

million

money in 1789,
to more than

francs

in

paper

the volume

grew

business of deviating from
well established lines when deal¬

ing with

this

important question
finance, he remarks:
"Such, briefly sketched in its
leading features, is the history of ;
of public

the

most

skillful,

persistent

attempt

substitute

for

the

nance

bodies,
value

ability

and,

for

legislative

standard

a

to

fi¬

of.

schemers. Every other
attempt of
the same kind in human
history,
under
has

whatever

reached

kind if not in
show

the

laws

results

in

degree; all of them

existence

real

as

circumstances,

similar

of

financial

in

their operation as
hold the planets in

those

which

their

courses.
*

«

*

"Prices of the necessities of life

increased; merchants

were obliged
them,
not
only to
depreciation of their mer¬
chandise, but also to cover their

to

increase

cover

rose,

later,

in

throughout the
world, a national standard devised
by theorists and manipulated by

called

years

laws

of

and

made

recognized

risk of loss from

eight

vigorous
ever

natural

"forty-five thousand
millions of francs" of this worthiess money before a final halt was

fluctuation; and,

while the prices of products thus

which

wages,

had

first

at

However, before the final dis¬
carding of the paper money plan

gone up, under the general stimu¬

an

versal doubt

expedient

hope

of

tried

was

building

in

the

confidence

in

this form of
money, which expedient was the
issuing of a new
under the

tended
as

good

this

be

security

estate

was

To

"choice

constitute

public

set apart to an

real

amount

take

ernment

lands

mandats

possession

could

of

gov-

lands;

to

the price of the
determined by two

be

under

the

price

mous,

to

in

purchase

of

assignats." But the

ment

"continued

assignats at the

to

govern-

issue

same

land

the

old

time that it

discrediting them by issuing

was

cent

of

their

nominal value;
from this they
speedily fell to fif-

teen» and

after to five

soon

per

an(* finally, in August, 1796,
slx months from their first issue,
three per cent. This plan failed
—just as it failed in New England

been

the

whim

or

sembles

to

as

low

%

of

irredeemable

according to the
interest of legislative as¬

rather
of

than

value

based

upon

permanent

and

agreed

in

upon

throughout
the
entire
world.
Such, we may fairly expect, will
always be the result of them until
the

fiat

of
the
Almighty shall
laws in the universe radi-'
cally different from those which

evolve

at present obtain."

but he

imposible

*

result

nature

France

it

nearly

created

paper,

War."
found

were

history of France
logically developed in obedience
to
natural laws; such
has, to a
greater
or
less
degree,
always

*n 1737; just as it failed under our
owa Confederation in 1781; just
as *t fmled under the Southern
Confederacy during our Civil

Having

labor—the
daily
laboring class—went

#

their

per

and,

the

was

standards

they fell to thirty-five

employment,

preceding the first
irredeemable currency.

the

press

was

were

time

the new mandats.
Even before
the mandats could be
issued from
.

men

of

wages

the

at

as

regard

the

were

conse¬

down until, at a time when
prices
of food,
clothing and various arti¬
cles of consumption were enor¬

delays
with

of

wages of the

"Thus

one

laboring

out

'h<f f"™alities and
previously established

and

a

the operation of the
simp¬
of supply
and demand,

issue of

named

one

discouragement,

maufactures

destroyed. As

law

by the govby the buyer,

experts,

or

diminished;

lest

and

and

the demand for labor

quence

any amount of the
once

checked

thrown

funy equal to the nominal value
0f the issue, and
any one offering
at

commerce

type

gold."

as

lus, lagged behind. Under the uni¬

"mandats," in"fully secured and

of

name

to

..

circulation.

uni-

were

as

tide of fiat money
calamity
once
it is fairly under

ernment

Convention

mon-

them-

the most expert in any

among

Results of French Paper Money

con¬

informer of

value

Criminal

Strasbourg

that

main

White

goods

to the

of

goods discovered.
ror,

Dr.

tunate if paid even in
the de¬
preciated fiat money — fortunate,

for

"reasonable"— the

was

and

detect

farmers and shopkeep¬
system was established

spy
a

the following excerpt:

of these evils in the United

the

per

added

profit of the retailer."
standing the fact that

century.

profitably sell at the estab¬
prices; many went out of
business, while others charged ex¬

were

be

has

lished

by

to

the

it

not

him

was

of

early days in France it
found that shopkeepers could

they

cent

part

than

no

In those
was

to be

was

latter

worked

worked in this twentieth

league.

Thirdly, five per cent
added for the profit of
the wholesaler.
Fourthly, ten

per

that

seen

century

one-third
-

clearly

and a general
overboard of the law

throwing
better

"The

economy

of supply and demand

ers,
a

here

planned

port from

Currency

ranked

issue

on

standard

raise

to

power

the value of

the

great trading areas."

in

coin recognized in the commerce
of civilized nations, it intrusts to

to

changing

world's

based

redemption

possession

the

not

currency

idea

press

offset

re-

observation—something that
may well be given serious thought
by our leaders in national affairs
today: "Whenever any nation in-

the

and

satisfactory

so

the
most skillful and honest financiers
in
Europe.
Cambon, especially,

worst

encour-

to close the

ing

would

which

rate

the

were

policy; he

that

year

gram

work

to

Cam-

to the conclusion

came

suits, Dr. White makes the follow-

Review

forces

to be made."

was

commenting on the failure of
that four-point price control pro-

ex¬

rates,

payment

for

reflect

person

any

In

of day-to-day

exchange

flexible

death
on

before
concluded, in what

was

automatically.
From
Canada's
standpoint, much could be said
a

the

later" the whole price-control plan was abolished.

a

less

9

page

"that

finally
penalty

was

experi-

us

rescue

versally recognized

powerless

be inflicted

these
to

to

selves and their country from the
flood which was sweeping every-

riod."—all of

it

Exchange—which it did in November, 1793—and, finally, "about

the pres¬

permitting

corrective

prop-

offered to

was

aged the Convention

"that thought should
be given to the International

member

criminal's

And

enemies of his

concludes,
now

the

reward

order

transaction."

bon,
gold

international

conditions

well

a

made
seem

francs;..thing to financial ruin

The great finance minister,

intensified."
may

a

in

informing the authorities regarding any such criminal

money

ports, the risks inherent in mak¬
ing our exports dearer and our
imports cheaper would obviously
"It

a

a

buoyant demand for Canadian

be

of

should

ent relaxation of these barriers to

Under

fiscation

consequence,

of

contrasted

as

strous,

penalty for such ofmade death, with con-

erty, and

decreed

Ca¬

from

ling areas, a deterioration in our
already rather precariously poised
over-all

as-

was

was

who

ments, which

convicted of having asked,

immediate

conditions

Canadian

of

therefore, could be an increase in
imports from both dollar and ster¬

trade.

other

also

payment in

a

and

ror

re-

any person

same

States."

United

of Canadian goods moving to the
United States market so long as

cally

the

United States

on

purchases

"The

trols

by

At

disappearance

would

nadian

im¬

prospects

payments and, conceivably, an in¬

Review

expected

markets.

the

dearer dollar would probably have
little or no effect on the volume

for

ultimately
export

present premium

this

at

might

Canada's

who

accepted assignats at
required to "pay

or

"the

fences

and

paper

one

l'ine of three thousand

Later,

countries

accept

discount"

national payments.

Assessing some probable reper¬
cussions from an early revaluation

to

signats,

between

and' "any

.

.

Napoleon Restored
When

as

Sound

Money

took

over,

Napoleon

was
practically bankrupt;
evidently had strong ideas
what constituted an honest

to

maintain these assignats and man^ats at anything like their nom*nal values, the government fin-

reliable currency; for he is
reported to have said: "I will
pay

a^y

live

gave

up

the attempt and al-

and

cash

or

I

pay

will

nothing.
never

.

.

.

resort

While I
to

irre¬

towed that "bargains might be deemable paper." He never
did;
depreciation made
in
whatever
currency and France, "under this determin¬
show that the
assignats continued Pe°Ple chose.
Since May, 1797, ation, commanded all the gold she
to fall. A forced
loan, calling in a both assignats and mandats had needed. When Waterloo came, with
billion of these, checked this
fall, been
virtually worth nothing." the invasion of the Allies, with
official

issued. All in vain, The

tables

of

.

but only for

was

passed

property
left

of

France

moment."

a

A

"confiscating
all

Frenchmen

after

July

14,

law

the
who

1789,

And

Dr-

nation

properties

Press

supposed to resuit in added
security of the paper
money; but the desired
results

Heavy fines, or imprisonment, seem not
to have been attained,
were
imposed on "any person
It was pointed
out
"the
that
selling gold or silver coin, or men
who had charge of French
making any difference in any- finance
during the Reign of Ter-

.

White

sums

tries
money

to

make

take

the

the

up

French experience in the
inS brief. statement as
wbat is likely to happen

and who had not returned."
These
were

.

foliow-

to

just

when

a

printingplace

of

rea* money:
"So

ended

reign

of

paper

in France. The twehty-five
hundred millions of mandats went
the

her

on

own

soil,

with

a

change
of
dynasty,
and
with
heavy expenses for war and in¬
demnities, France, on a specie
basis,
experienced
financial distress."

no

severe

In

the

money

into

war

common

heap

of

refuse

with the previous forty-five thou¬

contrast
with
Napoleon's
straightforward approach to this
subject
of
public
finance,
the
manner

dent

in

which

Franklin

somewhat

the

late

Roosevelt

Presi¬
met

similar, but far less

a

dif-

Volume 172

Number 4928

.

.

.

The Commercial and Financial Chronicle

(357)

ficult, situation upward of a dec¬
ade ago seems worth recalling to
mind at this point.
In

those

nomic

bad

very

early

1930s

our

structure.

surely
Business

way.

standstill;

eco¬

in

was

a

at a

was

unemployment
was
bank failures were a

rampant;

daily occurence, and - things in
general were pretty much upset.
But

did

we

exactly

what

.

sorted

,

irredeemable

to

paper

He

just

that—

those

unwise

have

to

nomic

and

social

standards

re¬

From

about

,

the

close

.-t

,

of

.

.

J

$20.67

ations)

(the steady price

did

Dr.

stood

His

voluminous

$35.00

to

an

gener¬

(re¬

ounce

sulting in the so-called 59c dol¬
lar), we seemed to be creating
new

values;

but,

unfortunately,
values cannot be that easily

real

created.
•

gold

sure

buried

do have

we

lot of

a

Fort

at

Knox, Ken¬
tucky—said to be about equal to
the combined supply held
by the
remaining countries of the world.
That
ounce,

gold,
rated
at
would appear

value

of

22

some

$35.00

to
billion

fin

have

a

dollars;

but at the former value
an

of $20.67
it is worth only 13 bil-

ounce,

lion

dollars.

the

It

will

be

that

seen

expedient hastily adopted by

the

Roosevelt

administration

Fort

Knox

than

thin

gold is nothing
air.

This

more

clearly

ports the well-established

theory

legislative

There is much

said

the gold

more

the

on

executive

or

fiat,

that needs to

broad

subject of

standard, stabilization of

international
be

permanent

as

able

that

currency

and

shall

unchange-

for

Dickson

heart

uring

cloth

store.

That

But

the

at
is

local

drygoods
subject in itself.

a
a

following points of this
question

money

do

pertinent to the present discussion.
seem

of

Gold

Standard

Was Treachery

The damage done by this act of

treachery

on

ers

that

an

mean

the part of
stand

we

lead-

our

to

appreciable financial

the
following will demonstrate:
We, consistently, are an exporting
nation—our
exports exceed our

imports

dollar value; and this
difference is normally adjusted by
in

shipments

of

gold

to

the

United

States.

Formerly one ounce of
gold would buy only $20.67 worth
of
our
exports; but under this
new

arrangement

gold

buys

exports.
leaders

displayed

nomic

any

brilliance

marked
seems

up

largely

gold

ounce

great
when

gold?

our

it

and

so;

very

of

one

of

$35.00 worth of such
Does that show that our

It

accounts

recent years,

in

all

of

shrewd

our

one

tions

should

dealings and activL

both

her

forthrightness

and

America;
sented

he

this

ably repre¬
in the prin-

very

country

rencies.
tate

dollar
In

dent

Yet

to

we

suddenly

not

fairness

to

Roosevelt,
believe

the

I—a
that

late

Particular interest in connection
f
lacklnf a 80Und specie backing
the Pnme cause of inflation.
Our

forebears

most

did not establish

specie

a

basis

preconceived
silver

the

he

never,

prehension.
admitted

In fact, he,

himself,

much: For early in his
first term he publicly stated that
as

without knowing what the results

would

be

he

felt obliged




"to try

in

Auditors

our

currency on

because

idea

of

that

in abundant

States—for

quite

some

gold

were

days

and

supply in
in

the

those

ident.

r e s

was

The

stated

true, particularly as respects
they undoubtedly adopted

ing men of that time, to whom
this important task had been en-

with

that

of

and

And

honest

basis

medium

since

the

for

of

cir¬

a

exchange.

present article has

been

heavily supported by ideas
ably advanced by Dr. White as
to what causes inflation, it seems
highly appropriate and fitting that
so

be

brought to

White's

close with Dr.

a

words

own

used

in

end-

jng
masterpiece
on
public
finance, "Fiat Money Inflation in

the

City Bank
Brooklyn, later taken over by
Irving Trust Company.
Mr.

be

in

Dierkes has been

of

a

charge
newly-

sion

t

Pen¬

Trust

division of the

Marine

G.

Bertrand

the

America.

in

the

they

as

large

a

Trusts.

demands

from

compa-

tion and service in this field,
Coordination of the activities of
the

^9

Marine

Midland

its service.
as

Mr, Paull

yice~President of

The Marine Midland Trust ComPany °* New York where he has
TPr J^any yf3!,8 been in charge of
"s Personal Trust Department,
*

*

Thomas H.
the

Mortgage

York

City

'

*

*

♦

Quinn, President

Inter-County

and

Title

Guaranty

Company

reported

of

of

New

July

on

25

that

there was a gain of 56% in
the company's earnings in its first
six

months

and

this

of

year

as

com-

pared with the corresponding pe-

Cliff

the

Traders

history

of

France

Communist
far

the

Bank

of

service

Jan. 1, 1932.

on

brought

struggle,

and

in

*

*

put

upon

American

yet

with

no

from

admitted

$790,840

June

on

Joseph

a

was

War

national

of

Brooklyn

N

it

Y

indi-

was

1 »rooKiyn>
was inai
in the Brooklyn "Eagle" of

Assistant

Bank

&

Trust

Co.

Central

straight¬

mond,

and

by

methods

National

Bank

of

*•

way,

by the world's most
costly experience, rather than by
yielding to dreamers, theorists,

cently
N.

D.

of

Marzano,

his

sold

Bank

declaimers,

refuge of
"There

or to that
is

'the last

Harris
served as a Major in the
U. S. Army Air Force.

scoundrel.'

a

is

lesson

a

*

in

which it behooves every
man to
ponder."

all

Arthur S.

this

thinking

of

#>4-

Vi

4-

sistant

First Nat'l N. J.

irre

interest

Commerce

with

the

of

re¬

in

the

Newark,

institution,

assumed on
July 17 the post of Vice-President
of

National

the

State

Bank

Reference to

Newark.

Mr.

zano's resignation from

The

Liberty

500,000

JERSEY

CITY, N.

JL
J.— Forma-

1

been

be

J

A1A

the appointT\ IT

4-

of

A

t*

Mr.

and

1

As-

Downtown

bank's

the

Aft

Agu-

successively

Manager

Manager

of

X.^ Aguirre as As-

IjnA

Vice-President.

tional Division.

to

President,

Interna-

He will continue

associated

with

that

de-

of

Mar-

had

zano

43
as

as

in

President

zano's

with the

been

bank

for

and succeeded his father

years

Mr

1938

Mar-

Richard, Jr., resigned

son

Vice-President of the Bank of

Commerce earlier in the year,

learned from the Newark

Miama, Fla., bank.

a

added

tion

by

*

Bergen

Avenue, and will
At a meeting of the trustees of
corporate securities, state The Dime Savings Bank of Brookand municipal bonds and shares iyn, N. Y., on July 21.
David E.
in investment trusts.
Ellis was appointed Auditor and
in

Officers

of

the

corporation

are

Hubert J. Dierkes Assistant Auditor, it was announced by George

Hugh A. Kelly, Chairman of
Board; Hubert D. Gallagher, C.
Johnson,
President
of
the
President; Wm. C. Heppenheimer, bank. Mr. Ellis started his bankJr., Vice-President; Bernard Ro- ing career with Barclay's Bank
detsky, Treasurer; and Harry E. Ltd., in London.
He was also
Roche, Vice-President.
with the Northern Trust Com-

*

*

The Fidelity and Deposit Com¬

to

National

of Maryland

and

its

of

Little

having
dividend, while

a like addi¬
($150,000) was brought about
sale of new stock.
The

the

June 30.

Clifford Michel Heads
Travelers Aid

Appeal

Clifford W. Michel, President of
Dome
the

Mines, Ltd., and partner in
banking firm of

investment

Carl M. Loeb, Rhoades and C°m1138

pany>

accepted

^

.

the

of

post

£eneral Chalrman f°r the 1950
*,und Appeal °\the Travelers Aid
So™etL?W Z°i
Mr; Mlchel wJb head a committee of over one hundred leaders in
,

*

,

business

and

industry.

He

an¬

that the goal of the cam¬

is

$309,000,

maintain

the

to

be

services

of

to

used
the

So¬

and

nounced

number of

a

Leo

an¬

Hicks & Price Staff

changes in their field
home
office
organizations.

*s "wise^'for the~p~asT~two
years Manager 0f the Oklahoma
cu
o££ice
has been elected an
iwv,

ca*

both

corn-

panies and named Manager in
Brooklyn, N. Y., succeeding the
iate Thomas J. Ternan, Jr.
In

the same office, Allan INJajor Race,
formerly an Assistant Manager,
has been advanced to the position
0f Associate Manager. The branch
1

continues

under

Vice-President
Charles

'

A

.

E.

_i.

A

__

the

H.

Hoge,

R.

i.

H/Tm.

U

m

WAM

direction

C.

services

Murray Joins

promotions

Secretary of

The

travel
assistance for
the
blind,
handicapped and aged; location of
runaways;
and
assistance
with
problems of family relationships.

other

it

difficulty.

affili¬

have

Baltimore,

of

pany

and

Bank

of the increase,
resulted from a

part

enlarged capital become effective

ate, the American Bonding Com¬

ceeds

*

The office of

the Montclair Bank is now operated as a branch of the National
Newark & Essex Banking Co.

and

S|!

$300,000 has been
the
capital of the

Montclair, ciety.
The Travelers Aid Society is the
taken over by the Naaa
Newark & Essex Banking ™ly soc a agency in the city deNewark in accordance with voted
solely^ to helping persons ot
detailed in our issue of all ages wno
are^away trom home

ter office of the bank.
*

Si!

of

of Montclair, of

Corporation has

*

&

was

sistant

announced,

Bank

$3,000,000 by the sale

total

nounced

On July 3 the business of the

partment at the Rockefeller Cen-

been

to

*

A

the Bank

Commerce,' fourtded
by his
father, Vito Marzano, 60 years
ago,
was made
in our issue of
July 13, page 177.
Richard Mar¬

tion of First National New Jersey

firm will maintain offices

National

Office of the Comptroller of the

of

Assistant

Company

announces

17*1 Aa

has

sistant

Corp. Is Formed

Trust

of Juan

ment

*

Kleeman,

Colonial

New York

*

of

*

Trust Co. of Oklahoma City, Okla.,
has increased its capital from
$2,-

stock

who

J., and severed his connection

pany

rector

dividend

:'i

$150,000,
Richard

Rich¬

Va., as
Vice - President,
leaving in April, 1949, to become

stock

a

Rock, Ark.,

June 15, page 2496.

Hanover

Company,

of New York for over 15 years,
during which much of his time
was spent in the New York State
and New England banking divisions.
In
1947, he joined the

financial

the

by

July 13.

ap-

Vice-President
Trust

capital of the

Bank

$300,000.

Peoples

tral

and

Col.

about

cated

of New York, it was announced
by Harvey L. Schwamm, President.
Mr. Harris was with Cen-

honest

921

National

of Dubuque,
Iowa, from $300,000 to $600,000, as
of
June
23, has
been
brought

tees of the Lincom Savings Bank

Bank
N. J.,
tional
Co. of
plans

meeting

a

C. Harris has been

pointed

an

deal

An increase in the

First

Currency.

tion in

of

at

effective June 30.

Deen elected
been
eieciea to
l0 the
me board
Doara of
oi trusirus-

1950

crisis

new

National had been $100,000 before
the consolidation, which became

on June 27, it is indicated by the.

1949.

vantage

The

cap.^al stock 0f $25,000, while the
capital stock of the First

wood, Kessler & Bartlett Inc., has

30,

Total

ago.

of the American

finance, and
stagnation
Gr
distress, but with a steady
progress in prosperity,
we shall
see
still
more
clearly the ad¬
in

bank

Ford
Bartlett, an engineering
executive, and President of Lock-

30.

year

the

finances

Civil

recent

own

initial

consolidated

$500,000 of new stock. The enlarged capital became operative

it is
"Sunday
News" of July 16, to take a posi-

a

the

which

pressure

French

upon

our

The

of

and

0f

assets increased to $1,304,543 June

riod

financial

during

War

serious

more

than

the

at

Franco-Prussian

latter.

the

Bank

charter

common

paign

glance

we

the

profits of not less than $162,482.98.
The Iron Bank had a common

as

France":
"if

the

of

with

Sea

He entered the

*

banks

through this new division will
enable each of them to broaden
the sc°Pe

Bank

This, it is stated,

of Pension Plan

creasing

Cashier,

National

Paull

associated
of

Bank

of "The Dime"

Group, Inc.

number

State

Assistant

Mid-

ago

National

the

created

Associa¬

35 years

career

old

Mr. Paull will

the only

as

National

Mr. Dierkes started

banking

also

contrary

the specie basis because the think-

safe

under

of

Jackson, Ohio,

National

$200,000, divided into 2,000
common
stock, par $100
each; the initial surplus will be
$300,000, with initial undivided

trollers, the Institute of Internal
and other banking or¬

nies and employers for informa-

probably

United

earlier

our

knowingly, did a dishonest act
during his long public career; but
I do believe that he was dealing
with
problems many of which
were
beyond his power or com-

Trust

July 20
by George E.

in-

is

na¬

Presi-

lyn

ary,

tion of Bank Auditors and Comp¬

made

^^Gver thaTmone'v ^ nation of the s^
divi"
th.°rough believer that money sion is said to be due
from

cur¬

Republican

Chicago, 111., and the BrookCompany.
In Febru1943, after 15 years with the
Brooklyn Trust, Mr. Ellis entered
the employ of "The Dime," ad¬
vancing to Assistant Auditor in
December,
1949.
Mr.
Ellis
is

pany,

active

an¬

was recognized as the outstand- is not a
new
service
ln^ diplomat of his time, as well Marine Midland banks,
as .a leading educator, and—of are presenting managing

hesi¬

devaluate

an

phrase-mongers,

59c.

to

—fully

did

accord¬

of the newly organized
Lexington State Bank, Lexington,
N. C. During World War II, Mr.

the

that

Inc.,

nouncement

clPa* capitals of Europe; he land

StfnC.k?hit
speculators
for th s schfmf£
sort of 'Reform' which

their

humani-

tarianism in the handling of these
matters.
He
thoroughly
loved

customers.

theory

stabilize

Group,

Executive Vice-President and Di-

of the greatest ex¬

pounders of the

land

ing to

Vice-President of

a

Mid¬

Marine

sanctioned

Furthermore, this tampering with
the dollar has placed us in the
unfavorable position of not prac¬
ticing what we preach; for we
have been

been elected

they

gold bargain undoubtedly appeals
to

Trust Company of New York, has

forward

doubt

for

Vice-

Midland

eco¬

hardly

without

justice

internal and external,
rightfully gain the highest
respect of the other nations for

suffer

loss—as

filled

was

to

as

it

Abandonment

White.

Paull,

It

her

culating

meas¬

as

Bertrand

conduct

the

for

George

President of The Marine

his

trusted, regarded this

yardstick

the

clearly

ardent desire that

the measuring of values
in international transactions as is
common

an

States

writings

his

First

shares of

ganizations,

gold;

definitely-stabilized

title

capital

Becker,

was

the desirability of de-

a

that

the

Jackson,

CAPITALIZATIONS

P

ticularly

on

promoting

Andrew

an

currencies and the like—and par-

veloping

Bankers

and

OFFICERS, ETC.

should prevail in the world—and,
especially, that America should so

sup-

that real values cannot be created

be

with

is

quite misleading—for fully 9 billions of today's rated value of the

by

reveal

ties,

To be

toward

ounce

for

great

so

it

had

with

REVISED

,

welfare of these United

an

NEW BRANCHES

our

of the nineteenth century, there,

influence

the

will be

Civil
War,
and
continuing
throughout the remaining decades
,,

in

consolidation is announced

of the Iron Bank of

bears.

comparative value of only 59c. By
this
marking up of gold from
which

The

CONSOLIDATIONS

NEW

sulting from generations of com¬
mon sense
displayed by our fore¬

m^all
probability, ^was no individual who exerted

at

News About Banks

radically

change
governmental,
eco¬

whole

department

agency

home office.

that

moves—moves

tended

and, in addition, we depreciated the U, S. dollar to a

money;

the

and it will require
of effort to undo many of

years

our

did

times;

many

these

earlier leaders and experts say a
nation should never do—we re,,

something."

21

...

Treasurer

United

o£

.

RaiK
ComDanv will
Light and ttaiiways
company, wiu

become

associated

Hicks

with

&

Price, members of the New York
stock

Exchange,

Salle Street

1

South

231

La

Mr * Murray will spe—
'

cialize in utility issues and

mutual

investment funds.

of

Hickey.

formerly

CHICAGO, 111.—Leo E. Murray,
Assistant
.

As-

S. Gronick Partner

Manager in Atlanta, sueMr.
Wise as Manager in

In Garfield & Co.

Oklahoma

City and in turn has
been
succeeded
in Atlanta by
James J. Duncan, formerly a special agent of that office.
Among
other

changes

announced

Wil-

Garfield

street
f

&

New
.

Co.,

York

v

,

0

60

Beaver

City, members

ctnnwVvrhani?e

® '

.

liam L. Lowe, in Syracuse, N. Y.,
has returned to his former posi-

announce that Samuel Gronick has
been admitted as a general partner

tion
as
Manager,
following
a
year's leave of absence.
John C.

jn

Gardner,
Manager in
Syracuse
since August, 1949, has been appointed an Assistant Manager of

the
M

firm.
Gronick's

'

admission to the

.

,

,

tlrm was previously reported
the "Chronicle" of July 12.

•

22

The Commercial and Financial Chronicle

(358)

Continued

from first

materials

cate

page

as

to promote the national
of materials for non-essential

use

tnat

fense, particularly excessive and

to

inventories.

unnecessary

Thus

find that

outlays to help the farmer, social
welfare expenditures, housing subsidies of one sort and
another, and veterans' benefits, which together have come;
to

we

For

much as national defense expenditures in
and with some relatively minor exceptions,
have been and apparently still are regarded as untouch¬
able. Funds sent abroad as bribes designed to assure sup¬
port against communism, and other foreign outlays be¬
lieved to be essential to our own defense must, so it is now
.said, be substantially enlarged, not reduced. Thus we find
that the ten billion or so—which dispatches now speak of
as
possibly but a beginning—must for the most part simply
be added to other expenditures as previously planned.
Now it happens that, despite record-breaking volume of
business, the 1951 budget as planned even before Korea
roughly

(1) Showed much

as

.showed

so

enough, accordingly, that the President
and his advisers are
wondering how a huge further en¬
largement in national expenditures is to be managed with¬
out giving a fillip to the
inflationary tendency already in
ovidence. In parts of his recent
message to Congress on
the Korean situation, Mr. Truman
gives evidence of an
awareness
.seems

of the existence of such

to have

a

problem, and at spots

a

vague sort of understanding of some of
fundamentals, but much more explicit formulation of
policy and much more vigorous attack upon fundamentals
are
required.
its

a

We may obtain the gist of the President's ideas from
few paragraphs of his Korea
message:
"We

tion

can

achieve

by employing

ized.

And

we

some

immediate increase in produc¬

and facilities not now fully util¬
continue to increase our total annual

can

use

the increasing skills of

•our

growing population and the higher productive capac¬
ity which results from plant expansion, new inventions
and more efficient methods
of production.
❖

"With this

enormous

the strains involved.

economic strength, the new and

recommending can be under¬
ability of our economy to bear I
Nevertheless, the magnitude of the

demands for military purposes that

are

now

which is already operating at
level, will require substantial redirection
an

economy

foreseeable,
a

very

high

of economic

re¬

sources.
❖

*

The

the

that the increased national

and that in the process
with its resulting

we

take action to

in¬

defense needs will be met,

do not bring on an

hardship for
*

must

every

*

inflation,

family.

$

looked
on

wonder

or

we

should adopt such direct

necessary to assure prompt

measures

as

are

and adequate supplies of

goods for military and essential civilian

I

therefore
the Congress now enact
legislation au¬
thorizing the Government to establish priorities and allo¬
Tecommend

that




it

it

they

No;

up.

and

re¬

immediately. People didn't
wonder

hundreds

of

it

if

had

true,

was

been

went
and
millions of

mixed

traded
dollars

No

Now,

and

testimonial

to

honest,

I

handling
doesn't

of

of

responsible

and

all

news;

that

mean

mistakes.

compliment to
think it is a

generations

accurate,

use.

panies

such

phone

and

of

We do make honest

er¬

great

the

and

speed

the

com¬

plexity

of the news we handle,
that the margin of error is really
slight.

very

Let

It is

a

will

why

another story

people

our

think

I

and

hundreds
on

you

illustrate

that

story of news that

print,

are

it

we

point.

willing to trade

of millions

of

securities

great

dug up

scarce,

and a

steel companies

many

and

great

of

working on that
printed a

the

offer

tell

to

such.

as

that if

you

I

the

smaller

somewhat

sent

story, and
in

reporter out on the
he picked up a letter

the course

tained

an

ceived

at
it

of

offer.

time which
It

had

been

con¬
re¬

brokerage house. He

a

over

to

a

subeditor.

Well, here it is. Somebody seems
to be making an offer, so what do
we

do

about

few

hun¬

two

a

a

is adequate to

year

into

tickler

of the

major

will

this month,

"red flag." On the

a

hand,

it

the

for

is

and

reporters has visited

company

hoist

system

compartments,

hoist

won't

Zilch

a

red

Com¬

Rubber

for instance, for six months.

addition

this

to

bread-and-

routine coverage of finan¬

cial news, which, quite truthfully,
is
a
somewhat
dull
procedure,

routinized

expensive

and

very

very,

to

handle, we have, if
you
will, a glamor part of the
business. Being a national news

to

tivities

which in the trade is called group

ticker
nal"

I

the

New

on

the

of

in

the

"Wall

it

illustrate

does

Dow-Jones, despite

interest

our

time

to

There

time

effort

an

serve

other

would

who

the

be

us

take

no¬

We

to

have

send

our

with

their wives

interests.
are
•

you

no

the

telephone

information

to

over

thought the

out

shopping

other female

or

companions. They were to report
what they paid as compared with
the

OPA

store

ceilings for
tell

and

particular

a

what

us

the

store

was.

One
was

thing

we were

interested in

whether the chain stores were

If a secretary of having less or more trouble ob¬
serving ceiling prices as compared
calls, for example,
with the independent stores. We
announcement of a divi¬

company

with the

dend, the
call

man

back

on

the

the copy desk
company and

check with the secretary to see
that is actually true

if
and he really

obtained
vey

and

a

a

We

printed

spend

mean

to say

their lives

print

that people

trying

fraudulent

to

news,

interesting

sur¬

expensive one, of
it

Journal"

Dow-Jones
I don't

very
very

course.

Street

made the call.

us

best way was to

reporters

telephone.

some

will

on

time in 22 cities.

from

efforts, some
efforts,
and

world's

of

During the war we were check¬
ing price ceilings on food in the
early days of price control to see
how they were being observed.

client's

surprised at the people

call

same

is

frank

are

kind

by having 100 reporters
working on the same story at the

things

serve

the

but

readers'.

Dow-Jones
Some

other
We

same

lot of cities. I think I
some

record

operate,

some

are

is that

thing, checking the
a

set

once

means

lot of reporters doing

a

same

thing in

that

the speed at
tries

to

Dow-Jones.

body's

the

good long thorough look
leaps into anything.

a

it

There
about

and

have

we

have

you

is

sensational episode, but

a

think

which

That

news

on

national viewpoint, we do
amount
of
work

journalism. All that

Jour¬

Street

a

tremendous

a

District

York

"Barron's".

in

and

from

D o w-J ones

it?

Incidentally, there were no spe¬
cial precautions; it was just a sys¬
tem
working.
The
subeditor

companies

a

organization and looking

We

a

small

police than to the financial
community and a little later we
printed quite a lot about the ac¬

obscure steel producers.
We

none

butter

link between a gentle¬

a

in Brooklyn better known

give us "hot news" with the naive
assumption that we will print it.

of

du

maintain al¬

we

only

second

quite

offer

being made for the stock

have

or

In

we

subterranean

one

Tele¬

General

Group Journalism

never

market,
including
some
very
antique facilities. We heard a re¬
port that a really astronomical
was

all

are

Steel,

States

on

rather

pany,

the

before

many syndicates, groups
individuals, were busily en¬
gaged in grabbing up all the basic
steel production that was in the
a

there

stockholders, and perhaps

flag

stock, that steel company

ago

extremely

so

the

other

Among other things, there was

to take

years

another

sent

would have skyrocketed.

didn't perhaps

illustrates

news.

steel was

about

Attorney

tell

me

which

he

it

to

we

have

had the

man

very

of

one

American

as

may

some

making the offer.

So

out

but

don't

which

but I think, considering

rors,

a

Telegraph,

United

This

tried to check

over and

had five reporters

don't make

we

minimum

obviously

divided

check the bona
fides of the group making the of¬
fer. Before we were finished, we

word

great

it

people

results.

that

a

elaborate

if

keep track of them.

reporter

story,

is

more
us

kinds
of
companies and public
interest in them varies. With com¬

visit

the

of securities just like that. I think

Dow-Jones,

a

reporters

have

that when Dow-Jones printed that

and

is

most continuous contact. Then you

item,

turned

"First,

other

calling upon a re¬
sponsible official of the company.

if

wait

are

occupy

period has elapsed without

Market Information
acted

They

us.

It screams at

one.

Disseminating Stock
market

which

systems

a directors' meeting,
a financial report is about due,
something of that sort.

dred

*

we

so

designed to show when there is

that

the

way.

any

or

4

page

in

it

have - very
human
we have devised two

great many filing cabinets. One

Motors,

from

with

we

Pont, and

Continued

stock¬

going to be

bill.

of

"In these circumstances,

now

is

full understanding of the fact

during the
reconversion period, as you know,

necessary programs 1 am now
taken with confidence in the

sure

a

(4) Realized that rigging the money market at best
merely defers the day when the fiddler will present his

Several

❖

business

quite helpful to

"the rich"—who must be taxed.

men

output each year, by putting to

in

a

company's

potential stockholders,
customers, to people who

tickler-file

consumption is to be reduced or held at current
levels, it is the consumers—the rank and file of them, not

acted

It is natural

the

or

Now,

that if

growing increasingly clear that the inflationary forces
generated during the last war and during the New Deal
years prior thereto—and certainly never vigorously com¬
bated during the more recent Fair Deal
years—had not
yet run their normal course.
Naturally They Wonder

its

to
do

which might be of in¬

to

holders

Fair Deal fol-de-rol which

But apart

that.

.

terest

a

Gave evidence of

(3)

their

cover

we

public information, and

are

news

any

memories

Revealed

which
we
obligation to

an

that

means

which

determination

a

realizing sense of the degree in which
production could be increased by improved productivity,
possibly with nothing other than a more intensive effort
on the
part of the wage earners of the country.
(With
proper adjustment of hours of work if need be, and a
willingness to produce as once they produced, an addition
of $10 billion to our output would be as nothing.)

and others, to

lay up "stock piles" of this and
from anything in the nature of hysteria
produced by the sudden appearance of war and at the
possible threat of a much larger scale war, it has been

That

terribly expensive—and, of course, some indica¬
of being able to persuade Congress to go along with

(2)

there, shortages of mate¬
instances, and unexpectedly insistent buying
of some types of consumers' goods had begun to be re¬
flected in prices before the Korean war started. Of course,
the outbreak in Korea, as unexpected as it appears to have
been to the great rank and file—and, we must say also
apparently to the powers that be — almost inevitably
started a movement, more or less panicky on the part of
consumers

evidence of

is

some

have

we

the

day-by-day affairs of
approximately 8,000 corporations.

him.

Scarcities of labor here and

rials in

print,
cover

reports, dividend actions,
actions by the board of directors,

into the New Deal and

tion

basic news-

our

financial

to cut
now

oi

news.

our

quotations

counter

really to reduce non-essential public expenditure—a de¬
termination which indicated a readiness on his part really

sizable deficit.

a

more

aware

the first place
we
have a practice that if we
print quotations on a security, we
feel
an
obligation to cover the
news
of the company whose se¬
curities
we
.quote.
Well,
that
means
that, including over-the-

couragement if the President:

recent years,

oe

have our rules

gathering job. In

part, we should feel a great deal more en¬

our

10

we

Let's talk about

promptly adopt some general
measures to
compensate for the growth of demand caused
by the expansion of military programs in a period of high
civilian incomes. I am directing all executive agencies to
conduct a detailed review of Government programs, for
the purpose of modifying them wherever practicable to
lessen the demand upon services, commodities, raw mate¬
rials, manpower, and facilities which are in competition
with those needed for national defense."

Political Untouchables

so

Basic News-Gathering Job

must

we

wen

is

and

safeguard

the

"Second,

it

them,

purposes; to prevent inventory hoarding; and to requisi¬
tion supplies and materials needed for the national de¬

Washington atmosphere for more than a decade-and-ahalf. The development of the notion that there was great
virtue in prodigality, and its exploitation by the poli¬
ticians, has, of course, made it natural, if not inevitable,
that vast sums be spent to catch the votes of this and that
element in the population which could not only then accept
but demand gratuities with a good conscience.

Thursday, July 27, 1950

.

necessary

security; to limit the

As We See It

.

.

ticker.

in

the

and

One

"Wall

over

the

amusing

have

incident "resulted from that. Be¬
fore I reached the office the next

but

morning, I had had several tele-

Volume 172

Number 4928

phone calls from the

The Commercial and Financial Chronicle

.

.

.

gentle¬

same

the

President

would

direct

Gen¬

My secretary told me Mr.
So-and-bo had been calling from

eral

MacArthur

38th

Parallel

out-of-town, and that I had better

lor

the

call

say

that that story has been ade¬

man.

the

operator.

identified himself
of

rather large

a

about

noted

read

Kerby,
tell

me

for

survey

your

and
Mid¬

quite behaving right. Mr.
I
don't expect you to
which chain it was, but
sake

God's

tell

wasn't

it

me

mine." I assured him it wasn't his,
he thanked me and

and

don't

have

hung up.

of

lot of that survey type

a

national is¬
national trends inside of

literally

sue

and

check

24 hours, and

that

organization

Our news

story.

can

a

have the results of

in the hands of our
the
next
morning's

survey

readers

in

All this is not

ing

that

wire

system, of which I
spoke to you before, runs rather
like
line.

the

All

telephone

party

country

a

bureaus

hooked

are

and they chat back and forth
and
exchange information
and

up

gossip. They are very apt to call
on

aid.

for

another

one

to

in¬

For

inci¬

and

styrene,

point

potential
have.

a

The

course

do and

we

news

you

coverage

finance
When

of

war,

all

that

cial

organization.

course,

them.

is basic to tell
what

That

portant item to

in

vestors

very

story about

is

a

synthetic

rubber

rubber

also

and

manufacturers.

means

com¬

interesting in

market

lot

a

It

all civilian

to

Stock

York

Newman

Co.

&

with

offices

to

also

indus¬

stance, if Pittsburgh is working on
a
steel
story
the
manager
at

der. Mr. Wallach

&

was

what

ascertain

to

Since

curity

our
activity in the
business is primarily

United

States

and

Henry Buckley to Be

broker.

as

Prior

an

individual stock

thereto

he

as

and

claim

don't

I

all brilliant stories, but
give you a practical look

are

it

will

at

the

find

in

For
was

of

kind

that

news

Dow-

originates which you don't

Jones

the

indicating that the
was going to ask au¬

story

Government

thority
think

12 there

July

on

Well,

allocate steel.

to

that

in this

confirmed

was

I

White
House press conference made it
pretty clear that the Government
morning's

The

paper.

allocate steel.

is going to

had'a preview of the

Then,

we

Council

of

Advisers

Economic

forthcoming report to the Presi¬
dent. Well, I can't say that has
been
confirmed
yet because it
hasn't

I

but

released,

been

sus¬

boys had a
pretty good idea of what will be
Washington

pect our
in it.
On

July 11

printed the story
tentative

Government's

the

of

we

planning for manpower mobiliza¬
tion. On July 10, we printed esti¬
mates
for manpower needs and
possible effect on industry.

their

Likewise,

July 10, we printed

Stocks in

vs.

a

War Economy

Railroad income bonds and second grade
which had been

even

been

fixed interest bonds,

As measured

by the

index, Income bonds had advanced to 69.3 by the end
This represented the best level reached since the
inception of the average in January, 1947. While the index was
not in existence during 1946, the bonds that make up the average
last

week.

reached

postwar high of about 90 during that period.

a

by the averages,
the

below

1946 peak.

As meas¬
about 23%

Income bonds last week were
The Dow-Jones railroad stock average was

below its 1946 high.

13%

clientele,

our

that the

for

also

had

We

story

a

previously intended

arms

Europe

printed

going

are

to

be

traffic

there

question but that earnings,
It may also be taken for
granted that Federal income taxes will be increased fairly soon,
and there is a strong possibility that the excess profits tax may
be reimposed.
It is this tax uncertainty that has presumably
before

hardly
continue

can

will

taxes,

motivated

the

recent

heavy

Interest payments are

bonds.

be

any

to

rise.

Another factor

denied the next day,

that

sured

it

was

but I am as¬
denied because

story had been cabled abroad,
and European nations were un¬

our

happy.

deemed

officials

The

desirable

to

it,

deny

but

it

arms

of course, being diverted.

are,
On

had a story that
situation was going to

July 5,

the Korean

bring

a

we

shift

aircraft

result

orders

for
is

the

Air

of

in

fighter
another

a

which

speedup

in

planes.

(2)

Good

we

the

printed

United

a

one.

On

June

story stating that

States Ground

Forces

would be ordered into Korea and




yield

for

specific

a

maturity.
Sound and aggressive

(3)

duction
roads

whose

Those

take

of

were

the

credit

over

considerable

a

time,

revenue

evidencing

record

period

of

growth.

(5)

Reserve

sinking fund,
provi¬

and

protective

indenture

sions.

ity, in my opinion, meets the fore¬
going requirements.
The various
types of issues outstanding permit
selective purchases by most
classes of investors, such as:

(1)

(2)

And many others.

fullest

advantage

of

any

opportunities presented

by

a

The business of the Port of New
York

Authority

There

is

a

necessary

competently and aggressively

producing

managed,

are

is

future

issues of

substantial

at least as vulnerable marketwise as good

grade common

stocks.
There

is,

would

War

II

road

common

warrant

much

of

course,

greater tax protection

afforded by

a

stocks

increased

more

the

tax structure such as prevailed during World
still leave sufficient earnings available for rail¬

However,

to

more

dividend

than justify

disbursements

present prices and to
a broad scale.
If a

on

stringent tax is coming, it would, in turn,

substantially

would consequently
be calculated to dampen enthusiasm for lower grade bonds. Also,
it would materially reduce funds that might, otherwise be avail¬
able for company purchases of the bonds. This would remove one
of the factors contributing to the better feeling toward these bonds
reduce

the

reported coverage of charges and

in recent weeks.
Wnere

regular

annual

income is no consideration

there are

analysts who are inclined to favor above all sections of the
list the highly speculative non-dividend paying stocks.
In most
cases these stocks represent the companies whose bonds are also
many

selling at substantial discounts. If rail earnings are to boom, and
a boom is the theory behind recent buying of low grade bonds,
the stocks of these roads should, percentagewise, benefit even more

substantially. This is particularly true if the anticipated
are to be used for, aggressive debt retirement.

ings

earn¬

VAN

VECHTEN

common

stock of the Speer

Company offers possibili¬
substantial long-term cap¬

appreciation

and

increased

The

company

established
and

its

plant,

government

purchased
at

from

fraction

a

of

value, and for improvements
St. Marys.
About one-half of

at

the proposed capital expenditures
of

$500,000 for 1950 will be used

sales.

Earnings in 1949, amounting to
$2.80 per common share, were the
largest for any other year except
1943 and new peaks are expected
for

1950.

It is expected

rapid, net
increased

that

sec¬

ond quarter 1950 earnings approx¬

imated

those

the

same

of

were

the

first

quarter

equal to $1.53

with $1,06

compared

a

ia

period of 1949.

Quarterly
dividends
of
17%
cents plus an extra
of 30 cents
brought total 1949 dividend dis¬
tributions up to $1 a

share.

payments

conservative

and it

are

most

reasonable to

seems

Such,

assume

ings materializes, the amounts de¬
pending upon the funds required
for expansion. The common stock
is

commonly quoted 18% bid of¬
at 191/2 and at the offered

fered

of

the

market

yields 5.13%.

of

111.—The
the

Executive

Midwest

Stock

Exchange has elected to member¬
ship Henry W. Meers, White, WeM
& Co., Chicago; Frank W. North,
Barret, Fitch & Co., Inc., Kansas
City, Mo., and C. Comstock Clay¬
ton,
Clayton
Securities
Corp.*

sales having
over

times. Pro¬

duction

to

CHICAGO,

particularly

and

Boston.

reached

sales
new

year.

the

Committee

1930 has been

peak in

this
Capacity
Of

Schuyler Van Vechter

a

peace

or a

of

ST. PETERSBURG,

Fla.—Stan¬

ley C. Shaver, Jr., has joined the
the largest staff of Shaver and Cook, Florida

war economy.

It ranks third among
manufacturers

Joins Shaver & Cook
(Special to The Financial Chronicle)

operations should continue under
either

balance for additions to its Punx-

Midwest Exch. Members

in

its

since

growth

May

increase the capacity

to

plant at Niagara
Falls, New York, by 25% and the.

side

is

the outgrowth
of a
business

a

times

that higher dividends will be paid
as the anticipated growth in earn¬

(Speer Carbon Company)

1899

3.7

graphite

as

SCHUYLER

11

used

its

share

income.

bonds.

was

Therefore, the
this Authority have been

assured.

Vice-Pres., Lee Higginson Corp.,
New York City

ital

increased

imately $2,290,000 was expended
for capital additions and improve¬
ments, about one-half of which,

they

its

Bond I Like the Best."

The

of

producing

producing metal cast¬
ings, 1.6 times.

when

and

particularly

proven

ingots

years,

capacity

furnaces

arc

operating

revenues

selected by me for the title "The

earnings bulge.

new

installed

electrical
ten

its

Individuals.

be expected to

the

last

Banks (all types).
Insurance companies.

(6)

net

of

the

double the capacity of its re¬
cently acquired and rapidly grow¬
ing electronic division which al¬
ready accounts for about 40% of

(5)

the weak side may

annual

sutawney

The Port of New York Author¬

one,

In

and of those

of

buying

on

and

branches

man¬

satisfactory

Trust accounts.

is still

other

of' graphite elec¬
important single
the expansion of

use

most

In the last three years,
approx¬

Substantial

(4)

Estates.

every

product,

agement.

(3)

inclination to use available funds for the re¬
the debt burden and fixed charges.
Some marginal
thus able to restore their credit standings completely.

showed

ally

its

electric

(4)

such

29

out¬

investors.

adding to the market appeal of these second

largely drawn off by taxes. During World War II and the
subsequent period of high earnings, railroad management gener¬

arc

growth has closely paralleled

metal

not

Force

requirements

would

Here

in

suffi¬

a

securities

Its

the

by the companies themselves if earnings reach expected levels and
are

Although its products

ties in order to reach most types

buying of second and third grade
deductible before arriving at taxable

grade bonds has been the possibility of heavy

third

and

listed among its cu;s-

are

tomers.

industry.

interest.

di¬

verted to Asia. That was officially

having

armament

of

sion sets

standing and with varied maturi¬

ties for

has been ditched. On
July 7 we predicted that syn¬
thetic rubber production would be
it

know,

look for:

we

of

amount

down-side, second grade and third grade bonds have in the past

bill would be ditched, and, as you

issuer

An

and

Obviously it is generally expected that with a prospective re¬
program, or under a full war economy, the railroads
are assured of a high level of traffic for a long time to come. These
expectations appear fully justified. With a sustained higher level

industries.
Many leading producers of steel,
chemicals, dry-cell batteries, auto¬
mobiles, glassy radios and televi¬

trodes,

Dow-Jones
of

widely di¬

a

of

group

for

pointedly ignored than railroad stocks
1946, have recently come to life. There

heavy buying throughout the list.

by

used

versified

the increased

morning.

tax

recent

mo¬

generators while its spe¬
are

erating
success,
and
generous
yields. In selecting revenue bonds

Carbon

pending

the

in

arc

closely related, its markets are
broad, diversified and expanding.

greatly increased. As a matter of
fact, we printed an exact figure.
That
we
confirmed
the
next

on

that

story

have

of

users

gained much in popularity,
due to their tax exemption, op¬

still many rail analysts who look on railroad stocks,
those of the fundamentally sound roads, as having
greater appeal than these second and third grade bonds. Regard¬
less of the length of an earnings boom and no matter how high
the earnings may go, there is a definite ceiling on the income from
a bond.
There is no such rigid ceiling on the dividends on common
stocks. By the very nature of the instrument there is a definite
limit on the price appreciation for any callable, non-convertible,
bond.
There is no such limit on common stock prices.
On the

the

occupy

more

since the bubble burst in
has

ured

newspaper.

average

instance,

a

Bonds

Korean

exclusive

are

they

the
States

to

part of all sizes and kinds of
cialties

the

sold

are

tors and

Bonds

bonds

trodes

furnaces and electrolytic cells and
manufacturers
of
dry cell bat¬
teries.
Brushes are an essential

necessary

Gov eminent

Jr.

installations, but also lor
steady replacements. This division

to

investment accounts. However,

(1)
cient

list of the stories con¬

the

the

years

Re¬

situation
which I hadn't seen in any other
newspaper,
and
I read a good
many. I don't claim that all these
cerning

in

place

in

through last week's edi¬
a

"bond"

United

enjoy a
only f«r initial orders

new

three broad categories, electrodes,
brushes and specialties.
Its elec¬

the

No comment
s

products

and

use

the

and

used

graphite
in

consumed

of its business may be divided into

Like

i

Thralls,

are

sales.

and

Bond

broadest

revenue

tion's of the "Wall Street Journal"
and made

to

sense.

a

was

partner in Buckley Brothers.

re¬

selection

"The

is

Jerome

Carbon

on

I

Buckley has recently

consolidated

the

confined

word

been active

Bonds

electronic component parts which
now account for about 40% of its

demand not

Best"

Henry W. Buckley, member of
the New York Stock Exchange,
will become a partner in the Stock
Exchange firm of Walston, Hoff¬
man & Goodwin, Aug. 1.
He will
make
his
headquarters
at
the
firm's New York office, 35 Wall
Mr.

in

marks will be

of

Partner in Walston Go.

Street.

se¬

Securities,
following

Co., specializing in Arbitrage.

public Steel is doing, and so on.
I went

Government

Tax-Exempt

with Shaskan

Pittsburgh might get on the wire
and ask his pal in Chicago what
National Steel is doing or call
Cleveland

stock of

Bonds)

at

Street, New York City, on
Sept. 1. Mr. Newman was a part¬
ner in Newman, Baum & Hollan¬

the

remaining 50% of the
Speer Resistor Corp., has
become a large scale producer of

(Port of New York Authority

Exchange,

54 Pine

im¬

very

important to in¬

would be obviously

New

and Herman K. Wallach will form

requirements,

companies.

rubber

graphite products in the United
States, and since mid-1949 when
it acquired Jeffers
Electric, Inc.,
and

the

the

to

means

The fact of that speedup

business.

the

and

are

number of

a

the

Take

Security I Lihe Best

the finan¬

it

Take that small

instance.

a

as

print it and

we

the shift in aircraft
for

with

story such

news

business

it

thought

confronted

are

great general
a

I

the line of factual
of a business and

newspaper

we

2

President, Thralls & Co., Inc.
New York City

Charles M. Newman, member of

do the other

so

but

newspapers,

might show

page

JEROME THRALLS, Jr.

Formed in New York

by way of boast¬
exclusives. Of

from

the
shortage
in

would

styrene

Continued

23

up

get

we

panies and

paper.

The

effect

Newman & Go. to Be

tell where the battle lines

We do

use

would

Line of Factual News Coverage

story

your

your

not

I

that

dentally,

stopping point

a

fighting.

tries

the

Midwestern food

report that a
western chain's meat departments
were

as

disregard

quately confirmed.

morning in the "Wall Street

Journal"

I

he

and

the President

as

chain. He said, "I
this

did

I

to

(359)

carbon

and

Theater Bldg.

24

(360)

The Commercial and Financial Chronicle

Continued

jrom jirst

government force

page

advance

the

Private Associations

pretend

a

government,

is

advance

to

lhe

c.

Weliare

Mate

become

What is call id the Welfare State

wage

limited

zation

responsibility

citizens

all

livelihood

nmrinp^ip01 P^tPrnrf^^rnH^
distribution

of

all

income

In such

Welfare

State

the

function

private associations which
gaged in,
struments

to

act

derlyinS

as

ernment in
meeting
responsibility.

its

velopment of such

to

or

.actor

in¬

responsibility of
establish

to

correlative

gains

But

should'be

thentic

of

House

operation

organize

Co-

citizens

olate

and

farmers.

curity

against

hardships

will

be

opponents

of

the

The

assured.

se-

.orecast

in

proposal

of

to

the
our

official

nascent

Welfare

guarantee

income to

an

But, what value would
income

guaranteed

d

recent

farmers

if

there

have

for

not

ac-

were

compulsory Welfare State (a few companying
guarantee
of
the
million surviving "libertarians!")
.unmasmg
that income?
inc
mrcimsing power of tbat
believe that when political force
a0w can a farmer's buying
power
is used to compel men to associate,
guaranteed unless there is a
and to operate their associations,
control
of
the
prices which a
in conformity with political pro¬
.armer
must pay
for what he
grams, then the inherent vigor of
juys?
How can industrial prices
a free people and a free
economy
je controlled without a control of
is destroyed.
They believe that
ndustrial labor?
our material progress will be re¬
The
difficulty of persuading
tarded by this loss of vigor far
labor unions to support a Welfare
more than it can be advanced by
..ate, which would enslave them,
the disciplinary efficiency of com¬
....

pulsory

cooperation.

that

sure

our

will become
A

good

a

They
are
spiritual progress
spiritual retreat.

example

the

of

two

opposing concepts of government
is

found

in

the

government

choice

between

protection

ernment

control

zations.

It

gov¬

labor organi¬

of

been

has

and

our

govern¬

mental policy for many years to
protect labor unions from destruc¬

tion

by,

subservience

or

the

to,

economic power of large employ¬
ers.
In
order
to
promote
an
eauant

bargaimnTnower

o

Li„L

„
E®."w
L

iawrtoUtTanihzr;a\™eerds in'
such

that

numbers

they

could

confront employers with a c' oice
between
paying good wages or

being

unable
properties.
The

to

operate

their

of

powers

em-

ployers and of organized em¬
ployees have been abused by both;
but
so
long
as
neither could
dominate

oi

the

other

the

principle

voluntary cooperation has been

maintained.

The government has

always had

and

a

police

parties to
their

should
to

power

abuses—and

break

seriously "harmful
power

to the
use

to' restrain

and

the

conscript

is

use

of

and

to

to

oolice

nunish

different
power

reward

to

right-

doers.
Wages and Prices

should

by the Socialist leaders

Labor Party in Great Britain

by promising

Stafford

however,

the

Cripps

miracle.

a

Sir

(Chancellor

of

an

no

fundamental

that

engulf

else

or

in the most calamitous depres-

us

sion

of

history. It is

our

de¬

no

fense of National Socialism to

that

sert

lo

Our objective is
through a planned econ¬
without
the
direction
of

carry

omy

labor.

State must become totalitarian
become insolvent, it is only

reveal

."

exactly

or

neces-

how

our

.

Three

years

-mpeUing men to remain in
ing and ln aSrlcu tu e.

nun-

Of course there is no fair comparison between the cruelly ensiaved labor of Russia and gently
labor

of

Britain.

It

would be silly to prophesy that an

street

is

unwilling

analyze

this

student

no

man-in-the-

science

unable

or

fiscal

to

problem.

But
teacher of political

or

shun

can

the

tiresome

task.
cal

scientists

remarks in

scrutiny of politi¬
will

I

extend

print to include

my

brief

a

analysis of this fiscal problem,
(,see appendix). But, to shorten
the present discussion I will now
°ffer only a few conclusions:
(1) We have devalued the dol¬
lar, borrowed over $200 billion
in

and

various

other

national

our

2xk

income

times what it

in
was

20 years ago.
(2)

the

farmers

it into power.

voted
be

and

silly

as

as

Hartley

That would

calling

HartIpv At

the

,
.„

who

law.

„

TaftRl]t

Hut, it

!s even more sllly to contend that
Welfare

a

State

can

fulfill

promises, and guarantee
livelihood and financial

We

have

increased

taxes

expenditures

from

$31.60
per
person
in
$268.23 person in 1948.

1929

to

(3) In adidtion to payments for

'or the

Year

general welfare of
other people. There

ourselves and
will

be

serious question of

a

ability to finance the
costs

another

of

continue

nancial

(4)
for

thus

great

to

our

illimitable
if

we

our

fi¬

war,

exhaust

resources.

The

State

program

which

the

against

hardship

to

its

brouSht forward this
year wi» add another $25 biUion
to annual national expenditures.
This calculation
staff

decent

security
all
able-

of

the

Senate

Expenditures

in

Departments; and
Senate

made by the

was

by

Commitee

the
was

on

Executive

reported to

the

Committee

a

year for the support

a

infant

an

Welfare

State

major

only just begun to bite!
Any competent stuaent of

fiscal

and

operating

become

lation

so

of

see

compensation
and
working conditions for all essen¬

detailed,

so

rights

the

private

that

the

State

people

tial workers.

Difference Between Police

Advocates of the Welfare
insist
that
political

unlimited

and

backed

by the coercive

total

should

wno

own

that

have

be

not

their

spend

to

It is

as¬

they should

their

be

power

of

women

States;

Federal

taxes

and

-

and

would

spending other people's

Of

this

course

they

they

made

are

more

Businessmen

politicians

slappers
first

pictured
exploiters,

are

fat
who

call

work

and

name

to buy things
money

wouldn't

Is

Welfare

which

buy for yourself.

State

Private

Substitution

for

mon

for

are

many

and

things of

parks

school facilities.

and

state

and

take

to

proposes

Welfare

and

more

more of a
man's earnings to buy
things for his individual use which

he ought to be free to buy less or
of

more

according to his individ¬

ual need

or

substitute

desire.

a

It proposes to
standard

common

of

living and a common, compulsory
pursuit of happiness for the indi¬
vidual rewards and the individual

pursuit

of

inspired
raise

happiness

the

themselves

highest

which

American

have

people

through

cooperative

the

enterprises

standard

of

to

volun¬
to

living,

coupled with the greatest individ¬
ual

liberty,

But,

enjoyed

ever

million human

why

by

130

beings.

shouldn't

you

buy

health insurance, or any
insurance against
misfor¬

your own

other

tune, from
surance

your

own

selected in¬

organization?

Millions

millions of people have done

Why

shouldn't

that

done

it.

then

your

own

with

Why

you

shouldn't

labor

organize

ganized

our

resources

organizations

use

to

or

in

cooperation

Labor

unions

doctrine

that

of

action

"make the annual tax obligation

refuse

pay strike benefits when men
to

pay

work; why should they
unemployment

benefits

as

fire

*

the

them.

established

and

evil,

fire

We

meet
upon

political

lives

our

with

bullets.

or¬

to

our

such

fundamentally

like

and

con¬

work

bullets

should

are

fighting
with

make

it

an

everlasting rule to end political
tyranny and denials of individual
liberty just as soon as the emer¬
us

has

overcome.

Time

quate

will

not

permit

exposition

of

posed

ade¬

any

how

social responsibilites that

all

demand the creation

to

sociations of
would

like

free

a

to

people.

refer to

the

are sup¬

compulsory Welfare State
be fulfilled through
voluntary

of
can

as¬

But I

the stimu¬

lating and comprehensive exposi-:
of our capacity and
willing-,

tion

to meet these

ness

which

is

responsibilities,

presented

by

a

repre¬

sentative group of industrial lead¬
ers in a book
entitled, "The New
Outlook in
Business," published

by Harper & Brothers in 1940.
When I list among the 22
authors,1
Paul
G.
Hoffman,
Richard
R.
Deupree, Robert E. Wood, Walter
D. Fuller and

ham,

that

would

be

any
I

Wallace .Brett Don-

will

you

think

understand why I
reading of this book

a

more

enlightening than

further argument by

believe that

of

offer

me.

the plans

these

grams

mists

and

practicing

more

Also,
pro¬

econo¬

trustworthy

guidance than those of the theo¬
rising economists who are befud-i

dling the American
with

roseate

people today

visions

of

make-

a

believe Welfare State.

Major

Excuses
are

for

Welfare

State

two

major excuses for
political support for

substituting
self-support,
and
political
dis¬
cipline for self-discipline, which
merit brief discussion.

One
some

can

pro¬

nationally

demands

emergency

There
you

unemployment insurance
alone

employers?

taxes t0 the Federal, this would

of the American people more than\ not

such

a

State

child

local

imum power of

com¬

common

But the

take

gent calamity that enslaves

Associations?

use which may
wisely be paid
through government, such as

either
add

should

been
There

purchasing
impar¬

and

temporarily necessary to de¬
velop and make effective the max¬

and

your

you

free

a

the natural

trols

ways

such

is

your

night to find
with

and

as

back-

day

impose

necessary to pre¬

regulators of prices and

ment

by

for

you

are

But, it should be

by

you

would

as

cold,
while

as

those genial

are

corpora¬

Emergencies

isn't

secure

of

Furthermore, it should be ac¬
cepted that, in the emergencies of
war, national disaster, or serious
economic
disorder, the govern¬

money with politi¬
with
businessmen.

than

The

its aid in

Government Powers in

told that

are

pri¬

duction.

investing their
cians

provide

we

tial

money.

argument

present

private monopolistic controls

petition

openly because even hum¬
people resent being treated

ble

income.
If

vent

by professional politicians
trained and experienced in the art

of

our

coopera¬

trade unions
associations; and the

trade

giad
for

spent

money

forward

go

of commerce and to
preserve com¬

morons

trusted

money.

sys¬

compulsory

a

organization

restraints

them

amount to 30% of present national

(5)
State

man,

United

and

advance

are

a

cooperatives,

power

the

of

were

proven

responsibilities

could

of

powers

tions,

their individual welfare is that tne

it.

every

We

government

upon

the

social

accepting

the

as

a

Apparently the concealed justi¬

masses

to

legalizing such collective projects

fication for taxing people so that
the government may spend their

to

we

the

vate, voluntary associations:

evitable.

earnings

of

willing

government would lend

State of National Socialism is in¬

individual

be

preserve

our

tive

of

as

backbone

a

patiently to expand the

property

emergence

Weliare

mature

to

without

smotnered by political

so

has
will

the other hand,

on

meet

reduced, and private en¬

so

terprise

Chairman, Senator McClellan. He

in

who

socialism.

labor

and

upon

common

private enterprise, we have
ample
evidence
that
we
could

confiscatory, the regu¬
management

has

tem of

of

the infant Weliare State must

reeds

who

vigor and productiveness of

the

problems

you

knowledge of history

a

resolved

that, with the development of its
vast public projects, taxation will

estimated that the increase in the

industries and to determine

proper

and

man

If,

that

has

exercis- lax burden to pay for this initial voluntary cooperatives to buy and
ing a .suPreme authority to plan program would be $16-3 annually sell things for you? Millions of
and. dl.re^ d)e °Peration of all for
people all over the world have

the

no

family is already paying

$1,000

tary

introductory

Welfare

a

the
a

over

for

ever

self-reliance

roads

Federal

and

becomes

do

wish to become depend¬
ent. Three weak reeds upon which

in¬

lean.

in¬

ways

year.

small

earner s

greedy,

For the later

it

addeu,

like children. So

The

per

on

to

weak

man

proven lact that tne average wage

expenditures.

promptly1 ensbvehh^IndS^^^^4
workers

are

$7U0

taxes

made

later,

the issuance of directions

nounce

comes

exceed

government has been able to carry
the enormous load of its present

national defense and interest on
uespite all its good intentions, the dedt the national government is
Labor Government had to an- expending about $25 billion per
.

three
no

to

dollars to

rection of labor.

those

sumed

To make it plain why a Welfare

to

of
or

which

tions, is foredoomed to failure,

sary

eitner

paid

controls,

as-

complete socialization

a

taxes,

millions
ignorant

taxes

prise, while relying on the taxes
capital produced by private
enterprise to sustain its opera-

flated

Exchequer) said in February,
"No country in the world,
_s
iar
as
I know, has yet sueneeded
in
carrying
through a
planned economy without the di¬

State and Welfare State

government




Socialism,

1946:

programs

assume

plained,

the

No

Under

Welfare State

If,

is

^ when cle/rif
it becomes evident

gfam js

wnich

offerings

strangely indifferent. Tne inairect

of

the rest

there

no such

inairect

rational bodied cltizens> without

of

utterly
police

when

becomes

agree

the

wrongdoers
from

these

require both

deadlocks

to

But

exercise

correct

to

even

inability

welfare.

met

was

"directed"

economic

yet

and

lihood

financial

employ-

wage-earners

working and living conditions

operate
voluntary
associations
through
which
the
opportunity to earn a decent livegain

that

reason

simply

what
you
can
do
better, more
cheaply and with greater satisfac¬
tion, for yourself. In so doing you
can
save
yourself from depend¬
ency on political favor, political
integrity and
political
wisdom,

resort

spenaers

to

more

concerning
people
are

neoole"?

tional

assure

Indeed the inevitable march of
political control is now clearly

can

and

to

and

cost,

of all.

au-

Voluntary

which

in

ie

this

an

and

«

ing together for mutual protection
and

service

free

fh
f Cw i f
Qtaf"
nt
to maintain an orderly society
labor that a Welfare State cannot under rigid control of a national
meet lts responsibilities to all the police. But, the attempt of a govPe°Ple without subjecting all the ernment to eliminate the mcenpeople to detailed regulation of tives and profits of private enter-

adequate
legal
Society of men and
are living and work-

legal structure

left

be

coercing

the

and

too

exasperateu

direct taxation ot in¬

political

comes,

we

that

so

securUy provided

and

or

sense

*abor UP°" which the welfare of of our political economy might at
workers depends?
It least make it financially possible

the

a

who

government

industrial

to

labor

is

by increased

become

voters

will

by

taxing

the

exhausted

to

j,?™ eZomk

of such candor,

cost

without controlling all the other

government

our

costs

a

livelihood

decent

a

an

structure for
women

is

all

in

ment

h

comoulsorv

The

thfe *°°d' *** iu*1

could

xiow

assumed

th^t

from

J

the

in

members

un-

an

will

your

As

direct

fhe Welfare State

find

to

point which I am trying to
briefly is that the major
offerings of a Welfare State are

incomes.

When

organizations,

your

moueiaie

or

puted

*de Products of agriculture, the nascent Welfare State mus
forestry and mining, The largest become eventually a State of Na-

Welfare State

a

concede

or

of
run

unable

are

make

votes

your

are

Ac

ought

shelter

or

u*e raw materials of industry that

agencies of tne gov¬

or

factor

s0ll>

a

en-

affect, production

or

distribution must be

employment

(7)

more

men

The

oe, paid by persons

representa-

which

ahvin^ .f \*e cost of products of honesty, in the Welfare State pre¬

all

are

wju

reasonable

of

and

us

political

when

today by the average
family nave been carefully com¬

terms

"Give

tbe

and

wage-earners

plain

be:

as

tives

of reasonable prices for

We cannot forget that

gov-

of

WOuld

to

in

small

mucn

offer

not

dollar they

The major part of all taxes

are, ana must
ot

to

they

do

of every

Thursday, July 27, 1950

.

work?

tu)

i

use

compel
government direc-

to

bribe

and>

^erviCeS for the workers.

and

witn

eminent

requirements.

/iue

thp

products in conformity

require the equalifor
all
other

compensation for the owners of
properties which are used to pro-

to plan

power

their

force

use

Why

farmers

wages

consumers

to

tions?

and, inevitably, the deter-

uiination

ity cannot be met without giving
the government

of

no

regiment the workers

obedience

for any important group of

groups

financial security against the
hardships that*may result from
unemployment, ill health, disability or old age. Such a responsible
and

to

would

a

workers would

of assuring

decent

a

promise

continuing and imperative duty.
Then the fixing of a

may be defined as a government
which assumes the direct and unto

wage-fixing

government

.

anxious to

so

security
through
a
politically
planned and directed economy is a

earner's

..

_u

they

cents out

earn."

into the service of a police state?
Why do they not admit the truism
that
the
promise
of
economic

direct responsibility for the wagelikelihood and security,

the

to

40

to

weliare.

that there will be

of force

Doomed in Welfare State
general welfare.

are necessary

general

Then why are

.

.

out of

is

the excuse

men

that

becauseJ

make too much
money

others, they should be

com-

-

pelled by taxation to share their
gains with those whom they ex-"

Volume 172

ploit;
are

because

or,

more

should

Number 4928

•

localities

some

their

prosperous,

be shared

with

The Commercial and Financial Chronicle

...

gams

poorer lo¬

calities. Let

law

supreme
was

uitre

by which

of

our

that

land

of law*'
government

our national

us disregard the coun¬
ter-argument that the forced serv¬

coula deprive a man

ice of the

and

support

to

.

"due process

no

of the liberty

himself

protect

and

dependents

his

7 hr

Hi

if

administration. These ag-

essary

giegate
but

*))<)//,■>.»• it'i'li

t

would

costs

toxerable

tional

be

burden

income.

But

should

munities

maintain

to

the

favored

com¬

taxed

away

defense

common

promote the general wel¬

to

and

or

be

welfare.
enable

It

could

the

nim to

not tax

to

government

take

his individual welfare

care

of

the

individual

welfare

Or

his

of

fare.

But, it is a proven fact that neighbors. It could not deprive
if every dollar of income in excess nim of his "unalienable right" to
of

fair

a

compensation for

services,

sonal

for the

or

private properties,
into

the

this

would

the

Federal

United

of

use

needed

to

ist dogma mat the individual citi¬
zen
snould
be
made
the
bond

works of general

for

value.

public

A major

"uue

the

national

must be obtained

direct

prive

a

indirect tax deduction from the

giain

on

nues

earnings

of

the

great

workers of small

So the

comes.

by

a

of

mass

moderate

or

of the

revenues

in¬
ex¬

welfare,

invented

a

new

of law" with which

process

reve¬

general

have

courts

tne

part of all essential public
or

the

of

servant

government can de¬

farmer of the right to raise

his

consumption,

own

he
obeys
limiting, the
can raise and
which he can
national gov¬

unless
orders

government
amount of

land for his

own

grain he

panding Welfare State will neces¬
sarily come from increased de¬

fixing the prices at
sell it. Today, the

ductions

ernment, by using this new "due
process of
law," can deprive a

those

from

who

the

earnings

the

are

beneficiaries

of

of

proclaimed

this

additional

for

excuse

paternal

a

collection and spending of a work¬
er's earnings,
is that voluntary

cooperation will fail to advance
the welfare of the cooperators as
far

compulsory
cooperation
would. It is argued that the thrift¬
as

less

unfortunate who most need

or

protection, will not
themselves.

sure

in¬

or cannot

It is also argued

that in any industry a chiseling
minority will break jiown the best
devised programs for preserving
an ideal balance between
produc¬
ing and consuming power. As one

he

as

the

of

right to spend, to
invest his own earnings

and

save

government spending.
The second

worker

wishes,

economic

the

for

support and protection of himself
his

and

family.

compelled
transfer

be
which

can

now

to
pay
taxes
substantial part of his

a

earnings

He

the

government so
that
it
can
then
provide such
economic protection for him and
to

for others

cides

to

the government de¬
the interest of the

as

in

be

If

10

20%

to

<j>f a man's sub¬

sistence

earnings can be taken
him today there is no legal

irom

barrier

from him
which, ac¬
table NRA experiment, I am fam¬ cording to British precedents, will
be required to support a young
iliar with these arguments and
Welfare State. In such a political
believe that I can
the

of

administrators

the

of

no¬

30

to

against

40%

taking

tomorrow,

appraise their

merits with the aid of

unusual

an

will be
associations,

what
voluntary
of

economy,

use

private,
with,
perhaps, an unusual impartiality except to serve as pressure groups
to try to elect and control public
of judgment. I still believe in the
officials so that, in the political
voluntary self-government of in¬
distribution of a worker's earn¬
dustry, which was the announced
objective of the NRA. I never be¬ ings, he may get back as much as
lieved in the compulsory political possible after paying a few mil¬
lion political employees for spend¬
government
of
industry
which
NRA dabbled in, while flounder¬ ing his money for him?
For
such
lowly and
limited
ing down the road to Limbo.
functions private associations may
There will always be chiselers
of

amount

experience

and

black marketeers to sabotage

and

subvert

and

cooperative

every

program

of private associations

political

governments.

and

ness

social ostracism

effective

tion

criminal

more

prosecu¬

discipline
recalcitrants.
is always some sympathy

to

There

for

than

is

the

who

rebel

live

to

man

against government
right as a free

his

asserts

and

work

as

are

a

free

he

pleases. There should not be the
same
sympathy for the cheat or

sharper who will not abide by the
rules of fair play adopted by his
neighbors and co-workers.
And

that

so

It

dominant

a

would not be accurate to de¬

associations

fine

"private"

as

or

"voluntary"

be,

afraid

of

monopojj^s^but

they have been educated to^fecognize only a

business man?;g$?hent
They
tolerate
labpr
monopolies that curtail
tion, create scarcities
prices with a ruthlessnegs that~no

monoply.

business

being
the

management

dared

ever

into

oppressive

Welfare

TheyJ:a|e

app^ov^f of
monopol&lf ofc- a

although,^6|fpiten-

State,

turies the

mio^jp^ly

exhibit.

to

seduced

common

trade

denounced

mockeries

always

of

vol¬

free

themselves

sory
service to
monopolies operated

Once

upon

a

time

it




was

increase

in

the

But

the

dollars

of

lar. Then
tional

of

Then

industrial
rise

the increase of

came

debt

billion.

of

the 60-cent dol¬

the

$200

rise

of

and

consequent
prices and the

wages

industrial

artificial

than

more

came

na¬

lifting

agricultural

of

prices.
So

have arrived at

we

inflated

national

largely

a

income

sociations.

in

influential factor

an

sory

more

tion of $1 trillion.

But, it might have sobered the
President

his

and

Fair

iriends if he had also

in

1929

the

Weather

pointed out

Federal

Treas¬

spending $268.23 per

was

person.

Also,

pointed

out

debt

per

1929

and

should
have
national

he
that

our

in
was
$1,721.80 in 1948.
(Treasury
Dept.
Reports;
See
Almanac

World
Doc.

person

$139.04

was

Senate

and

1949:

bright mathe¬
matician could easily figure that,
since
the
national
government
spent, as the Treasury reports,
150, infra.) A

about 5%
in

of the national

income

about 20% in

1948, if

1929 and

this

rate

won't

there

continues

increase

of

left
long before
reach the President's goal of

for

be

income

any

private spending

we

$1 trillion.
Of

politically
economy

planned

of National

and

dircted

Socialism.

APPENDIX

advocates

spending

Welfare

the

of

plated,

State

drastic

the

that

of

increases

recent

necessitated

World

contem¬

to be anticipated. They

or

assert

been

is

taxation

increased

War.

Second

by the

that

But,

tax

have

years

war

ac¬

five years ago and,
after an abrupt decline, Federal
expenditures
have
been
rising
again—not to pay the costs of
that war—not to pay the continu¬
ing costs of national defense —
tually ended

but

to

for more and more
expanding projects of

pay

and

new

the Welfare

State.

are

the unavoidable

costs of national

defense, the pay¬
of interest on debts, and the

the comparatively small cost of nec¬

authentic

tion

raises

of

dreadful

the

how

would

we

ques¬

be

able

finance the illimitable costs of

nations
we

international
in

learned

War.

It

war.

Second

the

is the fond

Great

bankrupt, as

become

can

World

hope of com¬

capitalist nations
themselves
and

bankrupt

into

communistic
reestablish
an

of

acceptance

dictatorship

the confisca¬

a

to

orderly society.
If
fear

there
of

war

fense. how
$25

is

billion

a

a

McClellan

must spend

that

we

for national de¬

can

we

dare to spend

additional

each

year,

largely to make life easier in our
own

and

other nations?

In addi¬

L.

Waddell &

amounting to 30% of present na¬
tional income, to pay for Federal
expenditures. This would "make
the annual tax obligation of the
American people" (to support na¬

tional,

State

ments)

"more

of

and

local

than

40

dollar they

every

is

illusion

an

so, it should be
the government must

make

of

out

and

more

are

more

collect

to

ment

and

more

taxes for larger and
penditures. However,

more

larger

ex¬

any student
of income tax returns knows that

Gray.

ard

staff

the

direct

as

of

sources

Bache

of

revenue

indirect

to

more

&

Co.,

101 Vz-

(bpecial to The Financial Chronicle)

„

,

WINSTON-SALEM, N. C.—Fred
McKenzie

M.

ciated

has

become

McDaniel

with

Jefferson

Co.,

asso¬

Lewis

&■

Greens¬

Building,

boro, N. C.

With Thomson
& McKinnon
iSpecial to The Financial Chronicle)

GASTONIA, N. C.—John E. Setis affiliated with

zer

Thomson &

income
are

ex¬

Gruss & Co. Admits

public hostility rises,
political spenders resort more

and

C.—Robert

N.

Joins McDaniel Lewis

hausted and

the

&

McKinnon.

Furthermore,
tax

Stix

Market Street.

West

mainly from

living.

of

with

has been added to

Jr.

and moderate incomes. Future tax

those who need mo^t of their in¬
come to maintain a decent stand¬

Norbert H;

—

The Financial Chronicle)

to

GREENSBORO,

is collected from persons of small

come

Mo.

affiliated

With Backe & Co.
(Special

money

people, in order to
make it possible for the govern¬

is

the Midwest Stock Exchange.

continue to
rich people

poor

LOUIS,

Co., 509 Olive Street, members of

evident that

and more

more

ST.

Zahner

L.

sedulously

by
liberal
politicians that taxes

:

u

1

Stix & Co. Adds

out

earn."

♦

< <»■

,

(Special to The Financial Chronicle)

govern¬

cents

with;

associated

is

Reed, Inc., 1012 Balti¬

Avenue.

more

burden per per¬

tax

CITY, Mo. —Charles

Summers

that

reported

by $166 annually; and would
require
total
Federal
taxes

which people of small

are

J.

Carmine

taxation

income

mitted

as

Teti

has

partner

a

been

to

ad¬

the New

recognize York Stock Exchange firm o%
they suf¬ Gruss & Co., 115 Broadway, New
fer most from them. Perhaps the
York City, and to membership oai
largest indirect tax is imposed in
the New York Curb Exchange.
the apparently direct taxation of
corporate income, which is in¬
evitably passed on to the humble

particularly

slow

to

to resent, although

and

,

in

With Schirmer, Atherton

higher prices for his

i

necessities.

disturbing to note the per¬
sistent ignorance or indifference
of masses of people to excise and
sales taxes, some of which (such
as

the

taxes on tobacco

enormous

completely hidden
in the retail price, some of which
are
invisible (such as real estate
taxes
included
in
rents),
and
and

liquor)

of

some

which

as

who

labor

blithely

State

Welfare

advocate

ought

a

inform
they will

to

that

constituents

their
pay

quite evident

are

retail sales taxes). But,
representatives of organized

(such

the

are

Not

most of its cost in the future
more
than they do now.
only will these workers sell
liberties

their

for

fraudulent

a

promise of security (which many
seem to regard as a good bargain)

also
pay
their
high price for
spending their incomes for them.
but

will

they

political

rulers

Today
by
the
$700 a

a

the indirect
average

paid
exceed

taxes

family

This amount has
been carefully calculated from ac¬
curate government reports. When
year.

income

direct
comes

are

a

average
small

taxes

added

to

proven

this

fact

family—which

wage

small

on

that

means

earner's family

already paying over $1,000
for the

it

the

the

—

is

a year

support of an infant Wel¬

fare State that has
to bite!

in¬

$700,

'

1

only just begun

special to The Financial Chronicle)

BOSTON,

It is

reasonable

year

Backman.

(Special to The Financial Chronicle)

this initial welfare program would

becomes

such

M.

formerly witfc

was

Child, Inc. of Salt Lake City.

KANSAS

analysis,

—even

This exhaustion of financial re¬
sources

$13 billion

Analysis of Fiscal Problem;

Senator

through

made/On' the basis

most

consumer

liberal

the

course

forced

American

this

of

information

was

increases must

it

private property and the

our

it

1948

of

of

of

sources

computations and

the major portion of income taxes

ican

Vera

and

W.

Delmar C.

and

With Waddell & Reed

Senate

collecting from the Amer¬
people and spending only
$31.60
per
person,
whereas
in

ury was

be

of life will disappear in the

the

Congress this estimate,
by the committee's staff,

which

to

or

national produc¬

a

tion

enrichment

of

on

and the detailed

predict that in 50 years

will

and
way

the

allow

expansion

the

in

influence

Chairman

were

there would be

Kenner

Charles

are

President;

Love,

Expenditures in the
Executive Departments presented

easy
to understand how the
President, in January of this year,
in a lyric flight of fancy, could

Welfare State. Their power¬

ful

a

The

Committee

depression began in 1929. Thus it

the

will

in

to our national

year

is

before

was

munists that all

economy,

a

spending
paid
largely by the rich. Even if that

income

in the securities busi¬

Officers

ness.

W. H.

There

national

265 West First North St

expenditures.

fostered

will not

political

cannot survive

for a Wel¬
according to

at

to engage

$25 billion

over

compul¬

our

and

as

tne

ration has been formed with of¬
fices

Miss Backman

$200 billion, about 2x/z times what

of

year

Corp.

PROVO, Utah—Ken-Lo Corpo¬

official estimates will add another

son

came

this

which,

increase the

First,

President

program

State

flation, and the devaluation of the
dollar.

for

the

forward

national income is the result of in¬

another

ment

tyrants.

distribution.

and

to

First, there

b^ff

tion

major

is a summary answer to
question presented for this
discussion: Private, voluntary as¬
Here

the

nation on earth have been

to

in

productive income, made possible
by capital enlargement of plants
and improved methods of produc¬

untary organization.

people%x^eve£y

TFg^iiSg
from^^Jml-

have

unions

as

'

The American people are right¬

fully

increase

will

tional

Tolerate^/
T-n}\

genuine

a

dollars

ject, of course, to laws restricting
and
controlling
lobbying
and

which are, and will
organized and maintained by
political aid to make effective
so,
to gain an undeserved sup¬
government regulations. Such as¬
port, the business cheater always
sociations might well be compared
poses as a little David fightib|fihe
to "company unions," which na¬
Goliath of Monopoly.
Labor Monopolies

these

will scoff at the idea that any such

propaganda,

fare

our

reduce
taxes,

resources

our

-war,

introductory

made

of

or

brought

income.

people, free to organize, to debate,
and
to
petition the government
for the redress of grievances, sub¬

political party will not be unduly
hampered by a too vigorous op¬
position.

peace

to

redupe

and to husband

to

Some

necessity

and

S0"

(361)

Ken-Lo

do not reduce but

we

plain

debt

our

increase in the dollars of national

to maintain

may also serve
illusion that we

They
the

State.

Welfare

the

in

or

busi¬

But

survive

It

the

of

peace¬

than it spent 20 years ago?
has been taxed out of a vast

that

general welfare.

in

more

-a

national

a

intend to increase. "Vet, in the face

time

represent

of

for national defense, national
administration of justice and na¬

expenditures

to make

or

of himself.

But, today, following the social¬

pay

tional

of himself,

care

fool

A New "Due Process of Law "

Treasury,

provide only part
revenue

take
a

siphoned

were

States

per¬

billion

$5 billion

on

the

from that has permitted the Fed¬
eral Government to spend annu¬

$40

interest

these

nascent Welfare State is adding
billions of dollars extracted from

ally

for

debt which

less

tunate individuals

must pay our

we

year

na¬

competent to the
by his free
competent, and the leveling labor and his free use of his own the pockets of all of us and then
down of humanity to a common earnings. The government could in part transferred to the pockets
standard of living, is not a demo¬ only
tax
him
to
support tne of some of us, after deducting the
cratic but a communistic doctrine. stricly limited powers of the gov¬ huge cost of welfare administra¬
Nevertheless, we may well agree ernment to provide for the com¬ tion.
that the exceptional profits of for¬ mon
defense
and. the
general
where
has
the
money
come
more

tion

<>;')<

s

v

our

on

to

heavy

a

ThU! *d:>

'•!]{ *,'Us-in > r't

ifyn

Mass.—Raymond W.

Morse is with
&

Schirmer, Atherton

Co., 50 Congress Street, mem¬

bers of the New York and Boston

Stock Exchanges.

With Hornblower & Weeks
(Special to The Financial Chronicle)

BOSTON,

Mass. —William

A-

Monroe, Jr., is with Hornblower &

Weeks, 75 Federal Street.

26

The Commercial and Financial Chronicle

(362)

Continued Jfrom

4

vaqe
y

r

operation

Administration,

has

l.flllbc

UWVilil
m

m

Af

ffl

IfAA
A WV

■A"

■

1

is

limited

a

■

■

KflTAFIITlCP
AJAlftVA£rAAi#V

only one man s opinion,
will, in the spirit I
have attempted to describe, conexpress

which

you

sider, weigh and accept or reject,
kind

The

in

evolved

of

economy

efiic^ency which has
never been equalled by any other

best efforts only as a result
in the form of penal-

system, and tnat the decentraliza-

our

with

•

the

United

by

a

understandable

generally
than
Certainly
there
more

Expression

free

enterprise.

are

indications

many

not

it

believe

to

something

mean

quite different to the concept that
is

held

by

who

those

advocate

defend free enterprise.

and
*

There

the

ing

have

those who

are

enterprise

free

ceived

as

implications

worst

it

individuals

privilege
ment

of

some

special

meant

business

damaging

interest

have

To

manage-

lack of restraint of prac-

or

tices

has

for

con-

convev-

laissez-faire philosophy

thought

the

to

There

free

of

public
who

those

are

enterprise

meaning unmitigated piracy by

as

business management.

Wisely it has been said that
freedom is indivisible. If, in our
not easily developed. -XJompetithinking, we attempt to isolate
tive capitalism" perhaps_is more free enterprise from other aspects
accurately
descriptive,
but the of the American life structure,
implications of that phrase are not free enterprise can neither be dealtogether happy ones. Dr. Henry fmed nor appraised.
Link,

In fact,

foundation

^

Unless concontrolled, producers
distributors must serve the

and

have

nine

times

the
.

in-

are

In-

.

Beneficent Spiral
Under such conditions the peonle
0f the United States developed an
economic

rich

jn

which

system

and

widely

resulted

distributed

and

connotations;
to all

convey

who

that

will

and

read

run

ire

.

benefits.

that here is the economic

of

philosogreatest promise

that'gives

phy

™

there

reoort

now

can

to

encouraging

are

dications of

in-

recent

under-

attpmntina

tn

Hpfino

anH

•

j

that
thp

WP

mav

fapf

tha^

indiffPnmiJ

to

hP

ii

q

fprnrisp

;

Whpn

nation
■>

wlllt

Power and Wages

aVanted
ol

lifei;o

eddy
ch-

thp

radicallv

a

in

and

fnnnHprc

nf

nartinrt

nf

a

niH

worlH

wp

different'wav

relationshiD

Sate—radiSlv

of
dif-

ftr'u

political and social usages
radically different relation-

and

shh

between

s

and

individual

citizens

nation's economy.

die

In the Beginning

ance

Declaration

Adam

and

of

One
of
t
.

was
ie

"Wealth

immortal

free

expression

nolitical

men;

the

asnira-

other

a

eclaration for economic freedom.
liberal political and eco-

These

nomic

declarations coincided with

tion

of

events

developed
natural

f"m

Under this constellaand

upon

continent

resources

d

an

rich

freedom

e}

un-

in

natural that our social life has
™fIected
individual
freedomthat we have lived under few
restrictions, with great

ee

enterprise,

unique

for

advancement

and




work

70

rewarded

be

in

ferKence
with
others.
Our

the

worst

liberties

of

punishments

came, not so much from breaking
4he laws of the land as from our
own mistakes.

A wise man has said, "The
human donkey requires either a
in front or a stick behind

carrot

to goad him into activity." Under
our philosophy, the "carrot of in-

Hoffman,

administrator

of

distinguished

Economic

Co-

®

:r

®
s

,

week was 40 hours or less.
Annual wages had risen to $1,150—

the application of about 7 V2 horse-

requires the
investment of some $8,000. Since
1939,
his hourly dollar
wages
have more than doubled and his
real weekly earnings have increased by some 36%.
power

and

his

appropriate

to

horsepower,

it

be-

an amount of me-

John M

Mr
Hancock before tlm New

pl.cit in free enterprise, have we

Workshop

*r®!

™mnrehensTon

on

are'
S

aboSt

brings

economic welfare of

JThis

societv

one

nv

is

the

marlcet.
does not refer only
to highly organized trading as in
the stock market

changes.

or

hp

lost

It is

interesting

o

or

canno

to examine

our

relative quality of living in quan-

the grain ex-

It includes all the chan-

p

pffpr.tivf,

the

the people of

ever

f"

.

An

terms.

workman

buys

n

.

stantially, but real wages had
nevertheless increased. In 1949,
the average wholesale price of
Passengers cars was $1,331, ■ of
whJc'1 more thdn ^40l) was tax

co3L

,

...

.

Ea(:h year automobiles repre-"creasing values, each year

Jhe.y beco™e a less dispensable
factor 111 the transportation syS1

1

-

7, ? automobile industry also is
aF|^ y csponsible or modern
T^trfhmpd
thp rani^HPuplnn5
^nt ^
,

.

to

imnorlant

\

simJlarl

have

see'n

emnlov

empl°y"
the

re.

frjgerator industry grovv from in--

'20s to

industry of major itn -

an

DOr+ancG

affordinff

ever-increas-

??g eSo™ent evIr^inSeaffng
buyer.
Prices
ar
after

havl

Qn_:

til automatic household refrigerathe

sT™?^raees all
factors^in^ thfsvs-

wS'

•

to $638. In 1949, postvvai inflation.cVf
f dollar s value sob-

tors are available to families in

a

a

the average wholesale price of

yaiiQQimTP1^QAQ Cai7

country' been
yatue ,owered
to" the

er

Economic Education yelr°L
to UnUcT States
If
Tmust be remembered how- these rital elements is
Sat the kcTc—fc S- d^ged ree enterprise
of

*be averaSe^ wholesale
passenge^0^aiQ3'
?0?if

significant beginnings in the early
.

lm

to comprehension.

was

ttie^market whieh'
fmbodfed
ana addrras by

tuti'

?n *7

job

^ove'thaf3oTi® ot

rJf appropriate

Universitv

United btates.

=°"suner above that o: any othercountiy.

®

York

t

^bey were, was $2,129. By 1940

^d"trvpUrcnase ttle pr0dUCts OI

ln^uesrtpy'it
e .l,

States. In 1949, 6,243.o72 passencars and trucks were sold in
t e
f!
77eir A\ *ue
waf "J0/® J; a~ £?0i07]?n.At the
end of 1949,43,773,982 automobilesand trucks were registered in tne

In 1939, the average worker
had at his service almost 6V2
horsepower of mechanical energy.
Investment per worker had risen
twelvefold to $6,000.
The work

adequate profitTThe'busi^ Sf s'ixtv tfreless menV
a°ef^,a"'P™™-°"sl of^'xty'lrel®^me"_
inrough such processes,
must

d^
^counted for more than
*5% °f a
-J?. ®
*b<: Unued

than

win iau tor iacK or capnai.

Workers

a. ^nnSrfn^er<i.nor?n?Ann
KS
s0id lia
was $93,400,000.
forty-two years later the auto™
indusd:ry> directly and in--

hours.

less

'5 7 automotive vehicles
The total value

p/"lce of

°£d.ehrs- If owners are not assured ductivity of
and of

ordy

were sold here.

$250.

Unless the cus- one-eighth

-wards for accomplishment
~that °"r laws initially were def 8ned to prevent undue inter-

and

and potent

the

to

were

practices tnat may retard eco- almost five times those of 1849.
nomic growth or operate against
Today it is estimated that the
the public interest.
Always the average industrial worker directs

op-

centiye" rather than the "stick of
d, affl",ty compulslon
was emphasized.
Paul

Pr('Se
e7
0 PJ
without
precedent, and Ameiican

60

wages

the instrument and servant— tomer, upon his own evaluation, comes apparent that the average
"«t the master-of the people.
receives value above price, the American workman directs the
With such beginnings, it is only business will fail througn lack of energy and benefits by the pro-

,

the early ferment of the industrial
revolution.

necessity,
from

was

as

Independ-

Smith's

social and
of

ins

an

on

the individual, and in government a"d workers

portunities

of W tions" both appeared in 1776.

week

sweet was the tastc of freedom generated by free enterprise
even under tbe shadow of death." which
require management to
From such beginnings grew bring about equitable distribution
If we assume that the muscle
0Ur nalio"al belief in freedom of of benefits to customers, owners power of a man is equivalent to

legal
Cur

com-

thp

that of Europe—a radi-

different"

^ch

bidding coast of New England in

t

Of

JboOO.

Annual

nhdnJnnh^

thp

rparhoH

with

wave

stantly.
The spirit and practice of

con-

Am I! the dead of winter and lost half broad public interest should be
vJl lZ their number before sprinS came- the contrcflling consideration,

pvkt

thni

nf

'indpd

l(

t

purchasing

Yet wben tbe Mayflower went Such principles are the spurs and
home'as the old writer says, "not incentives of economic growth.
thffnaPHnnw^ a single colonist went with her, so
Rewards and penalties are

pannnt

whi?h

on

and

an

IS ptpwhprp

'bsenrp

a

Wages

of workers increased

+

^afp^v1 h'ppin with te.hs the story of the Mayflower
frpp
pntp?nri J k Pilgrims who landed on the for-

rn,,ntprnp!t Ipfnnt
h

,

ways—no filling stations.
In 1907 there were only 143,200
automobiles of all types in tne
n,d States, and in that year

invpsimpnf

^

striving for individ-

petition and of freedom of choice
^e part of buyers are imporCourageously they f a c e d the tant and distinguishing characmost fearful conditions—expos- teristics of free enterprise. Unaer
ur?' disease and starvation—as a our economic philosophy, business
pr7? to .be paid willingly for management is wisely restrained
spiritual liberty. An old historian from engaging in monopolistic

that

standing of free enterprise
Tn

power

.

vou

general

more

costSi

They did not seek
7rom
ar ,and ward-

Many of them-surrendered secur^
T1 fvtfr
Tu 7reed°m*
pirl^ua^ hberty was their goal.

opportunity unlimited.
I

to worship according to

^

.

ual rewards, invented, developed, *

conscience

Industrial Growth and the fuhinc
mier si
■
•

individual deci-

our

Eree. enterprise is the product made and sold many new and
American -industrial
manageof a fundamental philosophy of desirable products. Tney aiso in- -rhent has increased productivity
human relationships. The Chris- vented and improved metnods of and real wages very rapidly by
tinguished
economist
Dr.
Leo tian code gives expression to the production so tnat more and bet- devising mechanisms that multiWolman characterizes our system responsibility, dignity and free- ter things could be made at lower ply the use of mechanical
power
as
"a privately owned, privately
dom of the individual.
The COsts and reduced prices. Lower and productivity and by finding
managed,
competitive
system." Sermon on the Mount survives as prices
brought
about
greater anu applying capital for purchasThat expression is more clearly the finest expression of human saieSj and
greater sales in turn ing such equipments A hundred
explanatory, but it is lengthy and, relationships.
The founders of brought about even lower prices, years ago, production was largely
therefore, not likely to be gener- this nation were guided by these profits and savings were invested accomplished by the direct applially adopted.
precepts
Our early history was to enlarge plants and to buy more cation of man's muscle power.
It is to be hoped that an expert Pr°f°undIy influenced by men and efficient
machinery.
Increased Mechanical horsepower per workin semantics may soon find a brief wonJen who came to this conti- mechanical power nelpeo men to er was quite limited.
Investment
expression that will have Horatio lienf seekinS> above all things, produce
more
gooos
at
lower per worker was in the order of
Alger

t.

w

As an industry develops from
sion kelps to produce the overall birth to maturity, it passes first
result in the economy.
through an era of pioneering, then
'"We need to teach the value of through a period of rapid growth,
the market process in our schools, eventually reaching a pnase of
We need to recognize that it is stability and slower growth rate:
tne
democratic
way
of
doing
It has been my privilege since
business a^d of conducting our 1907 to be associated with two
affairs. We need also to recognize great industries during their pio-.
that
the
more
we
understand neering and rapid growth phases
about it, the better we can use and to observe the improvement
it as a strengthening factor in our of production, reduction of costs
country's economy.
*
and prices great market expan"I;do not mean to imply that sion, all taking place in the presthe market can operate without ence of rapidly rising real wages
a framework of rules.
We in this and reduction of hours worked
jlreeV society, of course, oppose per week.
-artificial controls of wages,
In 190*, conservative people
prps, production or distribution were not at all sure that the auto-,
^fciibept in clear cases of national mobile was here to stay. Steam,
emergency. But we do recognize electric and gasoline cars cornme need
to protect the market peted for the rich man s dollars.
process
with
appropriate
laws. The Ford Motor Company was
Contract and property rights, for only four years old. The Model T
instance.
Rules to prevent- mo- was yet to be born.' General Mo-'
nopoly, and to raise standards of tors did not exist. The Cadillac
health, safety/ and to prevent car .... was propelled by a crude,
falsification in weights and meas- single-cylmder engine.^ Electric
ures and content of products, an^ starters were five years in the fuso on, are other examples."
" ture. There were no concrete highmarket

industrial

consumers,
inventors,
pioneers and investors.

are

wants of tne consumer. We each
make our own decision
in the

.

Thursday, July 27, 1950

.

must labor two hours and four
minutes; the American for nine
minutes.1
The benefits of freeenterprise are very tangible onesl

of economic power.

rewards

Free men,

has

tion in aecision-making which tne
prevents the development of great concentration
sumers

are

demonstrated
that "Private Capitalism" as distinguished from "State Capitals
ism" supplies clarification.
DisCorporation,

powerful influence.

operates

market permits

for
the

are

—

an

psychologists have discovered that

Psychological

The

of

Rewards

have been sug-

many

gested, substitute expressions

G.

exertion.

rewards

.

ously impair the operation of free
enterprise.

Semantics

Although

most

and

world leadership.
dependence and by our ConstituSometimes there has been too tion with its Bill of Rights. In
much freedom. Frequently men these documents are reflected and
bave displayed too little enter- recorded the moral and' social
Prise- Just now it seems that re- concepts of a free people, resolved
stricted freedom may place limi- never to become the servants of
tations ■. upon enterprise serious government.
enouSh to violate the public inQur economic principles and
terest and to bring about radical usages, which we designate as
and "pdesirahte revolution in our «Free Enterprise," could not have
American way of life. Human COme into existence except as an
nature b5!ng as lt Is' tbe balance outgrowth of our moral, social and
of ingredients seldom is perfect, political backgrounds.
Nevertbeless, the basic formula
The initial policies and practices
works SC) wed and generates such 0f ^e Government of the United
amazinS benefits that we should states brought about environment
be very certain of the greater an(j incentives that encouraged
value of another economic mech- cooperative productivity by all
anism before we abandon or sen- 0Ur citizens—workmen, farmers,

Americans either do
understand the expression or

that

extra

jnaction

poverty - stricken colonies pulling power of penalties.
bave become the world's richest -phe Nazis found slave labor
and most powerful nation, now efficient and wasteful."
ineptly struggling under the terPolitically our principles
fible, recently acquired burden of defined by our Declaration of

of

States

America might be designated

^es for

tie,

that has

irnftenections

mitted

•

.

with the proceeds of seven hours
and
15 minutes of work.
Tne
Russian workman must devote
104 hours and 30 minutes to earn-^
ing a pair of shoes. A pound of
wneat bread costs the American
7% minutes of labor; the Russian
one hour and 10 minutes. For 20
cigarettes
the Russian
worker

buy

Few people work for
work's sake. Most of us put forth
•

beyond the imagination of men,
prougut forth national growth,
the creation and broad distribution of wealth at a rate so amazing that in 174 years thirteen lit-

viewpoint, and

people

for hard work and creative think-

of pressure

Mine

which

sell to_eacn otner.

and

"our American system has tra"We ih'-ehis country have found
ditionally offered ricn rewards that the market—despite its ad-

VI

#

WlAVIIlf AAIuFAF

ITAfftAftlAlCKvllftAvA

through

ne.s

said:

.

a

pair

American

of

shoes

lowest

income

brackets

In

1949' 4.450.000 automatic house-

hold refrigerators were sold. At.
end of that year. 30 million-

°.f these usetul appliances were in •
use in the United States,
'
The frozen food and air conditioning industries are important
by-products of the modern re-

f"geration industry.
rS'%llar accounts could be given ;
amazing growth

i New York "Times."

of tne

Volume 172

Number 4928

The Commercial and Financial Chronicle

...

(363)
radio

industry,

cnanicai

various

of

nousenold

me-

of

appliances,

union

diesel engines, diesel locomotives.
We

in the

are

tronic

Such

growth
of

beneficiaries

place

taxes

economic

ments

of

Vitality

vitality

advance

to

being

great

sucn

continued

national

our

seg-

Enterprise

has

has

it

tnat

increase

All

society
enterprise.

Free

of

climate

a

complex

entei prise

Free

in

ireeaom.

our

share the fruits of

.

«'If

two

our

pensions

Reuther

and

stated:

powerful

ditures
as

union*.

which

is

about

the

risks of owning

same

the present tax take in England

It

is

very difficult to develop
stand together in the ffont-line public understanding of the imtrenches in the struggle for a plications of government spendof fuller measure of economic and ing at the present rate of more
social justice for our mefnbersnip, than 27 cents of
every dollar of

healthful economic

rapid,

Mr.

already

and

nuclear fission.
•

higher

beginning of elec-

developments

becoming

are

shop,

•

otner gan.s.

wealth

material

our

to

and

well-

share in indus-

1 am comment tnat thehe is no national income—or at the posPower in America that-can stop sibie future rate of 40 or 50 cents
us in. our forward ma-pch to a bet- out of tne dollar.
*er Bie ^0l our Pe°Pl&*
T
Students of
economic
history

"What has happened to tne flow
of equity capital which xostered
the growth of American industry?

the

is the savings of

have

we

have

said

that

when

Pe°Ple making $10,000
up

an

as

It is conceivable, however, that,

despite

its amazing vitality, free
enterprise may be nullified
Trough the cumulative effects of
such erosive influences
It

•

is

not

discuss

my

tne

here

purpose

now

cause so

confusion

the

minds

much

the

of

people of the United States.
Manv thoughtful oeoole
turbed
that

because

it

them

to

seems

inimical

forces

dis-

are

aSKWw:
cratic

moving

much like those that caused

very

England's decline.
It

is not

such

mv

subject*

education
education
,u;

securitv

ih-idie-

s

for

socialized'

meriecine

socialized

medicine'

#socialized

un

discuss

to

socfal

as

Federal

measures

!

purpose

medicine,

hiUinp^Q
business

nf

of

•by governmental agencies.

How-

two major forces that

ever,

con-

tributed to England's sorry plight

^h0e™eforeeaseeenm0tor mer1[

To°

or

shnrt-siohterl

'• listfe

nracticpo of

unions

and

thus accelerating inflation.

socialism and, through group
pressures, influence our legisiators to limit our freedoms.
•

,

f-

f,

.

granted
gran
tea

nowers
powers

De.c 'ne

enacted

national

our
•

was

irom

a

set in motion

wnen

Iha

Iron man
the government of free
men.

totle

the

than

more

birth of Christ

."The

only

-where

everyone

'"riA

Th
,

J.

A

,

re-

as

potent means

a

.

.

T.

spending

j^ntpiv

a

«fii

,

,

hillinn

npr

approxTnit

vear

aSe

to an

Up
r

_

C402.G3

tex of

mail; woman
child in the United States,
i:

Jnd

upon

every

Me&llan

~

Tohn

nator

an

r

of

the
.

.

provisions

im-

of

the

j

owning

could

.

Public

4%

shares of

develon

removes

Only

a

fectively in Russia
The Impact of War?
,

prepared this discussion of

f

J*®® enterprise, our troops in
Aorea were retreating before the
enem>» ana it was evident tnat
oar economy might be converted
at .any moment to meet the re<fuirenients ox an accelerated de-

f^nse program,
result

of

such

transition

dom. Taxes would be greatly mcreased. We would be subjected

business

a

in-

stocks

all-

an

programs^^vTgorouLy spoored by
adopted^ided

his party are
per

year

costs

a^east $25

eventually will reach
over

iand

above

to the most severe governmental

debtj tax and bureau—

cratic

structures, must result
business would reward him with eventually in gieater inflation or
a iarge personal income and per- dollar devaluation and in bureauhaps with a substantial estate crallc control tnat may pass the
subject to his own disposal to his Pomt oi- 110 return.
h?ir.s or to institutions of his
Unfortunately,
such
developchoice.
ments as I have described have a
that the

of that

success

of

his

personal

income.

Taxes

KSffl'fS "fee"W3

return'' Thai* iffnuTevf

no

that England has already

dence

take 38% of his comPany's Profit- Passed that point and that the
Dividends Paid to his stockholders United Stales rapidly is approachare. taxcd a«ain as part °Mba in§ '■ No thoughtfu person serecipients' personal income. Know- riously believes that the wayward

ing that he cannot increase his
American corpora- capital by selling his company's
tions for the l'me being have an securities, he must refrain from
adequate supply of money for ex- paying generous dividends in or-

economic and social- trends in
England could be reversed by the
Conservative Party if it were re¬
turned to power. Have the people

pansion

of the United States been so demoralized by the effect of taxing

Fact No. 2:

.
.
.
but it is money obtained principally through tne re-

der to retain profits for business
expansion.

tention of earnings and through
hnrrnwiT~

Tn

Dorrowlll8-

january
Hliqtrv

thp

oi/o

the

to July 1, 1949, inUnited

High

estate

vpar,

An the 6 /i yeais trom

1945

*•'

raised

states

00o ooo from retained

^

earn-

a
u

him

deprive

taxes

?

•

0f the

/ aeprive mm

incentive of accumulating

fortune

the

for

benefit

of

his

.Ioriane to\ ine. Deneiu or nis

and spending and by devotion to
* social seruritv that
tne ietisn oi social security tnat
we have passed "the point of no
^

^eirs' Y°un£ Americans, no matter

•

"m "^1^^ oTen
.

Fact No. 3:

Their

increased

from

but only

.

.

the

$4,500,000,000 from
stock to investors.

sale

the

of

vainp

•

sale

of

would

assets

exceed

thers, not only because incentives
have been destroyed, but because

the specious philosophy of "social

thp

present

For

stork

Woolen

p*-

Com-

stock is now selling for $26.37

pany
a

nf

the

but if the company's as-

share

hauidated

The
mav

elimination

be iust

enterprise as the shrinkage of investment

funds

i

•

*

-.«x:

-t

g

pany

has
of

united^
tafes in^republk:
united states, in this republic

our

our

public servants, by and arge, re.
and

t

The^vUl oLfe^

*

*

Deonle

people.

JheTiind£ ^f ^overnmefe we'd^
,7
serve.

Incidentally, Russia, since 1935,

Daniel Webster remarked

many years ago that

"God grants

has established and promoted most freedom only to those who love

effectlve incentives for her citi- it and are always ready to guard
a"d ddfaad «•"

XkhoWers zens-be they industrlal workers-

tt»

.g

selling

£or

$26

»

a

assets
stock

of

that

$33

for each

now

sells

at

"

f

01
VI

||| |l

■■

fAf

WflllllllC
VVHIIAAIIV
U- l

J

1J

.l

Ut the Dona luAlKet

^i6-38- (These stodc
d£ cduf3e'
the P>ices as of
datTe ,on will^b
aiticle to
wbich I have reierred was

5

■

1

AKAiVSIS
mmUMMMJ mAw

share" Socony-Vacuum Oil Comshare

that

•

vc&inieiu Iunub-

would receive $37.60 a share from
the liquidation. Every share of
the U. S. Steel Corporation stock Continued from page
is backed by $56.56 worth of as11

problems

PlaSoe us ini these days of confusion and controversy are the fruits
of indifference, complacency, lgnorance and wrong thinking on

incentive

of

destructive to free

as

C°nC,USi°n
terrible

The

fa-

they have been indoctrinated with

.

Many corporations

American

6„£fise^wL

^ds
.

t'oday^t ra^e of

^a£ a o^theSerSte Ixm-/

t

averaged

'

pn<;h

......

Senator John L. McC|ellan, of

of

it

outstanding stock at

that

eye

,inTfri] .I

n

^b CorZra«ons hafhit
timeglow P

to tax

power

said,

r Ac-' adop£ea. ln

the

from

the

is

the

in

V

mune

by

States

he

1914, held labor unions to be
■

f

..

loans and credits

state

possesses

ings and investments but
incentive for enterprise.

dlpfeedfy "of* afarge'paH

£cr
brinS'ng about the communis- considerably the total value of all
Uc state

belore

years

,

$23,500,000,000

wnen

stable

equality

:

Jul)

Federal
only destroys sav-

prior

years

£esto'" described a sharply gradu- sets, the money realized from the

Tnic

This

enunciated by Aris-

graduated

tax not

here be noted tnat Karl In other words, if they snould go fable, they lose the substance by
in his "Communist Mani- out of business and sell their as- striving for the shadow.

ated income tax

legislators departed
precept for

was

that "The

us

income

fee power to destroy," and it are worth more dead than alive, .security/' Like the dog in Aesop's

«

time-honored

principle

minority
minority,

borne

United

the

dnL

Government in the United States

In 1914 another significant chain
of events

of

the

m

preceding year.
;

a
a

to

burden

tax

minds

Marx,

Constitutional

end

to

ialls upon us because we have aeparted from the moral teachings
upon
which our
culture
was

may

laUon
upon a
a constitutional
lation based
based upon

amendment

^ cnabu-

.

follows:

as

For 55

g

of

.

Us substance is

Fact No. 1:

similar

Here as in England, too many
labor uni°" leaders are advocates

monopo

eaei.

has

.

striction of output with
end results.

monono-

Our Federal income tax became

•

.

labor

taxation

z[ne

paw™ ofthe dollaf

Tax Burden

divprsion

socialism

and

power

tlvlfy and consequently, by adding

people

arp

through

income

;of

forces

socialism,

"fringe benefits" that are disproA thoughtful aricle recently was
P°rxtK'nale to increased proauc- published in "Newsweek" Maga-

The

two

is

organizations way station on the road to comto exact muism."
pensions
and
Attrition

labor

many

use monopolistic
waSe
increases,

pxaminatinn

Thpse

of

most ef

our present

audiences

present

Erosive Forces

Loss of Incentive

been accurately described as "a knowing

-

npr^putinn
persecution

used

de

lean

television

or

bousing and rent controls,
®
*
government
lending and credit born
by a. :I of
•endorsement, public power, farm den, induced tnrough monopolistic
subsidies
subsidies,

were

States

radio

make recordiags"

bureau-

toward

United

controls we have ever known.
Sucn measures, superimposed upon

To° many iabor union leaders
dictatorship through forces encourage featherbedding or re-

be

may

being

were

few years ago an ambitious Amer-

freedom

to

sL^Lri'od

the

transportation on five major rail- private risk capital, business canroads. James Caesar Petrillo con- not grow, and government must
tinues to dictate the terms on assume ownership and direction
which musicians can perform for of the economy. That, of course,

controversial

manv

questions that
in

to

the

America they

The

steeply

to'

must be to accelerate the development of forces opposed to free-

•

The

tort

in

i

ts' so1""

+'

incentives

stroyed

fed industry."

notwithsta

•

■tact

wnen

earning
at least $10,000 per year. Today
there are more than twice as many

nation

a

Vh

n

27

peopie

a year and
there were 20 years ago.
had
repeated
practical demon- spends more than 25% of its na- But their average income aner
sti ations of tne power of organized tional income for
government it taxes is $14,500 apiece, compared
labor.
Mr. John I*. Lewis time is the beginning of national de- with $30,000 in 1929. Taxes and a
and again has Snowli his power to ierioration.
When a government tremendous jump in the cost of
paralyze industry by turning off takes these great percentages of in- living have virtually wiped out
its luel supply. At this writing one
come, there is little left lor saving most of the risk capital wnicn once

"On other labor fronts,

cmWictc

manner*

Hp?

It has been virtually taxed out of
existence. The traditional source

amazingly rapid rate, of tne railroad unions, demanding and investment. When saving and
ding the development a larger wage increase than was investment are
sufficiently reand increasing pressures of many recommended
by-a Presidential stricted, free enterprise must dispotent opposing forces.
fact-finding board, has tied up appear. Without the investment of
at

a

try'

•

War II, the
government

average rate of return on the government's
debt was 2.36%.
Six years later after the $1 billion

"

-

antJ"monoP°.1y
la^s; Years Jaj-er.
further sPecial PrAvilege for labor
unions

■

was

provided by the Nor-

ris-La Guardia Act which

the

injunctive

power

where labor unions

concerned.

billioiff-level of

Dresent $43

exoenditures|

n/r/.r'i0iion-c

limited

of the courts

are

th

Federal

qdimath

conservative

Senator

cnome

hpcause

SiSS

in

Brook

^alone

Again, in 1935, the Wagner Act
provided severe penalties for eertain "unfair labor practices" on

!enTnmZ

the

and few BroXngi esfeuates
J™ Xat the prtbahleultimate

part of

employers.

This law,

is completely silent as
labor practices on the part of

however,
to

labor unions and labor leaders.

,

h

A

Minority Dictates

cumulative

is

measures
,

effpet

reflected
,

,

of

by

Xf.

such

a

fol..

lowing statement made t us montn

the

S3,'

cost

of

the

social

Sft'ni'rr^P lh?nintefS
2

Df

a
ct

guaranteed

guciictiitccu

annual
eti
ut ud i

wage

July Letter of The National City Bank

New

York.




hteh

social

secaiirity

pro-

nf

the stock of nine of the country's
15 ^rgest companies is less than
'bc book value of their assetsand the book value usually is a
very

conservative figure.

I now quote the "Newsweek"
business news editor's conclusions
as to the significance of the facts
that have been outlined:

bil-

"The real meaning of these fig-

only one of 'a
expenditure

Their stock could not be sold for

approximate $44

security

number
programs

for

s^5 hillioif
of the

amf

statement that the total

debt total
to 4.22%.

$24 billion, the average interest rate rose

grown

.

.

e

June 30' 1939! ju^t before the outbreak of
World War II the average rate of return on The Governments
J45 bHHon debt was 2^53%. By June 30 1945, the debt had grown
<> ^ b.llion-but the average interest rate concurrently reg.stered a striking drop to 1.94%.
This occurred against the background of a wartime mcrease
fj1

w

^

,

$57 billion in the nations money supply coincident with the
ataorpHon
^
mercial and Federal Reserve banks.

.

During the first World War (1915-20), our commercial bank
lion Per yeaf> whieh-is $34 billion ures is startling. They show that if deposits rose from $15 to $30 billion; and during the second conPer year more thap.Wft,jpiow spend most of our corporations were not uict from $40 to $125 billion.
(Now, under the existing reserve
soaal security programs. Since already in existence, it would oe
th
$lgl billion of d
sits can be expanded to $387 bilwill

0f

now

anoth?r war-

is-"

Federal

well-known economist..

xui

d

average

we

grams,

ThP

,P P

Taking

T|le article from ^hlcb
quot!nlliL
value oi

ten*^

being*•promoted, it

'^'$7

.

impossible today to

a

create

them.

v

lion.)

high enough price to replace the

SinS' dragging recession.

...

As a

market during the first

we

oul 01 every dollar of national in- enterprise cannot possibly work if
come to cover
goyoniiQ^nt evppn- people are unwilling to take the

Another possible element making for the

(3)

^ sirnple
comPt>^aliod indicates vestment
very caimbanker
and unhysterical
inmay soon require 40 cents
puts it: 'Private

that

A second factor apparently responsible for the bond mar-

(2)

„

X1

over

,

,,

_

war
_

was
„

poorer

showing

the government's taking....

,

,

nation s railroads Jan. 1, 1918, with subsequent losses

over of
of

,.

a

billion dollars.

from

penditures

7

page

Immediate Price, JIVage
of

raising

teachers,

the

firemen,
others

nurses

and

wages

have

and

threaten our freedoms. By

policemen,

ation, I, too, am opposed to gov¬
ernment controls. But the gravest

real

10 years.

How much further

cities and

our

states

avoid disaster?

can

still

and

go

ther inflation at home.

-

has undermined the stability
of all our colleges; churches, hospitals
and
other
institutions,
shrinking the value of endowment

great a dependence upon govern¬

the

of

last

funds

.

while

raising

operating

is

It

..

.

ization

•

ity

forcing the reorganization

plans, raising the cost be¬

It is

to pay.

many

cheapening the real worth

-of ad insurance, all annuities, all
v*

'■*

-

lnv>v>much:

inflation

more

can

Preserve
Price

often

other

and

such

will

measures

in

power

of

the

fear

profiteer at the expense

the confidence of people
in
government
and
justice
is
sapped, leaving grievances which
the politically unscrupulous can
exploit. ' '
v
•;;
;

No-

are

that

concentrate

government .and

for

care

of many,

Way

controls

opposed" out

to

To the extent that some are per¬

mitted to

Stop Inflation

American

the

individuals

of

k

society stand?

our

people

achieve
be

can

tion—now.
all

in

economy

than

taken

At

postponable

to

move

government

to

infla¬

stop

like

time

a

same

appropri¬
More

will

have

be

to

voted

to

dead

Some
be

can

contend

price

prevented

by

increases

public

ap¬

peals and threats to invoke price
control

legislation. That hope has
already been dashed.
Its fallacy

lay in the fact that such threats
could

only

legislation

the

on

effective

be

statute

if

already

were

books,

price

on

stand¬

a

by basis, ready to be put into in¬
stant operation.
Under such

stand-by law, with

a

this,

government

ex-

Securities Salesman's Corner

sion

war

break

Wages, rent and food costs are
largest
components
of • all
prices.
They cannot be left to
run
free, if inflation is to
be

five

years,

DUTTON

had

this

the

government

might have

power

justice required them.

for

of the many rea¬

one

was

insistence over the
years on the necessity for putting
into law a full stand-by mobiliza¬
sons

my

program—to be able to pre¬

vent the

which

war

a

brings.

price increases

runaway

always

emergency

have no alterna¬
tive but compulsory controls—or
Now,

we

Many

accounts,

or

I
realize, still
hope that the Korean crisis will
pass off
without upsetting our¬
.

selves too much.

quite a few who have put you off with a "see
me later,"
or an "I'll think it over," or some other such excuse.
There arc people who have been
sitting on more cash than is ad¬

until

wait

hand

of

sought

already overloaded economy. We have been at the top of
now we are
going to expand production to an extent
that will reach the
straining point. Business activity and produc¬
tion will be pushed to even
greater heights. Already hoarding and
scare
buying is door-to-door gossip and front page news.
The
a

boom and

But the

point is this—if there

ever

was

a

time when pro¬

purchasing power of one's assets depended
intelligent handling it is now.

skillful and

If

as

you believe that sour\dly selected equities afford a measure
protection against the shrinkage in value of fixed assets, such

cash

fact)

and

then

government bonds (and history proves that
now
is a golden opportunity to

before your clients who have been
This is where some
see

you

what

where with

some

about all

month is here

help

of them

and

more

now!

you.

You

can

go

lackadaisically tell

this.

a

sensible "build-up," an oppor¬

business than you have had in many a
long
First of all, there is an old law of salesman¬

ship that

says, "Make it important." The way to make something
important is to create some excitement. You do this in two

ways

—by the tone of
for

your

voice and by making

a

telephone call to ask

an

appointment. Let us say, for example, that you have some
prospects who two months ago have said to you, "I'll wait a
while,
maybe this market will have a tumble. I'll buy some stocks later."

All right, we've had the tumble, and we've had the news that we're
off to the races to the tune of another
$10 billion more for ar¬

deliberately refuse

we

the

lock

stable

until

door

the

you

monthsr Mi, Put-It-Off, .and I'd like to

and talk with you.

see

r

next "Wednesday, and

also

to

your neighborhood
When is the best time for

Friday.
some

appointments with the

ex-

of going over this matter of asset protection against
shrinkage of dollars that may lie ahead. This doesn't

press purpose

the possible

over

I expect to be in
on

.you?"
And don't be put off—make

mean

come

,

that you have to overstate the case—but

it does

mean

that

people who thought they were playing safe by holding too large
a percentage of their assets in
cash had better get busy and invest
some

of

it

in

some

protection—and

that

protection

is

the

right

equities.

Race

Has

in

prices

rise

Begun

which

has

already occurred since the Korean
outbreak will be used to justify
increases this fall and win¬

wage

ter. Those wage increases may not
labor

do

prices.

since
to still

higher
higher

good

any

will

wages

lead

Once the inflationary race

begun, it becomes

difficult

has this qualification—even

a

balanced fund offers

more

real pro¬

tection than cash,
ance,

savings accounts, government bonds, life insur¬
and building and loan investments
during a period of inten-

sified inflation. I personally would be wary of many highly specu¬
lative stocks (especially
sorqe that, have been dragged out of the
doghouse in recent weeks).' " l
1
' "
"
'




the

more

will

There

check.

to

ever

al¬

be

ways

to cry, "Wait

new groups

have

we

caught up."
is

always—now!
It

may

recent

true

economically
be

must

that

wait

soon

dis¬

further

for

aster.

under

Price

their

arms;

to

race

Control?

While

munitions
siz¬

weap¬

we

were

stocking tanks and radar. Because
we
permitted the Soviets to gain
this

headstart

in

their

mobiliza¬

tion, we now face a round of pup¬
pet aggressions—where next who
tell?

can

More than two .years ago,

tifying

in tes¬
the so-called Marshall

on

Plan, I warned that the time had
mobilize

to

if

economy

served.

peace

Had

then,

the

to be pre¬

was

begun to mobil¬

we

two

Korean invasion

American

ago,

the

never

have

years

might

place.
We

Dare

do

or

behind

lag

Korea

reduced.

basic

disparity

the

the

not

the

mobilization

mobilization

of

must

It is to the

between

Soviet

democracies

must direct

The

war

is

of final decision.

lack

Soviet

the

arena

and

on

the

that

we

ourselves.

of our defense pol¬
repeatedly stressed,
be to pace ourselves vis-aessence

affair did blow over, we still
would have to mobilize—or invite

subsistence

ing

on

their

inadequate
Widows liv¬

the

have

Soviets.

How

formation.

ing

living

find

the

costs?

cost

of

.who

Workers

cut by ris¬
who

Farmers
the

things they

gress,

legislation today but a repetition
of the tragic blundering of the re¬

assistance

in

free

1942

and

rise to

left

allowed

110%

to

wages

farm

of parity.

run

prices

to

That law

legalized inflation. More than a
year
later, when this effort to
control

tial

prices in piecemeal,

manner

broke down,

a

substitute for the over-all
which

I

par¬

crude

ceiling

originally proposed

adopted.
But by then
price had been paid in

a

was

terrible

an

infla¬

Ko¬

tailed

will

to

I

will
do

the

not

the

Voluntary

,

controls

cannot,

pos¬

sibly be adequate for what needs
be done—if it is to be done in

to

time.

Only

selfish

a

few

make

can

voluntary
controls ; unworkable.
Voluntary controls are important
machinery

mobilization

of

is

set

up.

What

limit

To

Risk

We

effectiveness

the

mobilization

our

done

what

to

through voluntary

of
be

can

means

is

to

jeopardize everything we hold
dear, our liberties, our posses¬
sions, the futures of our children.
Shall

risk all

we

To

avoid

For

petty profit?

that—for what?

inconveniences?

petty

Mobilize

for

Strength

Perhaps I should emphasize this
thought. The term "mobilization"
sounds

bad.

visions

of

thrust

into

It

raises

all

our

frightening
young

men

foxholes, of all sorts
hardships and regimentations

at

home.

"mobilization"

But

properly done

be

can

a

of

source

strength.
Our

aim

the

nation

and

farm,

should

be

that

so

to

organize
factory

every

dol¬
lar/every bit of material can be
put to use where it will strength¬
every

man,

every

defenses and fill the most

our

equal

for

treatment
should

demands

all.

All

be

kept in bal¬
ance, for defense abroad and for
defense at home, for the needs of
civilians and for

our

The

to

ments

that

our

allies.

weight of the different ele¬
be

kept in balance will

shift with time.

What I propose is

organize

we

ourselves—all

of men, money, ma¬

resources

terials, morale^—so that whatever
happens—new aggressions abroad,

possible

destruction

whatever
forces

at

happens,

home—

the

armed

what

get

they need,
they need it, with the least
necessary dislocation of the civ¬
can

when

The President has al¬

specifically

mentioned the need to step up our
to
Western
European

nations

in
rearming themselves
against possible aggression.
How
rapidly that program must be

pushed

depends

on

Direction

necessary

have that in¬

President

the

pace

of

This

our

military needs.

that

of

our

readily tapped, pass¬
laws now, setting

necessary

the

up

be

can

ing all

that

so

civilian

it is capable

pansion,

of

defense

of swift

ex¬

creating now,
mobilizing
agency

the

arid

central

the

guide

machinery

necessary

mobilization and

flow

of

all

our

to
re¬

sources.

tion

raw

our economy direc¬
replace drift. Purpose
replace aimlessness.

must

must

Strengthen the United Nations
Abroad

military

state

every *

Our de¬

reflects not only

establishment, but
innumerable other things, such as
the

Not Drift

putting,,

Throughout

Nor is the effort required of us
to be measured merely in terms
of direct

—

requires*

thing in readiness now—organize
ing ail our resources into pools

Soviet rearmament.

fensive strength

<

material

stockpiles, the number of freight
cars
we
have, the adequacy of

there would

another

body,

eration,

coordinating

of
are

the

other

j

>,haveKto be-./ cur-l
those resource!A

f free

More

Do

ready stated that it will extend
beyond the $10 billion thus far
requested. In his message to Con¬

must buy mounting?
Is the omission of price control

cent war? As you know, the price
control bill finally passed by Con¬

Must

large

husbands?

wages

activities

ilians.
We

effort be?

their real

if the

aggression elsewhere.

the insurance left them by

find

Even

rean

on

grants?

promptly to narrow that gap:
Many of these actions will re¬
quire scarce materials or limited
manpower. Less essential civiliari

our

tion

struggling

war might require is dangerously
wide,
steps
should
be- taken

ad¬

vis

I

must

today—will constif-

strength or weakf
in event of war any time in
next five years/;
" -

Wherever the gap between our
normal civilian pursuits and what

be

This

Union's mobilization for
be

do

not

essential needs first. There should

Do

savings will be reduced if infla¬

civil servants, and others

us

tute sources of

en

Least

icy,

nurses,

cost

Put another way/what we do—i.

,

American people.
Who opposes
price controls? The millions whose

continues?. The millions of
teachers, firemen, policemen,

of

sources

would

'

'

of

part of

Those who believe this, misread
the temper and intelligence of the

be

weakness, 1 which

dearly in Wood and treasure.

and

men

produce

quantities of military

vanced

Fears

a

scuttled

we

plants continued

the
Who

in

though, kept several million

priorities

accompanied

must

ourselves to

are

ended

war

is

by price
politically.
The people aren't ready for it, so
this argument runs, implying that
we

we

demobilizing
before
th'.
was won. The Soviet Unior.

ran,

taken

be said that while it

these
woud

against the enemy—and so far are
lagging in that race. When the

ize

The right time to stop inflation

two, three or
deficits in our

for the transition period until the

blind

not

that

fact

come

gress

Every firm that is intelligently serving its clientele should
provide its salesmen with a list of securities that should
bring in
a
good return and also offer some possibility of enhancement
during the period which lies ahead. A good mutual fund certainly

pro¬

stocking our
homes with refrigerators and tele¬
vision. sets,
the
Soviets
were

sioners

you

futile,

It
is still
possible to
another terrible conflict
—but only through a far greater

ons.

The

Should

years.

in

out

of raw
three, in

or

two,

five

cases,

economy

prevent

able

horse is stolen.

say,

r

•'

to

with fixed incomes? Old-age pen¬

the next six

..

that

poses

mament

just for a starter. So you pick up your telephone and you
"Mr. Put-It-Off, How are .you?" And he says, "Fine." And
say, "It looks like we are in for some shrinking dollars
during

a

evitable.

peace

controls, it is too

Maybe you will get some¬
maybe you won't. But if you will

dramatize your presentation with

tunity to close

can

these people again and
you can

think

a

bring this forcefully

salesmanship

around and

them

this is

the fence.

on

taken

This legislation before you pro¬

with your controls until

of

.

has

take

us.

run

late, until after

inflation

has

upon

•

have

national debt will go higher—you will hear more and more about
deficits despite higher taxes and controls.
No one can tell just
bow far this altogether new and sensational turn in our affairs
will
tection of the value and

v

prices

legislation is
that action will not

means

The

upon an

is

illusory hope. That doesn't mean
I regard another world war in¬

We dare

before

be taken until too

nothing about investing it.

The events of the past week
give you an opportunity to talk
.sense to these
people. Vast spending for armament will be piled

This

posed.

your

are

'

people,

effort than has thus far been

the piper of inflation.

pay

takes

!

Crisis Bigger Than Korea

vented these price rises.

That

capacity

plant

Don't Waste Time

major
society will submit
to ceilings on their gains, if all
are treated fairly and equitably.

pre¬

place.

times when you literally must "build a fire" under
people in order to get them to act—even when it is in their
interest to do so.
Probably among your

visable and yet they have done

some

the

are

prospects, there

of

materials,

of

had

that

—

I believe that each of the

segments

back

knowledge

war.

halted.

notice, the President would
Under any system of price and
the legal authority to
wage control, machinery would be
the price increases of established
for
correcting
in¬
recent weeks to levels prevailing
equities and for orderly changes
before the emergency began. The where the needs of defense or
roll

of

bring in any major expan¬

ceilings on wages, farm prices
and profits the real reason why
price controls are now being ne¬
glected?
the

of

event

To

have

additional

some

off in

to impose

ness

out

best

of courage

its due

To

By JOHN

lack

Futile

Are

We must develop new sources

Supply pr substitutes for chrome,'
manganese
and
other
supplies
which we must expect will be cut

Ceilings Fair for All
a

Thursday, July 27, 1950

.

power,
of oil supplies,
capacity and so on.::. f
"

steel

and wounded.

things; the national
needlessly.

.

electric

bil¬

hundred

a

lessly prolonging the conflict, un¬
necessarily increasing the toll of

mount

Threats

added

lions to the cost of the war, need¬

Shut the Door Now

There

which

tion

Is

tion

And Save

—

effective

more

dollar

The Commercial and Financial Chronicle

-

To the extent that the value of

themselves.

yond the capacity of
>

,

will

buy the

government

on

'

inflation?

Savings Lose Value
of health insurance and hospital-

.

dependent

more

than

saving is destroyed, so is the abil¬

costs.

.

ment ask what would make

eliminated.

be

prices rise, the real

every

billions

control

Let those who fear, as I do, too

inflation

years

.

to

10

The

.

the

preservation of the
American system today are not
government controls.
They are
military defeat abroad and fur¬
threat

cruelly

so

slashed by the inflation of the last
•

r'<

"

■

by Congress shrinks.

debt

inclin¬

salaries of
whose

been

of

ated

Rent Controls Called For
means

should

Each day that
value

-

i-

(364)~

Continued

-

1'

-

•

•

28

in

United

cooperating

have to be

continuous

the

op¬

actions

Nations who

with

us

in

this

Number 4928

Volume 172

struggle
peace.

The Commercial and Financial Chronicle

..

.

for
real
and
lasting
This organization might

developed out of the existing
Recovery Program.

be

European
One

and

would

resources.

new

divide

is not enough simply to

It

existing

The total re¬

resources.

the

of

command

the

at

sources

be

functions
tap

its

of

find

to

peoples of the world must be

free

constantly swelled.

Continued

from

Helps

Those

.

.

help those Nations who are will¬

mobilize themselves
to fight aggression. There must be
a
common sharing of burdens. It
ing

international

The State oi Trade and

to incur

us

deficits,

while others store surpluses for a

"rainy"

The rainy

day.

lion.

This

extends

by

capacity

up

America

all-

for

mobilization, with a general
ceiling over the entire economy
to prevent further inflation and
an all-embracing system of priori¬
out

ties

to

and

minimize

or a

drop of 0.1 point.

This

week's operating

ago,

ingots

steel

1950, compared to 99.4% a week

rate is equivalent to 1,892,900 tons of

castings

and

for

strengthen

defenses

our

amount

It

invite cruel suffering and

profiteering and to

fiable increases.

(5) Prompt creation of an over¬
mobilizing
agency
to
syn¬
chronize all our efforts.

review all
capital issues, public and private,
make

hospitals

sure

other

and

needs

to

essential
housing,

or

represented

the

Trade Volume Lifted by Fear of Impending Shortages

,

the

Week

buying, already at

period ended

some

dollar

volume

week

a

a high level, was accelerated in
Wednesday of last week by the fear among
impending shortages of certain goods.
Retail

on

of

consumers

moderately above the level of the comparable
Dun & Bradstreet, Inc., states in its current

was

year

ago,

trade.

of

slight rise the past week in the demand for ap¬
for nylon hosiery and some accessories fre¬
was
a
slight increase in the interest in
women's sportswear, the overall unit volume of dresses
bought
was
virtually unchanged.
Men's summer suits and sport shirts
parel

was

with

While

quent.

in

were

a

requests

there

moderate

demand,

as

footwear

was

of

both

formal

and

utility types.
A

noticeable

of

food

increase

helped

in

the

raise

to

demand

consumer

over-all

dollar

for

volume

some-

in

food

some

during the week.

to

meats

to "Ward's Automotive Reports" the past week,
production in the United States and Canada de¬
estimated total of 190,-315 units, compared with the

an

and

fresh

produce

practically unchanged,
about increased dollar

although

and
cars

and

rose sharply last week, as an
purchased automobiles and major
appliances; among the more frequently sought appliances were
refrigerators and freezers.
There was also a rising interest in

total

week's

with output of 160,173 units pro¬
Canada in the like 1949 week.

compares

in the United States and

Demand

Commercial and

Slightly

industrial failures dipped to

of

essen¬

182 occurred, they exceeded the 91
1948.
Failures continued below the
below

the 251

in the comparable
prewar

$5,000

or more

preceding week, while those under $5,000 rose.

the

level

and

in the similar 1939 week.

Casualties involving liabilities of

increase, they were slightly lower than in

in

house-furnishings
consumers

Household

sets.

linens

attracted

The dollar volume of furniture

170 in the week

July 20 from 187 in the preceding week, Dun & Bradstreet,
Inc., reports.
Although casualties were slightly lower than a year
when

sales

very

favorable atten¬

tion.

ended

ago

for

number of

television

Business Failures Ease

brought

sections.

scattered

increased

2,762 trucks built in Canada.

prices

was

154,742 cars
26,414 trucks built in the United States and a total of 6,697

The

higher

were

slightly

duced

sections and
Total

last

of

volume

dollar

estimated

was

estimates

Regional

ago.

in the

New

Despite this

Midwest

1949.

.

.

...

+ 1 to

period ended

be from

to

varied

from

percentages:

declined from

housewares

in

rose

some

steady in others.

was

retail

week

and

3%

last

year's

Wednesday

on

7%

to

above

level

a

year

these

by

.

England, South, and Northeast +2 to +6; East 0 to —4;
+3 to +'7; Southwest +4 to +8; and Pacific Coast

-|-5.

rearming of those nations ready
to
resist aggression, along with
the expansion of our own defense

casualties during the week
just ended.
However, an increase occurred in the East North
Central and in the South Atlantic states.
More concerns failed
than a year ago in the Middle Atlantic, New
England, South
Atlantic, West South Central, and Mountain states.
These in¬
creases
were
offset, however, by relatively sharp declines from
1949 in the Pacific, West North Central, and East South Central

by various trade shows and the need for'- many
replenish diminished stocks, wholesale ordering rose
in the week.
Aggregate dollar volume was moder¬
ately above the level for the corresponding period a year ago.
The number of buyers present at various wholesale centers in¬
creased slightly and was moderately above last year's figure.

forces.

states.

the

with
peace.

Nearly three
an

from

item

I clipped
newspaper which

years ago

a

of

told

This

General.

Soviet

a

general

that the Western democ¬

boasted
racies

by

made

boast

a

bound to be defeated

were

by the Soviet Union because they
would

to

arm

their

prized

They

the

make

not

necessary

sacrifices

themselves.
standards of

living too highly. They would not
be

to

willing

ter." In
eral

the

accept

ciplines to put "guns"

Russia, though, this gen¬
the people
were
to hardship. The Soviet

boasted,

inured

the
sacrifices to mobilize. A lean and
Government

overrun

Russia
world

Western

a

bring

couldn't

which

force

mobilized

but

hungry,
would

would

further

A

wholesale

itself

ago

before,

or a

foods

of 31

gain of 2.1%.

the

in general use and

sum
total of the price per pound
is not a cost-of-living index.

declining slightly for three days, the daily wholesale
price index, compiled by Dun & Bradstreet, Inc.,
sharply higher in the closing days of the week to extend
the upward movement of recent weeks.
Rising to the highest
level since September, 1948, the index closed at 276.48 on July 18.
This compared with 275.58 a week previous, and with 238.78 on
the corresponding date a year ago.
After

commodity

be

unsettled

last

on

week

the

Chicago

with

prices

to
fluctuating rather widely at

Board of Trade continued

times.

Mobilize

is

.That
fronts

It

be

petty

this

con¬

country

of the free

strength
still

test: which

the

peoples of the
is the choice of "peace"

"butter,"

or

Peace

us—nob only

but all

world.

for

now,

of

mobilizing

while

peace

and

can

clinging to

saved, or of

wants

our

petty

profits,

imperilling our freedom and our
civilization.
.

,

„

No outside enemy can defeat us.

We

can

defeat ourselves. Gentle¬

men, yours

is the decision. Which

shall it be—discomfort or defeat?




Trading was less active as sales volume dropped to a daily
average of 44,300,000 bushels as compared with 50,000,000 bushels
in the preceding week.
■
The movement of winter wheat to terminal markets continued
heavy with prices off slightly for the week.
has
been
progressing rapidly and prospects for the
showed improvement during June.
fairly

The official estimate of the total wheat crop as

Cocoa

the

close.,

prices

rose

Soft

Department store sales on a country-wide basis, as taken from
Reserve Board's index for the week ended July 15r
24% from the like period of last year. An increase of *8%
(revised) was recorded in the previous week from that of a year
Federal
rose

For the four weeks ended July 15, 1950, sales showed a rise
a year ago, but for the year

ago.

of

10% from the corresponding period

to

date

register

Notable
retail

wheat, flours also

sharply 'toj

new

no

trade.

continued

Building

marked in

was

change.

activity

up

New

York

lines of food and home

some

the

against possible

estimated department store sales

shortages

As

wares.

were

fa

week

past
war

a

conse¬

placed at close to

15% ahead of the like week of 1949.

According to the Federal Reserve Board's index, department
City for the weekly period to July 15, 1950r
advanced 16% from the like period of last year.
In the preceding
week a decline of *7% (revised) was registered from the similar
week of 1949.
For the four weeks ended July 15, 1950, an increase
of 3% took
*In

For the

place.

using

ago

year

year

to date volume decreased by 4%.

comparisons allowances should be made

for the differences in the number of trading

cities

some

than

the

week

ending July

Francis Cook With

ifyigh. levels for ifre season,

days.

one

For stores in

more

announced

Company,

Inc.,

Francis

Cook

A.

become

has

:——

Sightmirror TV Stock

crop

sold in good volume.

had

ending July 8 contained one less trading day.
^
1

PHILADELPHIA, Pa.—Tyson &

of July 1 was

1

trading day
corresponding week last year and conversely the week '
the

Tyson in Philadelphia

new

in

stores

Harvesting

957,000,000 bushels, as compared with last year's production of
1,146,000,000 bushels.
The country movement of corn was quite:
heavy; cash prices were generally firm.
The outlook for the new
corn crop also showed
improvement.
Oats prices declined rather
sharply as the new crop movement to market increased in volume.
Flour prices were slightly firmer.
Buying of hard wheat
flours was fair most of the week with considerable pick-up noted
toward

to

store sales in New York

turned

markets

retailers

appreciably

quence,

Commodity Price Index Moves Sharply Higher

Grain

Stimulated

1950,

sharp rise last week lifted the Dun & Bradstreet
price index for July 18 to $6.41, from $6.28 the

at this time.
The index represents

to

mobilize—in time.

food

Sharp Uptrend

The current level marks a cumu¬
lative advance of 7.4% over the $5.96 recorded on June 20, just
preceding the start of hostilities in the Far East.
This week's
figure of $6.41 is the highest since Oct. 26, 1947, when it stood at
$6.47, and represents an increase of 12.3% above the $5.71 a year
week

dis¬
"but¬

over

regions reported decreases in

Food Price Index Extends

ominously prophetic today.

seems

It

the

Speedier assistance in

(8)

Five

•

market.

previous week's total of 194,073 (revised) units.
Total output for the current week was made up of

32%

Strengthen the United Na¬

from

clined

were

by coordinating our efforts
it
in
common
defense
of

factors

Dry groceries, such as flour, sugar, spices and cereals
increasingly popular with housewives.
The unit volume of

week

(7)

Bullish

reflected

vehicle

schools,

tions

of prices

buying induced by de¬
velopments in the Korean situation and the possibility for a small
crop due to the sharp curtailment in acreage reported last week;
Reflecting the advance in raw 'cotton, prices for cotton textiles
moved sharply higher, with most manufacturers and distributors

an

Output Recedes Slightly From Previous

projects

more

above

According

met first.

are

American

of

ex¬

penditures. As an aid to that a
Capital Issues Committee should
be established under the Secretary

less

the current uptrend

motor

all

Postpone less essential

Association

235,392 cars or 42.5%

of

increase

increase of 65,085 cars, or 9%
1949, but a decrease of 102,812
11.5% below the comparable period in 1948.

Auto

take effect for at least the second-

Treasury

in

There

corresponding week in

the

seasonal

Export demand for cotton continued active.

ago.

kinds

These taxes should

Continued
rent
controls
provisioh for clearly justi¬

the

to

according
an

materially

new

The New York spot quotation touched 40 cents per
pound,
highest since July, 1947. Trading was more active; reported sales
in the ten spot markets totaled 106,300 bales, compared with 49,300
the previous week, and 61,500 in the corresponding week a
year

withdrawn

preceding week.

cars,

all

half of this year.

was

The week's total

possible

cover

cars,

This

touched

electric

Loadings of revenue freight for the week ended July 15, 1950,
789,268

increased

futures

futures

Domestic cotton prices registered further sharp advances this

survey

(3) Taxes high enough to elim¬

deferring

the

by

Carloadings Improve in Latest Week

i'bove

the

distributed

dislocations.

disaster.

(6)

Historical High Record

energy

the corresponding period two years ago.

of the output reported for

totaled

(4)

r

,«

previous week, 724,037,000 kwh., or 13.3% above the total output
tor the week ended July 23, 1949, and 843,575,000 kwh. in excess

the

lard

lard

Consumer

Railroads.

with

;r;

179,357,000 kwh. higher than the figure reported for the

was

price and wage control and ra¬
tioning authority. To do less is to

costs.

to

compared

,

electrical

of

of

week.

Institute.

legislation to provide for effective

defense

industry,

light and power industry for the week ended July 22, was esti¬
mated
at
6,185,702,000 kwh., according to the Edison Electric

(2) The very least that must be
is to amend this priorities

inate

entire

the

81.5% and 1,502,500 tons.

The

in

last week.
All
highs, aided by
strength in vegetable oils and the rise in live hog prices to the
highest levels since October, 1948.
Cattle prices finished lower
under the influence of heavier receipts.

this week

1,894,800 tons a week ago.
A month ago the rate was_ 101.2%
and production amounted to 1,929,100 tons; a year ago it stood
at

trading

steel companies having 94% of the steel

the week beginning July 24,

for

done

tial

Steel Institute announced

making capacity for the entire industry will be 99.3% of capacity

recommenda¬

my

Organize

(1)

to

Iron and

Electric Output Sets New
sum

previous survey by "The Iron

a

of

deliveries

than four million tons this year and next.

more

has

day

tions:

of

year

one

Age" which showed that the industry was planning to expand its

come.

To

Industry

combined expansion programs will add 3,363,000 ingot tons to their
annual capacity by the end of 1952 at an estimated cost of $1 bil¬

to

will not do for

by active manufacturer demand for actual cocoa, a scarcity
offerings from primary markets, and growing concern over the
situation.
Trading in coffee was very active with
both spot and futures prices advancing to new
all-time highs.
Both raw and refined sugar scored further slight
gains. Volume
of

that the operating rate of

.

America, by itself, cannot save
the
whole world.
We can only

29

aided

5

page

The American
America

(365)

that
as¬

Offered by
Tellier

offering
of

&

an

Teller

Co., New York are
issue of 749,000 shares
stock

common

(par 1 cent) of
Television Corp. at

sociated with them in their Phila¬

Sightmirror

delphia
office,
Lewis .Tower
Building, and William U. Rosenmund, Jr. in their Pittsburgh of¬

40

fice,"First National Bank Build¬
ing, as
Registered Representa¬
tives.,.,
V.•Mr, Cook was formerly an of¬
ficer of Charles A. Taggart & Co.

Rochelle, N. Y., plans to use the

.

,

.

.

-

cents per share. "

The
cated

net

corporation,
at

*

.1

: v

.

*

is lo*
St.; ;New

which

111 •;Cedar

proceeds for payment of pa-

-

t^ts, etc., and for working eap..'

■<:...

■*,i-'i

;

'

1.

30

(366)

them

as

Continued

deal

from

and

Problems of the
&

Small-Scale Investor

South Korea.

Whyle

.

the

Says—

week

A

I said I
wasn't a military expert. But
=5 By WALTER WHYTEs
I can read history and can add
Hardly had I dropped last well enough to come up with
week's column into the mail some right answers.
What I
box when the market started

is

see

or

so

ago

lot of bad

a

news

and kept going up until ing out of Korea before we

the

end

The get enough materiel and men

week.

the

of

into eager

few weeks turned

in to turn the tide.
to me is more

demand

total

for

A

exist
of

use

.

ings.
Possibly that is
with

pointing
trends in

But what

important is not

Thev

ine

—

■

,

dividend

return,

investor

the

knows*-that

prospective
the

govern-

ment has probably already with-*
why

one reason

number of economists have been

a

...

..

in

sav-

alarm

certain

to

savings pattern.2

our

com¬

up,

frightened selling of the past

proportions

reverse

the

ooint out

nroportion

mdividuah

that

in

increas-

an

savines

the

of

nation

our

of
are

being channeled into financial in-

much

so

as

in

turn

a

stitutiOns

such

insurance

life

as

companies, commercial and savings banks, and retirement funds;

war

will not end in Korea.

favorably-with the entire
amount distributed to all stock.mers. But if he is in the high
'"come tax brackets he knows
?h,at the government will in turn
J^e possibly a major portion of
hls dividend as well. The stock
Payin® 6% may yield him only
Pares

Securities

What

will

this

stock market is

one

Pacific Coast Exchanges

Schwabacher & Co.
York Curb Exchange

San

Francisco

Stock

Chicago Board of
Wall Street

14

COrtlandt

iAssoc'ate)

Exchange

Trade

New York 5. N. Y.

7-4150

Teletype NY 1-928

Private Wires to Principal Offices

San Francisco—Santa

Barbara

Monterey—Oakland—Sacramen to
Fresno—Santa

shore.

"partial
tling in

Its half¬

or

*

market
the

dis¬

thing twice.
learning that

same

shock

The

seldom

of

war

had broken out caused

market break.

a

On this break

187.50
118.75

like

Washington wasn't put¬

137.50

ting

any

Subject to prior sale

or

a

THOMAS, HAAB & BOTTS
Members

Put

Dealers

50

Calls

&

Broken

lot

of

short

outstanding

stock

was

news

came

covered.

in

and

As
it

the

looked

strict controls into
immediate
force,
and
the
likelihood of new profits be¬
came .imminent,
stocks ral¬

price cnange

lied.

<4

I

think

further

Assn., Inc.

think

Broadway, N. Y. 4, Tel. BO 9-8470

to

this

rally has
But I also

go.

that

down

stocks

will

go

again, though perhaps

not below their recent lows.

I

To Shrewd Investors -Traders

from

37.2%

rose

would it

1946.

the

in the

in

For trad¬

proportion

also
and

42.3

to
,,

45.0 /o

.

,

,

three points of

same

*

8

❖

of

case

panies
70.7%

manufacturing

from
in

For

it

*

Amer.CarFd'y@ 30

137.50

in

concerns

in

71.6%

1936

*

one

(now close

■

at

hand)

■

E5

| Bondex Weekly Bulletins

can

help ■

continue to be right in your H
decisions.
Specific
trend ■
analysis gives helpful

H you

■
H!

market

|

ADVICE on TIMING

| your purchases and sales.
s

Get

your

■ which
s

copy

includes

Selections

of
37

■
■

Bulletin

current

"War

1[

Market's

offering excellent

■ opportunities.

trading g

P

is

agile enough to get in

and out, a

=

now

Bulletin and

current

B

weekly issues

■

and receive
next

BONDEX

4

seldom

can
accomplish.
For
long-term trader a posi¬
tion of holding and adding to
on
breaks, will make for
profits.

[The
article
time

views
do

not

coincide

in

this

necessarily at
with

They

are

those

of

any

the

presented

as

those of the author only.]

Publishers

CHICAGO,

of

Nussbaum has

BANKERS INVESTMENT SERVICE

with

for free pamphlet—

|

["Ymf Stake in the Fight Against Communism" m
=

Faroll

South La Salle

—

Robert

also

the average,

on

from

and

55.0%

over

year

dates.3

-32.8%
the

to

still
but

57.7%

three

ten-

become connected
&

Company,

209

our
ar-

That the,owners' stake in

business units would continue

to decline to

almost

an

proportion

insignifi-

relative

to

the

During these two decades when
corporations were increasing their proportion of debts to
equity underpinning, life insur¬

companies, which invest al¬
most entirely in debt instruments,
approximately doubled in size;
and the bond holdings of commer¬
cial
banks
almost
quadrupled.
Although both types of institutions increased their holdings of
corporate bonds, their increase in
size was mostly
in holdings of
ance

government debt.
These institutions

large-scale

rather

of

are

thin

morse

of some poorer,
(3) Should life insurance
stocks?

of

many

commercial

our

banks

that

fact

our

their

savings and the
investments

are

ventures

new

problems of

senior to

me^s held by our insurance comPan*es an.d banks as security for
our policies and savings are no
longer senior
equity and so

ffi

of the risks of

business

the

of

substantial

a

all
outright ownership
are

business units,

subject to

units?

Will

creasing burden of debt fall
easily

into

our

because of an

financial

in-

more

difficulties

anc* receiverships on occasions
when the curve of business activ^ happens to fall for a time be*ow normal? .
Before we too hastily assume

leaves the

balancing the scales

this

is

uniquely the
problem of the small investor, let
us
look in passing at the largescale individual investor.
He is,
of course, the wealthier among
the

individual

investors

and

is

subject to income taxation at a
higher rate than individuals of
ed

to

modify his performance as
a furnisher of equity capital
and
new venture capital.
This has its
unfortunate

inasmuch
he is characteristically better able
to take the risks of equity and
aspects

than

the

most

same

if

as

insurance

the

tion

&

aualitv

Dert

conservatism

and

the flow of equity and

encourage

venture capital?

This, howdesirable, does not look like

a

probable

development.

Taxes

cannot be^ reduced unless government

The
the

expenditures
whole

contrary.

becomes

more

to ask

more

bulk

or

ments is

reduced,

are

historical

trend

is

to

civilization
complex, we seem

As

and

our

more

of

our

gov-

Hfe

insurance

other

assets

companies
cash

than

2 See

for

J'a 6%

example various articles by.
during'the past few years

Homer Jones
in

the

"Journal

3 From

Stahrl

of

Finance."

Edmunds,

to hold

and

high

grade debt instruments to the extent of at least 5% of the total,
Could insurance companies

(4)
and

savings
bonds

the

of

invest

banks
would

stitution that

specialize

capital
nancing? Diversification and
equity

selection

pert

for

ventures

the

risk

of

insurance

the

ex-

commitments

of

minimize

in

fi-

venture

and

would

in

intermediate in-

an

new

corn-

The holding of bonds would

pany

gjve them a senior claim if theJ
equity junior to the bonds were
beid by others. Thus the problem
WOuld be shifted partly to indi->
vidua! investors. The companies,
insurance commissions might

weii

this

explore

possibility,

limitations

suitable

and

with good

administration it might
be reasonably safe and yet coristian important flow of venture;
capital.
- (5)
How about the possibility
of the government filling the gap.
in
the financing of equity and.
rew venture capital?
A very close
approaCh to this was made in the
case
of seVeral advances by the
Reconstruction Finance Corpora¬

for example, the Lustron
Dependence
upon
this
method as a solution would mean

tion,

as,

loan.

a

shift

from

ownership

private

and control.

Could

(6)

save

corporations

them¬

for capital expansion?

the

is

method

by

which

looked upon this method
favor because of the high
rates of tax they would have to
pay if the earnings were distributed. It tends to perpetuate the
corporations which can do it; but
the method has the limitation that
have

with

it does nothing to provide

capital to others.
These

r

'

supra, p.

36.

outside
\

-

alternative ways of cop-

hmJK? i"g.with
the changing pattern of
savings are either unpromising or

a

government
disburseresult of past wars and

the threat of future wars.

(2) Can the method of taxation

be reorganized-se as to give more

are

the

not coping
we

equity capital ^financing? Unques-

come

to

tax

signed

receiver

from

an

almost

con¬

with it

must hope that

subject
discouraging in¬
rates as the wealthy

small-scale

neither

tax system could be de-

of

such that

encouragement to new venture and

a

utility. The

at best of limited

sequences

investor,

such

investor nor to the business and
legal limitations Qf the savings institution, ^may make a substantial

overcoming

the unbalance that appears to ex-

confiscatory rate might appeal to ;ist.
But by the very virtue of
our sensej&f justice. But unless it
being "small-scale," this type of
is

Street, members of

of

staffs"t w™uld

income

high rates.
Now when he
contemplates
investment "in
a
say,

company

their investment
Probably not be unsafe to permit

such

us

a

stocks which have little or no/
senior issues.
Under such restrictions and considering the ex-

whichz-swould accomplish
Ibis result. To-relieve stockholders
bf "double"taxation" and the high contribtuion toward

let

were

undermining its own senior posi-

for such capital before
the personal income taxes rose to

offering,

it

partner in the business. To avoid

(1) YViIl taxes be reduced so paying out to stocknoldeis only
-that more profits will be avail- a portion of the eai nines accruable *° e<iuity investors, and so ing to them. Wealthy stockholders

The tionably

source

stock

com¬

tirely by the small-scale investor, many of our large corporations
'fJsome other pos- financed their capital needs dur"
ing the past decade That is, by

new

jump to the conclu¬

we

that

insurance

buys stocks junior to bonds,
which it holds, its position is al¬

selves

ever

Before

life

a

pany

within

side of the balance
sheet will continue to expand to

securities;
equity by

substantial

a

If

others.

and

hand

senior

mainly

are

B

largely to individual investors.
sion

policies

ber
of
dollars
involved.
The
quality of certainty is there mainIy because the character of assets
of these institutions is such as to
furnish the high probability of
payment upon need. These assets

right

small-'

hairlteorbed'a'n Increasing

insurance

quality that is of prime importance to many people. It is the
certainty of payment of the num-

This

they
proportion of

Life

com-

holdings of.

increase their

p&nies

already appear to have arrived?
That the proportion of debt in the

the point where the debt instru-

these

big

G.

be

ly is about the position at which

lower income citizens. He wasTtre

the New York and Midwest* Stock

■mail Exchanges.




111.

living would

the

new"venture investment

(Special to The Financial Chronicle)

our

of

1946.

64.3%

lower incomes. This fact has tend¬

expressed

With Faroll & Co.
INCORPORATED

654 Madison Ave., New York 21

Send

us

the

Chronicle.

| Send $1

feat that most of

That the rise in

not be met?
standard

in

1926

C=S

r==

capital necessary to cope with
expanding population would

an

corporations

declined

ital and

This will make it an ideal
sold the majority of their stocks 1
g| prior to the June 26th market break fij
H and who are now looking for the = trader's
market,
assuming

fail,

that the formation

creditors' stake, which incidental-

underpinning
ample

com-

heavily in old ventures and debt
capital rather than in equity cap-

jj who

I Next Buying Spot |

of

mean

the small-

on

If he should

to

and

trading

looks

275.00
450.00
250.00

387.59

1936 and 35.7%

ing

29.3%

to

equity

form

one

Sep. 18
Gulf Oil
@ 65% Oct. 13
Republic Steel @ 38
Oct. 2

Dec. 12

1926

financing entirely

scale investor?

creased taxes in

Plymouth Oil. @ 45

Atl., Gulf &W.I.@ 76

in

Does this leave

income.

increased

cant

387.50

Sep. 29

28.4%

burden

objections.
The objectors might not be willing
to gamble on the possibility that
the shift of burden might increase,
the productivity of society to a
point where all are richer instead

the burden for this important type

the

Richfield Oil .@43% Oct. 28

Allis-ChTmers @ 33% Sep. 25
Genl Refract. @ 29% Nov. 29
A. HI. Byers. . @ 20% Jan. 20

structures

company

personal
Gf

give up its
half-way measures.
At that
time
you
will get the in¬

forced to

..

....

equity capital. Taken at 10-year
intervals,, we find that the proportion of debt m manufacturing

legal ^restrictions; wealthy
individuals, by-reason of discouragmgly high rates of taxation of

will be

counts

•

@ 27% Oct. 23 $250.00
Shell Un. Oil. @ 42
Oct.
9 362.50

of

gets worse the Administration

Rosa

Per 100 Shares Plus Tax

the

in

underpinning

rested?

battlefront

the

another.

SPECIAL CALL OFFERINGS

of

time. This means that the equity
underpinning dropped in its proportion of the capital structure in

from

The

Studebaker

one

in asking for
controls" is whis¬
the dark.
As the

*

•

moot ques¬

a

measures

news

Exchange

the

on

Members

New

our

from

way

Stock

to

foot in the water and

foot

York

do

structures
decrease

corresponding

proportion

The Administration has

tion.

Orders Executed on

New

! dGtbt m and
°U,r ties
tutions
by Virtue of their liabili"
and

J" Pcapital
• °?

corporate
a

the

loud

and savings accounts have a cer-

com-

r,tVe^dVUbSir^inCreaSe °f risk capital: the savi"gs instinn/

Pacific Coast

in

tain

flf cash that

an amount

u

Korean

that the

of

taxpayers to others

drawn by the corporate income

nPw

certain

shifting

a

result

so

tax

between 2% and 3% after tax.
buying. The rumors of pan'c,
Hence it is no wonder that many
so
widespread during the the political tides all through which, for legal and other reasons,
individuals subject to the hign
break,
disappeared
com¬ Asia—China, Indo-China and, are constrained to confine their bracket taxes
put their surplus
investment of these funds to debt
available for savings in safe mu¬
pletely and the rumors of perhaps, even the Philippines..
instruments. There is therefore a
sensational profits were rid¬ It is evident that our
foreign widespread concern that we shall nicipal bonds yielding a tax free
income of less than 3%
rather
ing high.
policy is now turning to the
*
*
#
dlht"inair?,mpnht!
than
venture the savings in stocks
Far East and away from the debt instruments and conservative
subject to business losses when
All this is cut of the whole Continent.
I'm not going to
dividends are taxed at a rate
cloth.
Rumors
of sharp forecast what its objectives
r^niHi nnH
vfn'nrP u^pl such ast° r?duce the income after
breaks and the reasons for will be, or how
tax f° the yl6ld on tax free bonds<
they'll be Srpc nnhiishpH vf +hp
ftMES
? many large"scale investors
indicate that have their
reached.
But I'm virtually of Internal Revenue
limitations as producers

Korea

Thursday, July 27, 1950

.

certain

from

the tides of battle in

on

.

.

merely

11

page

of

shqrp rallies. Both
were
and are being fed by
hopes and fears based a great

Markets

Walter

uninformed

as

are

rumors

Tomorrow's

.

The Commercial and Financial Chronicle

I

accompanied by a commensurate: reduction in government ex-

penditures; such

consid&jEkL

*

moves,

bymany

C

meet when he considers

investing

in equities. Let us now consider
cause -some t)f these specifie-problems^

.-might be
-to

investor has serious problems to

}

Number 4928

Volume 172

.

.The Commercial and Financial Chronicle

.

Because of the smaller amounts

he has to invest
investment

there

are

problems

certain

which

are

difficult of solution for him

more

vestment in securities selected to
give a rate ot income

that obtainable
which

(1) In the first place, should he
go into stocks at all; and if so, to
what
extent?
This
problem
is

and

complicated for the
than

vestor

it

sma

1

in-

Series E bonds,

on

The amount within this

than for the large-scale investor,

more

higher than

is

the

income

in

common

placed

in

stock

fixed

tain stock is going to move
up, or
down, in price.
Furthermore he

will

probably

some

out

pay

money

reporting service that

pur-

nancial

ability

vestor.

Some

can

that

the

of

be obtained at
does

not

small

these

of

yearly cost
constitute an una

economical proportion of the

nual

in-

services

investment

income.

an-

needs

for

pur-

seriously.

tific studies

have

Several
been

scien-

made

of

jective;

the

nancial

interest

Their

two action.

have

writers
in

the

no

fi-

investor's

recommendations

economical for them.

times done

to the dates on which they will

,as

be

have to

met,

at least

are

cer-

tain in amount. The opportunities
to

and

to

than

more

secure

substantial

secure

ciation

safe income

a

appre-

the principal are

of

much

less important to it than the sureof

ness

small

a

income

safe

and

maintain the principal

ability to

value of the investment fund.
The

typical

small

investor,

on

the other hand, faces dilemmas as

both

to

the principal and

the

to

principal:

(1)

If

fines his investments to

endangering

is

short

is

It

value.

the

not

(a)

he

As

con-

stocks, he

principal
for

uncommon

double their value in

to

stocks

the in-

investments,

of his

come

period of

a

a

about

the

of

cycle.

(2)

curities

If

to

he

such

se-

though he will be certain to main.tain the dollar principal, he risks
a

decline in the purchasing power

of

the

in the

principal

inflation.

(b)

event

As to income:

of
(1)

If he tries for a
to

high rate of yield,
that extent he risks his future
which

securities
of

offer

almost

income

volve

capital, for
high rates
invariably in-

and

income

both

of

higher risks of failure. (2)
small rate

On the other hand, the

of

from

income

safe

investments

be too low to meet the costs
living of him or his dependents,

may

of

the past decade, for example, the 2.9% return on the best
of these, namely the Series E SavDuring

ings Bond, was more than doubly
by the decline in

offset

the

pur-

chasing power of the dollars involved.
How

compromise between these
-He

income?

for safety and
probably solve

needs

conflicting

can

common

stocks is superior to the
of putting the entire

alternative

fund into securities of intermedin
ate safety, such as second grade

arise for consideration.

the

(2)

of investment risk. For if the one
stock should turn out badly, the
entire investment would be lost.

But if the investment is diversified over a number of industries
and companies, the chances are
infinitely highly that a loss in
any one stock will be more than
offset by gains among the others.
Having reduced ihvestment risk
by balancing and diversification
in the portfolio, we now turn to
more difficult problems, of which
one is: (3) Should the small investor attempt to "time" his trans-

rather
than
if he has current

It is rarely ecoin the low
income tax brackets to be invest-

moved from extreme overvaluations to extreme undervaluations
in the business cycles, should he
concentrate his purchases at the
lowest points of the cycle and sell
out at the highest points, thereby

hand while

securing maximum profit from the

paying

upswings

"future"
"present," for

say

debts, he probably should not be
investing at all.
nomical

ing

for

money

with

the

a

person

with

other

one

he

is

out,

mortgage or note. If
the investment is as certain as the
interest

on

a

liability, it will yield him a lower
rate than he pays out.
If it yields
him more, he will probably find
that

he

is

trying

to

balance

a

liability which is certain against
an assets which is uncertain.
Assuming then that he is clear

erate

salary

that

he

is

certainly

ing that stock values have usually

and
insuring himself
against loss of value in the downswings?
There is no doubt that

such

a

policy would be enormous-

ly profitable if perfectly executed.
There are a number of
difficulties in the way of successful execution. One is that he will
probably not be able to judge the
peaks and nadirs of the fluctu-

jower ieveis 0f the

hp

p

that +hP nrire

it

„




.

size

The

oossibilitv

i<;

worth

butThe^anall^LveJtor

ing

SfscrimlnXd

shouH

»»

L° seenuntTs
a

smallaccount
of

as

that

a

may

large

time

'

rhprW

IvS
require

one;

may

as

and the

be

small

hjlffi °SJSJ

newspaper,

Another possibility is the vestor to get expert selection, diversification, and supervision is
by purchasing a share in a mutual
fund. Some of these are balanced
funds; that is, include bonds as
well as stocks. Some even prac-

,

produce

the r>ast
•

as

iudged from data of

merely

hp

can

to

nrotect

tice "timing"; that is, attempting

to lower the ratio of stock in¬
vestment and increase the ratio of
bond investment when stocks get
high and reverse the procedure
when they are low. The holder

usually draw on a competent has the option of withdrawing his

TheY frequently press the broker

amount

share of the market value of the
fund at any time, upon short
notice; but the initial loading
charge is often too high to make;
moving in and out economical,
The amount of the loading charge
should be ascertained and considered very carefully. Five percent
or under would not be regarded
as high. Many run over 7 or 8%.
Thus it is not unusual for the
loading fee to equal one or two
years' dividends.
The investor
may have to spend time analyzing different funds to select one
that is economical on loading and
management fees, gives the type
of portfolio he desires, and has
a satisfactory record of past performance. But selecting the one
fund gives him a greater diversification of his investment than he
could possibly gain by direct in-

for advice on what stocks to buy
for near_term price appreciation,
Such a Sreat demand for this kind
investment when thev are low he of advice evokes a supply to meet
mieht well follow the oolicv of
it:- The broker may perhaps be
«doiiar averaging"
This simplv Pardoned
if be falls into the
rons;sts
of
nutting
the
same
babit of giving such speculative
amount
of dollars
into common advice. to a bona fide investor,
k
•
e
h ti
e
Deri0cj with- KnowinS of this limitation may
* regard to the price level
This helP .the *nv^st.or to make his own
jii
r;Luit automatically in ac- Position sufficiently clear. If the
riirnnlating fewer shares at high
broker is convinced that the cusnrjrpt;
an5 m0re shares at low Corner is interested in getting in.
levels
trinsically sound stocks at prices
'
..
which are not unreasonable for
Zi pernaps JfJ® long run performance rather than
mosf abncult Pr°plem tov
interested in immediate price apsmall investor that or selecting preciation, he will be quite comhis stocks, this requires
w petent and willing to give appro- vestment in common stocks. The
Qualities he is not likely io
? priate advice and guidance.
selection may be better than the
W sufficient meagre: (a; aoiniy,
(d) The investment dealer is small investor could make, and
aad (b) time, a mm mu a g
simiiariy competent and also gen- probably would not be worse,
Jf diversilicatron wouia involve erally of high character. His ad- And if the practice is also promthe selection oi ax iaasx
. v^ce w^i ^ costiess where he de- ised of varying the ratio of bond
But selection ot
se
pends for recompense on his profit and stock investment with the
stocks implies
a
y
■
,
from any purchases which the market, the investor may gain
a cousiderauon o
g
p
customer may make from him more, and will probably not lose
foll(); 1..^re
■
th
Several limitations should be kept more, than if he tried the same
versification w u
q
.n mind Qne is that he will have thing himself,
study and an
anrj
mfKt
a natural enthusiasm for the seSummarv
aeainst the usual

cfntratine
high

mistake of

purchases

and

when

con-

stocks

concentrating

dis-

.

,

,

,

nn„

u

of which will be bad. It is diffi— investor lean

for advice on selec-

cult for the uninitiated to be un- tion of stocks? Several possibiliimpressed when a member of the ties immediately come to mind
financial community expresses a Let us note their advantages and
ments.
confident opinion as to the future limitations.
The investible surplus left over course of the market.
It is still
(a) He might subscribe to a
after meeting the above described more difficult for him not to be service
that makes suggestions
needs
measures
the maximum impressed when he sees in print and analyses. This solution has
amount he should consider for in- a definite statement that a cer- the merit of being within the fi.

daily

himself

the

f earnings it is reasonably likely

,

.

the

Where the small investor

discounts

_

borrowing but also suffiavoid service charges,
which are usually high compared
with the income on safe invest-

in

statistical department for analyses and conclusion: Most people
who fre(*uent brokerage offices
are of a sPeculative disposition,

afjequatelv

red.

to

a

moiuve Ior ine smaii °neAnother possibility worth
checking is a large trust company,
The investor should not pass over Like a Public investment counsel,
lightly the advisability of de- s°me such companies do not find
pending for advice upon some ** possible to accept the size of
person
with whom he can sit accounts which fall within our
down and talk over his problems definition of a small scale investor
and who can ask questions to get except at a fee which is prohibthe needed picture of all the as- itive compared with the income,
pects of the personal financial However, the matter should al¬
situation.
•
ways be explored, for such com(b) Friends and acquaintances Panies usually have very corncould fulfill this last mentioned Patent investment officers and
condition. Their advice will cost their advice and services are well
nothing and
will usually
be worth while. To the small scale
worth the cost. Unless they are investor, many trust companies
column

market prices

,

cient

to

professionals, their competence is have the advantage of providing
open
to question.
Until their a P?01 of securities; so that by
lating
on
market
swings.
The competence has been adequately buying say one share in it, the inchances are high that he did not demonstrated, it would be well vestor gets a participation in a
make it that way; but they are for the investor to seek out a p.o- diversified list of perhaps a hunhigh that he will lose it that way. fessional; that is, a person who dred different stocks expertly secm-ill invp<?tnr wi<?hpc tn
makes his living by giving such lected and supervised,
roncentrate his purchases in the
advice.
(g) Another way for a small in-

mnrP

porary

grow

spec'u-

wni asfc him if he made it

ations at the time they occur. If
exact
he should have such a correct
dollar protection in
the future, judgment he would then be faced
Pnmnetent
This will include the arranging of with the psychological difficulty
y "?any :'fhpcp ^nnld
sufficient life insurance to meet of selling
when the record of s u<?y,
of ,
f
Hav
the needs of his family in the earnings is good and of buying probably require a
roinimnm
event of his untimely death. Cash when the record is poor. The pol- ?r torty
Vn
rv
definition
in a savings account or in governicy also requires him to act op- uu"ai
porwoiio.
y
ment bonds of short enough term
positely from his fellow investors, the inv'estia^le*.
investor
should be set aside to take care who
unfortunately buy stocks sma*J s<ra .
f i|
of any forecastable future drains, most heavily when they are in the cauld not live o
Parning
An additional amount in a savhigher price levels.
Few people ak)ad-. .inereiore ne
s
ings account for unforecastable have sufficient confidence in their "ls "Ving some o
y; ..
contingencies,
the
proverbial own judgments of price move- case
£an, a d y i?npirtrrnnnH nf
rainv day, should be provided. The
ments to behave oppositely from e^en ** he ftaa 1
8
.
H
balance in his checking account the crowd.
education or experience requ
should not only be sufficient to
Lacking confidence in his own Consequently we
meet all purchases between pay judgment, he will also be vulner^
'
oil
days without the necessity of ternable to a deluge of advice, much
(4) On whom should the small
he must then consider the
extent to which he needs

of debt,

some!

The" indi- J!™

viduals. It would be somewhat
analogous
to
depending
for
medical advice upon the doctor's

stock

actions in common stocks? Know-

nature

forecaster were even fairly
consistently good, he would be
making so much money practicing
what he preaches that he would
not bother working for the mod-

investment "problems "of

investment be and lighten load in the higher stock broker.
He is generally
put in one promising stock or di- ievejs perhaps the safest method both caPable and honest. His advided among a number? There is is for'him to do it on the basis of vice is usually unbiased, for he
hardly a stock so promising but tlie reasonableness of the price wid probably have no financial
that a number of others equally at a
to ^
t average interest in'the security he recompromising can be found.
Thus, parnjn«o nn thp stork That is to- mends. Furthermore, such advice
while not reducing the chances , v
stocks only
when the costs
tke investor little, the
for a good return, spreading the prjce seems low or at least rea- broker securing his income most
investment among several equally g0na)3ie compared with the earn- likely merely from the commisgood
selections does, 'however, .
share over the past five sion on Purchases or sales the inmost assuredly reduce the degree .B
years
(b) Sell any stock vestor makes through him.
He
Should

problem best by analyzing the
of his future liabilities.
I

this

the

bonds and preferred stocks. The getting for writing his advice,
latter might give the same yield When
a
forecaster
of
market
as the average of the governments movements
seems
to
be
taking
and the commons. But no part of himself seriously, I like to ask him
it would have the degree of pro- if he's got $20,000,000. Because if
tection against monetary inflation he can forecast fairly consistently
that is afforded by the common he could easily have it.
So far
stocks.
Also no part of it would the answer has always been "No."
have the degree of resistance to But if he ever answers "Yes", I

tions

phase

government bonds, al-

as

by achieving a balance begovernment
bonds
and

safe

subsequent

investments

his

absolute

equal

an

the

in

tween

and

confines

between the depression and
prosperity phases of a business
cycle.
Conversely they often deamount

come

safety

depreciation in dollar value that
is characteristic of government
bonds, savings accounts, and life
insurance policies.
With the decision to invest in
common stocks as well as in high
grade bonds, certain further ques-

few years elaps-

ing

cline

income by chances are the investor" will"be
meeting them in sequence rather no better off following it than by
than both at the same time. This continuous holding of the average
plan of compromising the con- stock. Writing and publishing such
flicting factors of safety and in- advices is a considerable chore. If
for

It is

the chance that the

small account will

cost

needs

on

that will be mutually economical

much time

stitution, while perhaps uncertain

31

although it would clearly not be

They

.securities will d i f f e r for the advice, he is likely to have the merit also of being ob-

individual

for the large chasing power protection and for such services, which lead to

_1S

to

ports to tell him when to buy and
when to sell.
Having paid money

investors, depending upon: take it

among

their

placed
amount

maximum

(367)

curities which he has on hand for
sale> which may cause an unintended bias in his recommendations. Another is that most stock
flotations are made through investment bankers and
dealers
during the times when the market prices are in their higher

To summarize: Whether or not
the small-scale investor advances
risk capital may affect the future
shape of our future economy. On
it may depend: the variety and
quantity of products making up
our standard of living; the amount

of our leisure time; the degree of
concentration of corporate business, and therefore the extent of
competition and monopoly; the
proportion of debt and equity interest
Qur corporate capital
structures; and therefore the naprofessional investment ture and Quaiity afr tbe assets
a competent person who which secure our life insurance

levels. Whereas a broker usually
considers only securities which
have a fairly active market, an
investment banker often sells issues which turn out to have no
actjve market after the pub,jc
distribution is terminated.
(e) A
counsel

ggjjg nothing but his advice,

is

perfec(; answer except for the
very serious
limitation that he
may be unable to advise on a
small accoUnt for a fee that would
be within the capacity of the account. Some such firms however
have 'been known to accept a
small account at a reasonable fee,

policies and bank deposits,

For the small-scale investor to

plug the apparently widening gap
between the demand and supply

of equity capital, he must face
certain problems; but we have
seen certain directions in whiqh
he can proceed toward a solutioii
of these problems.

32

The Commercial and Financial Chronicle

(368)

inUlCallOllb UI vlirrcni

latest week

Business Activity
Equivalent to—
ingots and castings

(net tons)

Steel

oil

month ended

on

Latest

Previous

Month

Year

Week

Week

Ago

Ago

July

1.892,900

99.4

July 15

5,495,450

1,894,800

101.2

that date,

Month

1,929,100

of

to stills —daily average (bbls.)
July 15
output (bbls.)
July 15
output (bbls.)
July 15
Gas. oil, and distillate fuel oil output (bbls.)
July 15
Residual fuel oil output (bbls.)
July 15
Stocks at refineries, at bulk terminals, in transit and in pipe linesFinished and unfinished gasoline (bbls.) at—
July 15
Kerosene
(bbls.) at
July 15
runs

4,725,400

OF

5,912,000

5,565,000

5,130,000

Imports

20,059,000

19,034,000

18,117,000

Exports

1,752,000

2,033,000

1,531,000

7,179,000

7,353,000

7,065,000

5,699,000

Domestic warehouse credits

8,026,000

7,916,000

7,467,000

7,785,000

Dollar

114,278,000

116,374,000

111,464,000

22,532,000

22,035,000

19,507,000

23,791,000

—July 15

58,658,000

56,568,000

47,717,000

68,622.000

July' 15

42,708,000

41,874,000

40,740,000

67,799,000

Revenue

July 15

789,268

553,876

805,680

724,183

July

540,985

646,256

637,154

455,432

8

Total

Total

—

CONSTRUCTION

Total

ENGINEERING NEWS-

construction—

S.

U.

—

construction
construction

Private
Public

municipal

and

State
Federal-

$343,307,000

$364,963,000

217,786,000

254,053,000

141,592,000

65,229,000

125,521,000

110,910,000

114,608,000

93,512,000

July 20
July 20

91,187,000

63,385,000

88,5.98,000

77,984,000

34,334,000

42,525,000

$256,200,000

26,010,000

;

15,538,000

building

restaurants

nonresidential

81

13

17
272

73

73

76

110

92

94

28

26

26

and garages,,—
buildings——/,—

32
113

66
110

68
102

——

33

31

30

_______

.

Educational

Hospital and institutional,

97.200

133,700

137,000

15,800

——

—

. —

recreational—

and

Social

__•■■■■'

construction

utilities

Public

213

Railroad

5,461,665

All

other

—i

,

——

telegraph,,—
utilities

public

private

Residential

STREET

INDUSTRIAL)

AND

(COMMERCIAL

187

170

July 20

147

1,,.,

building

Nonresidential

*

INC.

——-—

construction

Public

•FAILURES

182

tary

naval facilities»

or

Finished steel (per lb.)

.July 13

3.837c

3.837c

3.705c

July 18
July 18

$46.38

$46.38

$46.38

$45.91

$37.17

$37-08

$39.00

$19.33

——

PRICES

(E.

M.

A

J.

refinery at
Export refinery at
tin

(New

York)

at

.July 19

22.200c

22.200c

.July 19

22.425c

22.425c

22.425c

17.520c

.July 19

89.500c

86.750c

77.000c

103.000c

Zinc

(St. Louis)

at.

12.000c

11.500c

12.000c

14.000c

11.300c

11.300c

11.800c

13.800C

July 19

15.000c

15.000c

15.000c

9,500c

Louis

(East St.

U.

S.

Government

DAILY AVERAGES:

Bonds

Railroad

.July 25

102.17

102.10

102.02

.July 25

115.24

114.85

115.63

.July 25

120.02

119.82

120.84

120.02

.July 25

118.60

118.60

119.20

118.20

114.66

114.46

115.24

112.75

107.98

106.92

107.80

105.00

.July 25

110.34

109.06

110.34

108.16

July 25

116.41

116.41

116.80

115.24

.July 25

119.00

119.20

120.02

118.40

U.

S.

July 25

2.34

2.34

2.35

2.27

Average

July 25

2.39

2.91

2.87

2.97

Aaa

July 25

2.65

2.66

2.61

2.65

Aa

Baa

July 25
_

COMMODITY

Orders

PAPERBOARD

received

PAINT

AND

REPORTER

Pacific

York

BRADSTREET,

SPECIALISTS

EXCHANGE—SECURITIES
Odd-lot sales by dealers
Number of orders
Number

of

ON

3.22

3.15

3.27

Sales

(average monthly),

BANK

EXCHANGE

N.

Y.

2.81

2.89

Sales

(average

daily), unadjusted

2.73

Sales

(average

daily), seasonally adjusted—

July 25

447.9

434.0

395.4

339.5

82

55

93

64

491,744

395,147

282,174

July 21

123.5

121.6

120.6

128.4

Stocks,

unadjusted

Stocks,

seasonally

INSTITUTE

COMMISSION:

sales

July

51,541

25,093

29,623

13,160

8

722,305

1,543,106

904,850

368,858

8

$30,976,066

$67,599,778

$41,289,592

$13,549,189

8

19,311

45,843

short

34,629

12,101

sales

8

152

293

321

136

Customers'

other

sales

8

19,159

45,550

34,308

11,965

8

555,812

1,434,872

994,556

318,652

8

6,302

11,359

11,038

5,844

8

549,510

1,423,513

983,518

312,808

8

$22,532,535

$59,792,806

$39,737,085

$10,251,259

8

135,810

422,380

342,130

100,700

shares—Customers'

Customers'

Customers'

short

other

Dollar value

total

sales

sales

"

sales

July

..

IIIIIII—II

—

Round-lot sales by dealers—
Number of shares—Total sales

Short

Other sales

.

.___

"I

8

IIIIIIIIIIIIIII

8

135,810

422,380

342,130

lob/TOO

8

279,150

470,700

243,570

147,790

Round-lot purchases by dealers—
Number of shares

PRICES NEW

SERIES

—

U.

S.

DEPT.

OF

p.™

1Q

ll

pn^ts

1909-July,

farm

All

as;

Fuel

and

Metals

lighting

and

Building

and

figure.

"

v

,"}£

materials

products

allied

products

JIncludes 489.000




167.5

173.1

167.9

155.5

244.2

243.7

224.0

174.2

154.0

162.4

162.2

265.1

241.0

231.1

150.5

*149.9

148.3

145.2

i h

139.6

138.7

135.9

137.9

i«

Estimated

133.4

133.2

133.1

130.0

173.7

173.1

173.0

167.8

204.2

*203.8

201.1

199."'

117.7

115.7

113.9

by the Rational Coal Association.

172,260

250.190

278,645

207,354

241
225
227
181

237
215
224
174

256
234
229
177

339

389

403

242

236

251

206

193

225

205
239
256

168
230
258

196
256
276

AGRICUL¬

OF

1914—100

—

As

;

-

grain

Feed grain

and hay

Tobacco

—
.

Cotton

—

Fruit

——

Truck

crops

Oil-bearing
Livestock

Dairy

REAL

crops

and

products—

—

animals

products

ESTATE
OF

LOAN

AND

—

— —

of

and

n

S.

—

FEDERAL

INSURANCE

May

Trust

—

companies..

lending

institutions—

—

Total

of

OXIDE

24i
220

$461,474
120,743

$393,677
107,966

$296,617

293.452

235,403

84,638

66,945

59,396

SAVINGS

Individuals

ZINC

324

243
165

CORPORATION

Mutual" Savings banks
Miscellaneous

308

235
161

(000's omitted):

companies

and

312

NONFARM

IJV

FINANCING
U.

—

______

eggs

213.9

171.9

July 18

burreuVrf^aude"runs.

166.2

172.0

157.1

269.2

iq

IIIIIIII

176.3

ih

~

materials

Chemicals
•Revised

metal

tSK

"and"foods

*161.9

96,952

*165,915

INDEX

products

Crops

Banks

175.3

*189,311

162.3 43

Unadjusted-

Poultry

162.9

266.531

,,

15:

Insurance

All commodities other than farm
Textile products

,

—

Savings and Loan associations

Tllltr

.

DEPT.

S.

■

LABOR—

*233
*223
*240
203
220

of June:

FARMERS

BY

August,

April

■

1926=100:

226
221
226
231
228

MANU¬

CLEANER

(number of unitsi

TURE

AREAS

All commodities

234
230
242
209
222

CLEANERS—STAND¬

ASSN.)—Month

NUMBER— U.

—Month

WHOLESALE

294.8

CONSTRUC¬

STEEL

(VACUUM

RECEIVED

Meat

sale3

OF

(tonnage)—estimated

VACUUM

SIZE

Food

Customers'

*311.5

(AMERI¬

STEEL

(tonnage)—estimated

FACTURERS

of

313.1

of June:

closed

Shipments

PRICES

—_

—_

adjusted

STRUCTURAL

TION—Month

Contracts

ARD

STOCK

46,389,039
347,666,963

1935-1939

unadjusted

2.65

Dollar value

of

—

2.83

Odd-lot purchases by dealers (customers' sales)—
Number of orders—Customers' total sales

Number

Y,

2.69

8

total

N.

2.83

(customers' purchases)—

shares—Customers'

OF

2.70

489,490

$394,056,002

86,101,764
482,802.280

FEDERAL

DISTRICT,

RESERVE

July 25

July 15

$568,904,044

102.562,255
465,460.849

FED¬

July 25

137,034

$568,023,104

/

SALES—SECOND

STORE

DEPARTMENT

3.15

145,799

14,350,863
63,699.715

(1935-1939^

INC.

June

July 25

INDEX—1926-36

THE

of

AVERAGE^I'M)—Month of June:

209.448

14,781,900

PURCHASES OF COMMODITIES—

&

100)—Month

ERAL

205,526

47,637,287

96,879,408

——

RESERVE

STOCK TRANSACTIONS FOR THE ODD-LOT ACCOUNT OF ODDAND

York City

3.45

129,356

8

80,624,846

City

of New

Factory sales

DEALERS

—i—

States,

United

Total
New

Outside

3.02

226,087

j

15,949,526

-

2.74

AVER AG E—100

LOT

80,891,868

39,556,473

-

——

——

CAN

PRICE

83,527,519

80,614,614
64,315,861
24,345,207

3.29

at

DRUG

111.838,224

Central

HOUSEHOLD

OU.,,

73,666,736
50,361,182

133,475,938

—

2.89

Percentage of activity
Unfilled orders (tons)

$22,701,824

2.69

186,959

42

45,712,850

3.34

188,355

80

42

136,585,976

2.93

July 15
July 15

88

44

$34,576,531

2.72

July 15

16

17

90

51,648,183

2.92

ASSOCIATION:

172

140,734,615

—

3.28

(tons)

187

CITIES—Month

2.72

Production (tons)

33

192

&

——

——

FABRICATED

NATIONAL

611

28

$22,506,004

DUN

—

July 25

INDEX

585

29

17
93

——

Central

•

MOODY'S

643

13
80

July 25

;

A

32

50
223
8

9

VALUATION

Mountains

,OUN

corporate
—!

27

41
199
13

53

-

Central

West

AVERAGES:

Government Bonds

23

42
215
13

15
85
9

Atlantic

CONSUMER

MOODY'S BOND YIELD DAILY

131

305

52

Atlantic

South

113.70

July 25

100

267

52

—

—

England

East

103.24

.July 25

12

103
285

34

INC.—215

BRADSTREET,

Middle

Average corporate

10

of June:
New

South

MOODY'S BOND PRICES

11

11
236

public

PERMIT

BUILDING

21

40

and

other

other

All

17.325c

.July 19

.July 19
Lead

22.200c

23

9
200

public service enterprises
development,.—

Conservation

Domestic

19

40

water

and

Miscellaneous

QUOTATIONS):

Electrolytic copper—

Straits

naval

and

Highways
Sewer

METAL

16

21

facilities——11
240

nonresidential

other

All

—

institutional

and

Hospital

Military

21

29

13

Educational
3.837c

23

30

building (other than mili¬

Industrial

PRICES:

IRON AGE COMPOSITE

712
614

275

1.034,000

6,102,283

1,428

14

6,908,000

6,006,345

$2,039

1,635

1,036

306

886,000

3,185,702

$2,220

1,798

(nofarmi,

10,440,000

.July 22

52.441

77

48,000

Other

kwh.)_

000

(in

output

$197,930,000

_

Telephone and
Electric

$231,149,000

82

1,500,000

INSTITUTE:

ELECTRIC

EDISON

$279,442,000

930

786,000

302

13,066,000

,

t9,300.000

*218

16,558,000

980
890

July 15

264

68,000

20,721.000

(-nonfarmi

-July 15

.July 15

7,029,000

28,000

Warehouses, office and loft buildings

Farm

STORE SALES INDEXAVERAGE=100—.

TEM—1035-39

6,713,000

638,000

OF

Remaining types
•DEPARTMENT

10.472,000

Industrial

Stores,

8

$121,154,000
46,768,000
9,845,000

millions):

alterations

Religious

July

57,661,000
8,539,000

Commercial

Other

.

10,658,000

units,,

and

Nonresidential

(U. S. BUREAU OF MINES):

OUTPUT

COAL

$141,650,000

66,486,000

Nonhousekeeping

$158,751,000

.

$170,467,000

-

budding

dwelling

Additions

July 20
July 20
July 20

(in

June

construction

Residential

CIVIL ENGINEERING
RECORD:

of

-

DEPT.

S.

construction,

new

New

'

between

-

CONSTRUCTION—U.

Private

Ago

OUT¬

shipped

and

goods stored

LABOR—Month

(number of cars)

Year

Month

BANK

foreign countries

AMERICAN RAILROADS:

freight loaded (number of cars)
freight received from connections

Revenue

Previous

SO:

shipments

on

Latest

Monch

302
2,999,558

exchange

Based

of that date:

*302
*3,537,476

—

RESERVE
June

2,147,000

111,739,000

*

YORK—As of

(i5,806,000

Domestic

are as

302
3,929,766

reporting

ACCEPTANCES

DOLLAR

NEW

BUILDING

ASSOCIATION OF

carriers

freight transported (tonsl

19,311,000

Kerosene

oil (bbls.) at

5,347,400

either for the

ASSOCIATION—

STANDING—FEDERAL

5,475,500

are

May:
motor

Volume of

of quotations,

cases

TRUCKING

Number of

1,502,500

in

or,

AMERICAN

81.5

(bbls. of 42

Gasoline

Gas, oil, and distillate fuel
Residual fuel oil (bbls.) at

or

Dates shown in first column

month available.

or

BANKERS

average

gallons each)
Crude

week

99.3

-July 30
—

PETROLEUM INSTITUTE:
and condensate output —daily

AMERICAN
Crude

of capacity)

steel operations (percent

Indicated

•

INSTITUTE:

AND STEEL

IRON

Thursday, July 27, 1950

.

The following statistical tabulations cover production and otlur figure* for the

|Mg%£ Pnrr-Anf

AMERICAN

.

.

(BUREAU

OF

79,713
196,865

199,900

173,926

168,926

217.661

193,231

141,232

$1,377,913

$1,171,148

$942,749

19,683

MINES)—Month

April:

Production

(short

tons)

Shipments

(short

tonst

Stocks

at

end of month

118.3
*Revised.

—,—

(short

tons)

.

18,351

Not avail.

19.589

17,213

Not avail.

15,743

15,644

Not avail.

Volume 172

Number 4928

The Commercial and Financial Chronicle

i-..

'till (it!*} FitHtrfHtl

t

<

i

•rv.

run

■''oil.

-i',

t. 1

(369)

Continued

jrom

only

15

page

one

ballot

put a

Who Is to Blame lor

1

find

can

It

is

candidates

on

The

tne

leeches

off

my

$400, now $30, and better. Ball
pointed pens, once $18 now $1 or
$2.
Tires, once good for 2,000

these

throat.

free market

a

that points to protJt

the magnetic
needle of our
achievement.
Radios,
formerly

All these interferences with the

workings of

price

is

some

ticket who will take

party

Boom and Bust?

left.

resource

box, and there I intend to
cross in the right square if

miles,

you

for

good

econ¬

if

lucky,

were

50,000

miles.

now

Gasoline

(without the tax) cheaper today
omy may keep the balls in the air
industry down
for some time.
But has any bu¬ than 30 years ago, despite infla¬
ernment had turned on all faucets with the fixed
charge of taxes and
And a better gasoline than
reaucrat yet repealed the law of tion.
to "create purchasing power," we
interest—you have a depressed inLindbergh had to fly the Atlantic.
had
the
1937
depression
and austrv. The industries leading the gravity?
But
the Big Government boys,
It is a law of physics that any
8,000,000 men continued to stay economic parade today, keeping
jobless until 1940 wnen war bay¬ supply and demand in balance— object is more stable, the closer busy with buying votes; busy also
its center
of
gravity is to the in finding more jobs for thening put them to work.
automobiles and petroleum, as ex¬
and
earth.
retainers
on
It is another law that a relatives
the
I
repeat that the government amples—are those most free from
pyramid should be placed on its public payroll, are loading the
whicn caused the 1937 bust was government
controls.
Note
tais
base and not on its apex.
These economy with high taxes which
staffed by the same breed of bi¬ fact well.
universal
laws
operate
in
tne are inevitably reflected in high
peds with bulging brows who con¬
Any industry working in a free market
place as well. Business has prices. They are lifting the cen¬
tinue to
assert
that they
alone market proves my argument. But
learned that the big money is in ter of gravity of prices constantly
know how to prevent boom ana the
petroleum industry is a good the
pockets of the little people at upward; they are putting the na¬
bust.
example. A modern refinery can the base of the economic
pyramid. tional pyramid on political stilts,
The worst depressions of all are
pioduce more or less gasoline or
Henry Ford was the leading pro¬ and at the same time, turning it
those in which
men, women and iuei oil from a barrel of crude oil.
fessor of that truth.
So the law upside down to rest on the apex
children actually starve to death.
If there is a terrific demand and
of prolits
It is thus
forces business in a of Washington, D. C.
Before adopting State
Socialism, short supply of gasoline, price
competitive economy — even that they propose to put an end

spite the further fact that the

note

that

had

Communist

famines

died

in

gov¬

Russia

which

had

millions

from

hunger, and that its
today is in large part
sustained
by 15,000,000 Russians
economy

in

slave

labor

working

camps

without pay except the minimum
of food
or
shelter necessary
to

keep body and soul together. The
Russian experiment—even in the
field

of

business

alone—is

not

so

hot. Yet, the left-wing propaganda
mill grinds out the endless tune:

If

don't

we

have

employment,

continuous

Americans

full

will

go

and then loads the

tells the refiner to shift

to

gaso¬

line. If sub-zero weather blankets

nation, price says, shift to fuel

a

oil.

against the wish of

men—to seek ways to

"Price finds oil"

As

is

result,

a

old

an

the

say¬

lower prices

And

better

money in order to reach the

speak,

markets

crowd

mass

Supply
What

bust?
than

and

Balance

Between

Effective

Demand

the guts of boom and

are

Are

they

anything

otner

supreme distortion between

a

supply and effective demand?
of factors may cause

score

that is the final fact.

force—as

silent

A

it, bat

What is tne

and

ceaseless

as

better

a

the

at

base

of

the

found

the

leum

save

from

us

struggles

the

represents

millions who

to

judgment

are

con¬

What do

political
free

we see

market.

tied

rapidly

have

We

in

up

potatoes,

getting

$4

to

of

inflation threats

new

votes

by artificially keeping prices
England, they spend tax
money to buy votes by
keeping

Commercial

artificially

Our

and

industrial

real

government

keeping

up

interest

low

double

taxation

of

rates

and

dividends

put

ident

the

of

National Asso¬
ciation of Real

to

Estate Boards,

subjecting

personal

as

im¬

gravity. Political

con¬

thus

siderations

of

next

peril

election

not distort

ments

as

do

the

winning

the

move¬

the

of

price needle telling
where goods should flow to supply
demand.

No

whether

the

goods is
Even

buyer

radical

a

the

Big

buy

their

they

can

lion

kids

asks,

one

or

cares,

seller

or

conservative.

or

Government

groceries

own

buy cheapest.
clamor

of

boys

where

If

Hopalong
and pistols,

Cassidy pants and
price will supply their demands.

get

must

profits

are

expand—

to

money

fixed

of

which

business

charges

paid even though
non-existent. In 1947

into

business

from

new

So, to

expansion

came

stock

issues.

common

the disease it creates,

cure

the government will put

business

deeper in debt with Federal loans.
In

a

prosperous

Federal

going

Government

$6

billion

in

period,
the
is
again

debt

for

Big Government,
managing

the

now

entire

allocated

facturers

only to those

who

in"

"kick

boom

day

can

and

do

bust

readjustments

prevent

the

than

day-by-

the

of

price

system?
A ship loaded with a
cargo of fuel oil may be destined
for Naples. But if the fluctuating

the

funds, it is
earnings, which in
hands

consumer's goods, and

ab¬
the

would

in

buy

business

bands would
to

buy producer's goods
provide the tools necessary for

good

jobs

men

and

for

our

women

700,000

young

entering

the

labor market each year. The taxes
paid by one petroleum company
Liverpool, last year equalled
$4,484 for every
the tanker in mid-ocean can be
worker, and $17.50 for each share
instantly diverted to supply the of common stock.
Again, to suck
greater demand—in short, prevent all the blood
possible from the
a
depression
in the Liverpool tax-bearing
animals, it maintains
market.
Compare that with the
depreciation schedules wholly un¬
tortuous readjustments made by related to
today's inflated prices.
what Woodrow Wilson called "the This not
only makes it difficult
palsied hand of bureaucracy." If for business to replace worn out
the fluctuating needle of price is
machinery, but gives such a dis¬
free to correct the little depres¬ torted
mirror
to
true
business

sions,

of

supply

in

how can there

Herbert U. Nelson

be

major

prices

property

rise

in

three

of

four

trends,
are

on

report¬

property market,

of

index

scarcity of offerings, remains

on

the

all

the

level

of

in

1949

76%

of

reporting cities. But it is
up in 19% of the reporting cities,
and of particular significance, in
56%

said.

of the

cities

of

over

population.

500,000

<

Six months ago the

curvey

showed

an

Primary factor responsible, the

been reporting
that
little
well-located,
welltenanted
downtown
property
is

There has been

for

ket volume in 75%

many

cities have

sale.

Now

some

owners

are

concluding to "take their profit"
and release their still scarce
ness

properties at

"The
future

a

busi¬

salable price.

general confidence in the
of

real

estate

is

affecting

population, and in 17% of all re¬
porting cities,

lower in only 8%.
no change in mar¬
of the report¬

ing cities. Prices are stable. They
are

at

level

for

cities,

up

the

84%

December-January
of

the

reporting

in 8% of the cities, down

frora

taking place. When the

gov¬

ernment fixes wages and rents, or

profits

my

as

to whet every

savings and lend them

shaky security. And

you

prices and rates—as it does in the helpless to protect our
railroad industry, for example— ings from their wasting.




ignorant

on

such

and I
own

are

sav¬

We have

not

only

ly in demand."
"The

market

commercial

East

tained at the 1949 rate in 57% of
on

property

downtown

reporting

has

compared with six months ago in
21% of the communities. In the

been

definitely accelerated by the im¬

South

Central

region

Alabama,
lead

the

in the percentage of its
reporting communities that have
country

experienced
The

East

the

recent

/uptrend.

North

Central region
(Ohio, Indiana, Illinois, Michigan,
Wisconsin) is just behind it. Both
show an uptrend in 70% of the
reporting cities, and in the East
South Central region not a single
city shows any recession, down

•

trend, or reduced volume of sales.
The

Pacific

Oregon,

area

(Washington,

California)

is

another

of

increasing activity, with
its cities showing that re¬

67% of

cent uptrend.
The

West

North

Central

area

(Minnesota, Iowa, Missouri, North
Dakota, South Dakota, Nebraska,

Kansas)

comes

cities

its

next, with 66% of

showing

recent

a

ac¬

celeration of sales.
The

Middle
Atlantic
region
York, Pennsylvania, New
Jersey)
shows a good general

(New

real estate market.

Mountain states

(Montana,
Utah, Nevada,
Colorado, Arizona, New Mexico)
are
in a healthy position, with
Idaho,

Wyoming,

their

of

cities

showing

additional 21%

an

an.

good

as

having at

market

a

six

as

months ago.
The

Atlantic

South

states

(Maryland, Delaware, West Vir¬
ginia, Virginia, North Carolina,
South Carolina, Florida, Georgia)
show

an

cities

and

uptrend in 41% of the
a
situation at least as

good as six months ago in 56% of
the cities.

South

West

states

Central

Louisiana, Oklahoma,
Texas) have had a recent market
(Arkansas,

pickup in 37% of reporting cities
and the market is at least as good
it was six months ago in 54%
of the reporting cities.

>.

as

New

In

trend

is

cities

and

as

England

reported

good

it

was

up- :

33%

of the
is at least

market

the

as

recent

a

in

year

a

ago

ia

;

Reports, made before the Ko¬
crisis, nevertheless show a
high percentage of cities whose
rean

general

real

estate

primarily affected
tary activity.

demand

was

by local mili¬

of this type included:
factories," "New inter¬
airport," "Air base here*
made permanent," "Army rocket
center," "Military projects."
Or
Reports

"Aircraft

national

the

opposite: "Army camp here
closed," "Closing government in¬
stallations."
Still
tor:

another

"Strikes,"

typical local fac¬

"Strike settled."
frequent,
is
this
type: "New superhighway," "New
four-lane bridge," "New freeway."
Two small cities just back of
or

Significantly

coastal

lation

areas report gain of popu¬
coming from coastal urban

areas.

-M

mm
mm

Ml

•"*»

mm

*■**

| Pointers

on

Selling J
mm*

mm

E For clever, helpful hints

in 8%.

Six
months
ago
the NAREB
residential purchases,
depression, short of the vast dis¬ demagogue to furious attacks on but also good commercial prop¬ survey showed an
uptrend in
sales
volume
for
modern
onelocations of war?
our business system.
Bureaucrats erty," the real estate board of St.
Louis
would
Government interferences with who
reported, in a typical reply, story factory buildings in only
eat
snakes
before
the free; market create rigidities loaning their own savings on 95% adding, "A big demand for 100% 9% of reporting cities, with price
that prevent these day-by-day re¬ public housing mortgages assert locations, but very little available. trend up in 8%, down in 27%.
(4) Farm sale volume is susr
adjustments of demand and supply the divine right of kings to take Secondary locations are up slight¬
a

said,

compared

73% of the cities.

(2) Volume of sales, limited by
the

public attitude favoring
investment," Mr. Nel¬

a

commercial

to

Association's
uptrend
in
sales volume in only 10% of all
real
estate
boards
report, is a reporting cities, and an uptrend
recently growing anticipation of in prices in only 11% of the cities.
the inflation effect of both war
Six months ago not a single city
preparedness and of other na¬ of over 500,000 population had an
tional programs. Combining with
up
for commercial property in
this to bring sellers and buyers
either prices or volume of sales.
together is the market adjustment
(3) For modern one-story in¬
from World War II scarcities that
dustrial buildings, sales volume is
has taken place in the past two
higher than it was six months ago
years. Since the war activity peak, in 50% of all cities of over 500,000
son

for

an

in

ing cities.

"Tne business

black?

has

The

500,000

business

cities

252

cities, and
only 10% of

Significantly, in cities
population, most

cities,
over

the

participated.

immediate

It

needle of price indicates a greater

shortage

in

ket, by

sorbing
earner's

to

more

in

stable in 59% of the

sensitive

boards

estate

for

industrial, and farm
properties measures up as follows,

of

h r e a 1

c

red, forever keep business

feast.

wage

What

h i

situation

commercial,

the

survey of the
real
estate

market

modern needs.

weakened

Nelson
as

(Kentucky, Tennessee,
Mississippi) seems to

least

Triangle," stated the report from
Pittsburgh, which has been re¬
making that crowded area to fit

have

es¬

with six months ago:

50%

provement program in our Golden

are

finding of the
51st
periodic

w

farm property, Mr.
shows this situation

The

a

real

considering residen¬
commercial, industrial, and

uptrend in the real estate market

(1) Prices for business property,

on

in

22

Regionally, the general
tial,

and

measuring the demand, are higher
tnan they were six months ago
in
31%
of the reporting cities,

summarized

always

Desperate

the

election?

next

in

manu¬

for

the

in

Large Volume

the

Pacific

tate market,

The

Statistically,

and

communities.

over-ail

primary factors in increas¬

as

Central

situation, with 55% of its cities
showing a recent uptrend in the

Mr. Nelson said:

investors'
deeper and deeper in debt during judgment on the business future
busy with 18 of the past 20
years.
Can a of individual cities, has been af¬
world, get government that
always operates fected, like the residential mar¬

And if they
did, would the quotas to produce

be

its

reported

July

gone

Belshazzar's

When would the double-domes of

around to these boys?

the

to

interest

be

only 2% of the money which went

mil¬

a

for

whistle-

ing number of transactions.

debt

is

every

In

up.

business under pressure to go into

It

at

Nelson, Executive Vice-President of National Asso¬
Boards, reports a growing anticipation

and

war

dollars

dimes.

the

ciation of Real Estate

etc.,
buy-

eggs,

rotten,

Herbert U.

billion

lem and vote their judgment with
and

know

lazy or cowardly to
uninformed millions

forward

Transactions Continue in

today? Constant
interferences with the

the* ficially

of

close to the prob¬

who

men

too

Commercial and Industrial Real Estate

this

correct

because
are

North

focus

petro¬

a

depression.

prices down.

seeking its level—that

stantly

bust!

supply to meet the de¬

mand—to

is estate are sharing in the general
the price uptrend of real estate sales vol¬
oTlts bonds. It is artificially keep¬ ume of the last six months, Her¬
distortion? It is price. Price works
ing down the interest on its bonds. bert U.Nelson,
in
market
every
place
where The whole credit structure of the Executive
goods are offered for money.
It nation is on political stilts. Arti¬ Vic e-P res¬
water

and

pyramid. Mass production, large stop to sell their freedom for the
industry has found and has today
volume, small unit profits — that snake oil and ration cards of the
known
underground reserves explains the miracle of America.
political hawksters of both parties.
greater than ever before, for use It has
But not me.
I'm still looking
brought conforts and lux¬
in peace or war, at the turning of
uries into millions of homes—and for the right square where I can
a
valve.
Two wars have proved
not to the country club set alone. put
my "X."
how lucky
we
were
that price

Interferences With Free Market
of

boom

petroleum

Russian.
Distortion

business¬

product for the

make

or

same

ing.

some

to

West

regions, volume of farm sales hi
rising in 37% of the reporting

communities,

up

as

E for selling securities
E the

Sales-

"Securities

E man's Corner," a
E

feature

in

E

day's

issue

every

E "Chronicle."

E

read 5
=j

regular =:
Thurs-

of

the
E

mm

Mifllltllllllllllllllllllllllltfltilflllllltl^

'

34

Financial Chronicle

The Commercial and

(370)

■

.

.

.

,

Alberta-Canada

Inc.

Oils,

•

Alexander's

Profit

Caspers Tin

Proceeds—To

exclusive

trust lor

held in

be

benefit of participating employees.
•
Allen Organ Co., Allentown, Pa. (9-1)
July 19 (letter of notification) 1 500 shares of 6% pre¬
ferred stock (par $100) and 750 shares of common stock

Price—At par. Underwriter—None. Pro¬
ceeds—For expansion of plant and development of other
electronic products.
Office—8th and Pittston Streets,
Allentown, Pa.
$100).

(par

American

••

Motorists

Insurance

Co., Chicago
(par $5) to
at rate of

June 28 filed 100,000 shares of capital stock
be

offered

one new

stockholders of record July 25

to

Price—At par.

share for each three held.

ceeds—For

general

corporate

Casualty insurance.
&

Television, Inc., North Little

Rock, Ark.
(letter of notification) 301,686 shares of com¬
stock (par 10 cents).
Price—75 cents per share.

June

16

mon

Underwriters—Gearhart,

Kinnard

&

Otis,

—Fifth and

York

New

Office

Proceeds—For additional working capital.

City.

Temporarily postponed.

Francisco, Calif.
49,853 snares of capital
stock, of which 30,000 shares are for account of company
and 19,853 shares for B. S. Kampert, a selling stock¬
holder.
Price—$1.02 per share. Proceeds—For working
caiptal. Office—Russ Bldg., San Francisco, Calif.
•

Church Oil & Gas Co., Inc., San

July

Cornish Streets, No. Little Rock, Ark.

Ampal-American Palestine Trading Corp.
April 10 filed $3,000,000 of 10-year 3% sinking fund de¬
bentures. Underwriter
Israel Securities Corp., New
York. Proceeds—To increase working capital to be used
for enterprises in Israel. Business—Devplonine the eco¬

(letter of notification)

13

June

2

common

Washington, D. C.
(letter of notification) 3,000 snares of class A
stock (par $12.50) and 1,000 shares of class B
stock (par 25 cents), to be sold in units of three

shares

of class A

stock and

one

Arkansas

Statement effective June 30.

of Israel.

resources

Power &

Light Co.
May 23 filed 155,000 shares of cumulative preferred stock
(par $100). Proceeds—To be applitd to (a) redemption
on Aug.
1, 1950, at $110 per share plus dividend ac¬
cruals, of all the 47,609 shares of outstanding $7 pre¬
ferred and 45,891 shares of outstanding $6 preferred;
and (b) the carrying forward of the company's construc¬
tion program. Bids—Received by company up to noon
(EDT) on June 19, but rejected. Only one bid was made
of $100,003 per share, with a $4.95 dividend from Lehman
Brothers, Equitable Securities Corp. and White. Weld &
Co. (jointly).
Statement effective June 12. No further
decision

Telephone Co., Decatur, Ind.
April 27 (letter of notification) 3,000 shares of 4%%
preferred stock, non-convertible. Price—At par ($100
per

share).

additions

Underwriter—None.
conversion

and

dial

to

stock

at

build

a

Natural

$100

share.

per

natural

No

underwriter.

transmission

gas

line.

Proceeds

Office—105

stock

Appliances, Inc., at

a

•

Co., Inc., Los Angeles, Calif.
1,750 shares of common
Price—At par ($100 per share).
Underwriter—
Proceeds—For expansion.
Offiee—2500 West 6th

stock.
None.

(letter of notification)

Columbia

Gas

bidders:

1974; and $13,000,000 of 3% de¬
1, 1974; and the remainder ($12,000,000) for expansion program.
Bids—To be received by
the corporation up to 11:30 p.m. (EDT) on Aug. 1.
bentures due Aug.

Dealer-Managers—Emanuel, Deetjen & Co.
Combustioneering Inc.,
writer—None named

writer—John

Price—50 cents per share.

of

com¬

Under¬

E.

Blair, Vice-President and a director,
310 East 66th Street, New
York, N. Y. Proceeds—For
working capital. Office—29 West 65th Street, New York
1J, N. Y.
Cameron
J'

(Wm.)

21 (amendment) 159,GOO shares of capital stock (par
if which 100,000 will be sold to the public and 59,000
of
red to employees. Of the total
offering, 150,333 shares
wxl! be sold by the
company and 8,667 for account of
y

$7

,

sto

kholders.

ers.

$16.
gen

Underwriter—Dealers may be underwrit¬
public, $19.50 per share; to employees,
5 per share. Proceeds — To reduce a loan and for
Price

—

To

;al corporate purposes.

builcl.ng materials.

Business

—

Statement originally

Distributor of
effective July

10.

Springfield Drive-In Theatre

Corp.
July 10 (letter of notification) $100,000 of debentures
and 1,000 shares of common stock (par $1) to be sold in
units of one $100 debenture and one share of stock. Price
—$101 per unit. Underwriter—None. Proceeds—To re¬
imburse George W. Fuller, Kansas City, Mo., for expenses
in completing the Sunset Drive-in Theatre, Springfield,
Office—215 W.

Mo.

Co.

Under¬

Price—$100 a share. Pro¬
equipment, expenses and working
capital.
Business—Research in field of smelting and
heating-treating of metals. Statement withdrawn July 17.
Commonwealth

(par lc).

Ohio

yet.

as

ceeds—For offices and

•

Broadway Angels, Inc., N. Y. City
July 20 (letter of notification) 570,000 shares
stock

Cincinnati,

June 5 filed 30,000 shares of class A capital stock.

(N. P.)

Optical Co.
July 11 (letter of notification) $150,000 of 4% debenture,
series D, due 1965.
Underwriter—None. Proceeds—For
working capital. Office—450 Medical Arts Bldg., Min¬
neapolis, Minn.

mon

System,

Halsey, Stuart & Co. Inc.; Morgan
Proceeds—To retire on Sept. 9 $45,000,000
of 31/4% debentures due April 1, 1973; $20,000,000 of 3%

and Lehman Brothers.

Benson

Clarette

debentures due March 1,

rate to be filed by

Consumers

18th

Power

Co., Jackson, Mich.
June 23 filed 499,903 shares of common stock (no par)
to be offered present holders at the rate of one new
share for each 10 held, with an oversubscription privi¬
lege.
Underwriter—To be named in an amendment,
along with offering price. Five months ago an offering
of 454,457 shares of common stock to common stockhold¬
was
underwritten by a group headed by Morgan
Stanley & Co. Price—Expected to be not less than $33
per share.
Proceeds—For construction. Offering—Post¬

ers

•

Cooper's Picture Frame, Inc., Reno, Nev.
July 18 (letter of notification) 200,000 shares of common
stock. Price—At par ($1 per share). Underwriter—None.
Proceeds—To buy a factory site, and construct and equip
a building.
Office—139 N. Virginia St., Reno, Nev.
•

Corporate Leaders of America,

Inc., N. Y. City

July 21 filed $10,000 of trust fund certificates, series B
period payment certificates, and 474,748.53 participations,
and $500,000 trust fund certificates, series B single pay¬
ment certificates,
and 25,170.26 participations. Under¬
writer
Corporate Leaders Sales Co., Inc., New York,
—

N. Y.

Boston

Philadelphia

Pittsburgh

San Francisco

Private IVires




to

all

offices

Chicago

Cleveland

fice—812 N. Fairfax St.,
•

k

Cristina Mines, Inc., N. Y. City
May 24 filed 400,000 shares of common stock (par 50
cents). Underwriter—Max Wolberg, a director of com¬
pany.

Price—$1 per share. Proceeds—For development
mining and shipment of ore.

of tonnage and

Alexandria, Va.

Duquesne Light Co.

July 25 filed $12,000,000 first mortgage bonds due 1980.
Underwriters—To be determined by competitive bidding*
Probable bidders for bonds: Halsey, Stuart & Co. Inc.;

and A. C.
Co., Inc.;
White, Weld & Co.; Drexel & Co. and Equitable Secur¬
ities Corp. (jointly); First Boston Corp.; Glore, Forgan
& Co. Proceeds—To repay bank loans and finance con¬
Loeb & Co., Union Securities Corp.
Co
(jointly); Harriman Ripley &

Kuhn,

Allyn

&

"

struction.
Eastern Stainless
June

100,060 shares of capital stock (par $5) to
the rate of one new share

filed

7

>

Steel Corp.

be offered to stockholders at

oversubscription privilege.
Price—To be filed
by amendment. Proceeds — To pay bank loans and for
working capital. Business — Stainless steel plates and
three

each

for

held,

with

Underwriter—Allen & Co., New York.

Offering postponed.

sheets.

Fedders-Quigan Corp.
103,402 shares of series A cumulative con¬

June 21 filed

vertible preferred
mon
stockholders

stock (par $50) to be offered to com¬
on
basis of one preferred share for1
Price—To be filed by amendment,

12 shares held.

each

Underwriter—Smith, Barney

Co., New York. Proceeds—To pay promissory note,
to complete purchase of a new plant at El Monte, Calif!,
&

for additional

and

working capital.

Offering postponed.

Security Corp. of Nevada, Reno, Nev.

First

14 (letter of notification) 50,000 shares of common
capital stock (par 10 cents). Price—$5 per share. Under¬
writer—None.
Proceeds—To buy instalment sales con¬
tracts and for investment in selected common stocks of

June

other

Office—511 W. 3rd St., Reno, Nev.

corporations.

Springfield Corp., Springfield, Mass.
May 29 (letter of notification) 5,471 shares of common
stock. Price—$15 per share. Underwriter — Springfield
Mortgage Corp., Springfield 3, Mass. Proceeds — For
working capital.
Fleetwood
Airflow, Inc., Wilkes-Barre, Pa.
April 20 (letter of notification) 79,050 shares of common
stock

(par 50 cents) to be offered first to common stock-,
Price—$1 per share to stockholders and $1.25

holders.

public. Underwriter—None. Proceeds—For working
capital, remaining $28,000 being offered to six creditors
Office—421 No. Pennsylvania Ave.,

to

in payment of debt.

Wilkes-Barre, Pa.
•

Wilkes-Barre, Pa.
8,965 shares of common
stock (par 50 cents). Price—At market. Underwriter—
Howard O'Connor,
302 Cliff Avenue, Pelham, N. Y.
Proceeds—To selling stockholder.
Fleetwood-Airflow,

July 19

Inc.,

(letter of notification)

Fleming-Hall Tobacco Co., Inc., N. Y.
30 (letter of notification) 180.000 shares of com¬
mon stock (par $1).
Price—$1.25 per share. Underwriter
—Carstairs & Co., 1421 Chestnut Street, Philadelphia 2,
Pa., will act as financial adviser.
Proceeds—To be
added to general funds. Office—595 Fifth Avenue, New
June

York, N. Y.
Florala

(Ala.)

Telephone Co.

(letter of notification) 1,200 shares of 4% cumu¬
lative preferred stock.
Price—At par ($25 per share).
Underwriter—None.
Proceeds—To extend and modern¬
June 29

ize

St., Kansas City, Mo.

poned.

New York

preferred and five common shares. Price—S105 per unit,
tniuerwriter—None. Proceeds—For working capital. Of-*

First

Stanley & Co.

an unspecified number of shares of com¬
(par $3) to be offered in exchange for shares

amendment.

Manager—W. E. Hutton & Co.

July 13

Nev.

July 10 (letter of notification) 300 shares of 6% cumula¬
tive preferred stock (par $100) and 1,500 shares of vot¬
ing common stock (par $1) to be offered in units of one

along with dividend rate.

Probable

Manufacturing Corp., N. Y. City

of Bendix Home

Ind.

City Stores Co.
July 17 filed an unspecified number of shares of common
stock (par $5) to be offered in exchange for common
stock (par $10) of Oppenheim, Collins & Co., Inc., and
for the 4V2% convertible preferred stock (par $50) and
common stock
(par $1) of Franklin Simon & Co., Inc.,
in ratios to be determined by the directors of City Stores
Co. when registration becomes effective. The exchange
offer is expected to expire around Sept. 15, 1950. Dealer-

N.

July 14 filed
mon

Office—

to

Boulder, Tulsa, Okla.
Avco

plant

Inc. (8/1)
July 7 filed $90,000,000 of debentures, series B, due 1975.
Underwriters—To be determined by competitive bidding.

Gas

Co., Tulsa, Okla.
(letter of notification) 2,500 shares of common

March 14

240 W. Monroe St., Decatur,

Proceeds—For
operations.

(par

—

Citizens

St., Los Angeles, Calif.

reached.

Associated

class B stock.

per

—

nomic

share of

unit. Underwriter—Emory S. Warren
& Co., Washington, D. C.
Proceeds—For general funds.
Office—1707 Eye St., N. W., Washington, D. C.

Price—$44.50

Las Vegas, Nev.

Corp.,

(letter of notification) 50,000 shares of common
$1). Price—$6 per share. Underwriter—None:
Irioceetis
To build a casino and theatre-restaurant,
16

ScOck

Credit Corp.,

Citizens

common

American Radio

III.

be sold by company

which 50,000 shares are to

Pro-'

Business—

purposes.

Chicago,

Plate Co.,

(par $1),
and
100,000 shares by three stockholders. Price—To be filed
by amendment. Underwriters—F. Eberstadt & Co. Inc.
and Shillinglaw, Bolger & Co.
Proceeds—Proceeds to
company, together with term loan of $1,000,000 from
insurance firm, will be used to pay existing long-term
obligations and the balance to be used as working capital.
of

Diamond Lil

July

Dryomatic Corp., Alexandria, Va.

150,000 shares of common stock

16 filed

June

ADDITIONS

SINCE PREVIOUS ISSUE

thrice—114 N. 3rd St., Las Vegas,

Temporarily postponed.

operations in Canada.

Inc.

Department Stores,

(letter of notification) participations under the
Sharing and Retirement Plan—not to exceed

$300,000.

•

Superior Oil of California, Ltd.

2,150,000 shares of common slock (par $1).
Price—To be filed by amendment. Underwriter—Dillon,
Read & Co. Inc. Proceeds—For geological and drilling

June 27 filed

July 18 filed 1,000,000 shares of common stock (par 50
cents).
Price—$2.50 per share.
Underwriter—Thomas
G. Wylie Co., New York.
Proceeds—For general funds.

July 21

Registration

Canadian

(Del.), Alberta,

Canada

i

INDICATES

•

Securities Now in

Thursday, July 27, 1950
'■

■

1

plant, lines and other telephone facilities.
Frontier Leather

Co., Sherwood, Ore.

July 8 (letter of notification) 1,000 shares of 6% cumula¬
tive preferred
stock

mon

stock (par $100) and 10,000 shares of com¬
to be offered in units of one

(par 20 cents)

preferred and ten common shares.
Price—$101 per unit.
Underwriter—George Patton & Co., Portland, Ore. Pro-:
ceeds—To

off

pay

mortgages

and for additions,

plant

facilities and equipment.
•

Gate

City Steel Works, Inc., Omaha, Neb.

July 14 (letter of notification) $95,000 of 51/2% subordin¬
ated debentures due May 1, 1959, to be sold by Lloyd
Taggart and Milward L. Simpson of Cody, Wyo. Price—
104% of principal amount. Underwriter—None. Office—
11th and Seward
•

General

St., Omaha, Neb.

Plywood Corp., Louisville, Ky.

July 17 (letter of notification) 101,500 shares of common
stock (par 50 cents). Price—$2.11 per share. Underwriter
—None. Proceeds—For working capital. Office—334 East
Broadway, Louisville, Ky.

>

General Radiant Heater Co., Inc.

May 3 filed 170,000 shares of common stock

Price—$3

per

advertising research, working capital, etc.

postponed.

stock
in

30

Temporarily

Amendment may be filed.

General Shoe Corp.,
June

(par 25<t).

share. Proceeds—For plant and warehouse,

filed

a

(par $1)

exchange

Nashville, Tenn.

maximum of

32,885 shares of common

to be offered on a share-for-share basis

for outstanding

Douglas Shoe Co.

preferred stock of W. L.

No underwriter.

.

Volume 172

Number 4928

.

.The Commercial and Financial Chronicle

.

Globe

Hill Mining Co., Colorado
(letter of notification) 5,885,000
mon stock.
Price—At par (one cent per
writers—George C. Carroll Co., Denver;
Shares, Inc., Denver; and M. A. Cleek,

Springs, Colo.

May 26

Proceeds—For

of

shares

Mines

Corp.,

Ltd.,

British

NEW ISSUE CALENDAR

,

1950

Weld & Co. and

Mutual Telephone Co

Columbia,

Bonds

&

Pfd.

Canada

.Feb.

16

stock

100,000

filed

50c).

(par

None.

shares of

Price—35c

non-assessable

common

share.

per

buy mining machinery
Statement effective May 10.

Atlantic

Qulf

Transportation

Co.,

11:30

for

and

Raytheon

partic.

may

gen

& Co.

basis."

August 2,
St.

($1

Louis-San

1950

(EDT)_.Equip. Tr. Ctfs

noon

Francisco Ry.

Noon (EDT)__

Equip. Tr. Ctfs.

August 7,

share. Underwriters—Names by amendment
Blair, Kollins & Co., Inc.; John J. Ber¬

and

A.

M.

Kidder

Price—Par for

Pacific

1950

Gulf

&

Co.

on

"best

a

Petroleums, Ltd

Common

$5 for class A.

common

August 8,

efforts

Proceeds

Seaboard

Finance

ferry, to finance dock and termcurrent obligations, and to provide

Stream

Preferred

Maine Central RR

Frozen

Foods, Inc., Miami,

Fla.

stock

common

share.

per

one

Allen

To

buy sea food for distribution.
St., Miami, Fla.

Office—26 N.

E.

Preferred & Com.

September

12,

Harrisonville

Telephone Co., Chicago, III.
14 (letter of notification) $150,000 of 4*4%
-mortgage bonds. Price — 103.375%. Underwriter

—

1950

Utah Power & Light Co

Bonds

OFFERINGS TEMPORARILY POSTPONED

American Natural Gas Co

July 21.

Common

Canadian Superior Oil of California, Ltd—Common

i

Harvill

Corp., Los Angeles, Calif.
(letter of notification) 150,000 shares of common
(par $1) to common stockholders of record June

Caspers Tin Plate Co

June 16

Consumers
Eastern

Power

Stainless

Common

Co
Steel

available capital for loan business.
St., Cincinnati, O.
Mutual

pany

at rate to be filed by amendment.

filed

to be filed

Corp

Norlina Oil Development

American Acceptance Corp.
(letter of notification) 20,000 shares of 60-cent
dividend
series cumulative preferred stock
(par $5).
Price—$10 per share.
Underwriter—None.
Proceeds—
26

Common

To

Common

Office—765 W. Lancaster

increase

Common

May

Common

common

working capital.
Office—6251
Angeles 45. Calif.
!

W.

Proceeds—For

Century

Blvd.,

Los

Northwestern Public Service Co
Public

Hydro-Oils, Ltd., Bartlesville, Okla.
July 16 (letter of notification) 300 000 shares of
stock.

Price

None.

Proceeds—For oil and gas development.

At

—

—P. O. Box 491,

($1

par

per

share).

common

5%

bonds

shares of

Underwriter—

Debs. & Pfd.

Tele-Tone

Bartlesville, Okla.

due

1967

common

(with

stock)

warrants

to

purchase

and 400,000 shares of

the

to

underwriter

of

the

bonds.

Price—

of

bonds, 100; and of stock to public and employees, $1
per share.
Underwriters—For bonds, P. W. Brooks &
Co., Inc.; for stock, Baker, Simonds & Co. Proceeds—
pay mortgage and certain debts, and balance added
working capital, part of which will be used to reduce

bank

loans.

Offering—Expected early in August.

Interstate

June
"stock

$5).

(par $5) and 2,000 shares of B common stock (par
Price—$25 per share. Underwriter—None. Proceeds

—To

increase

working

capital.

Office

—

1157

Central

Ave., Dubuque, la.

Engineering Works, Ltd., Lihue, Hawaii
June 23
(letter of notification) 98,000 shares of com¬
mon
stock
(par $1).
Price—$1.10 per share.
Under¬
writer—Ross & Co., Box 2665, Honolulu, T. H. Proceeds
—For working capital. Co.'s Address—Box 1589, Lihue,

Leigh Foods, Inc. (N. Y.)
(letter of notification) 300,000 shares of capital
(par 10 cents). Price—$1 per share. Underwriter
—None. Proceeds—For working capital and general cor¬
porate purposes. Office—630 Fifth Avenue, New York 20,
June 30
stock

New York.

Louisiana

Preferred

&

further

decision reached.

Chemical of California, Newhall, Calif.
(letter of notification) 282,250 shares of capital
Price—At par ($1 per share). Underwriter—Floyd

Loven

Allen

&

Co., Inc., Los Angeles, Calif. Proceeds—To
buy land, build a plant and'equip it to produce so-called
"impact" plastics. Office—244 S. Pine St., Newhall, Calif.
Credit Corp., Wichita, Kansas
(letter of notification) 200,000 shares of common

Mercantile
June 30

(par $1).

Price—$1.50

Proceeds—For

fice—609

Soott St.,

general

per

corporate

Wichita, Kan.




share.

Underwriter—
purposes.

Of¬

Coal Corp., Chicago
notification) up to 2,000 shares

of

(no par)

Vice-President

of

be
or

offered

per

the

be

sold

share)

at

of

the market price

by T. Howard Green,
Underwriter—Faroll

comnanv,

Tracy and Shields & Co., Chicago.

Northwestern
9 filed

to

Public

Service

49,200 shares of

Huron, S. D.

stock (par $3) to
stockholders at rate of one share

to present

each 10 held.

Co.,

common

Underwriter—A. C. Allyn and, Co., Inc.,

Price—To be filed by amendment. Proceeds
—For construction expenditures. Postponed temporarily.

Ohio Oil & Gas Co.

Merry Brothers Brick & Tile Co., Augusta, Ga.
1,250 shares of 5% cumu¬
lative preferred stock.
Price—At par ($100 per share).
Underwriter—Johnson, Lane, Space & Co., Inc. Proceeds
—To Ernest B. Merry, Jr., Vice-President and General
Manager, the selling stockholder.
June 15 (letter of notification)

Middle

South

June 1 filed 400,000 shares of common stock (no par) to
be offered to preferred stockholders of three subsidiaries
—Arkansas Power & Light Co., Louisiana Power & Light
and Mississippi Power & Light Co.
UnderwriterEquitable Securities Corp will serve as "dealer-man¬
ager." (See also listings of Arkansas, Louisiana and

Mississippi companies elsewhere in these columns.)
Middlesex
Feb.

Co.

offered

to

stockholders

common

one-for-five

basis.

at

$50

common

share

Underwriter—Clark, Dodge &
working

Indefinitely postponed.

Miles

Laboratories, Inc., Elkhart, Ind.
(letter of notification) 2,500 shares of common
stock (no par). Price—$16.50 per share. Underwriter—
Cohu &

Co., New York City.

stockholders.
Miller
March

Proceeds—To two selling

(letter

Co., Inc.
notification) 1,000

shares

of

6%

Un¬
derwriters-George D. B. Bonbright & Co., Binghamton,
Y. Proceeds—To assist in acquisition of 1216 shares

N.

I.

Mines

Management, Inc., Wallace, Ida.
July 18 (letter of notification) 250,000 shares of common
stock. Price—25 cents per share. Underwriter — None.
Proceeds—For working capital and to make contract pay¬
ments. Office—507 Bank St., Wallace, Idaho.
•

Mission

Appliance Corp., Hawthorne, Calif.
July 24 filed 50,000 shares of 6% cumulative convertible
preferred stock.

Price—At

par

($20 per share).

Under¬

Co., Los Angeles, Calif. Proceeds—To
install machinery and equipment
proposed new plant to be located east of the Rocky

retire bank
in

a

Mountains.

loans and

Business—Manufacturer

of

and electric

gas

water and space heaters.

share plus dividends, the outstanding 44,476 shares of $6

preferred

stock

(EDT)

on

and

for

construction

and

other

Bids—Received by company
June 19 but rejected. Four bids

purposes.

Proceeds—Toward

and

Schoyer.

offered

of

common

per

share.

through Preston,
repayment of

loans.

bank

Orchards

Telephone Co., Orchards, Wash.
(letter of notification) 500 shares of common

16

stock.

Price—At

None.

Pacific

June

par

($100

per

Proceeds—To modernize

30

Petroleums

filed

Ltd.

share).
plant.

Underwriter—

(8/7)

shares of common stock (par
$1-Canadian). Price—To be filed by amendment. Under¬
writer—Eastman, Dillon & Co. Proceeds—To pay bank
and

900,000

for corporate

purposes,' including development

Pan American Gold Ltd., Toronto, Canada
July 20, 1948 filed 1,983,295 shares of common stock (par
SI). Underwriters may be brokers.
Price—45 cents per
share.
Proceeds
Mainly for development. Statement
effective April 10, 1950.
—

•

Pitney-Bowes,

Inc., Stamford, Conn.
(letter of notification) up to 10,500 shares of
common stock
(par $2) to be subscribed for under em¬
ployees' stock purchase plan. Price — $14.15 per share.
July

18

Power Condenser &

Electronics Corp., Boston
(letter of notification) 2,250 shares of common
stock (par $1) and $15,000 of 6% sinking fund deben¬
tures due 1958 to be offered in units of one $1,000 de¬

July

17

100 shares of common stock.
Price—$1,000
unit. Underwriter—Luckhurst & Co., Inc., New York.
Proceeds—For working capital.
benture and

Power

Petroleum Ltd., Toronto Canada
1949, 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. Under¬

April 25,

writers—S.

G.

Cranwell

administration

-For

effective June 27,

Public

June

26

Co., New York.
and

drilling.

Proceeds—

Statement

1949.

Service

filed

&

expenses

Co.

of

Colorado

$7,000,000 of convertible

debentures, due
1960, and 100,000 shares of cumulative preferred stock
(par $100). Underwriters—To be determined by com¬
petitive bidding, along with prices, interest rate on de¬

bentures and dividend rate

Mississippi Power & Light Co.
May 23 filed 85,000 shares of cumulative preferred stock
(par 100). Proceeds—To be used to redeem at $110 per

rate

Watt

be

per

of company's common stock.
•

1,100 shares

Price—50 cents

treasury.
To

•

R.)

of

notification)

in

Proceeds—For working capital.

Offering date indefinite.

(Walter

6

held

of oil and gas lands.

per

Proceeds—To pay notes and for additional

capital.

(letter of

now

Underwriter—None.

loan

Water

Co., Newark, N. J.
(letter of notification) 5,200 shares of

9

a

on

May 5
stock

March

Utilities, Inc.

writer—Lester &

May 31

stock

(between $20 and $22

June

and for working capital.
Avenue, Bryn Mawr, Pa.

New York.

cumulative preferred stock at par ($100 per share).

„

Power

Light Co.
May 23 filed 90,000 shares of preferred stock (par $100).
Proceeds—"fo be used to redeerq, at $110 per shart plus
dividend accruals, the 59,422 shares of outstanding $6
preferred -stock, and for construction and other purposes.
Bids—Received by company up to noon (EDT) on June
19, but rejected.
Three bids were made as follows:
Union Securities Corp., $100.40 per share with a $4.65
dividend; Blyth & Co., Inc., and Equitable Securities
Corp. (jointly), $100.10 with a $4.65 dividend; and W. C.
Langley & Co. and First Boston Corp. (jointly), $100.30
with a $5.80 dividend.
Statement effective June 12. No

None.

Class A & Com.

June 23

T. H

stock

Corp

United States Plywood Corp

stock

Kauai

stock.

Radio

Co.

Finance

Corp., Dubuque, Iowa
(letter of notification) 4,000 shares of common

14

Common

receivable

Illinois

(letter

10

& Co., Rogers &

Pfd. & Com.

60,000

tain officers and directors of the
company; 60,000 shares
to be reserved for stock options; and 40,000 shares to

optioned

Common

common

(par $1).
Of the latter, 272,000 shares will be
publicly offered and 28,000 shares will be offered to cer¬

be

Corp

Southern Co.

Address

stock

A.

Co. of Colorado

Telephone

Safeway Stores, Inc

Industrial Stamping & Mfg. Co., Detroit
July 6 filed (by amendment) $500,000 of first mortgage

to

Service

Rochester

notes

Northern

a

•

To

Water Co.___

ex¬

Statement ef¬

North

June

Common

Underwriter—None.

Co., Washington, D. C.

share. No underwriter. Proceeds to be used to

per

Middlesex

share.

four

Under¬

construction.

Proceeds—For expansion and working
Office—220 West 19th St., New York 11, N. Y.

Fedders-Quigan Corp.

per

each

par.

Proceeds—To pay short-

1950-1951

writer—None.

cents

for

toward

and

New York Pattern Co., Inc., N. Y.
July 14 (letter of notification) 2,450 shares of 7% cumu¬
lative preferred stock (par $40).
Price—At par. Under¬

70

share

Price—Of bonds

by amendment; of preferred, at

notes

held, with an
oversubscription privilege; rights expire July 31. Price—

one

6th

(7/28)
$1,000,000 first mortgage bonds, series G,
due 1980, and 100,000 shares of preferred
stock, series C
(par $10), the new preferred stock to be offered initi¬
ally to common stockholders and employees of the com¬
27

on

of

E.

Telephone Co., Honolulu, Hawaii

June

26

basis

Office—123

plore and develop oil and mineral leases.
fective May 22.

Mc-

Proceeds—
Offering—Made

To retire bank loans and for expansion.

(no par) and 1,000 shares of preferred stock (par
$100). Price—$25 per share for common and $100 for
preferred.
Underwriter—None.
Proceeds—To increase

March 28 filed 600 shares of capital stock (no
par.) To
offer only sufficient shares to raise $1,000,000 at $5,000

first

Courtney-Breckenridge & Co., St. Louis, Mo.

stock

Common

October 9,

July

Mutual Credit of Cincinnati, Inc.,
Cincinnati, O.
7 (letter of notification) 1,200 shares of common

capital.

1950

.;,Utah Power & Light Co

27th

No

12.

June

term

Equip. Trust Ctfs.

Organ Co

after date of issuance.
Underwriter—None.
Proceeds—
year

with a $4.90 dividend. Statement effective June
further decision reached.

writer—Kidder, Peabody & Co.

September 1, 1950

(letter of notification) 100,000 shares of 6% pre¬
ferred stock (par $1), each share convertible into two
Price—$3

Co

August 16, 1950

June 30

shares of

1950

an ocean

Linal facilities, to pay
working capital..

stock

Ry.,

Common

mcluae

—To complete

•

Debentures

Manufacturing Co

Great Northern
A

Hcu
aiocK ana 270,UUU shares t25c par;
common stoca
Offering—135,000 shares of common will be offered foi
subscription by holders on the basis of one-for-two at

25 cents per

(EDT)

Jacksonville,

Florida

May 27, 1949, filed 620,000 shares of class

ana

a.m.

Kidder, Peabody & Co. (jointly), $100.19

1950

Columbia Gas System, Inc.

Underwriter—

Proceeds—To

working capital.

August 1,

Securities

$4.80 dividend;

a

a

Spokane, Wash.
July 28,

Union

Corp., $100.10 per share
Lehman Brothers, $100,551 with
$4.85 div.; W. C. Langley/& Co. and First Boston Corp.
(jointly), $100.30 with a $4.90 dividend; and Blyth & Co.,
Inc., Equitable Securities Corp
Shields & Co., White,
with

mining equipment.

Granville

follows:

as

com¬

share). Under¬
Inter-Mountain

35

(371)

corpo¬

to noon
were made

up

on preferred stock. Probable
Halsey, Stuart & Co. Inc.; Blyth &
Co., Inc., and Smith, Barney & Co. (jointly); Lehman
Brothers; First Boston Corp.; Harris, Hall & Co., Inc.;
Kidder, Peabody & Co. Probable bidders for preferred:
Glore, Forgan & Co. and W. C. Langley & Co. (jointly);
Lehman Brothers; First Boston Corp., Boettcher & Co.

bidders

for

bonds:

Continued

on

page

36

'

36

V

(372)

Continued from page

The Commercial and Financial Chronicle

Probable

bidders are: Morgan Stanley & Co., Kidder,
& Co. and Merrill Lynch, Pierce, Fenner &
(jointly); Blyth & Co., Inc. and Bear, Stearns &
Co. (jointly); Lehman Brothers; Union Securities Corp.
and Equitable Securities Corp. (jointly); Harriman Rip¬
ley & Co., Inc. Proceeds—To purchase shares of subsid¬

35

June

Beane

stock to

and

Bosworth, Sullivan & Co.; Kuhn, Loeb & Co. and
Harris, Hall & Co., Inc. (jointly.) Proceeds—For con¬
Temporarily postponed.

struction.

Raytheon Manufacturing Co. (8/1)
July L'z filed 289.459 shares oi common stock

v

.

offered

be

holders

to

of

stock

common

(par $5),
of

Proceeds—For

(N.

-

.share for each four held.

July 14 filed

Inc.,

to

•

$1,000 debenture and

Christensen, Inc., Denver, Col. Proceeds—For
chinery, equipment and working capital.

new

Royal Television & Electronics, Inc.,
Washington, D. C.
June 22 (letter of notification) 600,000 shares of
stock (par 10 cents). Price—50 cents per share.

•

•

-

writer—None.. Proceeds—To

•

Office—714 Fifth

nents.

the

at

Of

will

common

rate

of

be

one

new

share

for

each

10

ment,

shares

•

preferred

not

needed

for

the

exchange

and

$20,000,000
Temporarily postponed.
•

in

bank

loans.

30,225

a
share-for-share basis for $1.35
ferred stock of company now owned

ing underwriting firms.
tiie

latter

stock

sold

$25.50 per share will
filed by amendment.

«

to

convertible

None.
for

remain

institutional

•

—

The

stock

•

(par 5 cents).

Price—20 cents per share.

Sightmaster Corp., New
Rochelle, N. Y.
.July 21 (letter of notification) 43,331 shares of

_

>

non-

(par $4) and 260,986 shares
of common stock (par 5
cents) to be offered in units of
one
preferred share and six common shares.r Price—

$5

per

unit.

Underwriter—None.

Proceeds—To

a

bank loan and accounts
payable and for other corporate
Office—385 North Avenue, New Rochelle
New York.

Simmel-Moservey Television Productions,

June 29 (letter of

stock

(par

Koellmer &

$1).

Inc.

notification) 150,000 shares of common
Price—$2 per share.
Underwriter—

Gunther, Newark,

N. J.

Proceeds

To

per

share).

com¬

plete films in. progress and for general corporate
pur¬
poses.
Office—321 So. Beverly Drive, Beverly Hills
Calif.

■

Southern Co.,

June 23 filed

Atlanta, Ga.
1,000,000 shares of common

stock (par $5).
Underwriters—10 be determined
by competitive bidding.




this

Sachs

&

Co.

per

share).

Curb

on

& Co., New York.

the New York

it

of

one

Natural

company

stock
share

Gas

announced

plans issuance

(no
for

par)

to

of

common

each

eight shares
Underwriters—

Co.

plans issuance of
stock and $450,000 of 18-year 41/2% first
a 5-year bank loan of $250,000, to

was

common

company

a new pipe line
project in south¬
Missouri, authorized by FPC, to cost $934,000.

June

15

filed

by

Proceeds—To

in¬

,

stockholders of record July 7 at rate of one new
each five heid, with rights
expiring Aug. 10,
and 4,300 shares are offered to
employees. Price—$5 per
share. Proceeds—To erect new office
building. Office—
common

for

-

it

Telephone
announced

Co., Ltd.
that

the company's present
approximately $10,000,000 of addi¬
tional funds by selling, in the fall of the current year,
50,000 additional shares of cumulative preferred stock
(par $20), a like amount of common stock (par $20) and
$8,000,000 of first mortgage bonds, series G.
Under¬

intention

Upson-Walton Co., Cleveland, Ohio
July 12 (letter of notification) 28,584 shares of common
stock (par $1), of which 24,284 shares are offered to

was

is to raise

writers—For

preferred stock,

probably Paine, Webber,

Jackson & Curtis, Stone & Webster Securities
Corp/
-

and

Mitchum, Tully & Co. For the bonds, to be determined"
by competitive* bidding.
Probable bidders for borate:
Halsey, Stuart & Co. Inc.; Kuhn, Loeb & Co. and Salo-*
Bros. &-Hutzler (jointly); Lehman
Brothers; Paine,
Webber, Jackson & Curtis and Stone & Webster Secur¬
ities Corp. (jointly); White, Weld & Co. and
Kidder,
Peabody
& Co. (jointly); Equitable Securities Corp.
mon

and

Harris, Hall & Co. (Inc.)

(jointly).

Proceeds—For

construction program.

Perry-Payne Bldg., Cleveland, O.

Vieh Co., Columbus, Ohio
May 8 (letter of notification) 19,500 shares of common
stock at $10 per share. Underwriter—The Ohio Co. Pro¬
ceeds—To buy the assets of Brodhead-Garrett Co. and
for working capital.
•

rate

Associated

Pro¬

working capital and for other corporate purposes.
including, the erection of a new plant at Anderson, Calif.
.Temporarily postponed.,
•« ,
-

700

14

eastern

crease

.

at

common

finance construction of

common

(about 50 cents

Price—To be

of

mortgage bonds, plus

Exchange through Tucker, Anthony & Co.

Dillon

announced

was

Associated
June

United States Plywood Corp.
June 19 filed 60,000 shares of series B cumulative con¬
vertible preferred stock (par $100). Underwriter—East¬
man,

Illinois

bid¬
Co.
(jointly); Blyth & Co., Inc.; Lehman Brothers; The First
Boston Corp. Proceeds—To increase investments in stock
of Michigan Consolidated Gas Co. and Milwaukee Gas
Light Co. Offering—Postponed indefinitely.

ceeds—To selling stockholder.

amendment along with dividend rate.

Proceeds will be used

Price—To be filed by amendment.

$234,000

Underwriter—To be sold

it

shares

stockholders
held.

per

Price—At market

Corp.; Drexel & Co.

To be determined by competitive bidding. Probable
ders: Glore, Forgan & Co. and W. C. Langley &

Office—Dallas, Tex.

(par 25 cents).

18

380,607

(formerly Texmass

13 filed

stock

Co.

American Natural Gas Co.

May
Oils

Power

company

Underwriters—Glore, Forgan & Co.; Kidder, Peabody & Co., and Alex. Brown & Sons, and others. Pro¬
ceeds—For additional working capital.

cancel existing indebtedness and
Office—East Michigan Street, Michi¬

West

Disinfecting Co.
July 25 (letter of notification) 3,000 shares of

common

(par 50 cents). Priee—At market (about $10 per
share). Underwriter—Coffin & Burr. Inc., New York.
Proceeds—To

selling stockholder.
Street, Long Island City, N. Y.

Office—42-16
;

Big Bear Markets of Michigan,
June 9 it

..

West

.....

was

announced company

Inc.
plans early registra¬

tion of 100,000 shares of additional capital stock.
writer—J. G. White & Co., New York.
•

Canada

July

stock
>

Co.

reported company may do some financing
year.
Traditional
underwriter:
Goldman,

ment.

Underwriter—

United Profit-Sharing Corp., N. Y.
City
July 21 (letter of notification) 1,400 shares of

share

repay

purposes.
.

($5

par

_

convertible preferred stock

mine .operators.
.

American Investment Co. of

•

Under¬

•

.

small

May 24 announced company is planning to file shortly
a registration statement covering 160,000 shares of
prior
preferred stock (par $50). Price—To be filed by amend¬

Syndicate, Inc.

N.
t-

Finance

First Boston

300,000 shares of common stock (par $1)
share.
Underwriter—Blair F. Claybaugh & Co., New York. Proceeds—To increase work¬
ing capital and repay loans from RFC and Croydon

First Boston

writer—Butler, Moser & Co., 44 Wall Street, New York,
Y.
Proceeds—To selling stockholder.
Office—111
Cedar Street, New
Rochelle, N. Y.

for

for construction expenditures.

Inc., Michigan City, Ind.
notification) 15,623 shares of common

Consolidated

Price—2.75

Sightmaster Corp., New Rochelle, N. Y.
June 20 (letter of notification) 18,500 shares of common

i

Texas

June

at

—To acquire properties and for
working capital.

i

mill

a

reported to be considering issue in late
summer of about $10,000,000
preferred stock. Probable
bidders: Morgan Stanley & Co.; Blyth & Co., Inc.; Union
Securities Corp. and Equitable Securities Corp. (jointly);

Transvision, Inc.

Seneca Oil Co., Oklahoma
City, Okla.
April 27 (letter of notification) 225,782 shares of class A
atock (par 500).
Price—$1.25 per share. Underwriter—
Genesee Valley Securities
Co., Rochester, N. Y. Proceeds

•

later

May 12

City, Ind

rester A. Clark.

Corp. and five others. Proceeds—For acquisition of stock
of Employees Credit
Corp. and for working capital.

•

share and 125,000

Co., Hailey, Idaho.

was

Alabama

Petroleum Co.)
July 24 filed voting trust certificates representing shares
of $5 cumulative preferred stock, class A
(no par). Vot¬
ing Trustees—John F. Chase, Lindsey Hooper and For¬

outstanding. Price—To be

Underwriters

June 3 it

under the company's re¬

Proceeds—To

pre¬

investors

build

455, Hailey, Idaho.

&

Prospective Offerings

plant facilities and for working
Temporarily postponed.

working funds.

gan

by 26 participat¬
An additional 36,000 shares of
two

cents per

Underwriter—Lackman

Aetna

estimated

For additional

June 26 (letter of
stock.
Price—At

(8/8).

on

an

Television Associates,

Offering—

July 20 filed 114,000 shares of $1.35 convertible preferred
.stock, series B (no par), to be offered in exchange

<cj

—

capital.

Office—El Portal Bldg., Las
Vegas, Nev.

Seaboard Finance Co.

10

Proceeds—To

writers—Sills, Fairman & Harris; Straus & Blosser. Pro¬
ceeds

—

•

use

market, at

Tele-Tone Radio Corp., N. Y. City
22 filed 100,000 shares of cumulative convertible
class A stock.
Price—At par ($10 per share).
Under¬

San

Calif.

open

June

Andreas Oil Co., Las Vegas, Nev.
July'14 (letter of notification) 12,500 shares of common
stock. Price—$2 per share. Underwriter
None. Pro■ceeds—To develop an oil lease in San Bernardino
County,

-

at

Address—Box

(letter of notification) 2,000 shares of capital
(par $5), purchased by The Citizens National Bank

135,000 shares of common stock (par $1).
Price—$6 per share. Underwriters — Sills, Fairman &
Harris; Straus & Blosser. Proceeds—To 15 selling stock¬
holders. Temporarily postponed.

Any old preferred not exchanged
will be redeemed on Oct. 1.
Price—To be filed by
amendment, along with the dividend rate on the new
preferred. Proceeds—To redeem the unexchanged 5%
stock, make cash payments on exchange, and toward the
of

services.

June 22 filed

preferred stock.

prepayment

be sold

Tele-Tone Radio Corp., N. Y. City

the

new

(letter of notification) 1,000,000 shares of com¬

stock to

mon

17

Co., trustee, on the
price of $20 per share, for
tirement plan.

held.

River Concentrating Co»/.;,-

Wood

-

June 26

construction, exploration and development.

& Trust

shares which will be created by
converting that many of
old 5% shares brought in under the
exchange into

.

*

28

Tappan Stove Co., Mansfield, Ohio

stock

the

of

•

road

July

writer—Merrill Lynch, Pierce, Fenner & Beane will offer
the unsubscribed common shares as well as 85,114 shares

.

Mines, Ltd.,
Vancouver, B. C.r Canada
'
filed 800,000 shares of common capital stock
(par $1). Price—35 cents per share. Underwriter—None.
Proceeds—Exploration and development work. Statement effective May 23.
Feb;

shares to be issued to directors of the company for their

compo¬

preferred 205,661 shares will be offered in
-exchange for 186,965 shares of outstanding 5% preferred
stock, along with an unspecified cash payment. Under¬

.

Western Uranium Cobalt

five-for-one basis.

Under-

common

stockholders

common

a

Ltd., Toronto, Canada
June 6, 1949, filed 375,000 shares of common stock. Price
—$1 per share (U. S. funds). Underwriter—None.' Pro¬
ceeds—Funds will be applied to the purchase of equip¬

St., N. W.. Washington, D. C.

to

1

Sudore Gold Mines

buy television set

offered

on

Western Oil Fields, Inc., Denver, Colo.
May 5 (letter of notification) 600,000 shares of common
a $50,000 note carrying interest at 4% payable
from percentage of oil sold.
This note will carry with
it as a bonus 500,000 shares of stock. - Price—Of stock,
250 per share. Underwriter—John G. Perry & Co., Den¬
ver.
Proceeds—To drill for oil in Wyoming and for
working capital.
stock and

Co., Wagenseller & Durst, Inc., Los Angeles, Calif.
expand business. Office—212 West B St.,
Ontario, Calif.

Safeway Stores, Inc.
June 8 filed 321,000 shares of cumulative preferred stock
(par $100) and 257,064 shares of common stock (par $5).
The

equipment, real estate, working capital and
purposes. Office-r-Virginia and Truckee
Building, Carson City, Nev.

(New Jersey)
unspecified number of shares of capital

an

($1 per share). Underwriter—Phil
O. Box 1283, Kingman, Ariz. Pro¬

general corporate

Proceeds—To

ma¬

Bldg., Carson City, Nev.

Price—At par

Morse, Trustee, P.

ter &

"

Inc., Carson City, Nev.

(letter of notification) 3,COO shares of common
(par 10 cents) to be issued to creditors. Office—

ceeds—For

Price—For preferred, $25
per share; for common, $4 per share. Underwriters—Les¬

Price—Separately, at par, and in units, at $2,000 each.
Underwriters—Boettcher & Co. and Peters, Writer &

"

Western Gold Mines,

stock.

Gas

95% from present 93.12%.

stock

100 shares of stock.

Price—At par ($50 per share).
Proceeds—To pay bank loans.

held.

Corp., Carson City, Nev.
May 29 (letter of notification) 300,000 shares of capital

4277

•

..July 11:(letter of notification) $150,000 of 5% convert.ible sinking fund debentures, due 1960, and 15,000 shares
of common stock (par $10), to be sold separately or in
one

—

Suburban Gas Service, Inc., Ontario, Calif.
July 14 (letter of notification) 6,900 shares of 6% con¬
vertible preferred stock,;series B, (par $25) and 41,400
shares of common stock (par $1). Of the common stock
34,500 shares will be reserved for conversion of preferred

Denver,

Colorado

units of

Office

(par $25), to be offered in exchange for 500,000
shares of outstanding capital stock of Creole Petroleum
Corp. at rate of eight Standard Oil shares for 15 Creole
shares.
Purpose—To increase holdings of Creole stock

Price—To be filed by amend¬

Rocky Mountain Textile Mills,
•

For working capital.

stock

Underwriter—The First Boston Corp., New York.

ment.

—

Standard Oil Co.

Proceeds—For general corporate purposes, including con¬
struction and repayment of a loan. Offering postponed.

be

Western Gypsum

Co., Shreveport, La.
June 26 (letter of notification) 13,500 shares of common
stock to be sold by Ronald M. Craigmyle, at market
(about $7.37V2 per share) through Craigmyle, Pinney &
Co., New York City.

Telephone Corp.
June 29 filed 125,000 shares of common stock (par $10)
to be offered to present stockholders at rate of one new

,

Proceeds

Southwest Natural

working capital.

Telephone Co., Franklin, N. C.
notification) 1,406 shares of capital
offered to stockholders at rate of one share

First National Bank

Lyons View Pike, Knoxville, Tenn.

Y.)

Thursday, July 27, 1950

17

None.

Inc., Pinehurst, N. C.
13,547 shares of common
capital stock. Price—At par ($1 per share). Underwrite*-

Rochester

Southern

Fire & Casualty Co., Knoxville, Tenn.
(letter of notification) 2,000 shares of capital
stock (no par). Price — $9.50 per share. Underwriter—

Resort Airlines,

—None.

Temporarily postponed.

stock
•

June 19 (letter of notification)

.

•

July 13

and radio sets.

ment for television

•

iaries in order to assist them in financing new construc¬

July

.

(letter of

Underwriter—None.

tion.

record

around Aug. 1 at rate of one share for each five shares
Jb.eld; rights to expire about Aug. 14. Price—To be filed
by amendment.
Underwriters—Hornblower & Weeks
and Paine, Webber, Jackson & Curtis.
Proceeds—For
working capital. Business—Electronic tubes and equip¬

.

22

for each two shares

.

to

.

Western Carolina

Pea body

'

.

25

it

Under¬

(Dominion of)

reported that registration is expected
of September of a new issue of
$100,000,000 bonds, the proceeds of which are to be used to
refund on Oct. 1, next, a like amount of 4% external
bonds, due Oct. 1, I960, which are payable in U. S. dol¬
was

about the middle

lars.

Probable

underwriter—Morgan Stanley & Co/

>

Volume 172

Number 4928

.

The Commercial and Financial Chronicle

.

.

(373)
Celanese Corp. of America
April 12 the stockholders voted to authorize the creation
of 1,000,000 shares of a new preferred stock (par $100),
505,000 shares of which can be issued at any time.
Plans are being formulated for the issuance this year,
if

market

an

initial series of this

conditions

be convertible into

considered

are
new

common

satisfactory,

Emerson

May

Florida

July 10
of

Maine

Power Co.

was announced that under an amended plan
reorganization it is proposed to issue to holders of all
classes of 6% preferred stock for each old share the right
to buy a unit consisting of eight shares of new common *
stock and $14 principal amount of new 4^% income de¬

tive

Light Co.

approved

new

.Williams and associates, would be offered the right
to buy a unit of one new common share and $1.75 of new
income debentures for-a package price of $2.25 for each

son

of

50,000 shares
$100). These

tion statement is expected to be filed with the SEC at
an

appropriate
Forgan & Co.

time.

T

Traditional

underwriter:

.'/.V-

banking group headed by Hemphill Noyes, Graham.
Parsons & €oi; Shields & Co., Blair, Rollins & Co., Drexel
& Co. and Sterling Grace Co.
a

Great Northern

Aug. 2 for the purchase from it of $14,130,000 equip¬
trust certificates, series of 1950, to mature in 30
equal semi-annually instalments beginning on Feb. 1,
on

ment

Central

Telephone Co.

June 22 company announced
tion statement late in July
common

$10), which

to be issued to

are

stockholders of Central Electric & Gas Co.

mon

basis.

for-13

Dealer

Curtis

&

son

stock (par

and

Proceeds—Mainly
Central

May 4, it

Managers—Paine,

Stone

to

Vermont

Webster

&

retire

1951 and

it plans to file a registra¬
covering 90,000 shares of

$850,000

Public

on

Webber,

a

1-

Holeproof Hosiery Co.

Jack¬
Corp.

Securities

short-term

Service

ending Aug. 1, 1965. Probable bidders: Halsey,
Stuart & Co. Inc.; Salomon Bros. & Hutzler; Harriman
Ripley & Co., Inc. and Lehman Brothers (jointly).

com¬

June 22 it

was announced that registration statement is
expected to be filed shortly covering not less than 25%
and not exceeding 33%% of the stock held by
principal
stockholders following proposed 7V2-for-l stock split up

loans.

Corp.

to

announced that if offer to acquire Green

was

Mountain Power Corp. becomes effective, it plans to re¬
fund outstanding $7,715,000 first and refunding 3%%
bonds due 1963 of Green Mountain by
new

the issue and sale
series and of

series

of

preferred stock, $100

par

value. Prob¬

able bidders for bonds: Halsey, Stuart & Co. Inc.; prob¬
able bidders for preferred: W. C. Langley & Co. and

Hemphill, Noyes, Graham, Parsons & Go. (jointly).

i

Indiana Gas & Water Co.

solidated first mortgage bonds due July 1, 1952.
Re¬
funding of the first and refunding mortgage 4*4% bonds,
series A, due Sept. 1, 1962, is also said to be a possibility.
Probable bidders: Halsey, Stuart & Co. Inc.; Morgan
Stanley & Co.; Lee Higginson Corp.; Harris, Hall & Co.
(Inc.); Drexel & Co.; Kuhn, Loeb & Co. and Salomon
Bros. & Hutzler (jointly); Harriman, Ripley & Co., Inc.;
First Boston Corp.; Lehman Brothers; Paine, Webber,
Jackson & Curtis; Kidder, Peabody & Co.

Credit Co.

Iowa

April
gram

plans to sell 250,000 shares. A group of under¬
writers, headed by Kidder, Peabody & Co. and The First
Boston Corp., are expected to offer the stock.
company

Edison

Co.

of

New

York, Inc.
May 15, Ralph H. Tapscott, Chairman, said the company
will require approximately $90,000,000 of "new money''
through the sale of securities. No permanent financing is
contemplated before this fall, however, and current ex¬
penditures are being financed by short-term loans, of
which $16,000,000 are now outstanding.
It is anticipated
that $257,000,000 will be needed for the construction pro¬
gram over the next four years. Probable bidders: Hal¬
sey, Stuart
& Co. Inc.; Morgan Stanley & Co.; First
Boston Corp.
Eastern

May 23 it
the SEC
assets

a

Utilities

was
new

will

and

stock.

Telephone Co.

(par $1) from 250,000 shares to 500,000 shares,
outstanding stock to have no pre¬
emptive rights.
with holders of present

•
Michigan Consolidated Gas Co.
July 25 it was reported company expects to sell between
$20,000,000 and $25,000,000 of first mortgage bonds this

Underwriters
To be determined by competitive
bidding. Probable bidders: Halsey, Stuart & Co. Inc.;
White, Weld & Co. and Lehman .Brothers (jointly);
Smith, Barney & Co. •> Proceeds—To pay'off short term
—

bank

sale

loans

for

of

for

and

new

construction

additional

construction

will

also

be

stock

common

Additional

costs.

raised

through the

American

to

Natural

•
Michigan-Wisconsin Pipe Line Co.
July 25 company received SEC authority to borrow not
more than
$20,000,000 from banks. A permanent financing program provides for the elimination of these bank
loans prior to their maturity, July 1, 1951, and such pro-

will

gram

include the issuance and

sale

of

$12,000,000

Proceeds will be used to repay

Milwaukee

Light Co. /
company's permanent »
expected to be consummated prior \
to October, 1959, will involve refinancing of $13,334,00© j
of first mortgage 41/&% bonds due 1967, $2,000,000 of 7%
preferred stock and bank loans (about $8,500,000) through

financing

program,

announced that the

the issuance of

senior securities and

new

common

stock
_

(American Natural Gas Co.

97.7% of presently
Probable bidders for bonds:

now owns

outstanding common stock).
Halsey, Stuart & Co. Inc.; Glore, Forgan & Co., and LehBrothers (jointly); Kidder, Peabody & Co.; Harri¬
man Ripley &
Co.; Smith, Barney & Co., Kuhn, Loeb &
Co. and Blyth & Co., Inc. (jointly).
Mountain

Fuel

Supply Co. of Utah

June

6 company announced plans to create a new firm
to take over its exploration and development of natural

and oil operations. It will be financed, in pari,
through public sale by the new unit of 1,000,000 shares of
capital stock (par $8). Financing plan submitted by First
Boston Corp. Expected this Fall.
Mountain

May

States

Power Co.

17 the stockholders voted to increase the author- '
preferred stock (par $50) from 75,000 to 150,00©

ized

shares.

There

presently

are

outstanding 72,993 shares.
Pierce, Fenner Sr.

Probable underwriter: Merrill Lynch,
Beane.
New

April

England Power Co.
it

24

estimated

that about $37,000,000 new
required to pay construction costs
estimated at $40,000,000 for 1950 to 1952. Present plan*

financing

was

will

be

issue

in late summer or early fall $10,000,00©
50,000 shares of preferred stock.
Probable
(1) For bonds—Halsey, Stuart & Co., Inc.;
(2) for bonds and preferred: Harriman Ripley & Co*
Inc.; Lehman Brothers; Kidder, Peabody & Co.; First
to

are

and

bidders:

Boston

New

July
sell

Long Island Lighting Co.
May 18 it was reported company's construction program
in 1950 will cost $20,000,000 which is currently being
by up to $12,000,000 bank loans pending per¬
financing which may be done following effec¬

tiveness of consolidation plan. Probable bidders for any
new securities include Smith, Barney & Co.

Hampshire Electric Co.
informed SEC it plans to issue and
competitive bidding $3,600,000 of first mortgage

18
at

company

sinking fund bonds, series A, due

1975.

Probable bid¬

ders:

Halsey, Stuart & Co. Inc.; The First Boston Corp.;
Kidder, Peabody & Co. Proceeds—To retire (a) $1,880,first mortgage bonds, series A

and B due 1963, and
$1,250,000 of bank loans due Dec. 31, 1952; and the

(b)

balance for construction purposes.

New York

May 24 it

State

Electric

&

Gas

Corp.

reported company expects to sell $14,000,000 of bonds and $6,000,000 of new preferred stock
in June,
1951, with an additional $10,000,000 of new
was

securities to be sold in
pay,

in part, cost of
in

$55,800,000

the

1952, the proceeds to be used to

new

next

construction estimated to total
three

years.
Probable biddei*
preferred: Blyth & Co., Inc., and Smith,
Barney & Co. (jointly); First Boston Corp. and Glore,
Forgan & Co. (jointly); Harriman Ripley & Co. Inc.

for bonds

Probable

and

bidders for

bonds only:

Halsey, Stuart & Cc*.

Inc.

Niagara

Co.

Mohawk

Power

Corp.

Probable bidders for

$22,000,000

of

first

Co., Fall

mortgage

of preferred

and

stock.

$
El Paso Electric Co., El Paso, Tex.
July 19 it was announced company plans to refund $3,500,000 bank loans (authority for which is sought from
FPC) with permanent financing prior to March 31, 1951,
their maturity date.
The last issue of debentures was
placed privately last September with the John Hancock

He

working capital to

added

that

meet

and

company

Smith, Barney & Co.

Macy (R. H.) & Co.
May 8 it was reported that company is considering issu-.
of $10,000,000 of new securities, either debentures
or preferred stock.
Traditional underwriters — Lehman
Brothers: Goldman, Sachs & Co.
*

ance

Maine Central

July 10,

company

RR.

(8/16)

-

applied to ICC for authority to issue

May 26 it was reported that between 47,000 and 48,000

$5,600,000 of equipment trust certificates.

shares of this company's common stock may be offered
some time in the near futuer through
F. Eberstadt &

ders:

*




expanded sales

plans to pay off its
bank loans in full by July, 1950. These loans now amount
to $12,000,000.
Traditional underwriters: Lehman Bros

Mutual Life Insurance Co.
Elliott Co.

additional

and

ler.

-

man

volume.

Edison

,

Gas

was

for

of the Brockton

•

;

bonds and 1$3,000,000 of additional common >
Previous debt financing was placed privately* v.

June 21 it

$1,300,000

loans, due in September, 1951, and the remaining
$300,000 will go to Central Telephone Co., parent, to re¬
pay temporary advances for construction.
Probable un¬
derwriter: Paine, Webber Jackson & Curtis.

(P.)

•

&

additional
stock.

Co. and Montaup Electric Co. and

a

•

Gas Co., parent.

000

bank

Lorillard

plan filed with
will be formed to acquire the

collateral trust bonds and $8,500,000

Co.

stock

mon

Jan. 19 announced that construction program will nece»«
sitate in 1950 not more than $25,000,000 of additional debt

company

sell

La Crosse

June 6, company announced that it has advised the Wis¬
consin P. S. Commission that it expects to sell $1,000,000
of long-term bonds and not less than $600,000 additional

financed

•
Michigan Bumper Corp., Grand Rapids, Mich.
July 20 stockholders voted to increase authorized com¬

Corp.; Merrill Lynch, Pierce, Fenner & Beane;
(3) for preferred:—W. C. Langley & Co.

Kaye-Halbert Corp., Culver City, Calif.
June 8, Harry Kaye, President, announced that "it is
possible from time to time that additional financing
might be undertaken to facilitate the further growth and
development of the business." Office—3555 Hayden Ave.,
Culver City, Calif.

manent

but

April 4, Herbert A. Kent, President, said: "It may be
necessary to do some financing" before Aug. 1, 1951 to
redeem $6,195,450 of 5% bonds due on that date and

of Eastern, and

issue

company said to plan sale of first mortgage
financq/part of its $3,200,000 construction pro¬
for I950./Probable underwriter: The First Boston

Corp.

Associates

announced that under

River Electric Light

26

common

Calif.

available.

bonds

Utilities Co.

bonds to

March

30
stockholders approved creation of 500,000
shares of cumulative preferred stock (par $100) of which

Southern

Los Angeles,

gas

Ripley & Cot, Inc. and Blyth & Co., Inc. (jointly); Kid¬
der, Peabody\& Co. Expected in August.

Chicago & Western Indiana RR.

Consolidated

Aug. 16.

July 5 it was reported that the company may issue $9,500,000 of refunding mortgage bonds. Probable bidders:
Halsey, Stuart & Cq. Inc.; First Boston Corp.; Harriman

Jan. 31 reported company will probably issue in the near
future some bonds to refund the 4% non-callable con¬

Commercial

upon

Lighting & Power Co.
April 14, S. R. Bertron, President, estimated construction
expenditures for 1950 between $19,000,000 and $20,000,000.
This estimate may be raised to accommodate increased
power demands on the system.
If this is the case, more
financing will be necessary, he added.
This may be
done
through additional common or preferred stock
financing.

•

Chenango & Unadilla Telephone Co.
July 17 company applied to New York P. S. Commission
for authority to issue $1,000,000 of mortgage bonds, $357,000 of preferred stock and $300,000 of common stock.

voted

Houston

for cash of first mortgage bonds of a new
a

be

authorized

Glore,

V

Ry. (8/2)
y
y
Bids will be received by the
company, at Room 905,
2 Wall Street, New
York, N. Y., at or before noon <EDT)

debentures would be'underwritten by Darien Corp. and

Basket,

company announced it plans sale of

4,452 shares
unissued, preferred stock, series C,
(par $15) and an additional 30,000 shares of preferred
stock, (par $15) to be authorized. Further details not
of

funds

capital through 1952.

for a proposed offering to stockholders of
subscribe to additional common stock.
The

stock and

May 25

fall.

creation

proceeds will be used to reimburse company for capital
expenditures already made and to provide funds for
further capital expenditures
contemplated. - A registra¬

package, price of $18. The common stock,
except for approximately 4,600,000 shares held by Harri¬

new

plans

rights to

a

of

Power &

stockholders

Granite City Steel Co.
July 11, company announced stockholders will vote Aug.
17 on increasing authorized common stock from
400,000
shares to 1,000,000 shares, and directors
approved tenta¬

Corp.

The issue

9

(jointly); Harriman Ripley & Co., Inc. Not

proximately $25,000,000

of

v

new

$4.50 cumulative preferred stock (par
shares are soon expected to be offered to finance
part of
construction program which is expected to
require ap¬

March 1 it

shares-held,

reported to be contemplating issuance

of

Goldman, Sachs & Co.
The proceeds would be used to pay outstand¬
ing notes of NEPSCO.
-

common

Corp.

imminent.

Florida

(jointly).

five

& Beane

June

Harriman Ripley & Co., Inc. and

bentures for

$25,000,000

ner

Co. at competitive bidding prior to Oct. 1, 1950.
Probable bidders: Blyth & Co., Inc., and Kidder, Peabody
& Co. (jointly); Coffin & Burr, Inc.; First Boston Corp.;

Electric

Power

company

considered

Power

States

Market

President, announced that

bonds, the proceeds to be used to
outstanding 3V4% and 3%% issues. Probable
bidders: Halsey, Stuart & Co.,
Inc.; Glore, Forgan & Co.
and W. C. Langley & Co.
(jointly); First Boston Corp.;
Kidder, Peabody & Co. and Merrill Lynch, Pierce, Fen-

July 24 New England Public Service Co. applied to the
SEC for authority to sell 260,000 shares of its holdings
(1,315,181 shares) of the common stock of Central Maine

Central

Phonograph Corp.

refund the

Dillon, Read & Co. Inc.: Morgan Stanley & Co.
Central

&

Abrams,

Ebers(tadt & Co.

of

stock which may
Net proceeds woulo

be used in part for expansion of the business, including
additional production facilities.
Probable underwriters

•

Radio

Benjamin

company may use unissued 1,240,390 shares of capital
stock (par $5) to
acquire additional plant facilities if
needed. Traditional underwriter: F.

preferred
stock.

29,

37

Probable bid¬
Halsey, Stuart & Co. Inc.; Harriman Ripley & Co.
Lehman Brothers (jointly); Salomon Bros. & Hutz¬

or

equity

financing,

including

short-term

bank

loam

bonds: Halsey, Stuart & Co. Inc.;
Morgan Stanley & Co.; The First Boston Corp.; Kuhn,

Loeb & Co.
Pacific

Northwest

Pipeline

Corp.

June 30 company sought FPC authority to build a 2,175
mile pipeline system—from southern Texas to Washing¬
ton—at

a

financing

cost of $174,186,602.
Negotiations for major
requirements are now in process of being

completed.
'*

Pacific Power & Light Co.
April 13, Paul McKee, Presdient, disclosed that a group
of 16 purchasers who acquired company's 500,000 shares
of common stock from American Power & Light Co. on
Feb. 6, last, have informed him of their intention to

Continued

on

page

38

38

The Commercial and Financial Chronicle

(374)

Continued

from

page

distribution

public

a

of

stock

South

May

prior

announced

was

the next four years
be

to

Carolina Electric & Gas

it

11

common

company

Co.

$34,000,000, of which $11,600,000 will

May 5 it

was

Southern

tion

said that there will be additional financing

competitive, and preferred
negotiated or competitive.
Plantation

July 6, it

be

this

either

Pipe Line Co.
Co.

Oil

June

21

involve

3%

bonds

the

Kuhn, Loeb & Co. and Lehman Brothers (jointly); First
Boston Corp.

Reynolds Metals Co.
June 7 company announced stockholders will vote Aug. 9
on

increasing

authorized

common

stock

1,500,000

from

shares to 2,500,000 shares. The increase is being sought
to make additional shares available for any future need.
Probable underwriter:

Reynolds & Co.

St. Louis-San Francisco
will

Bids

be

Ry.

Aug. 2 for the purchase from it of $3,705,000 equip¬
trust certificates, series G, to mature in 15 equal

tive

Co.

Inc.;

Brothers

Halsey, Stuart &
Harriman Ripley & Co., Inc. and Lehman
(jointly); Salomon Bros. & Hutzler; Harris,

Hall & Co.

San

Probable bidders:

(Inc.).

Brothers

Salomon

Bros.

&

and

Bear,

Stearns

&

Co.

(jointly);

Hutzler.

that the company's entire com¬
(440,000 shares) was expected to be

was announced

issue

stock

registered with the SEC in the
for

sale

Property.

to

near

future and offered

the

highest bidder by the Office of Alien
Probable bidders: A G Becker & Co. (Inc.),

Union Securities Corp. and

Ladenburg, Thalmann & Co.

(jointly); Merrill Lynch, Pierce, Fenner & Beane; Kid¬
der, Peabody & Co.; F. Eberstadt & Co.; Allen & Co.;
company to be formed by United States & Inter¬
national Securities Corp.: Dillon. Read &
Co.; F. S. Moseley & Co.; Riter & Co.
new

Meanwhile,
toward

Co.

trustee

of

excess

profits

be

sold late this

summer

at

(jointly).

bond market con¬
virtually dormant with the

possible exception of the income
obligations of the railroads, and
there is little to indicate any early

general pickup in the

new

issue

market.

True, Columbia Gas System has
called for bids to be returned next
©n

debentures,

$90,4*00,000
largely

of

new

of

the current

The

proceeds would

C.

•

Toronto




program. Ex¬

be

in

used

(William R.)

& Co., Inc.
Bobst, President, announced that

12 Elmer H.

poration

proposes

recapitalization

and

change

in

cor¬

name

Warner-Hudnut, Inc.; also to file

a registration state¬
the SEC covering the sale of
approximately
325,000 shares of new common stock (par $1) to the

with

pub¬
through a nation-wide group of underwriters headed
by F. Eberstadt & Co., Inc.
,

lic

part

Western Pacific RR.

July 17 it was reported company plans issuance and sale
of $22,000,000
mortgage bonds. Probable bidders: Hal¬
Stuart & Co. Inc.; Blyth & Co., Inc.; Lehman Bro¬
Bear, Stearns & Co. (jointly); Merrill Lynch,
Pierce, Fenner & Beane. Proceeds—To retire first mort¬
sey,

Union Securities Corp.;

thers and

4%

gage

(Ont.), Canada

bonds

and

convertible

income

4%%

bonds

due 2014.

of

Control authorized the sale in the
United States of
$15,000,000 debentures to provide funds
for construction of Toronto's
subway. The proposal pro¬
vides for borrowing at an
average interest rate of 2.84%.
It is understood that the
new
debentures are to be

•

Wilcox-Gay Corp.

July

14 it

posed

privately with institutional investors through a
banking group headed by Dominion Securities
Corp.
and Harriman
Ripley & Co., Inc. "

announced

was

acquisition

Radio &

placed

of

that, in

Garod

connection with

Radio

Corp.

and

pro¬

Majestic

Television, Inc., Wilcox-Gay Corp. plans public

offering of

a new

issue of stock.

-—Gearhart, Kinnard & Otis.

Traditional Underwriter

Proceeds

—

For

working

capital.

•

United Gas Pipe Line Co.
July 25 filed with FPC for

Worcester County Electric Co.
authority to build 1,130 miles
April 25 company reported planning issuance of
$10,Texas, Louisiana and Mississippi at a ..000,000 first
mortgage bonds. Probable bidders: Halsey,
cost of about
$110,000,000, including new facilities. It is
Stuart & Co. Inc.; Harriman
Ripley & Co.. Inc.; Lehman
probable that the bulk of this new
capital will be raised
Brothers; Kidder, Peabody & Co.; First Boston Corp.;
through
of

new

lines

in

the public sale of

levies

due

for

have

run

activity is for the

convinced that

a

goodly portion of the current buy¬
ing reflects purchases by traders
in anticipation of a
"mark-up" as
the administration unfolds its ac¬
tual tax aims.

But for the moment the market
refunding
operation, but past that there is is roaring along on the
high road
nothing really important in the and new
borrowers are naturally
immediate offing.
profiting.
a

to .offer-

expects

be used to finance construction

Warner

•

Traditional underwriters:
Langley & Co.

W.

of
actual investors who
intend to put the bonds
away is a
matter of conjecture.
are

company

common

competi¬

Tide Water Power Co.

account

Observers

announced

stock to be voted upon Aug.
17, Continental
Co., Inc., contemplates public offering of part of its
Vulcan common stock
holdings (which now total 59..2%).
Early registration with SEC expected.
Underwriters—
Goldman, Sachs & Co. and Lehman Brothers.

May 4 stockholders have approved an increase in the
authorized
cgmmon stock to 1,000,000 shares from 500,000
shares. It was understood that
125,000 shares may be

the past week or
10 days
with indicated
average yields hav¬
ing been
pared
some
10
basis
points in that period. How much

The corporate

was

competitive

Can

ment

wild

Tuesday

the

to

new

securities.

*

Columbia Gas Debentures
Next

Tuesday

will

the

opening! of bids for Columbia

Gas'

new

$90,000,000
of
debentures
with prospective bidders slated to

This

pleted

details with company'

"standby"^
Co.'s

ers

ahead.

undertook

agreement

on

the
Haloid

offering of 47,183 shares of

additional
had

shares

to

common

to

of

take

about

up

the

sharehold¬

issue

11,000

when

the

equities.

pretty thoroughly cleared

up now.

The current operation is chiefly

refunding and intended to replace
$45,000,000 of 3i4s, due 1973 and
$33,000,000
new

of

issue.

3s

due

1974,

with

The indicated bal¬

plans,

the

threat

of

a

will spur or hinder such

however,

remains

to

be

seen.

Such
amounts

operations
of

equipment

steel

require
and

large

pumping

which

.

shares

of

approximately 77% of
total,
indicating
that
in¬
terest is still high in the case of
With

-

the

priced at 29 y4 less
cession of
sors

75

reported

out well with
ance

cents

the

a
a

take-down

dealers'

con¬

share, spon¬
moving

stock

about half the bal¬

sold the first day.

are

convinced

that

only

proper

"pricing" is needed to

sure

satisfactory deal.

as¬

Pipe

Line

Currently Plantation Pipe Line
Co. is planning some
$50,000,000
of new
financing, partly through
the public sale of bonds and
part¬

-

-

bankers'

would be added to funds for'

construction purposes. Market ob¬

a

Whether

war

conceivably
com¬ "rights" expired this week.
could come rapidly under alloca¬
Stockholders exercised their tion if the present situation should
largest
involving rights to the extent of 36,272 become worse.

when the syndicate
dissolved, it is
evident that the situation has been

servers

new

company
recently
of the year's

one

the

ance

Subscribed

Bankers,., who

single undertakings,
$110,000,000
of
debentures
and
though some bonds were around

the

Merrill. Lynch. Pierce, Fenner & Beane

77%

bring

today.

tinues

...

Vulcan Detinning Co.
July 18, A. C. Buttfield, President, announced that,
following approval of proposed two-for-one split-up of,

forthcoming. Probable bidders: Halsey, Stuart
Inc.; Stone & Webster Securities Corp. and White,
(jointly); Kuhn, Loeb & Co. and A. C. Allyn

the turn
wartime taxa¬

literally

Oct. 9.

a

& Co.

corporations, has turned interest
discuss final
sharply to the tax exempt market.
officials
Municipals

it

20

ceeds will

Weld & Co.

tion, with higher rates indicated
for individuals and a
jacking-up
of

Common stock expected about Sept.

pected this Fall.

would be

however,

revival

(jointly).

President, announced that

bonds will

July 25 the Board

Schering Corp.

bonds:

and

bidding not exceeding $20,000,000
of first and
refunding mortgage bonds. Probable bid¬
ders: Halsey, Stuart & Co. Inc.; Union Securities
Corp.;
Kuhn, Loeb & Co.; White, Weld & Co.; Stone & Web-'
ster Securities
Corp.; Salomon Bros. & Hutzler.
Pro¬

June

sold.

for

bonds about

through

Diego Gas & Electric Co.

Lehman

mon

Power

to pay for construction.

July 3 it was reported that company may issue late in
September or early October between $8,000,000 and
$10,000,000 of bonds. Probable bidders: Halsey, Stuart
& Co. Inc.; Blyth & Co., Inc.;
White, Weld & Co. and
Shields & Co. (jointly): First Boston Corp.; Union Se¬
curities Corp.; Merrill Lynch, Pierce, Fenner &
Beane;

May 4, it

June

bidding, but the amount has not yet been decided."
Banking circles speculated that a $40,000,000 bond sale

Co.

each
stock

and

.

Tennessee Gas Transmission Co.
25 Gardiner
Symonds,

"some

&

bond

Virginia Electric & Power Co.

Tampa Electric Co.
April 25 it was announced company plans to raise
$4,700,000 in new money through sale of additional
securities, the proceeds to finance in part 1950 con¬
struction expenditures.
Jan.

annual instalments.

Utah

authorized

shares) in Southern Utah Power Co. for not less than
$550,000 base price, plus adjustments.

(8/2)

ment

SEC

the

the Gulf Coast and off-shore fields in Louisiana and
Texas to markets in Indiana, Ohio and
Michigan. Com¬
pany is now in process of completing negotiations for
its major financing requirements.

of

1950, to be fol¬
by additional financing early in 1951, involving
of at least $5,000,000 additional common stock

8

from

to pres¬

for

share

Valley Gas Pipe Line Co., Inc., Houston, Tex.
June 27 company sought FPC authorization to construct
a $144,500,000 pipeline project to
carry natural gas from

of Washington Gas &
Electric Co. to undertake negotiations with "all interested
parties" for the sale of its common stock interest (62,910

by the company, at Suite 1524-8,
120 Broadway, New York, N. Y., at or before noon (EDT)

on

issuance and sale of at least $10,000,000

Southern
June

new

approved

Inc.; Blyth & Co. and Kidder, Peabody & Co. (jointly);
First Boston Corp.
j

received

and

sale

Probable bidders:

Halsey Stuart & Co.
Inc.; Morgan Stanley & Co. and Drexel & Co. (jointly);

12

which will be offered to stockholders under
preemptive
rights. Probable bidders for bonds: Halsey, Stuart & Co.

1970 and $15,000,000

due

& Beane

first mortgage bonds, with respect to which a declaration
is expected to be filed prior to Nov. 1,

April 17 stockholders approved the issuance of $90,000,000 new bonds for the purpose of refunding $50,000000 3%% bonds due 1965; $10,000,000 3V4% bonds due
1972.

the

bidders

Brothers

t-

be used for construction program, estimated at $32,520,for 1950-1951. Permanent financing is expected to

Service Electric & Gas Co.

$15,000,000

•

Co.

000

lowed

bonds due

SEC

Gas

Proceeds

one

common: Blyth &
Co., Inc.; Union Securities Corp. and
Smith, Barney & Co. (jointly); Lehman Brothers; W. C.
Lar;gley & Co. and Glore, Forgan & Co. (jointly); Kid¬
der, Peabody & Co. and Merrill Lynch, Pierce, Fenner

temporary bank borrowings of
up to $20,000,000 to mature July 1, 1951, the proceeds to

financing of about $50 000,000, part of which is expected
to be placed privately and the balance sold to the public.
Underwriter—May be Morgan Stanley & Co. Proceeds—
To be used to build new pippe line, with construction to
begin early next year and completion scheduled for
early 1952.
Public

requested.

Co.

/

Natural

of

Halsey, Stuart & Co. Inc.;.
Bear, Stearns & Co. (jointly);
Corp. and Smith, Barney & Co. (joint¬
ly); First Boston Corp. and Blyth & Co.. Inc.; Harriman
Ripley & Co., Inc.; Kidder, Peabody & Co.; White* Weld
& Co.; Salomon Bros. & Hutzler.
Probable bidders for-

summer

Southern

that this company, an affiliate
(New Jersey), is contemplating

shares to be offered

ratio

Union Securities

reported that company expects to issue

was

common

the company's construction
program, and for
forward
the
expansion
program
into 1951.

Probable

Lehman

$55,000,000 of bonds.
Probable bidders:
The First Boston Corp. and Harris, Hall & Co. (Inc.)
(jointly); Halsey, Stuart & Co. Inc.; Blyth & Co., Inc.;
Shields & Co. Proceeds would be used to refund $30,000,000 3y4% bonds and for construction costs.

reported

was

Standard

would

stock

be

it

March 3

later this year, with probably some common stock to be
underwritten by Drexel & Co.
Bond financing would

Edison

(10 9)
is expected

registration

be used to repay short-term loans in connec¬

with

carrying

proposed, under its amended plan
holdings of 154,231.8 shares of
Co. common stock as to which an

California

(9/12)

that

in

eight shares held.

Gas Co.

Gas

Jersey

Light Co.

reported

was

shareholders

sales will

exemption from competitive bidding is

Electric Co.

it

166,604 additional
ent

filed with SEC, to sell its
South

Power &

15

Aug. 2 of $8,000,000 of additional first mortgage
bonds
to
be sold
through competitive bidding, and

June 15 United Corp.

Probable bidders: Halsey, Stuart
Riplev & Co., Inc. and Lehman
(jointly); Salomon Bros. & Hutzler.

pipe

about

spent in 1950.

South Jersey

announced company

22-inch

July

Brothers.

Harriman

Inc.:

Philadelphia

1968;

in

It is estimated that $6,000,000 of new
will be required this year, to be raised by
the sale of $3,000,000 of bonds and 60,000 shares of pre¬
ferred stock (par $50). Probable bidders include Lehman

April 1, 1965.

to

Natural Gas Co.
was

Utah

to spend

Thursday, July 27, 1950

$25,000,000.

money

Brothers

of

Oct.

plans

.

plans to build a 325line in Utah to cost approximately
Hearings will be held before the Utah
P. S. Commission in August or
September, after a study
of the project.
mile

31, 1950.
Probable bidders for bonds: Halsey, Stuart & Co. Inc.;
Stone & Webster Securities Corp.

July 12 companv reported planning issuance and sale
early in September of $10,005,000 additional equipment
trust certificates, series Z, to mature annually April 1,
Co.

and

debentures

Pennsylvania RR.

1951

Utah
June 5 it

manently refund $2,200,000 of bank loans by the sale of

these

pected.

&

Co.

June 2 company announced it plans to finance and per¬

shares at earliest
practical date, which may be shortly after Aug. 6. A. C.
Allyn & Co., Inc. and Bear, Sterns & Co. headed this
group.
The 500,000 shares of common stock are being
split-up on a S^-for-l basis, all or part of which will
be
publicly offered.
Company also expects to raise
$3,000,000 in new money later this year and a similar
amount in 1951.
Registration of new 1,750,000 soon ex¬
make

Pacific Power

Sierra

37

.

.

Financing,

ly by bank loans.
Meanwhile

United

Gas

Pipe

Line Co. has just filed with FPC
for permission to build 1,130 miles
of new lines in Texas, Louisiana
and

Mississippi at a cost of about
$110,000,000 including other facil¬

ities.

'

'

*

""■*

Financing of new natural gas
pipe lines holds promise of yield¬
Doubtless the bulk of this new
ing substantial new business for capital would be raised through
investment bankers in the months

the public sale of

new

securities.

Volume 172

Number 4928

.

The Commercial and Financial Chronicle

.

.

(375)

Continued

from

8

page

Misinterpretation
Of Dow's Theory

ing" has its maximum merit when,
as
revealed
in subsequent plottings, the succeeding Major Trend
upward movement proves to be of
"unorthodox"

type—as in the

contemporary instance above cited
(from June, 1949). Such discern¬
ments

illustrated

were

writer

emphasized

when

in

the

Market

Comments during June-July, 1949.
the
statements
(quotes):
"The
charted pattern

veying

convincing

'exhaustion'

force

this

evidences

the

of

the

of

On

to be con¬

appears

of

downward

Major Trend."

matter

of

studies

over

established the fact that unfolding
current

patterns have

never repro¬

duced

completely for a sustained
length of time an exact replica of

preceding pattern—in either

any

both of the two Indicators.

or

In

the light of that fact, it is interest¬

ing to note

a contemporary Com¬
propounding as follows:
"Stock
prices
since
1942
have
duplicated the pattern made by
the price movements in 1921-1924,

mentator

the

base

period for the long ad¬

"The

vance.

two

•

markets

look

plike."
The

implied intimation for the

reader

is of

that the

course

simi¬

larity of patterns—so far—conveys
of

assurance

Future

this

such

has erred in
or

1929

duration

or

a

completed

self

do

obsessed

well

to

have

been

long

riod

of

Trend
:

s

of

that what really prompts the ques¬
tion
is
whether
some
historical
records exist to

serve

the

to

answer

a

guiding

one

sougat,'

as

actual

ould help to

realistic

"bull"

current

The
there

is

will

be fulfilled

succeeded

in

of the

some

length from about

to

short

as

months—and

seven

six

as

the

peaks

of

broader views, we find

radical variations m"scope or de¬

and

gree

in

find

we

Major

time

to

aspects and

variance

at

with

any

blance of "mechanical"

be

the

reader

"me¬

age)

the

more

to

seems

"bear"

to be

stance

included

are

"bull"
such
we
a

authorities

the

of

change

to

Robert

To

Rhea,

version that

direction

Trend—as

reference
markets.

as

attribute the

point

in

with

"bear"

and

to

(1)

downward

of

the

"confirmed"

Major

-

by

180th Common

A

dividend

regular

(2)
in

a

the

marks

—

of

"confirmed''

the

market.

ket

into

the

completion of

which

in¬

Extremes

breed

upward

corresponding

downward

in

the

1950,

stockholders of record

to

of business

Harry L.

market

and

wo qdali Industries 1

Allegheny Ludlunt Steel Corporation
meeting of

a

the Board

of

Directors

of

July 20, 1950, a divi¬
fifty cents (50c) per

dend of

declared
of

Stock

Common

the

on

the

Cor¬

The

of

twelve

dollar

cne

($1.12t,5>c)

per

Stock

of

ers

also

Board

Preferred

record

business

on

declared

today

of

business

Au'

1950.

W. D. BlCKHAM, Secretary

1,

15,

record

of

Capital Distribution in
A

r—

the

of

close

A.

distribution in partial

Company

tity—and this is true regardless of

on

at

the

rate

business

of

business

interim

on

meeting held

1950,

No.

the

declared

dividend of

at

sixty cents

13,520,000

stock of the

common

payab'e

September

1950, to stockholders of

the close of business

61

on

August

7, 1950.
L. H.

capital stock of The Borden

Atlanta, Georgia

and

Thursday issues of thf

dividend payments

L. NOETZEL

Treasurer

SUBURBAN; PROPANE GAS

Light

CORPORATION

a

COMMON

DIVIDEND

SOUTHERN CALIFORNIA

international
The

harvester

Board

declared

August

21 cents

a

Directors

of

The

Directors

of

International

Har¬

Company have declared

quar¬

seventy-five cents ($1.75)

NOTICE

per

share

the Common

on

stockholders

record

of

to

Aug. 1,

will

give

1950.
R.

GOULD

MOREHEAD,

July 24,

1950

Treasurer

close of business

on

galore and

pay

libera)

dividends.

recommendation
that

the

standing

GERARD

DIVIDEND

Commercial &

Financial

Chronicl*

Southern

Park Place
REctor

New

York

8.

N

*

2-9570

the

shares

business

Directors

for

and that

one

vote at

of

record

as

of

the

close

of

June

28, 1950, will be entitled to
such meeting. The transfer books will

be closed

Dated, June 28, 1950.

C. KING,

Secretary

251/2

11

cents per

Cumulative

NATIONAL CONTAINER

Railway

CORPORATION
On

of the

18, 1950, a regular
quarterly
dividend
of 15^

per

share

the

Common

was

declared
Stock

of

National Container Corpora¬

DIVIDEND

A
per

dividend

share

on

stock without par value of Southern

record August
HARRY

of

15, 1950.
GINSBERG,

fiscal

holders
on

year

on

of

ended

record

August 15,

at

15,

the

1949,

to

stock¬

of

business

1950.
J.

J.

the

Stock,

to

stockholders of

August 5, 1950;

cents per

share

Preferred

on

the

Stock,

4.88% Series, payable August
31,

1950,

record

on

to

stockholders of

August 5, 1950.

of

31,

1950,

close

out

on

Company for

December

September

Railway

declared

the surplus of net profits of the

the

payable

1950.

of *eventy-five cents
($0.75)
1,298,200 shares of Common

Company has today been

stockholders

on

Cumulative

1950

all

1950,

record

30V2

NOTICE

New York, July 25,

tion, payable September 11,
to

31,

on

the

share

Preferred

4.08% Series, payable August

Company

July

Treasurer
\Y.




of

of incorporation of the Com¬
amended for this and related purpo«es; and to transact such other business as
may properly come before the meeting.

not

BEI5J5I5ISfSf^!lSJS15f5®51SI5JSIB15j5IBl^@

Board

be

Stockholders
25

NO.

The Board of Directors has

J. EGER, Secretary

<

stock of the Company out¬
in the hands of the public be split

four

STOCK

SERIES

authorized the payment

certificate

pany

2

PREFERRED

following quarterly dividends:,

common

the basis of

on

the

of

NO.

CUMULATIVE
4.88%

STOCK

August 5, 1950.

STOCKHOLDERS

a

ideas

PREFERRED

SERIES

1,1950, to stockholders of record at the

Dye Corporation

Pursuant to call by the Board of Directors,
special meeting of the stockholders of Allied
Chemical & Dye Coritoration will he held at
the principal office of the Company, No. 61
Broadway, New York City, at 11:00 A.M.
(Eastern Daylight Time), on Monday, July
31, 1950, to consider and take action upon

yoe

CUMULATIVE
4.08%

DIVIDEND

on

payable September

EDISON COMPANY

quarterly dividend of
share

a

today

Stoek, payable Aug. 15, 1950,

Treasurer

Broadway, New York 6, N. Y.

To the Stockholders:

"Chronicle"

of

at

NOTICE OF SPECIAL MEETING
O*

41 year
consecutive

1,

record

St

JAEGER, Treasurer

the close of business August 11, 1950.

the preferred stock

subscription to the Monday

1950.

GRIFFIN,

July

on

Company, payable on Septem¬
6, 1950 to holders of record

162

terly dividend No. 128 of one dollar and

Allied Chemical 8t

E.

quarterly

a

outstanding

shares of

share has been declared

per

the

vester

full year'i

payable
stockholders

dividend of 20 cents per share

company

MEFTING

to

(INCORPORATED)

on

D. W. JACK,

$35

declared

1950,

Secretary-Treasurer.

Ifiord&tvS

H

4, 1950.
Secretary &

been

31,

COMPANY

THE SOUTHERN

24,

the Capital Stock of the

close

the

at

has

August

on

Secretary

Company will be paid on August
24,1950 to stockholders of record

ISIBMSJSIBIBIEISJSJSJSISISISiSfSISfS/SJSJpP1

regular quarterly dividend of
per
share on the Common

M.

Jr.

liquida¬

of $6.89

A

300

of record August 15,

cents

McCASKEY,

July 25, 1950

tion of American Power &

each

August 15, 1950.

on

E.

Liquidation

payable
September 1,
stockholders of record

to

the

at

Company,

Street, New York 6, N. Y.

1950,

the $4.50 Cumulative
Corporation, payable
1950, to Preferred stockhold¬

share

S.

An

Company
Two Rector

vertible Preferred Stock has been

declared

Stock

dividend

a

one-half

and

close

gust 4,

at the close

September

regular quarterly dividend of
per share on the 5% Con¬

3IV4-

Directors

per

the

nc

a

30^

at

poration, payable September
30, 1950, to Common stock¬
of

of

quarterly dividend
share on the out'
standing capital stock of this
Company, payable September 9,
1950, to stockholders of record

the Allegheny Ludlum Steel Corporation held

was

A

Board

declared
of

(604)

share

a

The

ber

"bear" market is of a separate en¬

INVESTED in

OIL COMPANY
INCORPORATED

DIVIDEND

—

CHAS. F. BRADLEY, Secretary
Broadway, New York 4, N. Y.

SOCONY-VACUUM

Hilyard, Treasurer

to

Light

Common

1950 who
Com¬

July 25, 1950

extremes

American Power &

of

25,

at the close

August 10, 1950. Checks will be

mar¬

NOTICE

holders

August

Company.

mailed.

peak points at-

FINANCIAL

per

to

on

the

upon

September 1,

on

as

tend

quarterly dividend of
share payable Sep¬

a

1950

8,

.

mar¬

followed

tember

Stock of record

pany, at a

ket.

Partial

"bull"

York, July 26, 1950.

high peak of the 1929 "bull'

"bear''

Under correct classification

each

1932

Major

a

New

Cents

of

payment

fifty cents ($.50)

One

long

extreme

deep "bear"

The Board of Directors has authorized
the

Directors of The Southern Com¬

market.

j

An

the

was

Stock
DIVIDEND

September 7, 1950.

Bruce H. Wallace, Treasurer

of

"bull" market and

similarly

on

1950

ensuing

Common

Company, payable in cash

the

direction

N. Y.

No. 158

intense

and

Company

per

Stock of

the Preferred

on

Common Stock of The American Tobacco

Loday,

next

quarterly dividend of $1.00

the aftermath of the exceptionally

point of change to upward

the

Trend

a

A

Seventy-five

share has been declared

per

nistorically

severe

be

Treasurer.

that date hold regularly issued
mon Stock
($1.00 par) of this

(75^)

peak which

high

J. B. McGEE

United States Lines

Dividend

of

share

a

Broadway

New York 6, N. Y.

company

sem¬

a

the close

at

September 7, 1950.

elevator

September 1, 1950.

Secondary movements—marks the
completion of

OTIS

Checks will be mailed.

September

chanical" features of the patterns

incomplete unless comments

61

refuting

New York 3,

111 Fifth Avenue

At

when

thirty-five (35^)
cents
per share has been declared,
payable September 21, 1950, to
of business

July 25,

Trend

July 19, 1950.
A dividend of

stockholders of record

unjustified criticisms

(above 200 in the D-J Ind. Aver¬

might

discussion of the

a

Theory.

DIVIDEND NOTICES

closest

Major

CORPORATION

tember 20, 1950, to stockholders
of record at the close of business

1950.

Presumably

Dow's

of

Tennessee
tikncssii cohporation

their

meaning under correct

if the writer has

adequately

holders of

consider

of

Dividend

"math¬

or

The

the

exceptionally

significances

radi¬

semblance

any

in

the

interpretations

Pittsburgh, Penna.

congruity

fine

in

the par value of $62.50 per share,
has been declared payable Sep-

and

completed

oscillations

"empirical" in
cally

consumed

patterns' of

Trend

of

share

or

th£ Major Trend
swings have proved to vary wide-,
ly in their vicissitudes.

is

*

more

to

the oscillations in

In such

the

some

contem¬

any

furnish

years

period of-time

a

of

discernments

on

DIVIDEND NOTICES

of

patterns from the stana-

Technical

guiaing

seven

bull market attains

Bear Markets

point

DIVIDEND NOTICES

dependability.
For many years,
the historical patterns reveal bull
and
bear
markets
varying
in

swings is this fact:

and

a

and

measure

Preferred Dividend No. 4

last?

carrying'..and

pre¬

Bull

charted

invariably be:

precedent

no

answer

an

market

must

answer

of

review

a

reestablish

c.ncept of

pe¬

points

namely, how much longer should

that this historical prec¬

edent has been broken.

the

long

a

Such

years.

clarification

Theory

a

average

to

a

length

over

Dow's

of

prices will

at

of

has conveyed

frequently

aoes t..e

precision.

implying such

visions

it

porary pattern with which he may
askedf be
dealing and with respect to
"bull" which he
may be entertaining de¬
market
last/
Significantly tnat- lusions of further
upward plotquestion is usually asked while a
tings to limitless heights.
"bull" market is in force and that
Tre
purposes
of
this
article
significant fact tends to suggest
I

how

approach

he

ponder

Trend oscillations

~

ematical"

that

with
upward

critics

by
if

patterns of these historical Major

(time)

Major

bring an an¬
contemplation by
either

the last 30 years.

never-enuing

movement.

rise.

Commentator

diction

over

will

events

to

swer

another

scope

each

a

performances,
period of years have

a

the

mechanical

empirical

versus

by the Major Trend oscil¬

Any Technician who finds him¬

The Cmient

the

tained

lations

39

MAHER, Secretary.

T. J. GAMBLE, Secretory

July 21, 1950

40

The Commercial and Financial Chronicle

(376)

that

BUSINESS BUZZ

Behmd-the-Seene Interpretations
iron the Nation'*

tempted to carve his in¬
itials somewhere in the joint, than

visting the Reserve Board.
executive

to be

separate conference
of his own. There would be

given

room

S^oeeorron

The

that

WASHINGTON, D. C.—Whether
Truman will put real
behind

.steam

tention

of

in¬

announced

his

curtailing government

activities not necessary to the war

of limiting the spread

means

as

a

of

inflation,

here

is seriously
basis

the

on

Executive's

first

doubted
Chief

the

of

perform¬
ance
on
this front, the alleged
"curtailment" of government
single

financing

housing

.sponsored

ac¬

considerable

With

the

fanfare,
that

President announced

asking agencies handling

he

was

financ¬

ing problems to tighten up.
One of these orders was the al¬

requirement that hereafter
a veteran must put up a 5% down
payment in buying a house with
a Gl-guaranteed
loan. This "or¬
der" appears to be moderate in¬
deed upon analysis.

leged

actual

The

the

of

text

GI loan is submitted

proposed

for

prior approval by the Veterans
Administration.
Under the law,
only non-supervised institutions—
or primarily mortgage companies
—are required to submit loans in
advance

The

,

•

obtain

to

guarantee.

a

banks, building and loan as¬

sociations
-

be borrowed

Home

Loan

Bank

and

insurance

compa-

for

This is

mortgages.
theoretical

on

and

from

turned

a

relending

"limitation."

The

banks.

prevent

double-sure

to

pretation from the nation's Capital
and may or may

Video
ad¬

order requires an

President's

ditional 5% down-payment in con¬
with

nection

This

loans.

is the

easy

only

phase

curtailment

President's

the

Cinema Television B

FHA-insured

future

Scophony-Baird Ltd.

of
of

government mortgage money
has
any
appearance
of

"A

which

girl

on

required,

be

and

where

a

m.s.wien&co.

the phone, Mr. Snobbottom, she said 'It's the
playing piggy-back with at the
Stork Club last night'!"

little redhead you were

substance.
Hereafter,
where a 5% down-payment was
required, a 10% down-payment
genuine

will

Corp. of America
Corp.

Government Employees

the

in

"limitation"

third

Finishing
Equipment Corp.

Trad Television

had not already

clamped down.
A

views.)

own

U. S.
Television

going overboard in case the

Home Loan Bank

not coincide with

"Chronicle's"

the

occa¬

an

ESTABLISHED
40

1919

Exchange PL, N. Y. 5

HA. 2-8780

Teletype N. Y. 1-1397

the coin of the

realm, be able un¬
language of Title IV, to

million

housing

new

units.

They

are said to favor the use of trailer
nies, all state or Federally-super- 10% cash payment was previously der the
vised, under the law may auto¬ required, a 15% payment will be restrict credit in wooden nickels. camps, possibly pre-fab housing,
matically commit the government required in the future, and so on.
So it would appear that where compulsory billeting where neces¬
to the guarantee and by statute a
sary, and even tent cities.
On the other hand, the housing the mortgage business is on the
down payment
may not
be re¬ act of this
*
*
❖
more
conventional basis of 50%
year liberalized FHA
quired where the loan is at a insurance on a broad
front, in down and 10 years to pay, that
Congress took one single step
level low enough so that the GI
general reducing down-payments this will be hit hard, but the 90% to kill off for the duration the
guarantee on top of the primary and
lengthening terms. Thus, for to 95% stuff with 30 years to pay, erection of a marble monument to
loan adds up
to the total pur¬
the officers and staff of the Fed¬
instance, in the lowest Title II will be tapped lightly.
chase price.
*
♦
*
eral
brackets, the term of repayment
Deposit
Insurance
Corp.,
Hence,
the
President's order was extended from 25
years to 30
The dope that there will be no equal in ornateness and dignity to
actually only requires a little 5%
years
and
the insurance ratio war housing in this war is only the Federal Reserve Board pal¬
"down payment in the case of nonraised to 95% from 90%.
a gleam in the eye of the National
ace in this city.
supervised lenders, or for some¬
So with FHA, the President has Security Resources Board's eye.
As part of the. bill to boost de¬
where around one-half the current
the
last
war
millions posit insurance coverage and low¬
only back-tracked in part on the During
volume of VA lending.
of housing units were constructed er the effective
1950 act's liberalization.
assessment, the
On
the
other hand,
there is
to
house
war
workers
in con¬ FDIC had asked for
$
$
$
authority to
some
hope that the supervised
Whatever the President appears gested areas or in outlying areas spend $15 million on a lot and
lenders may take advantage of the
where
new
factories
were
built.
building of its own. The agency
loophole in the law which per¬ to have done with the govern¬
The
highlight of this extrava¬ lives in rented quarters.
mits them to submit applications ment favored financing of hous¬
was
the proposal of the
for loans for prior approval to the ing, he has given every indication ganza
It was reported that this was a
CIO
reputedly backed by Mrs.
VA, and thus escape, where it is that the clamp-down will really
building of such projected beauty
Roosevelt,
for
the
allocation
of
be put on mortgage financing out¬
applicable,
the
automatic
nomaterials to build an entire city
down
payment provision of the side the blissful guarantee heaven.
Title IV of the President's control of 25,000, which the CIO would
law.
bill is written in the usual style control, adjacent to Willow Run.
It is reasonable to expect that
This advertisement is neither an offer
A former Senator, Harry S. Tru¬
of Genesis with which the Federal

For

Large Appreciation Potential
WE SUGGEST

RIVERSIDE CEMENT CO.
CLASS B (common) STOCK
A

leading producer of cement

in

fast-growing

Southern

California.

Analysis of this Company and
review of the Cement

a

Indus¬

try available on request.

Selling about

$8.50

LERNER & CO.
Investment

Securities

II Poll Office Squire, Boston i
Tel.

HUbbard

Mas*.

2-1990

-

most

institutions,

supervised

will

this

do

Reserve

Board,

will

eventually, because they
be disposed to cooperate in

minister the

the

anti-inflation

posed legislation.

best,

it is said that all
step will do will be

such

fringe

a

the

out

cut

of

lunatic

extreme

guaranteed

housing

fi¬

nancing. The veteran then would
have

to

put up

5%.

This would

♦2nd the racket of building houses

to sell

to

veterans who

irrespon¬

bought them with
nothing down to escape

$50

sibly

commercial-level

or

paying
because

rents,

the subsidized credit requires less
of

On

the

other

hand,

a

great

projects already have
going and set under the old

got

many

in

this

bill

will

title, writes its

encompassing

of the Federal

ers

are

the

pro¬

consumer

mortgage financing, it would
be difficult to imagine that in any

kind of

an

unpredictable situation

the Federal Reserve system would
find
to

itself

handle

without

it.

It is

broad
not

powers

unreason¬

able to suppose that broad creditrestriction
powers
not
uncon¬
nected with
mortgage financing
be

read

into

the

law

to

be

more

acceptable than

war

housing

was

buy

any

NEW

of

these

securities.

quired
the

in

The public hous¬

ing boys have been sabotaging its
since

sale

the

in the

new

h<

w

?;

Allied Electric Products Inc.

hoping that
they could turn it over to local
housing authorities for subsidized
public housing.
They have had
their way somewhat.
Some of it,
however,
has
been
grudgingly
sold. Other units have been
away

NSRB,
that
of

it

come

the

not

160,000 Units
$.45

is

reported,

greater than it ever has been be¬
and thus far the President
has not seen f-rt
suggest that the
fore,

(Each

Unit:

believes

1

order would have

the

ef¬

fect of reducing to 15% from 25%
the

figure

representing




the

per¬

share

Price

$1

Stock,

Common

given

Preferred

$7.50

par

x/z

and

share

Common)

Unit

per

war,

to

the

erect

nation
a

can¬

couple

20,000 Shares

of

Stock,

Price $4.50 per
Teletype—NY 1-971

$1

par

Share

Firm Trading Markets
Copies

of

the

Prospectus may

be

obtained

from only such of the undersigned

FOREIGN SECURITIES

brokers

or

dealers

in

as

from
are

securities

your

investment dealer or

licensed
in

this

or

registered

State.

All Issues

Hill, Thompson & Co., Inc.

PARL MARKS & CO- INC.
FOREIGN SECURITIES

margin of ifwnr foe be cut back.
Another pioveuon of the Presi¬
dent's

par

the impact on materials

new

afford

HAnover 2-0050

Stock, $6

Convertible Preferred
and

to colleges and universities.

act provisions

$7,500 from $4/)00. or 60% versus
50%.
Hence, the total availability
of the mortgage guarantee is even

by the Prospectus.

war,

Common

Congress

boosting the total GI guarantee to

solicitation of offers to

made only

is

ISSUE

no-

n'u'd « a.ses eventually,
this spring enacted

to sell nor a

offering

enor¬

down-payrncnt rule.
Against the possibility that a
5% down-payment might be re¬

The

mously expensive and has been a
headache since.

if

it passes this way.
Certainly the
"Fed" would, if wooden nickels
come

This

,

pow¬

Reserve Board

both

over

Chairman of the War In¬
vestigating Committee, effective¬
ly scotched that one.
as

man,

ad¬

and

could

monthly payment burden.

a

So

however,

that
to

At

program.

which

Brainard-Judd & Co.

New York 4. N. Y.

Fraser,

Hiscox, Van Meter & Co., Inc.

SPECIALISTS

50 Broad Street

a

flect the "behind the scene" inter¬

sional isolated member institution
from

of

with

be

would

do

could

student

(This column is intended to re¬

current

of borrowings for relend¬
ing
averages
around 3%. The
highest total of borrowings for
this purpose has never averaged
more than 5%.
So the most that
"order"

CIO, which

a

tion.

figure

this

ordinarily

not

sources

member

figures

arguments against the assess¬

blast against the assesment reduc¬

to be regular and
of loanable funds

supposed

normal

finance,

technical finance, came out

than Federal Reserve Banks

more
are

is

their members any

funds to

with

erudite

with

up

ment credit. Even the

The

of loan¬

be normal sources

to

ed

able

reduc¬

the

not

unfamiliar

and

entirely

an

but

was

wanted

directors

Banking Committee, green

of the

Home Loan Banks are not intend¬

order

provides that the 5% down pay¬
ment may be required only when
a

could

situation

the

FDIC

building

system

Bank

Loan

which

tor

tivities.

Home

the

was

tion in assessments. New members

centage of the assets of a member
of

the

of

a

irony of

the

the

CoMomtON
President

FDIC

Each

steel vaults—to hold records.

And You

Capital

visting it would be even

one

when

Washington

Thursday, July 27, 1950

.

more

•

•

•

.

.

C. T. Williams

Phelps & Co.

William N. Pope, Inc.

& Company,

Inc.