Full text of Commercial and Financial Chronicle : June 17, 1948, Vol. 167, No. 4708

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194$

JUN 18

BUS. ADM.
LIBRARY

ESTABLISHED 1839

Volume 167

Number 4708

New

York, N. Y., Thursday, June 17, 1948

Price 30 Cents

Peacetime Draft Is
Threat to Individual

in

Liberty and Our Free
Enterprise System
?

By JIM HOWARD

'

Veteran of Overseas War Service
and

Opponent of Communism
and Militarism, traces steps in
military program for regimenta¬
tion

of

America.

Holds

draft

enacted in peacetime is major de¬

feat in struggle, for freedom
waged by English-speaking peo¬
ples for past five hundred years.

By RAYMOND RODGERS*
Professor of Banking, New York

The

tremendous

pressure

for

-

By WINTHROP W

University

acitvity unless

as principal
postwar changes in commercial banks'
(1) rapid increase in business loans; (2) decline in
loans on securities; (3) increase in residential
mortgage credit;
and (4) rapid expansion of consumer credit.
Says banks are
stressing quality of loans, but warns of rise in ratio of loans to
capital; -Favors decline of bank holdings of public debt, and

arm-

in

rely.

Whether you

like

it

not,

or

enactment

made

time

light of world
developments

by Congress of peace¬
conscription
exerted
by
President
Truman,... through his
military secretaries and" certain
.members of Congress, is not moti¬
vated by international affairs.
It
is the result of careful planning

V

in

as

well

as

individuals

banking decisions have

the '♦/

and banking

monetary

or war comes..

which nations

—

to be
;—•"

—

legislation.

monetary

will

;

\'

.

years

World

War

the

before

II

of

deed

-

the

loss

income

of

prestige attendant upon

and

curtailment

of

appointments

wartime

the

on

far

moved

...

7

"

~ "

r—:—

——

the

the

officer

simple, di¬

rect

and

con¬

fidential

resumption

economy,many

per¬
sonal financial

World War II officers decided to

transactions of

of

peacetime

a

avoid

a

return

to * the

rigorous

activity
of
civilian productive
enterprise by perpetuating their
comfortable

mobilization

officer de¬

proceeded

(Continued

at

PICTORIAL

the

on

a

SECTION

Outing,

Jersey

Exchange

and
of

tour

with

scene

the

System in

serve

ment

Federal

1913.

Re¬

Govern¬

bond

purchases, which be¬
important in banking in
World War I, developed until
gov¬
ernment
financing became the
came

42)

on page

for

PICTURES taken at Bond Club of
New

control

ing

After World War I,

Stock

years

ago.Credit

Rodgers

positions in the armed national basis entered the bank¬

services.

See

forty
Raymond

dominant

F.

S.

factor

(Continued

in
on

banking

page

Pacific

Northwest industries.

in

by Dr. Rodgers be¬
Meeting of the
Bankers
Association,
Springs, Colo., June

47th

Annual

Colorado

Glenwood

11, 1948.

Havana

ins Go.

>.

,

Franklin Custodian

Funds,

Hirsch & Co.
Member* New fork Stock Exchange
and other Exchangee

25 Broad St., New
■Anover 2-0600

Chicago

>]'

Teletype NT 1-210

"

Cleveland

Geneva

;:i

York 4, N.Y.
London

(Representative)

was
of huge
proportions,

COMMON STOCK SERIES

-

/

The Worst Yet?

of

The President in his

"non-political" tour through the
country has been busily engaged in laying the
groundwork
for his
coming election campaign. If he had any real doubt
about
obtaining the Democratic nomination, he doubtless is

also

fortifying his position as respects this contest, but in
event he is laying out the broad outlines of the
campaign

any
he fully

expects to conduct this

autumn to win arfother term

in the White House.

He, evidently, has chosen Congress as
his "issue/*
Obviously enough it is not merely Congress that
he is
shooting at, but the Republican party which controls
Congress.
If he

convince the voters that this
Congress has
proved to be the "worst" either since the
in

can

beginning—or

his

memory

(as he at

one

—

time

appeared to

he will have

plainly

purchases

of '
a

and

loans

g a i n s t the

pub l i

debt. *

e

Tax

revenues

and

the

sale

of government

obligations" to
non-commer¬

W. W. Aldrich

cial bank buy-,
did

ers

qover

not

the rapidly rising expendi-.

tures of the government and credit

(Continued

on page

*An address by

fore

52nd

the New

Annual

York

sociation,

26)

Mr. Aldrich be¬
Convention

of

State Bankers As¬

Bretton

Woods,

N.

H.,

June 14, 1948.

(Continued

on

page

36)

State and

:

STATE

and

Municipal

MUNICIPAL

BONDS

PREFERRED STOCK SERIES
>

BOND SERIES

Bond Department

;

THE NAHONAL CITY BANK

UTILITIES SERIES

INCOME (BALANCE FUND) SERIES
1

Protpectus

on

OF NEW YORK

request

FRANKLIN DISTRIBUTORS, Inc.
64 Wall Street, New York 5

HJUtT SMITH & CO.
52 WILLIAM ST., N. Y.

Bell
-

Bond

Dept. Teletype: NY 1-708

-

Teletype

Private

New York

NY

Wires

THE CHASE

HAnover 2-0980

5

1-395

NATIONAL BANK

Connect

Montreal

OF
-

Toronto

THE CITY OF NEW YORK

We will discount

profits

on

>

request

Street, New York 4, N. Y.

Tel. WHitehall 3-2840

Tele. NY 1-809




bonds & stocks

&

"j

(when issued contracts)

Light Co.

Analysis

upon

request

Corporate Securities

OTIS & CO.
^

sutr0 bros. & co.

(Incorporated)

Gordon Graves & Co.
INVESTMENTS

Wisconsin Power

Railway Co.

■

INSTITUTIONAL

CANADIAN

on

Central of Georgia

Distributors of Municipal
and

Information

30 Broad

1

:

Underwriters and

I

con-

■

took the form

BANK

Analyzed and Appraised

•

:

inc.

PORTFOLIOS

,

]....

]

credit,,, which

A Mutual Fund
'

in-f
implications]

succeeded in pillorying the
Republican party. In dis¬
crediting that party, he will more or less discredit any
candidate it may select at
Philadelphia. This is partic-

*An address
fore

I

During the
the. in-. I
crease in bank "

qualify his broader statement)

>

Est. 1896

Established

1899

CLEVELAND
New York
Chicago
Denver
Cincinnati Columbus Toledo Buffalo

<

war

even

32)

The economic

-^sideration.

EDITORIAL

re¬

from

-

for

proposal

importance and warrant careful

~

banking is in¬

military officers.
.j. Mindful

-

.

Modern

professional

by

Supports

•

crease; and investments, a sharp decline.
of these changes, are of
great

do about

of

end

{
)

•

,

started

:

Since the end of the war
very important changes, have occurred!
in commercial bank
portfolios. Loans have experienced a rapid

them.

:

1

commission."';;v-'\

and
what
Wash i ngton

«

|
:

inflation makes clear need for constructive action

asserts current

Banking is no longer local in' character; and the banker is
no
longer, a free agent. Bankers have become the
indispensable part
of a
on

|

Mr. Aldrich lists

force Federal Reserve to
change credit restriction policies, but does
not look for much
political action to reduce expansion of credit.
Hints phenomena associated with credit
point to end of boom, and
holds weakest link in economic chain is
sustained present high
price
level.
Predicts moderate decline< in business

ament expenses increase sharply

!

portfolios:

may

r

f

ALDRICH*

Chairman of the Board,
'
The Chase National Bank of the
City of New York

,

Noting changes in character of banking, Dr. Rodgers reviews effects
of world
developments and domestic fiscal policies on present day
banking system. Asserts rearmament and relief expenditures

great credit mechanism

:t

Copy

a

Dominion Securities
Grporatkm*
40

-

Telephone BEetor 2-7340

Members New

end

Members New York Stock Exchange

120 Broadway, New York 5

ira haupt&co.

Exchange Place, New York 5.N.Y.

111

NY 1-702-3

Boston

Exchange
Exchangee
•

Broadway, N. Y. 6

WOrth 4-6000
Bell System Teletype

York Stock

other Principal

Teletype NY 1-379*
Telephone: Enterprise 1820

COMMERCIAL

THE

(2634)

2

By JOSEPH

President, The Detroit

of New Jersey

We speak

the

about

Association

loudly and vigorously

need

maintain

to

(Continued

Bank

our

33)

on page

industrial growth and warns

maintain and expand

ABA President stresses need of more savings to

later.

M. DODGE*

President, American Bankers

Standard Oil

indefinitely/and without limit, at
no price or penalty, either now or

Debt

Savings and

We trade in

Thursday, June 17, 1948

CHRONICLE

& FINANCIAL

spending, is threatening serious inflation. Attacks inconsis¬
tency of promoting easy credit, on one hand, throujh government guarantees and the like, and propos¬
ing, on the other hand, restrictions and controls on private credit. Says tax structure inhibits risk cap¬
ital and is forcing retention of corporate earnings.
Foresees likelihood of further deficit financing,
with more taxes and inflation, and criticizes extravagant housing program.

heavy private, together with government
Scrip

New York Hanseatic

Corporation
Broadway, New

120

1-583

regularly

gram had to do
in Government
S

and reduce the money means
pressing on prices.

ers,

Government

Bought—Sold—Quoted

Savings

Request

Prospectus on
r

frfc PONNELL & fO.
Members

1

we

Curb Exchange

New York

eco¬

ac¬

Joseph M. Dodge

cumulation.

Common

Detroit Int'l Bridge

reports

billion

in every

Hoving Corp.

-

1946

and

increased

1923

Established

ended

expanding economy and its prin¬
cipal source is from savings and
their investment. It was from this
we
built what we have today.

sumers

;

HAnover 2-9470

Southern

We should

But, unforutnately,

have

States

been

the

Members
York

Dealers wAss'n

Security

NATIONAL BANK
of INDIA, LIMITED
Bankers

to

the

Government

Office:

Head

Bishopsgate,

26,

in India, Burma, Ceylon, Kenya
Colony, Kerlcho, Kenya, and Aden

Branches

Zanzibar

and

savings in investment has
steadily increased the physical
plant and equipment behind every
worker and has multiplied the ex¬

of

comfort

Reserve

Fund

sion

£2,500,000

of

conducts every description
banking and exchange business

The

to

Bank

of

Trusteeships and Executorships
also undertaken

As

and se¬

little

39 Broadway, New York 6

but

an

retirement

government

debt,

address

of

expan¬

comes,

Mr.

and that the general finan¬
of consumers, while

status

still

strong

developed

the

first

signs of weakness in 1947. I sug¬
gest that this is not an encourag¬
ing forecast for savings.

it

Dodge at
Meeting of the New York State
Bankers
Association, B r e 11 o ti
Woods, N. H., June 14, 1948. by

will overspend their in¬

cial

bank-held

redistribute

example, recently I saw a

an

families

production. In the form
purchase of Government
Savings Bonds these savings per¬
the

-

ago I read a wryly
quip which exaggerated
but
illustrated
the problem,
it
went like this—"We should have
Not

long

humorous

Tele. NY 1-1610

DIgby 4-3122

calling for mount¬

programs

Chicago Stock Exchange

v

ing expenditures, for a variety of
purposes,
and for an indefinite
future.,! We do not know the final
cost of

enlarged
State and mu¬
nicipal., expenditures, ; debt
and
taxes are rising. /Within the last
foreign aid

or an

defense program.

Southwest Lumber

creases

controls

and

as

The next

hear of

we

But,

if

even

you agree

National

N. Y. Cotton Exchange

or

new

represent

lectively.
mass

to

us,

they

YORK

NEW

•

DETROIT 7

CHICAGO

GENEVA,

Bldg.

N. Y.

4,

PITTSBURGH

SWITZERLAND

with this,

Government.

ever and wherever

1856

rMembers
New York Stock Exchange
and other: leading exchanges

;

and

do not pass all the blame over to
the public officials of city, state,
or

Quoted

—

corrective.

a

*

day

Sold

H. Hentz & Co.

for

business

over

individual affairs

—

Established

emergency

demands

and

Producing .C-

/ Bought

or

alarm

*

Southern Production

tax or debt in¬
One day we hear expres¬

expenditure,

more

Southwest Gas
V

Royal Bank of Scotland

Who¬

are,

they

incorporated by Royal Charter 1727

individually and col¬
only reflect our

OFFICE—Edinburgh

HEAD

They

carelessness and indifference

Branches throughout

taxes, prices, costs, and
economy.
On the one hand gov¬

Scotland

debt,

LONDON OFFICES:

headline — "One
in ernment officials receive little
every four United States families pressure from the many most af¬
is likely to overspend this year." fected ' by their
acts,
and who
This article publicized a study in¬ should be.most interested in the
dicating that at least 25% of our purchasing power of their dol¬

of

*An

The Parker

of

hear

Exchange

New York Curb Exchange

newspaper

the

mit

with; the

do

individual.

his living.

available for

banks, and will have

the

to need large
quantities of savings funds, which,
at the moment, are particularly
important as an offset to inflation
and serve to help multiply the

£4>000,000
£2,000,000

—

new

people's fault or the fault of

the

continue

resources

Subscribed CapitalPaid-Up Capital

We

decrease.

inflation

nothing
inflation, high
prices, high taxes, low interest
rates, lack of incentive, the depre¬
own
investments in' the person- ciating purchasing power of the
ally^owned properties and equip¬ dollar, or any other of the factors
ment which have added to the
beyond the direct control of the

curity

London, E. C.

Members

New York Stock

•

publicly and officially attrib¬ continuing acts of a nature to
uted to everything or anything magnify the evil which causes the
but its real causes. It will become alarm.
'f^ -!- •"' ■.
'«../■

these

In this country progress

in

Kenya Colony and Uganda

Joseph McManus & Co.

be

pansion of his output.' Their use
by the individual has permitted
him to continue to expand his

Teletype—NY 1-376-377-378

substantial reduction of ex¬
penditures for other purposes, and

any

of

•

branch offices

the elimination of other inflation¬

about

'

our

government expenditures for for¬
eign aid and the military estab¬
lishment are not being offset by

sions

And, unless I miss my guess,
the decline in the rate of savings
accumulation sooner or later will

security and at
the same time a direct contribu¬
tion to our progressively higher
standard of living.
The use of
individual

their

New

Direct wires to

apparent that the inflation¬

thrift."

United
source of

La.-Birmingham, Ala.

effect of additional billions in

ary

mosphere which can be pointed
out as especially encouraging to
the development of savings and

remember that tra¬

tions of the Citizens of the

Troster,Currie & Summers

public, policy

has

must

ditionally the savings accumula¬

Production

It is

NY 1-1557

HAnover 2-0700

Government Spending

Exchange

St, New York 4, N. Y.

New Orleans,

brought disadvantages instead
of advantages to savings. While few weeks we entered the third
be found, short of forced saving,
the need for thrift is recognized round of wage increases and the
to slow down this spending which
wage-price, spiral has been given
is forcing up prices and reducing and advocated, our public policies
have progressively served to put another upward push.,
the rate of the savings accumula¬
it at a lower and lower discount.
t'Where do we find any general
tions of the people.
Certainly there are few general determination to resist and elim¬
Factor of Savings
conditions
and
nopublic
at¬ inate or postpone avoidable public

tionary pressures. Some way

NEW YORK 5

WALL ST.

Teletype NY 1-1140

billion less personal sav¬
than in 1946. Actually con¬
spent more than the in¬
crease in their personal incomes,
less tax and other payments. This
added substantially to the infla¬

ing

York Curb Exchange

Members New

is

It

quarter of the year. Sav¬

ings did not, and the year

64

generally recognized that
a high rate of capital accumula¬
tion is essential to a progressively

with $4

Frank C. Masterson & Co.

Members New York Stock

25 Broad

circumstances

of

1947 show that con¬

over

*Lonsdale Co.

•Prospectus on request

Steiner, Rouse & Co

in¬

of

ary practices.
What has become
fundamentally of the economies and reduction?
so
freely promised a year ago?
opposed to, the idea of thrift,
sumers spent more on goods and
Even if we leave out the new for¬
services than ever before in our economy and savings. And that, if
this trend continues, it may have eign aid and defense costs, where
history.
In 1947 personal con¬
are
they?
Proposals for appro¬
drastically adverse effects on the
sumption spending increased $21
future status of our economy.
\ priations are on the increase, not

The

for the year

Central States Elec. (Va.)

posits or reserves may not be in¬
creasing or are actually declining.
I
However, it would be unreal¬
istic to fail to recognize a trend

pressure

savings

on

REctor 2-781S

Tel.

with their best ef¬
forts.
They will do this to the
extent of selling deposits out; of
their banks at a time when de¬
and back them

must keep

the

BROADWAY, NEW YORK 5

difficulties

The

flation."

everyone
been the

ing the war and since the war.
They will continue to make ,their
facilities and services available

nomic reasons,

Exchange

New York Stock

120

Bonds, and
you
have
given it your
complete supp o r t.
For
sound

could really enjoy this in¬

we

so

knows, the banks creasing savings under the con¬
have
principal instru¬ ditions of either deflation or in¬
ment
for
the
distribution
of flation need little elaboration.
United States Savings Bonds dur¬
Inflationary Effects of
As

of

sale

the

during the depression

of individual hold-»saved more

into the hands

e-

Cam¬
paign
for

curity

Lonsdale Company

Bought—Sold—Quoted

■*

Treasury's
National

Louisiana Securities

know, two points of the American Bankers Association Credit Control Pro¬
with savings—to save regularly in a savings account and to invest
Savings Bonds. Many of you took part, as I did, in getting under way the

As you

York 5

Teletype NY

7-56(50

BArclay

Alabama &

3 Bishopsgate,
8 West

49
+

lars, and the trends of our econ¬
On the other, they are hard
pressed
by
highly organized

E. C. 2

Smithfield, E. C. /

Charing Cross, S. W. /

Burlington Gardens, W. I
■

64 New Bond Street,

W. /

omy.

TOTAL ASSETS

groups, representing interests
which work for greater public ex¬

£141,823,667

subsidies,
easy-term
guaranteed credit, all out of your
penditures, purchases,
pricesupports,
and

taxes.
^

Associated

And, everyone seems to be

suffering. from the

Williams

that

delusion

Banks-J.

Glyn Mills & Co.
Deacon's Bank, Ltd.

the public revenues can be tapped

Appliance Company
Common Stock
We Maintain American Markets

For:
SPECIALIZING IN SERVICE TO

Manufacturing complete line of pre¬
cision

is

Company

Importantly

Canadian

fittings and valves,

couplings,
in

position

from

to

benefit

Canadian Banks

program.

Book

value

(6-30-47)

Net current assets

Current

du

Price

about

$id.44

British Securities

(6-30-47) $9.60
$8.00

per

N. Y. Telephone

Teletype BS 424
CAnal 6-8100




AND

DEALERS

ON

PACIFIC COAST SECURITIES
QUOTATIONS

AND

EXECUTIONS

.

HANDLED

OUR

OVER

DIRECT

Co.

Kaiser 5
Goodbody &. Co.
Members IV. T, Stock Exchange and

Other Principal Exchanges

MEMBERS

20

PINE STREET

NEW

YORK

5

SAN FRANCISCO STOCK EXCHANGE

Los ANGELES STOCK EXCHANGE
'

.

115 BROADWAY

Telephone BArclay 7-0100

PROMPTLY

PRIVATE WIRE

Securities

share

St., Boston 9, Mass.

HAacock 6-8200

and

South African

Pont, Homsey Co.

31 Milk

BROKERS

Canadian Mining

aircraft

expanded

Industrials

NEW YORK 6, N.Y.
Teletype NY 1-672

TEL.

WH

J-9015

^

1500

RUSS

SAN

BUILDING

FRANCISCO

TEL.

DO 2-0773

4
-

THE

Volume' 167 11N umber"4708

COMMERCIAL

CHRONICLE

FINANCIAL

&

(2635)

INDEX
'

"

f;

•.

Portfolios .4

Poster Changes in Commercial Bank

Aldrich

—Winthrop W.

1

(

.-

Peacetinie Draft Is Threat to Individual Freedom and Our
Free

<

-—Raymond

,

,

'

}';

!

-T__--i_^_^-r::»__Coverj

Rodgers

/

Jellinek, in answering question, "hew long will the bull market
last?",.gives seven reason* for continuation of upswing. Sees stocks
as "almost
only values which have not yet been hit by inflation/'

■kr

4— 1 /'J/i -i -i- - -1

4 Savings and Debt—Joseph M. Dodge _J_

Management's Responsibilities to Stockholders—Harry "A. Bullis-

v

4

4

of the Dow-Jones Industrial

4
i»"V

received "offi-

'/ft. f

"

"

cial"

1

More Investment Needed to Increase Real Incomes

^

'

—Frank D.

•

on

Business

i- l-4£ii _'i ^

-

:

j,-'i

v7-\

»

•

a

i-tu

3

V

V

i

,

Fi

The Larger Aspects of LIFO—David M.

q u

now

Freudenthal_---_j_- 12 '

,ar

13 4

Sterling, the Sterling Area and ERP—Sir Stafford Cripps—

t

u a

e

comes,

I

Industrial Development and New Capital

Sources

•

,

,

(6) With
short-term

4 i —Albert R. Koch

15

Ernest Jellinek

V

>

to push prices upward?
Historical, precedent reveals that

acting
Trust Investment Policy and Its Application

V—Russell H.

;

.,,

on

-4/:/'•;• 4; V-"

.

:;44 3.

NYSE Reminds Members
3 Listed

17

Foreign Trade—George W. Wolf-i—*

*

Whitney and Davison Resign
Ward & Company—

-

:

Metzner___—_4-—

Fundamental Facts

44/'''''

.

.•

4,

"•

I v

t

••••.;;'

y,

•

'V:.''

' /

•

'.r

--V-

3 to Conduct Special Offerings

17
m

44/

;

j4:__4_.-. 20

Institutions Can Buy More Series F and G Bonds--.;.-^——

'

22

<

Dunstan Expects Delay in Further Sale of World Bank Bonds 24
C

Pacific Northwest Tour Sponsored by San Francisco

Exchange Was Great Success_

__ _

_

_

t 3

(

:

v

_4.4-1-—^—25

____

as

1929 period)

after

market signal,

the rise prior to
confirmation. In

confirmation point and

previous

,

From

Bill to Exempt World Bank Bonds from SEC Control Blocked 24

,

'

-

of

low

point/of

economist's

the

-

Dorset Fabrics

Kingan Com. & Pfd.

new

Treasury ,4bonds

view4; all', data indicate that the
upswing is continuing. Trade and
financial reports
of _this- spring
show that our economy is still ex¬

U. S. Finishing Com. & Pfd.

at

a

matter; of fact, the
seems
to be de¬

termined to use all powers "at

its

J.K.Rice,Jr.&Co.
-

to

Members N. Y.

REctor

1908

Security Dealers Assn.

2-4500—120

Broadway

"

Bell System Teletype N. Y. 1-714

(7) Prosperity and full employ¬

:

Established

•
.

prevent deflation of
any kind before the fall elections.
disposal

'

have

ment

brought a continuous
growth
of
population
in
the
United States. From April lv 1940,
to

Janl, 1, 1948, our population
by. about 14 million people

rose

In

1947,

increase reached

the

all-time record of. 2,700,000.

Metal

Forming
Corporation

an

This

fact in the life of

our

nation is paramount, in appraising

amounted to the economic outlook.. The con¬
about ' 26
points ; (161 j to 187). tinuous growth ' of the United
T^refore, <a r/se to - 2% in r the States population necessitates fur¬
DowfJones .averages may be ex¬ ther expansion of our production
pected from4a .technical stand¬ facilities^ Charles' F. '
Kettering
point. >:
4■
4:4;:: .,;v>4'. v,,V Vice-President of General Motors
the

•

SEC Adds Los Angeles Stock Exchange to List Permitted;; 4

4

-

:

government has reinflationary deficit fi¬

As

market,.jthe distance be¬ important

tween the

4

17

Heimann Urges Planning for Hard Money Return^.——_

Dow-Jones

this bull

j'-T;/

Sad, Sorry and Puzzling

as

the

Ii:-10

Stocks

large

was

9

Off-Board Transactions in

on

the Dow-Jones bull

■

/

last five bull markets (with

appreciation of stocks,

the

'4\4v,'4''/^^44/ 1-3

^v;.'

Directors of Montgomery,

as

in the

the exception of the

19

Federal Water A Gas Corp.

cushion

a

issuance

the

Administration

factors

4
'
the rise in the stock-market still

16 3

More Production—The Price of Freedom—Charles Luckman

:

to

nancing.

which "created ',*■

«.

the

turhed

eco-'

riomic

Outlook for Fuel Oil and Petroleum Produfcts—^A. J/. Mcintosh 15

•

iy»%;

a s

basiG

as

Tennessee Gas Trans. Co.

''

t?;S e c ondly^ are the

!

and will act

t<Pdetail trade.

ises, how

long will the
bull market

—Wesley'-Lindow _-_u——14 4

Texas Gas Trans. Corp.

try and agriculture. Similarly, the
recent cutting of taxes* by $5 bil¬
lion has increased individual in¬

d.

•;

long-

as a

term support to our heavy indus¬

the

STREET, NEW YORE

Telephone: WHitehall 4-6551

4

•

of Europe acts

recovery

est ion,

John Doe—Economics of His Pay Envelope and Savings

99 WALL

The Marshall Plan' for the

(5)
•

t i on f

r s

above 1947 .for the first

-9%

quarter of 1948.

new

a

1

ev a

New Tax Law and Speculation-+-J. K. Lasser____x_-^
:

were

which ,must be 4
...

-

; Obsolete Securities Dept.

^

■

on;frdnted

with

6

Electric Utility Financing—Harold H. Scaff—
^'i'Xi'*

recogni-

-We. are

c

Newbury^i—_6;'

Effects of Rearmament and ERP

Sell it to lis!

The "bull market" has finally

Averages.

4

tjom'4'^' 4* ^ -i 4- -

—-—

—

"HOLD IT!"

The

*

for

Jellinek-.——; 3

Grounds for Bullish Optimism—Earnest

Don't

v

prevailing bearish sentiment held by investors and traders
nearly two years has given way to a general optimism." Even
skeptical technician^'have been convinced by the upside penetration

^ Z,

Europe's Planning Sabotaging ERP—J. Van Galen___-il--

AND COMPANY

•
• Partner, Jacquin, Bliss & Stanley 44.4'4"
Members of the New York Stock Exchange

-

^

? Mr.

System—Jim Howard—..—--Cover

Enterprise

Banking Economics and the Inflationary Boom

.

By ERNEST JELLINEK

________Cover

—._1—;

LicHTtnsiEin

B. S.

P«e

Articles and News

3

BOUGHT
-'

'

^

'

Current

Iron

&

Steel

H

SOLD
•'

looking for.

a

—

V'

-

'

1'

-1

QUOTED
4

-1

'

Request

on

CORPORATION

Institute

lev.eling-off

'

Bulletin

52 Wall St.

New York 5, N. Y.

"riot to fall into the mental atti¬
tude of

P<

FIRST COLONY

recently warned members of the
American

—

-A'11

4

-

Tel. HA 2-8080

Tele. NY 1-2425

.

letdoWn in demand.: This coulc;

or

and - that "these growth lead- to a reluctance to expand
will continue for:; some facilities in line with the growing
time.
Most noteworthy are the nation." New
plants and products
factors enumerated below:;4
are
needed to- supply 4 the con¬

panding

.

As We

,

See

It

(Editorial).—_____-____ri-—___4—_r___Cover

4:44 Canadian JSecurities^

-~Lz

-4;-.^.Coming. Events in

i

Triangle^-il-ti^r.'-r/
News—Carlisle BargeronlJl

i-

From Washington Ahead of the
Indication

60 million, the; number

was

^bfjbmplbyed in the United States
has*now reached about 65 million;

:

4 T;(4

consequently V consumer

41

power

4_I.4__

Activityi4 -_Z-

of Business

/

is

at

an

buying
unprecedented
increased by

level, and, has. been-

/.

/

Notes-U

ObServations-r-A.

Governments..

k

,

and

equipping that, is being done.by
4 transients , entering
the United

Wilfred-

Our Reporter on

buying

observed

//■.

News About - Banks and ' Bankers..43,-4-. J—^

•

little

the

.'vr,:NSTA
;4f-

of ^postwar

number

desired

.1bbs:

•Reeommendations_4^ti--i4|ri44;t'4

Ein^igr^-"The; Dalton-Cripps-Bevin

.

14

Securities -Salesman's - Corner.. 14i'l_44 J

....44;

..44--;?

Tomorrow's Markets (Walter Whyte Says)

tures/of

16

.'.*.4

.

.

4 —4—- -—

n

38

lion

are

ex¬

th 1939;

with $16 bil¬

and only $5 billion
:• 4'" r>

in 1947,
-

f :(3)/'Money iin

circulation

is

Limestone Corp.

projected

'

4"-;

concluded

two^

f *

industry has initiated an
entirely^ new- and constructive ap¬
proach to labor relations in which,
eventually/ the whole

of - United
industry will; participate.
broad implication of this
settlement cannot be fully

States

J

assessed

at

this

COMMERCIAL

The

44

and

~

;

*'

11

Units
'4 ,;' v,4

f

'

"

s-

r'

v

^*

,-To Yield About 8%%
r

Description

;;

r

on

^

.

..

request

■

George Birkins Company
40 Exchange Place, New York 5
WHitehall 4-6957

Tele. NY 1 -1404

time/ The bene¬

ficial effects of this precedent

will
continue to influence,, labor rela¬
tions for years to come,
At

.

a

j

■

time when corporate .bonds

yield around 3.-%, a yield of 6%
j$ obtainable on an average blue
chip common stock (many good
stocks

LAMBORN & CO.,Inc.
99

WALL

STREET

'

NEW YORK 5, N. %

yield much more) and the

than three times larger than
before the

was

war

and savings

Dominion

SUGAR
Raw—Refined—Liquid.

.

,

FINANCIAL CHRONICLE

*

r-y ; ')

r

,

44

Bond

4 Approximate Price 52^

;

contract between Genthe/largest union

the

in

:

'

eral 'Motors and

prospects of uninterrupted pros¬
perity over the next few years are
of- Canr.da/ $38.00 'per ' yeaV.
of spendable income; this spring seemingly almost guaranteed.
A
Other
Countries, $42.00 per vyear.
£*
were again on the rise according
rising, market is only beginning
>AV«
".+ Ajy, *1 v
r'"
Other publications ,*
■.
y to Department; of Commerce rer to adjust the relationship between
Bank
and Quotation
dividends and stock prices to a
Record—Monthly,;
$25.00 per. year.
^Foreign postage extra.)
■r/*(4) -Figures released by the Fed¬ level considered normal; by in¬
Monthly
Earnings ^' Record'
Monthly/
vestment appraisals. All observa¬
$2$.00 -per yesu. -i Foreign postage extra./ eral Reserve Board for the period
Note—On account of the fluctuationr.- in
Jan.
1/ 1943,. to May 15, 1948, tions reveal that ^ominon: stocks
the rate of exchange, remittances for for¬
show, an Jncrease r of 6 % in ^retail are almost the only .values of our
eign subscriptions and art"C"tisements»muc't
sales
over
the same
period of economy which have not yet been
be made in New .York funds.
T/
.(Continued on page..5)4
*
H947;'""while manufacturers' sales
more

it

Published; Twice • Weekly <::y. - •. > y"a. ^

industry

jn>rl948 as compared

5:4?

48

Washington and

heavy

pected to reach about $20 billion

' 44

Registration...*...;..^

State of Trade and Industryr,

■r;i,:•>.;

year wage

wage

increased 40% over
lastly ear/and contracts -are con¬
tinuing to rise. ; Capital expendi¬

4vj^ablle ;p4u^^eciu,ities^.i4y,^-^--Llirfc--—
Securities Now in

-The' recently

-i

13^£^HuiWing

activity,'; ! this

the

of

armament program.

States;frojn all parts of the world.
19 .4

;-'v. RailroadSecurities_4__4____.i_____^

The

demands

vast

The

Prospective Security Offerings^ -.'4-1.----——-':444^4i-46..v4 spring,y-has

.

Bloomington

<*'<1)' production is being geared stantly growing number of United
YjSjtest;' potentialities. While States consumers,, apart from the

--

Investment4"^-^''f Ybe-

Dealerrjtreker—Investment.
;■, -

trends-

Regular Features

■:rK

-

f

f':; " 44

.

Office'

Rpg- U. S. Patent

■'

.,-

^

•,

WILLIAM B.

DANA

COMPANY, Publishers

4 " 25 Park Place, New York 8, N. Y. '

'■XT'.

HEctor ,2-9570 to 9576 i

■

44

|

HERBERT D, SEIBERT, Editor & Publisher

WILLIAM

i

WILLIAM

DANA
D.

RIGGS, Business

,

Manager

'

Thursday, June 17, J948... ff-.
V- Every

.

Thursday

/Vertislng

iSswd

(general

aijd

news

i

'records, corporation
state arid city

"1

3,

Drapers'

land,

news,

Offices:

Chicago

Monday (com-1
market quotation
newt, .bank clearings,
etc.K - 4 :
;

135'

Salle

S.. La

4 Reentered

as

25, 1942,
York.
N.
Y.,
.

8, 1879.
'

*

"

&

Smith.

-

;

,

.

;4

;•

,

The

the
under

-

'

,

.




per

year;

Prudence Co,

/

„

Co.

Spencer Trask & Lo.

4

Members New

Newburger, Loeb & Co

York

in

""/;r

(Member* New Yorlc .Stock Exchange
15 Broad

St., N.Y. 5

BeU

WHitiM 4^6330

Teletype NY

1-2033

»*

4

'Stock Exchange '

25 Broad Street/ New York
J v. ; YklY HAnover 2-430®c:

•

Subscriptions, in United: States, tr.'r S>'
Possessions,4 Territories and Members of
$35.00

;

!

PREFERRED STOCKS

National

Bank

& Trust Company

44

of New York

Miles Shoes,

Inc.

Analyses available on request

,

1

'

.

Union,

?

Lawyers Mortgage Co.

N. Y. Title & Mtge.

post office at New
the Act of March

Subscription Rates

High Grade Public Utility and Industrial

Bond & Mtge. Guar. Co.

Public

,

^

r-

Pan-American

interested in offerings of

Lawyers Title & Guar. Co.

becond-class matter Pebru-,

at

■
"

are

;

St.,<

Copyright 194S by William B. Dana
Company.. J, - '
■ / "
Tary

We

CERTIFICATES

every

111.
(Telephone: State 0613);
Gardens,-London, E. C., Eng¬

c/o Edwards

TITLE COMPANY

ad-!

and

plete statistical issue

'firOther

Dlgby 4-2727
r;1 c.

'

President"

SEIBERT,

Exports—Imports—F utures

—

.

'

Albany

4 *. 4 ;4
_

-

.4

Boston

v
-

4

'

Members New

York Curb Exchange

.135 S. La Salle St., Chicago 3
4: ; TeL: FINancial 2330

;'Teletype—try 1-5 /
Glens Falls

-

Schenectady

,

-

..

J.

Worcester

;

C. E.

Unterberg & Co.

Members N. 7.

!

Security Dealers Asstw

61 Broadway, New

York 6, N. Y.

Telephone BOwlinf Green 9-3565
Teletype NY 1-1666

,

1

Management's Responsibilities to Stockholders

*

By HARRY A.

J

4

Editor, "Algemeen Handelsblad," Amsterdam

of their interrelatonships. Cites General Mills activities in bringing stock- holders in closer relationship with the company and in interesting stockholders in company s prodnets. Decries public impression large corporations are under one-man control, and discusses reforms

and indicates complications

I

V
i

in

■

exclusively,

:
During the early years of this century, expansion and production, almost
occupied the country's best business brains.
t
The years between the two World Wars were characterized by tremendous
en selling and
merchandis¬

ing.

<

I

and

hope

that

believe

second

the

business failure and
consequent hardship to all.
These
interrelationships have
of

danger

greatly complicated by the
tremendous growth of American
been

.

:

emphasis

AMSTERDAM

printed matter can never take
the place of personal contact. ,•,
Any publication is, at; best, a
one-way avenue, and the essence

:.f'

n s

i

p

our

i

r

n g

'

",

only if it rests

f

<

.

,

in

progress

field

the

.

human

of

,rela-

LMions.. I

am
confident that,

through

ef¬

fort

Harry A. Buliis

de¬

termined

the
of

and

exercise

:

tolerance and human understand¬

ing, the many intricate group re¬

lationships of our modern world

harmonized.

and will be

can

The developments of our post¬
war

the

focus

the four

of

free

brought into
interdependence

have

economy

sharp

in

major groups

our

competitive system: manage¬

ment labor, stockholder, and con¬
More and more the leaders

sumer.

these

are" coming to
realize the need for sound think¬

of

groups

ing and sincere cooperation if all
to enjoy to the full the bene¬
fits of our way of life.
We are
are

gradually learning that each group
has duties and responsibilities as
well as rights, and that we all
stand to gain more through coop¬
eration than through controversy.
It

indicative

is

of

the

of

trend

American thought that this meet¬

ing

being devoted to a discus¬
responsibilities

;s

sion of the social
of business.

by a part¬

economic

of sound relations between owner

the

rency

tions

nership of two or three. The of¬ Chairman, James; F. Bell, in 1938
was probably a corner of the to
pioneer informal regional meet¬
shop or mill.
The business was ings with stockholders through¬
managed by the owner, and he out the country. At these gather¬
knew •; personally
the men - who ings we meet personally about
worked
for him — knew their 25% of our owners. * These meet¬

proprietor combined in
the function of
management and ownership, and
he was closely identified with laboi also. Such were the conditions
which existed when in the year
1869 when Governor C. C. Wash¬
burn built his first flour mill in

Autumn

his

the

own

person

Minneapolis

the Falls of
' ' \ "

on

Anthony.

St.

but

war,

the

in

resumed

were

of, 1946.

and

of

the

nancial

cussions
Dr. J.

in¬

The

formal meeting offers wide possi¬
It gives owners and man¬

bilities.

and opportunity to become
acquainted and to learn from each

agers

16

fi¬
s-

in

afford

•with

economy

ism"

freely competitive
our "people's capital¬

our
—

Harold

as

Stassen calls it—

management > acts-: as a balance
wheel for the interests of employ¬

stockholders,; and the consum¬
public.
It is in a position of
trusteeship
for
each
of
these
groups. Management has the duty
iof seeing that no one group gains
ees,

ing

France

wide ramifications.

\

If sound management

tain the proper

balance, all groups

But if

prosper.

main¬

can

gains

group

one

holders.
That

of

expense

*An

the

address

Annual

the

Harvard

others,
by

is

Bullis

Mr.

the

of

Business School Alumni

Association,
12, 1948.

Boston,

Mass.,

But unfortunately, in a great

stockholders are apa¬
thetic.
They stay away from an¬
nual
meetings in droves.
Few
at
ever visit their companies or write

there

Conference

June

many cases,

ad¬
bilateral
healthy
European economy ever be cre¬
ated
in this way?
It gradually

soft

We
arouse

is

CORPORATION
An

illustrated

us

analysis

and

is

brochure

has been

available

We

Coal

a

interested

to

by

Much
13

Our

that

believe

the

way

to

the interest of stockholders

friendly
can

personal contact.

be accomplished

nual reports,

by

an¬

in¬

maintain
common

request.

a

,

position in

stock

from

stockholder

new

moment
the

receive his

we

he

until

end

name

on

It does not
his

sold

has

then

even

a

the

commence

purchase records.

stock,

and

reluctantly

hope of future reunion!
contact

Initial

with

a

stock¬

letter ad¬
President
of the company welcoming him
into "the General Mills family."
is

holder

dressed

a

to

personal

him by the

-

This

letter

stockholder,
assorted

offers

also

gift,

as a

or

the

new

box of our

a

products,

grocery

mailed to him

to be

to whomever he

(Continued on page 35)

dividend inserts, and

tional

'»:■

r

This is

Cooperation

'»

,

for

the

r"

portance, worth

,

"

.

•

Furnished

on

Request!

ever"

-

more

break
vicious circle ERP wilt
/

.;/■

;

Between.the.

Countries.

European

W.

,

which these dif¬
piling up is- shown

The extent to
ficulties

clearly

are

the balances of pay¬
the five Western

by

between

ment

Union Powers.

,

-

.

^

;

Belgium, less devastated by the
war
than
her
neighbors,
has
granted credits totalling 15 billion
francs to those countries, 13 mil¬
lion francs of which were loaned

*

while pausing to

demonstration of
how difficult it will be to bring
about
economic
cooperation in
the

condition of

present disjointed

j.;

Europe.

so long as the
relationships in
Europe continue to exist—each
country isolated from the other
by currency regulations and with¬
out a free, stable, internationally

clear that,

It is

present monetary

valid

currency—a

healthy recon¬
trade is

struction of international

built

up

by

an

the

merce

as

a

r'i

ment.

•

•

<

These credits were

corol¬

lary to the monetary agreements
which Belgium
concluded with
those countries .and the settling
of

maximum for mutual credits.

a

agreements

monetary

These

are

because of the bilateral
trade agreements for payments by
means
of bilateral clearing. In
necessary

the

practice

of credits

granting

the four other
countries have made full* use Of
was

not" mutual:

credits but Belgium
that credit lines
but needs dol¬

those Belgian
not

does

need

in those countries,
lars

to

(needless
countries

other

say

need

that the

them too!).

Belgium believes—probably quite
rightly—that it cannot go on with
the issue of these credits via the
without

increasing use being
in international com¬
basis of value and a

:

year.

Banque

for international settle¬

currency

Approximate Market 13-1314

one

granted as a result of and

only

those costs a fixed stand¬
exchange is necessary. The

of it

in

exchange of

impossible and that this can

hence

' :

■

1

Balances of Payment

only currency at present eligible
for this role is the U. S. dollar,

sale.

or

become

out of this

fail.

It is a

consider.

ard of

Old Ben

purchase

difficulties, the

If Europe does not

acute.'

matter of extreme im¬

a

made

inquiries

means

therefore

goods and services on the basis of
the smallest economic costs.
To

A Prospectus

and more

genuinely interna-,
of payment will

for

demand

balance,

be

your

a

genuinely sound economic

a

traffic; -currency

Difficulty of Economic

relations with

,

invite

and

a

can

isolates countries more

compare
on

results

How

settlement.

ated;, for. a

program.

personal

by'

and other financial

vestment dealers

institutions

giving

prepared

*

with the

Jf't

OLD BEN COAL

holders'

the
responsibility of
management to stimulate this in¬
terest on the part of its stock¬
holders, to try to awaken them to
responsibilities of ownership.

countries, are

currency

mitted and this

making real progress in our stock¬

and

therefore,

expensive imports from the

more

,

letters to the officers. It becomes,

the

year

the

ought to feel.
It is how progres¬
sive management wants him to

unreasonable advantage at the feel.

an

how

is

When an own¬

and suggests that

me

im¬

cheaper

ports
from the hard currency
countries are excluded while the

healthy and natural
without-the tension or
"we"—rather
than
"you"
or
friction
now; occurring
in both
"they"—should do this or that, the national and the international
stockholder then I know that we have been commerce of the five countries,
writes to

er

farce.

a

economically

The

,

unquestionably the "we" relationship.

jacket
which
has
idea "foreign trade"
of

more

even

into a bilat¬

is thrust

the

made

economic insight.

with

strait

eral

.

^unreasonable advantage at the ex¬ country's most ardent campaigner
for
the
rights of small stock¬
pense of the others, v ■ ,

perfectly explicable to

Commerce

Actually, this pact does not merely
mean a pact of mutual assistance
against renewed German aggres¬

^

'v
is

anybody

the Benelux countries con¬
cluded the Western Union Pact,

Washburn's early initia¬

of New York,

been

ing. ' ■■

,

Under

such a policy,

war

"export drives," the results
extremely disappoint¬

of all
have

we
who manage the other, and results in the estab¬
sion, like the Dunkirk Pact be¬
which evolved from lishment of confidence and mutual
tween -Britain
and - France
of
respect.
'.v
1
.'"+ .'./.V"
March 4, 1947, but is also aimed
It has been the custom for the
tive face a very different situa¬
at military, economic and cultural
tion. The company—Gefteral Mills chairman to greet each stockhold¬
cooperation between the five part¬
•—is owned by over 12,000 share¬ er personally at the door as he 'of
ner countries.
-■
holders living in every State of she arrives for the meeting. We
The
pact, as yet, is nothing
the Union, and it has 12,500 em¬ have avoided the use of a stage
more than a "pactum de
contraployees. Management has emerged or platform of any kind, in order
to be free to move among the au¬ hendo," an expression of the will
as an entity separate from owner¬
of these countries to cooperate in
ship and labor, yet its obligations dience in a friendly and informal
This has been particu¬ the spheres named.* Its real con¬
to uoth, and
to the public, are manner.
larly efective during the period of tent depends on how it is worked
more important than ever.
; ,
/ v.,
questions-and-answers with which out.
Stockholder Relationships
we
conclude each meeting. V
In a certain sense it was put to
With this approach it has been the economic test at the recent fi¬
During the next few minutes I
and
monetary talks in
shall discuss one of these respon¬ possible, in a tactful way, to em¬ nancial
Unfortunately, it has
sibilities of management—that of phasize the stockholder?' respon¬ Brussels.
stockholder
relations. ' First
of sibility to management—the need, been weighed and—for the time
all, what does the progressive as Mr. Bell puts it, for each owner being at any rate—found wanting.
and independent stockholder want to "get behind the company, mor¬ Th^se talks have at. least shown
ally and spiritually as . well as how difficult it is, under the
and expect of management?
We have: therefore present circumstances,, to arrive
"Above
all
he •« wants
to
be fiapcially."
made the personal.. approach the
at I a
common
arrangement ac¬
treated as an owner and a part¬
keystone of our whole stockholder ceptable to all parties and pro¬
ner
in
the
enterprise and not
:
viding
a
reasonable guarantee
merely as a name on a stock relations program.
Our purpose is to establish the that the conditions will be cre¬
ledger." So says Mr. Lewis Gilbert

Today,

■

(Sweden since July,
1947) the result is that, notwith¬
standing all the lip service that
has been paid to the expansion of
international trade, and in spite

since the

company

Governor

-

states

exception of Switzer¬

the

land—have pursued

This

Britain,

'

:

As all Western European

and

which has very

influences.

those

the evil.

March

On

influences by excluding

in foreign

relief; they did not go

temporary

to the root of

pro¬

•

reality, this system serves to
governments to pursue
a
certain policy since, it is be¬
lieved that it is possible to elim¬
inate the "troublesome", elements

Brussels could

Galen

Van

were

"to

Germany

In

a

d i

in

Reichsmark."

enable the

changea b le
currency. The
most

restrictions

currency

the

tect

e x-

do was

relations.

eign

introduced

the

free,

w

practice of holding such in¬
formal meetings is being followed
by a growing number of compa¬
nies
Interested
in
improving
The

stockholder

restric¬

creation

ings were discontinued during the

Thus

raising of

foreign 'cur¬

fice

faults, their special abilities, and
the
members of
their families.

pol¬

icy leading to

former" Board

and

founder

our

sound

upon

industry.

owned by one man or

be fruitful

can

Seventy-five or a 100 and manager is frank and unim¬
century will years ago, the average business
peded two-way communication. ^
be marked by was
small, and it was usually
This was the reasoning that led
of

half

Cooperation'

—

five powers of the
Brussels Pact

the

between

but

magazines,

stockholder

, '

maintains European governments in their current
attempts at planning have become hopelessly enmeshed in compli¬
cations, and lost ail control of situation.
Asserts real stabiliza¬
tion of free currencies is prerequisite to healthy restoration of
international commerce, and hence to ERP success.
Dutch publicist

stockholders as well as in annual meetings. -

corporation reports to

ERR

By DR. J. VAN GALEN

stockholders, employees and public,

indastrialist reviews responsibilities of management to

Prominent

Would Sabotage

BULLIS*

Board, General Mills, Inc.

Chairman of the

Thursday, June 17, 1948

CHRONICLE

& FINANCIAL

COMMERCIAL

THE

(2636)

i

Nationale

de

Belgique
its

endangering

monetary equilibrium.,'

.

1;

..

Here

policy

;

System of International
.'...Credits•.
- V..
-•''

Wrong
.

own

again,

which

storation of

a

we
meet with ; a
handicaps the re¬

sound

and natural

equilibrium.
These credits are
issued
by
the
national banks.
They therefore have a direct in¬
fluence

on

national

currency

without

Effects

jpOMSTOCK & CO.
r

»1S©.U Salle St.

/

.

Dearborn 1501

Teletype CG 055




Members:

225

CHICAG0 4, ILL.
*

EAST MASON

PHONES—Daly 5392,

Chicago Stock-Exchange

ST.

>

r

-

Chicago: State 0933

of

-

v*' MILWAUKEE (2)
Teletype-MI 488 V

of

Currency

Restrictions

International. Trade

Currency restrictions lead to a
decline in foreign
ram#^

clear

after

trade; this be-i
1931

when for¬

involving the automatism
which existed, for example, under
the gold standard and guaranteed
the; restoration
of equilibrium.
This

management, which counter-

(Continued

on page

47)

_

j

FINANCIAL

THE,COMMERCIAL

Number 4708

167

Volume

•

-

.

•

-

-

(2637)

-

5

Grounds For

Steel Production

:

The

CHRONICLE

*

Electric Output
■Carload ings "

State v o£ Trade

> — ■

-

Retail Trade

,

Commodity-Price Indexvi
•

'

Food

•

■

By A. WILFRED MAY 1

Price Index

Continued from page 3)

1

hit by

Auto Production

and, Industry

Business Failures

-

That Enigmatic Stock

-

„

the inflation which

is so

dailyriife.^ »w
view of the fact that stock

obvious in our

Market

-

^

In

prices still have not moved beyond the reach of a prudent in¬
vestor; I would recommend the
of its wide implications on today's investor and speculator. purchase of issues ef leading com¬
;
;
The book, is authored by a security analyst panies. •
Commitments
in/ oils;
•*
who is a partner in a Wall Street brokerage firm,. steels, coppers, the: coal industry,
the natural gas industry, papery
and who uniquely combines this practical experi-.
heavy; .machinery,*^ wool,- r»ypn? *
ence with a theoretical background and the abilr'-ity, to write.: .Impelled by ; an honest- intellectual shipping and; railroad industries
J*-search for the j truth and. free of predetermined will prove to be both secure and
prices
iRusi
dogmatic conclusions, this work is as;important profitable, f Stock
//for its abstentions .as „it is, for fhe .conclusions eventually reflect the tremendout
which it does »contain. -The omissions as of a growth of the United States in thil
usually-fostered pet investing system, as well as decade, and investors still have m
excellent opportunity to partieir
the inclusion of much de-bunking, might ordi-

this week is being devoted, to a newly-published book
on security price movement ("THE STOCK MARKET—Basic Guide
for Investors," by Joseph Mindell, 305 pages, B„ C. Forbes-4k Sons, $5)
Our space

■

industrial production for
continued to hold to a
high level. While slight declines occurred in the output of some goods,
were offset by moderate increases in other lines.
:
^"W>A steady flow of raw rmateriads^YWmaintained mithe.wffek and,
plants for the most part were able to obtain an-adequate supply.. This
made for steady and high employment and payrolls. Labor-manage-:
ment relations, too^ were in the main generally favorable. . ^
r
'However, the dispute between the bituminous coal operators an«F
the miners continued last week to drag on without any material prog¬
ress in the form of a new work contract for the soft coal miners*/v
Instead, both the operators and John L. Lewis reopened negotia-;
tloris on Friday last. If the talks gave evidence of being long-drawn
out; it was predicted by some Washington: sources that by mid-week
the Federal Mediation Director would be forced to recommend to the
As has been true

the country as a

-

of many past weeks,

President that he set up an emergency

.

be

because

whole, in the previous week,

preliminary to obtaining an

provisions of the Taft-Hartley
on June 30, next.

.

•

;'
,f

injunction against a strike, under'the
Law. The present contract terminates
■

"

-

„

fact-finding board. This would
:

•

»

really highlight the great difficulties obstructing
the management of capital; As a result we are

ie<i

*
A. wlhMjii
Wilfred May -

today is

*'

pate in the expected' advance
the stock market / -

narily be thought of as short-coming^ but—arising from the author's intellectual honesty—they

5;'.

Some Realistic

the basic shortcomings of

the third conNovember, the

To Dem. Convention:

De-Bunking /

illusionment

Department points out.
>
%
...
,
; .
Centered in manufacturing, this decline according to the

v

ment, resulted in part from labor
.which curtailed hours worked.
t*.* At the same time;
ary

depart¬
disputes and material shortages
:"

total personal income, of which wage

and sal¬

annuaLrate of $209,100,009,~

payments are a part, increased to an

$1,400,000,000 above the previous month. Most of the
increase resulted from increased farm income, as both-price

000 in April,
Overall

-and marketings

of farm products rose.

•

factory payrolls declined in April
dropping below the November,
2947, level.; Retail-trade payrolls also declined after, seasonal adjust¬
ment, as employment failed to show the usual April upturn., ■ ... <
*
'*
PC
,:
: v■
*
&
* '■
;/•.' ; ■ '
'
•

department also noted that
fourth consecutive month,

vi The

for-the

the Dow theory.

LOUISVILLE,

promotional sales of seasonal merchandise helped to
stimulate consumer buying during the past week. Retail dollar vol¬
ume

rose

Week

a

that of the corresponding
J 1"
~
increase in the demand for graduation and

slightly and moderately exceeded

'

year ago.

"There

appraising stock prices or
"internal market evidence,more commonly- known as technical
forecasting of the market. The*all-too-ready and too-credulous em¬

Thomas Graham

observer as Mr.
difficulties whibll Inc., Kentucky Home Life Build¬
are realized,
to nostrums whose weaknesses * are inherent but un¬ ing, has been appointed a.delegate
realized. .Ironically enough, Mr. Mindell" catches this "escapism" as to the Democratic National Con¬
,/ * / "•
embraced by the Dow theorist, when he says "The great popularity vention in Philadelphia.
of the Dow Theory in financial circles reveals the pathetic human
hunger for a mechanical gadget that Will dcf our thinking and make
With Smithy Hague & CoJ
our judgments for us."
But he does not-realize that he himself may
(Special to The Pxnancxai. Chronici*) ■
also be thus psychologically victimized in other directions.
.
^ >
bracing of technical gadgets by as, intelligent an
Mindell seems to reflect a common "escapism""frofn

wedding

was

a

large

MICH.— Walter T.
with

DETROIT,

A Too ReadilyrAccepted

v:.'

■

Rossier has become affiliated

Tool

Smith,

It is this columnist's opinion that, as with many other technicians,
if Mr. Mindell applied as great quantity and quality of scrutiny to
his favored investment tools as he does to "those about which he is

Hague

Penobscot

Co.,

&

:

Building.

\

dubious, he would be skeptical about the former also.
Ail example
continued to ; shun luxury of this is his strong approval of stock price ratio lines. Briefly
-Vj;v:'/t. '/''"'''I, started, ratio technique is based on the premise that future action of
f--l
Wholesale dollar volume increased slightly in the Week arid was a stodk or group of stocks can be deduced from notation that its
somewhat above the level of the like week of 1947. Buyers evidenced
past behavior is as good as, poorer than, or better than, that of the
some caution in placing large orders for fall merchandise and in¬
general market.
In capturing tMt magic trend it is assumed that
sisted on early deliveries. Re-orders for most types of seasonal mer¬
an
issue "acting better than the market" has established an up¬
chandise remained substantial.
:
trend, and vice-versa.
(Thus Mr. Mindell concludes: "It is best
to play the long side only of those issues that are in persistent ratio
STEEL OPERATIONS SCHEDULED AT SLIGHTLY LOWER
line uptrends, and to sell short only those in persistent downtrends")
CAPACITY FOR CURRENT WEEK
But it seems to this writer that the converse conclusion could just
The Federal Trade Commission is determined to change the sell¬
as likely, if not even more likely, be valid.
Particularly to a buyer
ing practices in the steel industry. The cease and desist order calling
looking for real value from an investment approach, an issue's mov¬
for drastic changes has been drawn up and is being studied by FTC
ing, higher-than-the-market (the ratioist's bull signal) could just
members. Little or no changes are expected in the form, it is be¬
as
logically mean that the particular issue is over- rather than
lieved, and the industry may find the order issued upon it early next
under-valued. -At some point of its divergence from the market,
year, if not sooner, according to "The Iron Age/' national metalranging between its price and zero, the ratioist's reasoning that the
working weekly, in its current summary of the steel trade.
lower a stock goes the worse it is, must be reduced to absurdity.
The order, "The Iron Age" has learned, calls upon the steel in¬
;
'
The "Escape" to "That Trend"
dustry to (1) establish a plant price for steel at every mill; (2) sell
f.o.b. mill when requested, and (3) cease the compilation and dissem¬
It seems to me that Mr. Mindell again "escapes" to too-ready
ination of freight rate information.
•
;
? " '
•

Co.,

dis¬
kind
market levels, is his embracing of

for

Numerous

•

Thomal

—

„

.

-

KY.

Graham of the Bankers Bond

(and apparently not the cause) of Mr. Mindell's
with tools of the "intrinsic investment value"

The result

Commerce

Delegate
|

,

steel has been lost as a result of
Among the good services rendered by Mr. Mindell is his pointing
major strikes since the beginning of 1946, according to the latest
out of the fallacy of emphasizing the error of single-cause reasoning
available figures, the American Iron and Steel Institute reports. In
in market as well as general economic analysis.
For example, the
terms of finished products, that amount is nearly equivalent to all
constant past variations in the stock market's valuation of the crossthe steel supplied to the automobile industry in both 1946 and 1947. \
section of American industry as represented in the Dow-Jones In¬
More than 42% of the loss this spring occurred after the miners
dustrial Average, lead him to conclude that "the variation is so
had agreed to return to work.
First, coal had to be loaded at the
great that we must concede that there is no dependable relation
mines and transported to coke ovens. Thert many other steps had to
between earnings and stock prices."- Mr. Mindell convincingly un¬
be taken, all of which required additional time, before the operations
dermines the popular proclivity to relate stock market movements
of blast furnaces, open hearth furnaces and other facilities could be
to commodity prices, to the interest rate, to bank credit, or to inven¬
restored. /• ;
'
tories. He shows the fallacy of trying to emulate the market action of
investment trusts and other important "they's."
He constructively
In the face of growing reports of fresh wage increases in many
industries to meet the high cost of living, it is significant to note that, points out the pitfalls in over-relying on growth stocks, as well as
during April, wage and salary payments declined for
secutive month, reaching the lowest level since last

■,

inescapable conclusion that investment Thos. Graham
far from being an art or science.

Nearly 20,000,000 tons of raw

•

K

/ ■ •" T

■

o|

;/)

gifts, though many consumers

items..

Kerr-Addison Mines Ltd.
Noranda Mines Ltd.
Ventures Ltd.

HART SMITH ft CO
H\nover 2-0980

52 WILLIAM ST., N. Y. 5
Bell

Teletype

Private
New York

NY

Wires

1-395

Connect

Toronto

Montreal

.

Such

an

order, while it does not

adoption of a new theory as a

specifically outlaw the has-

ment-with old-ones, in

~{ ing point system, would so drastically change the relationship be-1
tween steel buyer and

with little

or no

at this time, the

seller as to produce an f.o.b. mill system
At least that is the opinion-

trend.

Enthusiasm over the

freight absorption.

magazine states.

*

-

\

/

',1

Steelmakers are convinced to a man

that legislation is the only

rule out the remote
chance that some steel firms might suddenly go to an f.o.b. mill sys¬
tem before the order is promulgated and before the steel basing point
case reaches the Supreme Court, as it likely will.
Neither foreign scrap arguments, nor anxiety over a pending
change in steel selling practices have had any effect on total steel
demand. Steel sales officials have finally thrown up their hands in
amazement at the continual stream of orders. Stark proof of the state
of things, this week, says this trade authority, is the widening of
promises for stainless steel and alloy steel items. In most cases
promises for these products were this week two or three times as
long as at the first of the year.
'
V
:; '
As to regular carbon steel products, the auto shutdowns are mute
evidence that there has been no change there. As predicted,* the auto
shutdowns occurred as an aftermath of the coal strike. A new coal
strike could be expected to eventually have the same effect.
answer

to the FTC.

;7..

Trend of the

(Continued on page 43) -: :v

.

of market

indispensability of this technical phe¬

full chapters on "The Major

has prompted

nomenon

,

4

disillusion-

"way out" after justified

his confidence in the detectability

,

Yet it would be foolhardy to

Current heavy, demand is setting a pattern which
the view that by the time the Marshall Plan and the

motor

Time Inc.

■

car

corporation

Kingan Co.

/Lonsdale Company
American Maize Products Co.
Bought—Sold—Quoted
Ilea
«•

♦Prospectus

on

tellier

FREDERIC H. HATCH 1 CO., INC.
Established

supports

MEMBERS

defense

63 Wall

\

request

42

1888

t

BtooilwY' "eW
Tel. Dlgby 4-4500
•

K. Y. SECURITY DEALERS ASSOCIATION

Bell Teletype NY 1-897

Street; New York B» N. Y.

——

(Continued on page 31)
fn-KM'

({'




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.

Thursday, June-17;-1948.

.... • -.

..

J i"r

■*r

•f

■

»*4

on

ii

''Corporation

Electric

l

.

By FRANK D. NEWBURY*

Consultant, Westinghouse

.

-

Real Incomes Effects of Rearmament

More Investment'Needed to hcrease
I

& FINANCIAL. CHRONICLE ;;

COMMERCIAL

THE

(2638)

6

/r/fff'i-V,.')'

By CHARLES CORTEZ ABBOTT*

4

f
relationships, prominent industrial economist combats the
Professor* of Business Economics,
Points out relief money.given to maintainHarvard Graduate School of Business Administration
'
spending accumulates in idle bank deposits, while additional funds saved for investment adds to work-'
Professor Abbott, after analyzing present and prospective economic
'
ing capital and, by increasing production, furnisher additional employment and income.
Points out
0. S. industrial progress has come about through savings and capital investment, and contends onodolfe^ ^developments ie the- light of proposed ' armament expenditure and f
♦ * foreign aid concludes no extreme effects on profits or corporate
of new investment produces a dollar of new income.
Stresses need of increasing savings and. profits,^
j ! working capital will be produced unless-radical price advances are
The subject I have been asked to discuss is not a simple one, but is obviously.im-r
■/ precipitated. Holds, in view of present full use of operating capac- ^
portant to every one of us.
Unfortunately, and in spite of its importance, there is no gen¬
ity, plant and equipment expenditures cannot be driven much above
eral agreement concerning the "fundamental factors" that are responsible for the state of *■' level of 1947 and inventory accumulation will not be much above

Analyzing inveslment-expenditure-income

increased spending

ory

}

t

create permanent prosperity.

can

....

{

■

....

busines s.<f
Left-wing to determine the truth. In this
D em o c ra ts .field that affects the live3 of all

,

have
of i d

e a s

of

set

one

few people are disinter¬
and few have failed to
up
their minds, with or

us,

ested,

and

answers.

make

Right-wing
Republicans

without the facts.

and more con¬
servative citi¬

generally

zens

have

ent

a

differ¬

Or-:

set.

labor

ganized
i t

h

a s

p

hi1osophy

and
F.

D.

Newbury

to

own

s

program

improve the

economic situ-?
ation of its members; management

different philos¬
ophy and program of its own.
Then the difficulty of reaching a
as

a

group

common

has

a

solution is immensely in¬

creased by the wide split between
the radical and liberal economists
tive

side, and more conserva¬
experts on the other. When

the

experts

one

on

is
difficult for the ordinary citizen
cannot

*An address

;

which, in very simple
language is this: What program
question,

by Mr. Newbury at

the 24th Industrial Conference of

Pennsylvania State! College
School of Engineering, State Col¬
lege, Pa., June 9, 1948.
the

keep

will make business good and

How -can we come closest
maintaining a high ilevel of

it good?

to

prosperity and avoid falling into
depression? But I shall try to dis¬
cuss
the
question: within
the
bounds
of fact
and logic, and
throw some light on the principles
involved. Needless to say, my long
experience in management leads
me to approach this question from
the conservative side, but I hope
1 can keep any bias I may have
out of the discussion, and give you
sound

for my conclusions.

reasons

approach that

The difference of
I have

just mentioned, that, ideo¬
logically, can be described as the

positions
left, also

the right and the
be described in eco¬

of
can

:

nomic' terms.;'(

Stated

very

V■/!?;?:;;/.

•

people

good

better

*

who

the'way to

sincerely believe that

incomes,

average

j.

$4-5 billion, as against actual figure of $6*7 billion in 1947.

.

simply'and

very

bluntly, the controversy arises be-

iexpenditure and European aid on business profits and industry's
more
plentiful production, and
meeds for working capital. Anyone who examines this subject—and'
more continuously sustained em¬
ithere are a number of persons here today whom I know have,
ployment is by doing everything
.

v

-

.

possible to increase consumption; ; this matterand those
people who, we can r
ni.
I ■: be¬
agree,
are
equally
good
and 1 ,v?i'
lieve, reach
equally sincere, who believe that
I the conclus.cn
these same desirable goals: will be
reached
most
surely by doing I that, it is as
everything possible to /. increase | yet too soon
! to speak with
investment. ' ?'
;any ..certainty
It will help to lower the ternon
this topic.

let us agree that'/neither
group
is more selfish, nor5 less
kindly, nor less generously r dis¬

their

toward

posed

We

than the other.

had

are

discussing

first

who

those

and

would

place investment first. Consump¬
tion and investment are academic
words that I-will have to define

reduced;

dog¬

marks of
economy

Charles C. Abbott

AIT we

•

line

PHILADELPHIA

Portsmouth Steel

B

&

Boston

&

Corporation <"

v-!;-;fv.''-':

three: First, s nee V-J
Day we have had a high-leve;
economy.
National income, " em¬
are

profits have x al'
exceeded previous peacetime
records.
Second, the" amount * of
and

El Paso Electric

Company

Seminole Oil & Gas
Gruen Watch
Maine

r-I;../?:

•

Preferred

~

''■?

Data on Request

-

CORPORATION
1420 Walnut St.

44 Wall Street

Philadelphia 2
ffinnypacker 5-5976

New York 5

■

24 Federal

Street, Boston 10

TeL HUbbard 2-3790

'

-

Philadelphia, New

•■>'-

WHitehall 3-7253

Privatq Wire System between

Tele. BS128

York

'V

and liOs Angeles

American

Common

Boxboard

American La France

Refining Co.

;

;

■

Foamitg

Bates Mfg. Co.

Stock

.

Botany Mills Com. & Pfds.

Bought and Sold

Empire So. Gas.

Debentures

Bought

and

Gisholt Machine

Sold

"I BANKERS BOND

™

H. M.
.

Incorporated
1st
.

i

,

Stromberg - Carlson
Wisconsin

Floor, Kentucky Home Life Bldg.

LOUISVILLE 2, KENTUCKY

Long Distance 238-9

V

-

Bell Tele. LS 186

.

Power

&

Light"

Byllesby & Company

PHILADELPHIA OFFICE

Stock

Exchange Bldg. Phila. 2

Telephone
RIttenhouse 6-3717

,

:

In
us

short, the problem confronting
is

estimate

to

injecting,' at
some

billions

an

the

effect

of

unknown

of' dollars

rate,
into an

at all costs, and
]econorny that 'is already running
the purchasing/power, jcloseitoi'capacity.
Each of these
of
those
receiving
the?" lower three points deserves some elabrange of incomes; they believe in j oration. ■.
?,"•. * -A.
;'•«v4- r
government price control, to keep
the prices of necessities/low? they* ;;./A* highslevei economy such - as
believe in the "ability to pay- iwe; have had since the end of the
principle
of
using
air»-,but Na i.wai:us."by ;definition a vulnerable
minimum level of profits.-to. pay iecGaomy.;*;.At one and the- same
power

without,.price* ■;tirne," it is vulnerable either to in-

increases; they believe/ ip^h.igb* r|iatipn .or deflation. .. Most people
iy»(ho,.hjave,observed, the course of
wage
policy generally,^
thi nki n
pecially directed to raisiugXfhe '.ebonoiTUc-.and;busi
minimum wage floor; they believe fthe ? last ?!two; or, three years will
(agree:that two fears have been
in government subsidies; of vari-,
kinds to increase consumption

ous

Dayton Malleable Iron

Ashland Oil & Refining Co.

increasing

ment, believe in maintaining pur¬

higher wages, and

LOUISVILLE

Ashland Oil &

favor

sums

especially

BUCKLEY SECURITIES

Walter J. Connolly & Co., Inc.

.

consumption as the way to better
business production and employ¬

Company

chasing

Traded in Round Lots '

will be
spent, and the rate at which they
will be spent, are. not yet knowh.

Theory"
who

Those

i

RR.
*

Prior

•

during which these

Consumption

"Increased

The

Teletype
PH 73

j continuously present.

;

a

healthy

that

;

a

id expanding.

mentioned

are-

.

What

Rearmament and

European
Relief Calls For :

;
I

are all aware of>
getting a picture,
the magnitude of expenditure.,
sure

am

you

the difficulty of
of

involved

in

rearmament and

Since then, additional1,
preparations have been made for
defense. '
the

.

air

70-group

other

force and for
still further?

and

purposes

appropriations
mates of the
armament

are
urged.
Esti¬
probable increase in-;

expenditure

budget

January

.billion to $7

> over

from

range

;:i.

The President's budget included
$4 billion for the European Re-«
covery
Program, excluding $*4;
billion -to^ be ;;;spent^^ during >the>
F

Spring; of : 1948
and excluding
Army expenditures/ in occupied-

areas'during* fiscal
billion.

.

1949 :of $144;

Since then the Economic

Cooperation. * Act has authorized^
the appropriation of-$5.3 billion;
for use during the.next 12 monthsn:
plus the unobligated balances of,
the Foreign Aid Act of 1947. r Of
the $5.3 billion, $3 billion is to be?

charged! to ,the surplus? iti./fiscal
1948. / The National City Bank in
its April? Bulletin estimated that;
over-all

On the one

United States -relief

•

.

"

GA.

ATLANTA,

Southern

SPOKANE, WASH.

American Furniture Co.

"

Textile Securities

Bassett Furniture Ind.

-

NORTHWEST MINING
SECURITIES
Fdr
or

of

AND

Immediate

Exchange

A.M.,

Pac.

STATE AND MUNICIPAL

>

Execution of Orders

Quotes call TWX Sp-43

other

Dan River Mills

from
Std.

10:45

Time:

CORPORATE BONDS

Floor

on

to

BONDS

11:30

LOCAL STOCKS

.;•??

V

hours.

Sp-82

at

Properties
STANDARD SECURITIES

Scott, Horner &
Mason, Inc.
Lynchburg, Va.
Tele. LY 83

.

■

LD 33

fflllllllllllllllllilllllllllllllllllllllllll




CORPORATION

A. M. LAW & COMPANY
(Established 1892)

SPARTANBURG, S. C.
L D. 51

.

Teletype STBG 1"#

$3,

and?

rehabilitation.-- grants.: and " loans:
of food and for education?;, medife- 'hand;-we have been fearful that
available; .during,; ;caleridar ;, 1948t
ithe/nse;of business activity would
cal, hospital and materhityjcar^;;
amounted, to ' $7.2 billion, f. As a
continue and thereby, presumably/
they believe in steeply progressive
very rough approximation. I sup-r
personal income taxes and, high; intensify the subsequent recession pose that what we are talking
'-when v and. as it came.-J. On, the
corporation income taxes to pro¬
about here today, is the effect dur¬
vide for .these various forms of other hand, we have been fearful
ing the next.! 10 to .12 months of,
assistance to low income groups.
injectingf ^into ?o u r
economy—,
Their' negative program includes <f ^Remarks by Professor Abbott
which/is presently, . generating, a
!at>a Round Table Conference • of
opposition to profits beyond a
gross national, product, of $250 bil¬
minimumlevel;
they
believe | the National Industrial Confer¬ lion or a little more—some $10
ence Board, New York City, May
profits in excess of this minimum
(Continued on pa ge 39)
26, 1948.
:
! ?;
(Continued on page 28) «

SPARTANBURG

\

the

billionr

niiuiiiiiiiiiiiiiiiiiiiHiiiiiiiiiiiiiiiiip

Trading Markets

Eu¬

aid. The President's bud-..
get of last January included $11"
billion in fiscal 1949 for national
ropean

.

LYNCHBURG

in/

the textbooks have been present,.
except stability of prices.

implica¬

I see the picture, the sal'en-

ployment

has been;

year

government' debt
retired.
All of the ear-;
some

has been

at this point I can under¬
the:/practical nature and im¬
this division t if > I
^pending which rearmament and
merely-mention some of the inter¬ (European aid will require is large,
mediate objectives and programs .but even
approximately accurate
of the group that places consump¬
jfigures cannot as yet be deter¬
tion first.. ;
:,;/■ /■-> ...
mined,- ; Third, the period of time
later on;

enormously■% successful ;•
V-J Day. Employ-^
rising; the standard

an

-aneed; taxation this

tions of the pattern into* which
facts

Except

-

living has been rising; capital
has been increasing;•business profits have been large; /
the budget, recently, has been bal-,;

famine the broad forces presently
'at

;* As

blessings.

our

upon>

under-,

investment

program exist, therefore, between 'these''forces fall.
those who would place consump¬
tion

not

of

work and consider the

method and

differences of

should

we

economy since
ment has been

matic declara-

j tions;

—

already

was

for the rise of prices, by any test"
with which I am familiar we have

fellow vnien [can do'is 'ex-

methods, not ends or motives.
The

or

Yet

estimate

precise think¬
ing

the, bust

us.

perature — the degree of heat j^ere are still
generated in the argument
if i too many, un¬
we keep in mind that both'groups;
known* varia¬
are trying to reach the same goal bles to
permit
of economic progress and stabil¬

ity;

—

that

portance i of

BOSTON

'

I have been asked to speak regarding the effect of rearmament

}

examined

give ? you 'complete 1 and
final
answers
to
this
controversial

it

agree,

*

-

the short time al¬
I cannot expect to

So, within
lotted to me

those

tween

achieve

Members

Standard
of

-

Brokers

-

Stock Exchange

Spokane

Dealers

-

Underwriters

Established

Peyton Building, Spokane
Branches

RHODES-HAVERTY

at

Kellogg, Idaho and Yakima, Wn.

-

Teletype

BLDG.

AT 288

1894

ATLANTA 1, GEORGIA

.

' 0

"»

Long -Distance

108

Volume 167

Number 4708

COMMERCIAL

THE

& FINANCIAL

CHRONICLE

on

By HAROLD H. SCAFF*
:

•

Ahead

of the News

Republican Presidential-nominees have reflected

13-

the possible

-

/

amazing ignor¬
its political system.
frequently in gather¬
an

of this country's governmental
set-up and
-There have been statements which ohe hears

ings,

they have

means

ington, /a,.n d< ficials,
the

have

re

more

State of¬
better local

been solemn

That

for

polls.

and

to

the

have so many candi¬
Presidency is evi¬
dence of their certainty of victory.

-effect that the

Republicans
could

win

with this man,
not with that

And

,o n e.

there has been
lot

a

of

irre-

I

have

serious doubts that

my

Roosevelt,' were he liv¬
running, would be the
great Roosevelt today.. Undoubt¬
edly he would be the same. Roose¬

ing

and

velt with the

"labuh"

ability to

same

instead of labor.

say

.spoken

There
at

'■/ >■t h

a t
t h e
-Democrats can't win with Truman

win

with

Eisenhower.;

would

his

be

not

command

example of what the
great Roosevelt personality has
•done to this country. In his long
reign, people got to thinking in
terms of personalities
; and
they

country which he

-can't
t

get

it.

over

ceased to be

Under

him,

it

by him. He

came

to

be looked to for the solution of all

ills,.

.our

i ;>:

The

that

(/:://// /<•''

plain facts-

could never,

He

had

of course,

are,

great personality
have won by himself.

the

greatest organization
-behind him that this country has

/ever known. It is

a

otherwise

that

also

fact

a

the

con-

'

stituent organizations which made

Presidential

the

up

overall

such

one,

the

as

:

State

governors .and

mayors, could not
him, with all of their
combined strength, in 1944 except
that a sufficient margin of
people,<
Republicans and Democrats alike,:

"have

'

the ivarious

sold

Harold

exception

Scaff

tors

/

stock

December, 1945 the industrial
price index, of Standard &

base

of

100%,

we find that at
April, 1948, the indus¬

we

made recent¬

ly: shows that-high grade electric
utility ;; operating company com¬
mon-slocks are now selling, at an

of about

average

14

times

earn¬

people,:/in / effect, ings;' whereas, in mid-1926, the
him on' rthe .radio high point of the market in that
and after haying heard Roosevelt," year/these same stocks were sell¬
ing- at, an average of about 21
would choose him.
after

hearing

He would, of course, have been
at the number of people

amazed

who

never once

radio.

heard him oh the!

Other politicians would

amazed

to

be

times.

\

utility

Medium

stocks

mon

ings,

are

of

average

ings.

selling
-

now

in

electric

company

about

whereas

were

know, at times when!

grade

operating

9

adverse

effect

times

mid-1946

15 times

over

an

earn¬

they
earn¬

;'■

vhey are "talking to the country,"!
v/ith
sons
in
the war,; figured
how many millions of people are;
Adverse Factors
"reluctantly that a change of horses
Because of our great interest at
at that time might/mean, a pro¬ doing- something else or t at/ least •
longation of the war. It is under-1 not listening to them.
My im¬ this time in the market for utility
standable that they thought so.
pression is, though I don't know
*Ari address by Mr. Scaff before
S • When you think of the great much; about suchf things/ that
/a; the Accounting Section of Edison
Roosevelt personality you should
very high Hooper rating is around* Electric Institute,
Atlantic City,
consider the powerful' machine
N. J., June 1,
and propaganda that made him
1948..///!/;//,>/-v.,'
<v- *'

A

•

of

construction

the

projected
of

program

the

owned electric utility
on the net earnings of
,

companies; the other was
of
rising
operating
net earnings.

the

effect

costs

on

/ We knew from

these

knowledge

our

economics

the

of

business / and /

studies which
two

fect

net

and

to

we

factors

had

made

that

not

such

a

af¬
way

that

extent

an

electric

should

earnings in
such

apparent to

the

that considerable

us

misunderstanding existed regard¬
ing these items and that
fort

should

these

be

some

made'..to

ef¬

clarify

points for the benefit of the

investing public and others.
Bearing in mind this objective,
that

and

might
upon

investing
public
placing undue stress

be

it

and

considers

adverse

not

enough stress on
earnings growth and
stability of the electric industry
and the soundness and strength
of its credit position, we in Ebasco
decided on the preparation of a
the inherent

booklet which

these

we

points

hope will clar¬
will

and

bring

hoped

until
copies

up

that

ago

booklet

would

week

a

of

our

available

be

for

this meeting, but due to the mag¬
nitude of the job and the diffi¬

culties of getting it printed in so
short a time, it was impossible to
meet

such

terial that

schedule.

a

however, to

use

some

I intend,
of the ma¬

have

developed as
discussion this
morning, and when we have com¬
pleted the book, I will see that a
copy is sent to each one of you.
basis

a

we

for

my

*

^.

i

'

.

Solid Foundation
Our

approach

»*

•'

*

'

*

"

of Industry

to

the

problem
and
the electric

briefly the operating

covers

financial

history of
industry, to show the solid foun¬
dation upon which the industry
has been built and the growth of
earning power that it has experi¬
enced; also that it has great sta¬
bility of earning power which is
so essential to attracting capital.
There is little

ing

need of burden¬

with

of the
of the
industry. Most of you have been
brought up in the industry and
know its history from first-hand
this group

any

details of the past history

contact.
-f

I

therefore devote the

will

mainder of my time

to

a

re¬

discus¬

sion of the future of the industry
we

as

see

contribute
doubt

it, which we hope will
toward dispelling any

which

may

future strength and

the

what

factors

ify

had
two

numerous

market price of the stocks should
be depressed thereby. It became

com¬

selling at

I
or

thought to be mainly
responsible for the condition; one
.was the apprehension about the

,,

in which he got the nomina¬ /c/A :study which

without

investing public the story of the
future prospects of the industry
in light of its expanding business.

were

these

the end of

Almost

found that two fac¬

we

privately

:

-

H.

•

about.

companies

a

common
numerous

why this condition

reasons

come

trial stock price stood at 92% and of the
ithe -utilities at 79%.
utility
/'/'.!
considering the amazing

natural*

"] Hagues, the Kellys, the CIO, the
Communists,

had

was-.142.2 as against 123.3
utility operating companies.
Using these figures to represent

fact that with

that

to the

for

have

tion, he-kissed off the Republican
billions which he gave away/
organizations in many States. Tn
he was a salable product for this;
a country so big and
unwieldly as:
organization.
But
nevertheless,- ours, he thought, apparently, that
"the organization had to be there.
140
million
is

business

stock

campaigns
are
great
personality !; contests.
Looking upon himself as a tower¬
ing personality/as was not un¬

way

a

Poor's

the

It

of

prices
moved
downward
more
sharply and, to date, have not re¬
gained their relative position.1
In

utility

reviewed

the subject and talked
number of men who, from
on

experience
and
connections, would be in a posi¬
tion to express sound opinions as

utility

company

showing

would

to

1947, / how¬
ever, ;

electric
We

their

-

Op e r a t i n g

made, because he got the impres¬
sion

this

even;

he

of

Begin

latter- half

Wendell Willkie in his great op¬
that

half

of

stocks.

hi nginthe

bungling in the handling
of his trips, that are now consti¬
tuting the hard luck of Truman/

worse

articles

the

and

determine

generally
might be causing
the relatively adverse market ac¬

moved

-1947/

same

to

factors that

tion

first

billions

commanded.://

a

dertook

the

1946

his speeches, that there would be

portunity, made

of

generally in
unison during

be making the same "mistakes" in

the

government: by
the people and for the
people, but

government

stocks

The likelihood is that he would

the

mar¬

prices

both groups of

would not be the fire in the count¬
less " organizations
around '/the

an

>

the

spend,# there

to

"

This is

1948,

But his

printed,

capital, particularly equity capital,
in view of the large amount of
financing
that
confronts
these
companies in the future, we un¬

April,
shows
•

that the
ket

the

months

ended

personality alone would not/be
sufficient to get him Jo first base.

and

and

four

the great

stuff,
Bargeron

1947,

the

sponsible

but could

.

stocks

they

dates

/ Stock market prices in recent months indicate that electric utility companies' common
temporarily have lost some of their appeal to investors. A comparison of the com¬
mon stock
prices of utility operating companies with industrials for the years 1946 and

more

mayors,

organizations than the. Democrats.

editorials

Carlisle

'

D01-*icii-<£-

larly in Wash-<

/

Vice-President, Ebasco Services Incorporated

Noting relative decline of appeal of electric utility stocks to investors, Mr. Scaff ascribes it to errone¬
apprehension about adverse effects of projected new construction, together with rising building
and operating costs.
Says misunderstanding exiits regarding these factors, and points out solid finanrial position of utilities and expanding markets for services.
Lays down formula for future construction financing, requiring 50% debt and 50% in preferred and common stocks and surplus, and prediets increased net earnings
arising from new facilities and economies. Sees favorable attitude toward
higher rates.

.

over

7

ous!

By CARLISLE BARGERON
The discussion and speculation in recent months
ance

(2639)

The

of

rate

exist as to its
stability." ' ;l

growth of electric
any lengthy pe¬
in-

has over

energy

riod of time been considerably

of

excess

the

general

economic;

The his¬
shows the;
dependence of industry
generally on central station pow¬
er, and the increasing amount of
energy
available per industrial
worker.
It can, therefore, be said
growth of the country.

tory of
growing

our

economy

-

1

forcibly

to

the

attention

of

(Continued

the

on page

36)

this.

Many a young columnist or
; celebrity in another field, having
had a tremendous build-up, for-i
gets

-that

that

-

the

tremendous

We take

standing he

has attained has collapsed. He has
mistaken the build-up for sheer

brilliancy

-

5

the people who gave - him
build-up and suddenly learns

on

i/ Now in the

,/"•

pleasure in announcing that

.

;

.

.

,

MR/FKANK A.WOOD

'

|

his part.
\/

of 1948 A. Dj
,our
commentators
and
pundits
-when thinking in terms of Presi¬
year

-

-

has'been elected

'*

'•

u

•

/> 'r:

are

zation

*

the

falls

one

other

These
up

of

rises

political

to

the

to

parties

more

of

one-

of

*

the

are

parties in office at-a given tim£
is due to the political trend being
in their direction.
The

viously towards the
not towards

sen,
.

any,,

particular

towards

.v

/./ .///•/ We

ods

pleased to

Republicans

Joe

Martin

/-candidate,

can

announce

the ^Republicans.




you

should read

■/••:

!■
*

many

"Yes"

answer

are

the tested meth¬

leading companies who
to

these

questions.

us

on

your

letterhead for Booklet C

\;///-•;/i/--'Edward L. BOLTONr//?/

/

t

/

M

now

associated with

Georgeson & Co.

us

Specialists in Stockholder Relations
52 Wall

/;// Eldkedge & Co.
t;

This

by

that;

-/^iKCOBPORATEb.

-

,/

;

/

•

"

.

Street, New York 5, N. Y.

Telephone IIAnover 2-1470

•

or

but

used

Write

1
^

are

Here* briefly described,

obf

now

Dewey, Taft, Stas-

Vandenberg,

'

J

-;.j.

political trend is

in doubt,

ASSET NUMBER ONE

•1

two

<■

Stockholders?

'

,

the

office-holders and patronage

dispensers

your

Stockholders know you?

If you are

i:4:/ New York 5, N. Y.

'*

of workers, office-holders and
over

know

your

as

made

country. The fact that there

—

57 William Street

heights.

are

patronage dispensers all

you

organi¬

pieces

great

Do

--//'Burr & Company,

set-up, the fact that it is made up
political parties. They
overlooking that in certain

of two great

conditions

Do

•

Executive Vice-President of,our firm

personalities, are over->
looking the nature of our political

and

CORPORATION EXECUTIVES

'.///J

dential

times

for/r;/

questions

.

'

AO WAIX -Stbeet/ iVBW^YOBK 5, N. Y.

Boston

•

Philadelphia

•

Chicago

•

Los Angeles

•

San Francisco

..

?f,

Thursday, June 17, 1948

& FINANCIAL CHRONICLE

COMMERCIAL

THE

(2640)

g
■

•nw"

New Tax Law and

Speculation

Dealer-Broker Investment

; By J. K. LASSER*

Recommendations-and Literature

Chairman, Committee on Federal Taxation,

Society of Certified Public Accountants

New York State

firms mentioned will he pleased

It is understood that the

applying principle of community property to capital gains taxation has encour¬
aged more speculation and quick turnover in securities. Says tax rate of 25% does not begin to apply
until family income exceeds $44,000 a year, and lays part of increased stock market activity to pros¬
pects of larger dividend payments.
Mr. Lasser points out

increases is the new tax law.
That comes by reason of its
securities held for a short period by mar¬

applied to gains on

materially lowering the rate
ried

people

proved
rich

f

The

than

during 1948.

a

investors and

Effect

tax

speculators, remov¬

J.

gains.

taxed

over

were

held

They

/

never

were

25%, if the securities
for

months. The wealthy taxpayer al¬
ways held his securities for the

full six months or; longer periods.
That gave him the lower tax.^The
effect,
naturally, v was
to i slow
the

down

Economists

that

low

a

have
tax

-

on

income

the government tax

revenues

the

be

would

Despite that,
1948

—

before

holders

assessed

very high
tax
on
any transactions
com¬
pleted within a six month period.
Experience in the 1920's always
—

the

capital

sales and

ment.

deals

more

produced

on

more

was un¬

larly conscious this

then, we got our 1948 aid
speculation and quick turnovers
indirect

most

a

inflation.

income taxation
this

was

One

first applied

to all married couples.
automatically cut the basic

rate,

the

security

the

had to

or

1941

family tax rate gives

was

was

even

*An

address

the

New

York

The

Certified

new

between

introduction

with

Public

of

Accountants,

Saranac Lake, N. Y., June. 8, 1948.

the

couple's tax
obsolete. Split¬

But this is limited

substantial tax savings

family group. That means
emphasis on:

continued
;

Joint

with

ventures

children

and

relatives; Lease arrangements
with the members of the family;

within the family;
a great many steps with simi¬
objectives. 7.
r
7

Assignments
and
lar*

,

,

'Total Tax Due bv Combination of Corporation land

tHalf of the Earnings Are Paid
As

.With

*

an

f

*

•

'

income

,

*"

.

'V

'

■

Corporation
Pavs

$20°000

t

30,000
4o,ooo_:_
50,00070,000-.:..

.

.

'.

'Proprietor

8,400

:

$3,367.
5,612
:- 8,089

11,152

19,000

T

16,059
26,897

26,600

7.

38,000'
60,80(1,
76,000
1*-"" " r ,w'wwu V'
♦Assuming, proprietor

45,009

m income other than

J

19,997
;

63,038
i 83,009;

stockholder is

or.

j

35,059 :

'

85,924
:115,840

-

Are Paid

21,380
30,698
45,306
76,651
98,463

r

represented by

that stated here.

;

a

-v

:

•--

as

Paid

as

But There
<

*

rate tax:

rent

developments in the industry
& Hickey, 49 Wall Street,

New

York-5, N. Y. :

Television
and

\

^

..

.

Aetna

Also

Insurance

and

;

.Deductible

>

'-$5,832

17,186

.*10,690

t 10,576

16,848

-

$4,569
,7,883
7

i 25,549

analysis

tional

Bank

Bank

of

of

77

pany.:;,

:

J

..77 1

»

,

it

Corporation
Earns

$10,000

A Proprietor

•

.

/>.

a

if

Corporation

If Eorninvs Are
•

$14,729
23,044

33,679

Earns

-.

:

30,000

*

Pays the Same Tax

; 20,000

NY

*

*'

,

■

.

i

,

,

$40,000
50,000

77

is

a

the

,
summary

York

Manhattan

i

ykr

70,000

^Earnings follow the normal definition of net
net income after salaries and after taxes.




Co.—Memo¬
& Co., 120

N. Y.

analysis—
Moreland & Co., Penobscot Build¬
ing, Detroit 26, Mich. ' *
Co.—New

Kellogg

and

Com¬

Valley Bonds—Discus¬
position—Goodbody & Co.,
Broadway, New York 6, N. Y.

Lehigh

; .7.;

v.;

Bros.

Broadway, New York 5,

7

Chase j Na¬

New

Electric

General

randum—Sutro

sion of

American Maricaibo

—

115

Discus¬

:

available

is

'77

Also

v

dum

Richfield

on

tion, and

an

Outlook.

-

available are circulars on

Quemont Mining Corporation
U. S. Fire Inourance Co.

>

and

memoran^

a

Oil

Marine

Corpora-*

.

Midland

Corporation—

-

analysis of Market Analytical study~-Paine; Webber,
''4'•'"5 J Jackson & Curtis, 25Broad Street, ■
New York 4, N. Y. r;
Western

Co.-4

Gas

Memorandum 7- Rauscher,

Co., / Inc.,
Mercantile
Building/ Dallas l/Tex//""
.

iMassey-Harris

Pierce
-

Co.

Limited-^—

Bank Memorandum—Bohjgard & Co./ 80
King Street,/West/ Toronto, Ont,
11
Canada.

7

.

-

<

Bank of Manhattan Company—

,87,376
■>«
Circular—Laird, Bissell & M^edsi ; Metal *. Forming k Corporation —,
;ii2;o9i
J12j767*
f iWd,DbU
,.j >,J 1103,580
120 Broadway, New York 5, N.'Yt Current bulletin — First Colony
; --qmarried couple >with twa*dependenis-and
Corporation;" 52 Wail Btreet, New
—
■■
' :
1
•
-7. .7. ,
Berkshire Fine Spinning Asso- York 5, N. Y.
^; <r . ''--—j' ;
-

••

,<

A Proprietor

.

Pays the 8ameT'ax
If Earnings Are

•'.<

111

N." Y.

Company—

7

of

The

Arkansas

11,749
16,215:

28,025
46,869
:785,034

33,672
50,738

43,373
1' 78,487
r

7

available

Corporation—Data-r—

Oil

Broadway, New York 6,

Summary and Analysis—Dempsey-Tegeler
&
Co.,
210
West
Seventh Street, Los Angeles 14,

Calif.;; -

- ::

Securities Corporation,

Aetna

*

•

:

—

N. Y.

Fleet

& Co., Inc., 1424 K Street, N. W.,
Washington 5, D. C. ,

of
First

Co.

Insurance

Memorandum

—

Corp., 100 Broadway, New

York 6,

Report
summary—Mitchell-Hoffman
—

26,

7

Firemen's
Newark

•

Boston

Industry

Retirement

Detroit

Building,

Buhl
Michigan.
Co.,

Cur¬

—

Vilas

Also

Barrmngs Are

.7

corpo¬ sociates, Inc.—Summary and ian*
.Y.l/r
alysis—Hill Richards & Co.,: 621

i'

'

;

Estate Planning and

Income—Study—M. A. Manley &

fNote the-following points at> which the tax .on/proprietorship:incomesrwould/equal the;

'

&

your

Georgeson & Co., 52 Wall Street,
5, N. Y.

ti>Stockholder ™,to Stockholder

r -

I $4,210
i

opinion—E. F. Hutton

and

Co., 61 Broadway, New York 6,

.

Ate No .7,i

Salaries.Paid v«- Salaries Paid

Salaries

to, Stockholder
5

&

know you?"
Write
letterhead for booklet C—

your

5, N. Y.

Dividends
l5QT».of

uJDeduc table/4

Are Deductible /

v/

>

;

'

100,000-..l«0,000--__
800,000-

»tand Half

.

l$5,275
'9,722
15,539 *

10,891

'•

7 *%of Earnings

to Stockholder1

;

6,928

-

1

Stockholder

i

$3,589

13,700

^Salaries

-

to

tPavs

•

$4,500

1

-'Deductible

Salaries

Stockholder

t70% of the Earnings Are

<

Dividends

But No

'.Deductible

r-

Separate Entitles Tax-—

-

mary

your

"Do

sion of interesting situation—Cohu
& Co., 1 Wall Street, New York

TAXES UNDER THE 1948 ACT

"

to

yes

know

and

*

children. That can still

you

for the

com¬

as

answer

you

Railroad Developments

still make these arrangements

give

munity property rule and lower¬
ing of surtax rates, has resulted in
tax reductions of as much as $16,000
in
the
$100,000
income
bracket, for example.
'
*

of

can

"Do

husband and wife. You

a

with your

income tax law,

of

Society

v-.,:

'

spouses,

now

are

old advantages.

can

at

State

on

ting income now gives you all the

the right
year for high dividends. It has
again become profitable to make

Lasser

Mr.

Annual

and

married

the

burden

But 1948 appears to be

us very

who

stockholders?"

partnerships,

between

reduce

only 48%. For 1947, it
less: a little over 39%,

Conference

by

15th

taxwise

estimates.

merce

be

money.

the

panies

questions:

the

gifts of
trusts for
the
wife's
benefit, and similar
sleps taken
by the husband-to

according to Department of Com¬

Now

more.

much

Champion Paper & Fibre Com¬
pany—Memorandum'—Sutro Bros.
& Co., 120 Broadway, New York
5, N. Y.
..7.::
::7. .'7•

Company ^National

New York

stock

get money. The overall per¬
centage of dividends to profits in

ily income exceeds $44,000. Under
the old law, in order to get 25%
tax

compare

-

Family

too

Company*-^-An¬

—

stockholders

corporation

are

to

tax rate applied to couples so that
the capital gains rate of 25% does
not begin to apply until the fam¬

held for six months

to

table

Family Divisions

for the low dividend

individual

the

memoranda

are

Tea

desirable.

rates since 1941 is that it has cost

year

That

dividends

Greater

reason

Haloid

the
sole
proprietor. A study of it will in¬
dicate
that
changes are highly
the

bound to follow.

principle of community property

available;

alysis

Commercial Solvents Corpora¬

tion,

taxes due under this law for both

of stock¬

year

Also
on

sion. I have prepared the accom¬

particu¬

be

Forge

Fitzgerald & Company,
Selected stocks discussed—A;> G. Inc., 40- Wall Street, New York 5,
Becker & Co., Inc., 120 South La N. Y.- -.<7/7 77'77
77 Salle Street, Chicago 3, 111.
'

holder need for funds because of

The'

manner.

will

memoran¬

Sicks Breweries Limited.

on

Camden

-

Public Utility Common Stocks-

year,

.a

panying

natural.

Even

in

are

Corporations

a

.

after

over

holders

moved by any pleas for alteration
of the tax system until this year,

to

left

have

income tax
high, controlling stock¬
prefer to have possible
dividends plowed back into the
development of the company. But
when income tax rates drop, high
dividend payments become more
rates

tax to the govern¬

Congress, however,

will

dum

,

is

available

Also

of

*

When personal

taxes.

rates

established that low tax rates

can

of a corpor¬
ation may be directly predicated
on
how much the major stock¬

from

Montreal,

Street,

the

which

Dividend payments

enhanced.

laws

our

stockholders

large

;

James

St.

Company, and Taylor Instru¬
.for-instance, in
ment Companies.
proprietor is married
and has two dependents, will pay
Curtis
Publishing
CompanyPublic Utility Stock Guide —
a tax no greater than
that on a
Circular—Ira Haupt &l Co., Ill
June issue containing comparative
corporation- earning *, $5,000 less.
Broadway, New York 6, N. Y.
; ^
The proprietorship would
have figures on public utility preferred
and common stocks—G. A. Saxton
this tax advantage up to earnings
Dominion Magnesium Limited& Co., Inc., 70 Pine Street, New
of just under $70,000.
•' V1
/ . ■ Circular—McLeod, Young, Weir &
A similar and even greater ad¬ York 5, N. Y..'
Co., Limited, Metropolitan Build7
vantage is held by the partner¬
Questions for Corporation Exec- ing, Toronto, Ont., Canada.
i
ship. Any small, family-held cor¬
poration should therefore look tives—Description of tested meth¬
ods used by many leading com¬
Dow Chemical Company—Sum¬
into the possibilities of conver¬

$55,000

keep after taxes.

keting of securities. And thereby

service

.

payments. A

dividend

corporate

rate

a

consultant

.

■

-

prediction of unusual dividend in¬
creases is based on the amount of

pleaded
capital

long

transactions would speed the mar¬

sales

may see

Memo^

Que., Canada.

Snell, Inc., 29 West 15th
Street, New York 11, N. Y.

operation.

personal income taxes. Under the
new income ttax law, 4he.jreverse
is bound to be true..v; .
'
v
A .sole proprietorship earning

the Vfall of this
terrific surge of

brackets,

upper

year

in the open market/7;
-

scribing

changed from • the; proprietor to
corporate form because corporate
taxes for them were -lower than

able income tax reductions in the

securities

of

turnover

;

prospect

the

—

360

Foster D.

number

—

randum—Fairbanks, Kirby & Co.,
Physical Measurements and

large

a

Y.

Butterfly Hosiery Co.

Corp.

In the last six or seven years,
numerous
small
companies

of larger dividends this year —
naturally encourages the buying
into the more likely companies.
As an indirect result of the size¬

six

than

more

Dividend Policies

-Another factor

-

N.

Inc.;

con¬

,

able tax rate that applied to longterm

Co.;

Machine

Straus-Duparquet,

form of

constantly had to advise as
to when the sale should occur. -.

Bloomington Limestone Corp.—

Product Evaluation—Bulletin* de¬

of

Trust, and Wall and Beaver

and Shepard Niles Crane & Hoist

income

the

be

on

Description—George Birkins Co.,
40 Exchange Place, New York 5,

American

on

circulars

are

Corp., Hotel Winde-

New

comments

are

of

version

have

Lasser

K.

the

of

will

Broadway,

issue

Gisholt

Furniture;

\

32

small, closely held corporations to
the partnership or proprietorship

ing it from the province of expert
accountants. Up to this year, they

reason

result

reductions

"

St. Corp.

N. Y.
same

Drake

mere

News"—Strauss

conclusions

and

Hotel

of

issue

current

the

Inc.,

In the

Reorganizations

on

Another

market to

have returned the stock

the favor¬

Bros.,

Nathan

selling is no longer
matter of expert tax advice. We

the buying and

have
always taken
their gains or
losses quickly.

L

to

York 4,

Watch for developments in taxes

market traders. The result is that

in

"Geared

lower cost than next year.

a

wiped out^for nearly all of the

bracket

outlook

previous years. And it may

be at

Opinion—Discussion of

Market

ing out this year certainly is going
to cost the stockholders much less

sell with a low tax
property with
high taxes. Now the distinction is

people

The

selling is in¬

mass

on

available

Also

corporation's dividend

a

Building, St. Louis 2, Mo.

Company

Iron

&

—

policy is the strong possibility of
increased tax rates for 1949. Pay¬

people will

low

was

deciding

reth

and
Broadway Barclay, Inc.—Memo¬
Lehigh Valley Coal Corp.—East¬ randum
Seligman, Lubetkin &
man,
Dillion & Co., 15 Broad Co., 41 Broad Street, New York 4f
Street, New York 5, N. Y.
N. Y.
Coal

ing

point to remember in

Another

gains,
orders

rate but hold on to

or

securi¬

ties.

and sell

day apart.

The effect

long periods
before selling
their

a

capital

on

buy

teresting. Experience proves that

tax¬

waite d

only

are

have

payers

the

if

even

for

have
that

years
the

rates

favorable

Treasury
statistics

Scherck, Richter Company, Land-

—

Analysis of outlook with special
reference to Philadelphia & Read¬

major, neglected factor in current stock market price
It has encouraged speculation and quick turnovers in stocks.
A

Industry

Coal

Anthracite

%

the following literature:

send interested parties

to

$45,353
,55,652

69,481

,

a

•'

if

A

V

Pays the SameTax
If Earnings Are

Corporation
Earns

$100,000 •
160,000,:
200,000 v

Proprietor

.
-

1
:

$88,831
i 124,036

146,078

profits. - To get earnings for dividends
Earnings subject to salaries are before taxes. • *

we

used

South Spring Street, Los

14, Calif.
Also

Angeles
7 !

available

are

:

and West
Point Manufacturing.
'1
'•J
Berkshire Fine Spinning Asso¬
ciates
Card memorandum—
&

Supply

Co.,

.

—

of Trade

Building, Chicago 4, IH.

analyses/of

Dan River Mills, Inc., Ducommum
Metals

v / Mississippi
Class Co. —Memo¬
randum—Kneeland & Co., Board

Mountain
Fuel
Supply
Co.—
Memorandum—Edward L. Burton

:

.

& Co.;

160 Main Street,

Salt Lake
,

:

(Continued on page 47)

;

City 1, Utah.

.

.

COMMERCIAL & FINANCIAL CHRONICLE

THE

Number 4708

Volume .167

Golf

EVENTS

A group pf. former officers of
the
Empire' Steel Corporation,

*

^ Magid, of

June

(Philadelphia, Pa.)

in Investment Field

of

July

Philadelphia Annual Summer
Outing at the Tavistock Country
Club, Haddonfield, N. J.

Bond Club of

i

Philadelphia Securities Associ¬
ation annual outing at Llanerch
Country Club, Llanerch, Pa.

at

(Milwaukee, Wis.)

25,-* 1948

Milwaukee
Merrill

Bond

Hills

Club

June 21,1948 (Omaha, Neb,)

Country

June 17, 1948

(St Louis, Mo.)
Dealers
Annual Outing at the Norwood
Louis

St.

Hills

Municipal

Country Club.

5

frolic

annual

Field Day at

the Omaha Country

for

STANY
:

i

v;

;

Bond

Club

of

Toledo

anmud

outing at the Inverness Country

York

ciub.:.;

Pa.)

(Philadelphia,

July 16, 1948 (Toledo, Ohio)

Municipal Bond Club of New
Annual Meeting at Sleepy
Hollow Country Club, Scarborough-on-Hudson, N. Y.

and

1948

Tournament

Club, Cup at Philadelphia

June 25, 1948 (New York City)

Investment; Bankers

Nebraska

Association

9,

Golf

Outing

Waukesha.

headed by Joseph B. Montgomery,

Jr., of Mansfield, O., and Samuel

25, 1948 (Cleveland, Ohio)
Cleveland spring
outing at Country Club.;
O

V-'"'"

June 18, 1948

COMING

Officials FormMew Co.

June

Partyw at Columbus Country

Club.

Club.

July 19-22, 1948 (Portland, Oreg.)
1

June 18, 1948

(Boston, Mass.)

Municipal Bond Club of Boston
outing at the Country
Club, Concord, Mass. To be pre¬
ceded by parties at the Hotel
Statler oh the evenings of June
;

annual

i6
Reserve Plant
at

BirdsborO,

and

17

E.

9:30

p.m.

until

•

Security Traders Asso¬

Boston

ciation

29th

Annual

Outing

;

New York Stock

i

Exchange Golf

Association 49th annual golf tour¬
nament at the Winged Foot Golf

at

Woodland Golf Club;
June 23, 1948

Annual Convention of National
Association of; Securities Admirt*;
istrators at the Multnomah Hotel,

June 29, 1948 (New York City)

Nov* 15-18,1948 (DaMas,

Club, Mamaroneck, N. Y.

(New York City)

1

Cleveland Security Traders As¬

York second annual outing at the

sociation

June

Montclair

Dec.

July 9, 1948 (Philadelphia, Pa.)

18, 1948 (Columbus, Ohio)
Stock & Bond Club

N.

J.

Golf

Club,

Montclair,

:

outing.

summer

;

5-i0, 1948 (Hollywood, Fla.)

Investment Bankers Association

1948 convention at the

Beach Hotel.

Investment Traders Association

for¬
Chair¬

gomery,

Magid

merly

the

of

man

board and President of the Empire
Steel Corporation, which was sold

recently to the Studebaker Cor¬
poration, is President of the new
Mr. Magid, formerly
Chairman of Empire Steel's exec¬
company.

utive

committee, has been elected

Chairman of the board of PennOhio

Steel.
President of

He

is

also

Vice-

Hill, Thompson &
Co;, New; York investment firm.
Other officers of the

new

com¬

pany include; W i 11 ia m Lake,
Vice-President in charge of pro¬

duction,

and

Roy

I. Mitchell,
Comptroller.
Both held similar positions with
Empire Steel. J. G. Baker, Pres¬
ident of General Steel Corpora¬
tion, will be Chairman of the

Vice-President

and

Executive Committee.

Whitney and Davison
Resign as Directors; |
Of Montgomery* Ward
H.

P.

Davison

and

George

Whitney have resigned from
the

Board

of

Directors

of

Montgomery Ward & Co., accord¬
ing to a statement issued by Mr.
Whitney on June 16 and from
which we quote as follows:
"Mr.

Davison

has

been

di¬

a

rector since 1929, except for an
interval during '.'the.\War;'; and I
have

since

served

Davison

was

one

instrumental

of

Mr.

Mr.

of the d 'rectors

in

services
man

1942.

obtaining

Avery

the

Chair¬

as

of the board of the company

in 1931.

Mr. Davison and I wish

to record

services

our

appreciation of the

rendered

by Mr.

Avery

tp the company in the past.
To
him is largely, due the splendid
present financial condition of the

and

company

we

hope that the

General Foods presents to its

stockholders

will continue for many
years to have the benefit of his
advice, knowledge and judgment.

company

*

"Certain differences of opinion,

however,, have arisen between us
as
to matters of policy, largely
involving the internal organiza¬
tion of the company. Mr. Davison
I have felt that in view of

Frances Barton is a

these differences, which we

henceforth

and

have

been unable to compose, our use¬

fulness

as

directors has been im¬

paired and therefore we have re¬
signed."

Thomas G.

Service

Department.

..

7 v-"-

By identifying the many consumer services of General Foods
with this

Campbell

friendly, symbolic personality who will

represent to the consuming public the knowledge,

experience, and spirit of helpfulness in the General Foods Con¬
sumer

personality,

we

value.

hope to build

an asset

-v;:1;:;;7 i

:•

of ever-increasing
■:

'

-

r:

With Brans, Nordeman
& Co., 60
York City,
members of the New York Stock
Exchange, announce that Thomas
G. Campbell, railroad economist,
Bruns,

Beaver

is

Nordeman
Street, New

with the, firm in charge of

now

its Railroad Research

Mr. Campbell

Department.

has been associated

with

several

New

York

ment

firms

during

the

years

and is the author

studies

on

railroads,

invest¬
past

35

of many
some
of

which have r.ece

i v ed national

recognition.

-

,:




General Foods Corporation
.

«.

!

;

•:-7 "

250 Park Avenue
:•;;;:'v- ^

V

•

"

K'

'

■

New York 17, N. Y.
i'

--;

'

■■

•

■■■

■

•

'

■

Tez.)

National Security Traders AmO*
elation Convention.

July 9, 1948 (Cleveland, Ohio)

Investment Association of New

midnight.

Columbus
Sanniel

from

June 22,1948 (Boston, Mass.)

*

Hollywood

Thursday, June 17, 1948

FINANCIAL CHRONICLE

COMMERCIAL &

THE

(2642)

10

next

Michigan Brevities

Connecticut Brevities
hinge and stamping division, lo¬
cated in Bristol, to Homer D. Bronson Company of Beacon Falls.
Veeder had previously announced plans of closing its Bristol plant
and moving its operations to the new plant under, construction in

pany,

Hartford. The Root Company, one*

the account of the company.

.Veeder-Root, Inc., has sold its

original units in the

of the

1928

March 31, 1948
approximately

log of orders on
was
reported as

produced continu¬
ous or piano
hinges. While the $240,000,000.
*
*
*
manufacture of hinges and metal
The Hartford Electric Light
stampings has been continued at
Company has announced in a
the Bristol plant since the merger,
letter to stockholders the receipt
the company's counter and com¬
of $2,667,533 in payment of its
puter business has become the
claim for a federal tax refund
dominating part of the business
for the
years
1940-1944. The
and Veeder-Root has decided to
money will be used to help fi¬
concentrate on this field.
nance
the
large
construction
program commenced the latter
United States Finishing Com¬
consolidation,

orders

unfilled

1,

Jan.

of

as

'••••■

$31,369,000 compared

were

to $4,541,000 a year

$21,703,000

for

offer

The stock was

Canadian transport aircraft.
" '
*
*
«
't':' ' "'--'y

per
.

Manning, Maxwell & Moore has
the
acquisition
in

announced :-

April, 1948 of the hydraulics divi¬
sion of Airex Manufacturing Co.,

Long Island City, N. Y. Manning,
Maxwell & Moore plans to move
the
business to its Jersey City
❖

#

change for temporary bonds of
said issue at the Bankers Trust
New

Hurlburt,

J.

B.

Williams

53

President

is

a

sun

claimed
sun

to

This

lish

liams

agent

has

in

Skol

II

Co.

*

have

State

Street, members of the New
York and Boston. Stock Exchanges,
on July
Chairman, and Max Taussig, Di¬
1.
Mr. Brown has been
rector, in New Haven Clock & in charge, of the Boston office of
Watch Co.
Mr. Eisner and Mr. Clark, Dodge & Co.
Prior* thereto
Taussig have resigned from the he was with Smith, Barney &
management &nd James Hertzman Co. and was a partner in Edward
has been elected president.
B. Smith & Co.
*

$

first

Aircraft

quarter

Corporation's
for

report

With Merrill Lynch Firm

1948

(Special

showed sales of $55,077,296 com¬

LOS

to Thb Financial

ANGELES,
is

Chronicle)

CAL.—C.

Merrill

with

*

the
est

314%

H.

to

G

e r

booked

Lynch,

,,

.

for

*

.

.

The

NEW

YORK STOCK

from

Hartford

•_

questions are

provisions of Section 8 of
to
securities

national

a

on

lege will expire.

Off-Board

on

Corp.
has
million in or¬
fiscal

orders.

a

The

year

balance

substantial volume of
from

received

New

York

and

Boston
•

member firms:

the

Board

ex¬

Section
of

Gov¬

' -V'/v

:

nothing herein contained shall be
construed to prohibit any memor member V
penalize any such C
acting as an odd-lot;

allied 'member

ber,

firm from, or to
firm

for,

dealer

specialist

or

or

otherwise'

publicly dealing for his or its own:.
account

(directly

r

through,

a

indirectly-

or

joint account or other?

another

change located outside the

similar organization in

or

dealings

the

directly
other
or

or

change

securities

any

indirectly

Exchange

or

such

upon

organization,

in securities dealt

in

on

Exchange, such member or al¬

lied member may

be suspended or

firm

is

listed

or

traded

change.

on

member*

in securities;

member)

such other

^

Ex-'

,r-

-

;

Under this provision a member
should first obtain the approval of

|

the

on

before effecting

Exchange

a

a

a.

listed stock except *

national securities exchange.*

j ^Proviso added

by order,

as

Securities; and v
expelled as the Board may deter¬ Exchange Commission; dated Oct,
mine; ^provided, however, that 4, 1941, effective Oct. 6, 1941.

'

Established 1919

.<

amended,

of

the

KELLOGG CO.

Charles A. Parceils & Co.

Stock

allied 'member" or
a

Ex-,

City of.

(of which such mem*,

ber,

publicly outside the Ex¬ transaction in

deals

the

in

the Exchange, or deals

on

New York

on

New Analysis

Available 5

Members Detroit Stock Exchange

Upon Request

Hartford and t

CO.

Hartford

Securities

Michigan Markets

Moreland & Co.

7-3191

639

EXCHANGE

New

Teletype NH 194

Danbury 5600

York:

BArclay

Penobscot

j-r'J

Building

Member Detroit Stock Exchange

DETROIT 26, MICH.

7-3542

1051 Penobscot Building

Telephone

Bell

Randolph 5625

System Teletype: HF 365

Teletype
DE 206

"•

i ! * M'l . J i

i

arrangement)

mits

current

the

contracts

;

&

?

1953, when this privi-

Jan. 31,

;

f

before

Coyle, Director of the Department of Member FirmsExchange, addressed on June 11 the follow*v

the City of New York which per¬

314%."

automotive

Waterbury 3-3166




1951; or $5 per share after

31,

„

,

New York Canal 6-3662

7-2669

an¬

will

the

change

(ending June 30, 1949), according
Gerity, Jr., its President.
this total, slightly more than
$14 million was said to represent

New Haven 6-0171
New London 2-4301

16

nected, either through a partner
or
otherwise, with another Ex¬

Exchange

.

or

on

jJan. 31, 1951 and on or

Primary Markets in

'*

share

a

inter¬

increased

firm.

was

Connecticut

MEMBERS

-

•"

per

ernors,

$7,500,000 bonds is¬
1947 are also held by

Exchanges

Information

CHAS. W. SCRANTON

Frank J.

"Whenever

Of

PRIMARY MARKETS
*

shall be at-

before

automobile

its 250,000th

change. * The particular
reads as follows:

Associate Members New York Curb

Statistical

June

on

transactions in listed stocks other

to James

Members

Connecticut Securities

.•:

Article XIV of the Constitution

Tifft Brothers
:

;v>

•

-

July 31, 1949; or $3.50 per share
'thereafter and on or before Jan.

concerning the application

of

additional

an

almost $19

new

.

*

*

,

following prices: £

at the

<

From time to time

i t y-Michigan

included

•.

$2.50

Corp.,

dealt in

Sixth Street.

earnings

The back¬

The

rate

Pierce, Fenner & Beane, 523 West

common

t

raised

Society of the United

insurance

net

share

Michi¬

other

To Members and Member Firms:-

of

in

sued

Reeves

per

-

amount

tached

ing circular letter to members and

first
mortgage
Equitable Life

of

to

pared to $41,405,729, in 1947 and
of $1.10 against $0.42.

stock for each $10 prinof the bond to

; common

i cipal

one

of the New York Stock

than

sold

has

balance

ders

United

-

entitle

Transactions in Listed Stock
i

in

early

production

stopped

if

5

f

>

by the affirmative vote of
majority of the Governors then
States under a supplemental in-f in office, ^ha 11 determine that a
denture dated Feb. 1, 1948. The
member or allied member is con¬

•*•• V-"

Brown.

W.

-

the
share of

are

any

NYSE Reminds Members

Briggs Meldrum plant.
contract will reestab¬

Assurance
R.

detachable

warrants

time and
holder to purchase
at

;

which such warrant

*

produce

than 20 years.

bonds

including Max A. Gel-

acquired the common
stock holdings of Paul V. Eisner,

,

new

troit,

a director, and clients of Rey¬
nolds & Co. and G. H. Walker &

W The

May

nounced that the corporation

Kelsey-Hayes Wheel Co., De¬

ler,

'z

1966

1,

Aug.

t

Ship¬

other vehicles.

$2,500,000
*

J' r

*f

States.

A group

; :-r\

"

1942.

Dur¬

United

the

*'4

sinking

514%

communities.

Frazer
*

*

land at intervals until World War

been

for

SU

Beginning in
1925, Briggs manufactured body
parts and bodies for Willys-Over¬

10 years J. B. Wil¬
exclusive selling

ing the past

.

An issue of $400,000 Crampton
Manufacturing Co. first mortgage:

*

V.'....

relationship that goes back

a

more

Corporation
of
New
principal Skol product
tan
lotion, which is
be the largest selling

tan lotion in the country.

*

*

j

Edgar F. Kaiser, Vice-President
and General Manager of Kaiser-

,

expected to begin Aug.

are

I from the

Company,

the Skol business from Gallowhur
Chemical

*

,

*

•*'

the Detroit

owns

certain

and

troit
gan

Inc., Toledo, O., with the produc¬
of station wagon bodies and
body
stampings and parts • for
ments

announced on May
the company had purchased

York. The

r.

the

tion

Glastonbury,
27 that

Wall

.Creamery

plier of Willys-Overland Motors.

W.

trucks and

B.

(June 15).

;

1

De¬

Tuesday

business

of

opening

Co. operating in De¬

which

?,Corp.,

Briggs Manufacturing Co., De¬
will become a major sup¬

Stubbs,

&

i

troit,

partner in

a

*

quoted "ex-rights" on the
troit
Stock
Exchange
at

^

participated in the public of¬
fering, at 102 and interest, of
$30 million 3% debentures due
1970 of National Dairy Products

York, N. Y.
*

*

Everett
the

become

Weeks

Whiting,

plant.

of

will

..

additional
share for each

214 shares held. The rights will
The stock was
expire July 10.
•

First of Michigan Corp. on

1*4% Veterans bond issue dated
March 15, 1947 of the State of
Michigan, with Sept. 15, 1948
and all subsequent coupons at¬
tached, are available for ex¬

Co,, exchange agent, 16

MASS.—Rodney

BOSTON,
Brown

are

subscribe for one

share at $1.75 per

27

$200,000,000

of the

each

$1,000

Rodney Brown To Be
Admitted by Whiting

1948
to

■

today (June 17)5
definitive
engraved
coupon
bonds in the denomination of
Beginning

1

t

22,

being issued warrants

Products Co. of record May

•».

...

,

fund bonds due.
(with warrants to •
purchase 40,000 shares of common J
stock) were offered to the public,
$16,891,162 for the corresponding
on June 2 at 100 and interest byv
ing Corp., Curtiss-Wright Corp., period of 1947. A new plant has
P. W. Brooks & Co. of New York.,
Sinclair Oil Co. and Warner Air¬
been leased at Richmond, Calif.,
The net proceeds are to be usedcraft Corp.
A total of 171 issues to increase the company's facil¬
to retire mortgage and other in-5
were traded in out of a total of
ities. 'i At •;
•'
debtedness
and
for
additional
190.
working capital.
; Watling, Lerchen & Co. and
Corp., Gar Wood Industries,
Inc., McClanahan Oil Co., Packard
Motor Car Co., Avco Manufactur¬

gan

on

MW—

-

,

%

■

Stockholders of Masco Screw

!

Wood In¬
dustries, Inc. for the six months
ended April 30, 1948 amounted to
$2,201,145, before provision for
income taxes, and $1,335,145 after
estimated provision for such taxes.
Sales for the period totaled $17,929,567 as compared to sales of

ing May were: Detroit Edison Co.,
Electromaster, Inc., Gerity-Michi-

-

f

Co.

%

%

The earnings of Gar

$2,956,900 in March, 1948.
The 10 most active stocks dur¬

.

.

v.

share.

V

.

at

May 15.
offered at $60.21

expired

and McDonald-Moore &

shares valued

with 240,847

and

subscribed for before

been

the

Septem¬

467,856 shares
changed hands.
This also com¬
pares with 369,567 shares val¬
ued at $4,710,410 in April, 1948,

4,154 of the 4,982 shares of com¬
stock offered to employees

had

:

when

1946

ber,
j

>

con¬

are

tinuing at a record high.

New

of

Co.

&

sales

retail

that

added

were

York.
Participating were the following
Detroit. bankers: First of
Michigan Corp., Wm. C. Roney
& C6., Watling, Lerchen & Co.
Stanley

trading volume in
I May totaled 432,735 shares, with
a dollar value of $5,966,402, top-,
ping all trading since

Corp.,

underwriters headed by Morgan

Exchange

Stock

21,000

output of

month represents a new

General
offered to
ithe public on June 3 at $12.75
per
share through a group of

$s

tf

Detroit

uled

by

owned

been

had

! reports that

mon

con¬
submarine con¬

new

and

struction

In¬

submarine

$5,842,000* for
version and

earlier.

*

'Motors

systems.
*

>V

*

.

in

The

after

years

_

business af¬

conjunction with other
It is engaged in
the designing, manufacture, fabri¬
cation and erection of mechanical

Stanley Works announced that

1948 backlog are

cluded in the

*

Hi

by

working capital.

..

:

'

Anchor will be used in the trans¬

conveyor

two

units this
monthly
production peak in the history of
—
—
—
; ~ the company. - The previous high
electrical, home appliance, radio
was 20,667 cars in January, when
and plumbing industries.
output was on a two-shift basis.
Currently, the Willow plant is
The 1,000.061 sares of North
producing at the rate of 800 units}
American Aviation, Inc. capital
per day on one shift.
Mr. Kaiser
stock (par $1 per share), which

The

received

be

to

proceeds

net

for

and 100,000 shares were

fairs

■

1948

120,000 shares of Anchor Steel & Conveyor Co. common stock (par $1)
at $2.50 per share, of which 20,000 shares4-were for the account of
Frank J. Shude, President and General Manager of the Anchor com¬

action of its ordinary

part of 1946 and now well under
May 26 elected 11 new
way.
and reelected three di¬
*
*
#
rectors.
The election of the new
Jenkins Bros, on April 12 com¬
board practically eliminated the
former directors and ends a stock¬ pleted arrangements with the gov¬
ernment for the purchase of the
holders'
proxy fight which
has
industrial plant and facilities ad¬
been in progress since early April.
At the organization meeting of the joining its Bridgeport works. The
new
board Mr. MacClathie, the company's annual report for the
President, and most of his associ¬ year ending Dec. 31, 1947 shows a
net profit for the year of $6.39 per
ate officers were reelected. At the
common share compared to $4.02
annual meeting Mr. MacClathie
for the previous year.
O-l
told the stockholders that busi¬
■/..
■■
*
*
*
y,'" ,y
ness
and earnings for the first
Bridgeport Gas Light Company
four months of the current year
greatly exceeded the correspond¬ has sold privately $2,250,000 gen¬
and
refunding
mortgage
ing period a year ago.
He also eral
bonds series A due 1973.
said that the business outlook is 3V4%
The proceeds have been used to
bright.
*
*
*
redeem
$768,000
outstanding
The Electric Boat Company
bonds, discharge $450,000 notes
and defray costs of additions.
has reported that consolidated
pany on
directors

offered to the public

Co.* Detroit, on May 20

C. G. McDonald &

just

week,

production started at the Willow
Run plant with the manufacture
of seven automobiles in June of
1946. He added that K-F's sched¬

fi
".:jr iT>.>18

I

DETROIT 26, MICH.
Bay City

—

Lansing

Muskegon

—

11 i£

Ll

:

y

♦

urn

.Volume 162

Number 4708.

THE

COMMERCIAL &

FINANCIAL CHRONICLE

,2643)
eral

Missouri Brevities

funds.

March
:

A. G> Edwards &
Sons, Reinholdt & Gardner and? Eckhardt-.
Petersen & Co., Inc. of St.
Louis,! Bankers Bond & Securities Co. "of
Hannibal, and H. O. Peet & Co.
Kansas City, on. May. 27 participated .in the public
offering of $(25,000,000 of Union Electric Co/ of
Missouri 3-% debentures due

-

*
•*

Last

Co.,

Mayf<>

■<

Glenn; ""/"

Courts

/

:

&

Company, Atlanta;
Vice-Presidenjts — Waldo Mailory, Clement| A. Evans & Co;,
Atlanta,, and Lex Jolley, John-

.

sonv

.

Lane,

Space

&

Co.,

*'*

>

1948,. Union Electric

fc' " *«

,

:.

Co.

< •

^

with

;

;

tto. serve-with the officers
tne Executive Committee?:
J.

"V.t l

Electric

on
-

W.>

-

'

,

'

•

ft.

t

Union

and

Beane, Atlanta.///;;/'■'"//;/;

>

common

/

Jolley

ter

'ft- /■'■/

ft

our coming/"Chronicle'! NSTA
Convention Year Book. /It
should not take
much-imagination to realize what volume we can
achieve when Our
complete;committee is in full operation.

VK-'v*
,

{ftLast

*' .ft V[\ ft

ft

^*#7

.tc

.week's suggestion for .outside advertising has-: not

/taken hold and we are most anxious that some- of our
:r/7xf | undertake solicitation of this form of
advertising. ft •'&>' :ift
//ft //ft.ftift//\ft:ft ftftft.-/// 'ft/
-*7>4

/

"K. I. M. YOUR NSTA"

-"BUY ADVERTISING'-

ftft
f"

-

ift-M

""

<,

HAROLD B.

ditional

120

will

construction in the St. Louis
which is expected to

;be

j

-

-

.

as

;

yet

members

area

/ft

/

Ohio*

r'

.

pleted
Z'V.Z.

was

shares of

ly

'

ft

t

'

-

-r

'

f

4

DETROIT, MICH.
Effective
July 1, Gilbert S. Currie and H.
Russell Hastings will be admitted
—

;<

'L

I*.

■

'.-ill

i.".-;.

■1

$14,000,000 Kansas

Southern

Ry.-

Co.

associates

per

holder

to

shares of

offered

June

on

9

at

Co;

first

mortgage

4%

sub¬

common

ment

in,

bonds,

the

«

;

of

group

bankers

share

invest¬

participating

in

Co.,

were

Newhard,

Reinholdt

&

Cook

&

Gardner,;.X

M. Simon & Co.,
Dempsey-Tegeler & Co. and Stern Bros. &
Co.
These
shares
were
oul-

«standing

Joseph - Light"-&. /Power Co.

its

a

headed

report said,: "Al¬
revenues, increased, to
a
peak of $4,405,544 for 1947,
amounting costs, of operation re¬

purchased

were

of

underwriters

by

Morgan Stanley &
Co. of New York from
General
Motors Corp.

annual

though

and

group

"

new

be used in. connection with plans
fee construction and acquisition

*

#

Si!

The Empire District Electric
Co.
$283,7.12 for for the three
months ended March
the^year, compared with $509,950
of additional
property and the'
31, 1948, reported gross operating
for 1946.
Of the aggregate in¬
296 000 shares of common stock
retirement of $3,860,000 of bank
revenue of
$1,832,747-, against $1,crease
of Fleet Oil Corp. which was re¬
of/$437,939 in operating
loans.
**:,/"
i
734,563 in the corresponding pe¬
evenues over 1948;
cently -organized; to
approximately riod of* last
engage
in }'■■■ Kansas; City Power &
year.
< Net
Light Co.; $175,000
income
crude oil production in
represented revenues re¬
after charges and Federal income
Oklahoma., -epprts for the 12 months ended!
//The parent company and prin¬ March- 31,. 1948 an operating rev-; sulting from ; the. acquisition by "taxes was
$281,069* compared with
the company Of; the
properties of
cipal :stockholder 1 is: the /Fleet feiiue
of
$233,574 for the three months
$26,540,525, . compared United Utilities.
Corp. in- March, ended March
Drilling 8t Producing Co. of Ada, with $24,088,150 foi the preceding;
31, 1947.
;
:
1947, and of Maryvilld Electric
*
*
Okla., whjch owns, 800,000; of the 12 months' period. Net income;
*
Light & Power Co. in October,
1,096,000 shares of Fleet Oil Corjp, after charges ' and taxes ; totaled I
H. O. Peet & Co./ and Stern
1947;"//Current assets at: Dec. 31,
common stock to be
Bros. & Co. were also included
outstanding $4,124,459, as
against $3,949,946! 1947/ amounted to/$2,316,555,, comafter

,,Aetna Securities. Corp. publicly
offered, June 15, at $1 per share

duced, net income

to

.

„

completion of the distribu¬

tion of the shares in this
offering.
;

Fleet

Oil Corp.'s ownership in-/

for the

12

>

months

ehded

March

oared

i

31/ 1947f 7/*;://://: Y/:'v;'

y2; of,a %. working interest,
approximately 56(1 acres :• ip 5;

•n

Pawnee
two
It is

H. Russell Hastings

\:;f

"some' time in the trading

dfepartf

ment. Mr. Hastings had been in
1 business for himself in Detroit.

•/1 ■ i. ;■

•

.

t

blocks

/v The

the

C. F. Cassell & Co.
J; CHARLOTTESVILLE,
Hunter
-rector

G.
of

(bounty,

Cockrell,
Finance

hard, Cook & Co:, Stern Bros. &

'has

joined

-bnd Street, N. E,„
Cockrell

as

will

substantial

pear

from- the1 sale

proceeds

296,000

shares

commopf

future,/timev

/ ',./ /;

■

firm

Murray Barysh
Murray L.
120

on

Barysh

of;

15.

Broadway,

Cify; members of the

'•;_"/

ries

'

among

of

///■'

chase

warrants)

and

.Gamble-Skogmo,

1958) at

par

Inc.,

preferred
prior

($50

5%
stock

to

per

July 31,
share) and

dividends.

preferred stock, se¬
1948
(with stoek pur¬

,

on May 25
120,000 shares

publicly

cumulative,
(convertible

6%

of

those which

offered

7;

'

2,605

nee

of

County

the

which

owns

?

the Paw¬

its

wildcat,

or

New

v ;




corporation's gen¬

Peftason Jenenbaunt Go.

Spinnmg

/

LANDRETH

Delhi

■i

.

..

.

I

.

Oil:

Teletype—SL 486

>

:

.

/

f.

-

V

/

Southern Union Gas

*•/•/

Stix & Co.

Southwest Gas Producing'
V'r,

y

,

T

vrf.

/,//:

Incorporated

Bought.— Sold
;

^

BUFFALO, N. Y.—A. J..Burke
Co., Ellicott Square Building,;
now doing business "as;'a
'cor-J
are -, A.
York, poration., ' Officers
J.

&; &
York,. is

,

v

tary.

LP. 246

v

Southern Production
r

-

:>-

r -

Rockwell Mfg,

BUILDING

ST. LOUIS 2, MO.

—

Quoted

INVESTMENT SECURITIES

:

509

Ernst

New

LOUIS

The net proceeds will be

added to the

T Consolidated Dearborn

v

Exchange is vacationing in, Burke, Sr., President and Treas¬
urer;' M/H. Burke, Vice-President;,
Adirondacks.; for the' ; next
and Albert J. Burke, Jr., Secre-'

three weeks.

mon.

ST.

com¬

Commpawealth Gas-

rentals and' the cost of drill1-

Now

Co., Inc., Wichita, Kan¬
par
for the preferred

Black, Sivalls & Bryson

proceeds will be used' by

A. I. Burke

at

and. $25 pen share for the

Berkshire Fine-

drilling and equip/

on

sas,
•

the St. Louis Dairy

acreage. -The balance

ing test wells

terials

1970 of Na-

of

the company to meet its share of
the

shares of $20 par value, common
stock of Wichita Building Ma¬

Dairy, Products / Gorp.,f

■

Vacation,
of

/ tional

SCHEECK, RICHTER COMPANY
.r

Landreth

.Stock

the

*

pf .Fleet>Qi!

identified

'■•./v.

,/3% debentures due

stockv.wjll be used

ping; additional wells, oh

Dir j

of June

be

a:

r;.
with the Sales Department of the- undeveloped properties.' •
'.»<■<—I————:—-r
'firm.

Co.,

,

of

offered 1,050 shares of $100 par

Reinbbldt & Gardner and Stifel,

-

Albemarle,

the

some

of the cost of

VA.

C. F. Cassell & Co.,
Inc., 112 Sec-1

Mr:

,

:

value,

/Co., Metropolitan St. Louis Co.,

by the company to meet its- share;;

former

of-

covering

amount of acreage are.
owned by
the company, which,
may be ex¬

plored at

Vr

7

cat

Corp.,

,

1

.

liabilities

-

has been with the firm for

.

;

current

Prescott, Wright, Snider Co.,;
Kansas City, im May publicly

& Co., New-

additional wells, and perhaps/ as
partnership in Crouse/ & Co.-,/
Nicolaus & Co., Inc., on May 27^
many as 30 in all, will be,drilled
Penobscot. Building, members, of
on this
properly.
. J
/ were among: those offering^ at
*.
the Detroit Stock Exchange. Mr.
>Interests in four groups of, wild-' Z102 and interest? $30,000,000^ of
Currie

v

f

contemplated that at least 7

'to

-/

■:4

County,; Okla., oh wjiich
producing wells are located.

V Dempsey-Tegler

with

$770,192.

eludes

Gilbert S. Currie

73

:
%

1,000,061 shares of North Amer¬
ican. Aviation,. Inc., capital stock
(par $1 per share) at $12.75 per

by

utility company., ..The net
proceeds from both of these will

stock at: 16.66

common

the public offering on June 3 of

Louisiana company will use the
proceeds to-pay off these notes.

same

stock at $12.50

share.

Among

100i35i

promissory notes, due May 28>
1949, held by three banks. The

St.-

common

#

series D, due May 1,1969, which
secure a like amount of

$12,000,000 of first
2%% bonds of the

mortgage

the

2V2

share; and thereafter and on
prior to May 1, 1958, to 1JA

shares, of

first

and Bear, Stearns & Co. and

ers

Grouse & Co. to Admit Aetna Securities
Corp.
Currie and Hastings // Offers Fleet Oil Issue
/

or

interest, the net proceeds to.
be used to acquire
$14,000,Q0A>
of Louisiana
&, Arkansas Ryn

•

f'-r/.V

per

and

offering 80,000 shades
oi .Kansas City
Powe^ & Light
-Co.
4% cumulative preferred
stock (par $100);. There are also
being offered by Lehman Broth¬

V,

'/

:

*

v

mortgage Z%% bonds, series- B,
due June 1,
1968, was publio-

publicly

$:'

^

An issue of

An investment hanking
group

/ / >.,v:

for

stock at

com^

May 10, 1948.

on

City.

how-<

;/>

s;

entitle

scribe

open for
,

headed by Glore, Forgan & Co,
and W. C. Langley, &
Co.,/are

'

'

The

>

•

Vft>i

^ New York 5,;
i/

capital.

$10 per share on or prior
business
late / this
year.
The
to, May 1, 1950; thereafter and on
Strouss-Hirshberg, Co., acquisition
or prior to
May 1, 1953, to two
in Youngstown,

rapid advance in op-i
erating costs."As a result, net in-!
come was
$367,293 lower than for
the-previous 12 months'' period.

SMITH,/Chairman/J;7

Broadway,/ /*

working

■

business of Gale & Co.,
primarily,
consists of the
financing and dis¬

stock outstanding during the
year ended1 Jan. 31, 1948; com¬

evei> a more

ft/Yearbook Committee, NSTA /yi;
yCollin, Norton, & Cd./y,^/':p/:7;//t/'i

-

$10(1,000" Un¬

secured note payable and for ad¬

mon

stock for

■/./>•„'./;

was,

-

•;jft

The net proceeds will

be used to retire the

average, numbqr of shares pf com¬

to $61,000,292- for the 12*
months
ended March 31,
1948, an increase
of $6,043,502 over the
previous 12
months' period. There

/ •
/We like to-feel that we profit: today on yesterday's good
willan^
experience. This is proven
by the fact that we are now- oyer $5,00ft

.•// /.•/''gross for

/ft/

$1.50 cumulative pre¬
stock, series A, no/, par
(with' common stock war¬

Gale firm.

taxes

after

';:// /

-

/"/

•

"
-

Bell

Teletype

SL 456

-

{

OLIVE.

STREET

St. Louis l,Mof

Building
'

St Louis 2, Mo.

Garfield 0225'
L. D. 123

f

■

of

value

•

-

i'

:

Stifel, Nicolaus &
offered publicly 9,000

Inc.,

ferred

was
$17,231,481, equal
payment of preferred- divL
dends to $5.94 per share .on the

ag-(

Gross operating .< revenues
fori
the company and its
subsidiaries!
continued upward and
amounted!

V.*1*

.

LIBBINGft5

Electric

$5,000,000.

Lex

.

ner

AD

an

,

T.

\v

pur¬

1949,j

Unionj

stock for

/

#

program of Union and its. sub-j
counting of instalment contracts
sidiary, Union Eleetrie Power Coi pared with
$18,653,570, or. $7.05, on- motor
In. March,
vehicles.
1948^ the North, Ameri-^ per share for the preceding
year.
Each common
can
stock
warrant
purchased 100,000 shares
A new branch store is now
under
o^

Jack F. Glenn 'IT
•

common

*

liabilir

.

gregate consideration of
$5,QOOH
OQO.
The net proceeds will be
applied
toward
defraying
the
costs
of
the
large construction'

It. Waggoner,
Wyatt, Neal &
■/. Waggoner, Atlanta; F.. D. Wil- '
lis; Merrill Lynch, Pierce, Fen-: ;
.•

authorities, to

or before June
30,
105,000; additional shares of

Means,; Trust Com- /
pany of Georgia,; Atlanta? Julr ian
A;
Space, Jr., Johnson,
LaneSpace & Co.? Savannah; '

v

agreement

.

chase on

.

:.;';

an

North

governmental

At- '

Alexander Yearley, The Robin- /
son-Humphrey Co., Atlanta.
:
The following were-elected

t.

the

into

American Co.,
parent, un<fer which that
company
has; agreed, subj feet to. approval
of

labftLtSv Secretary-Treasurer)-—
,i

entered

at

Consolidated net. sales. of the rants) and 9,000 shares, of com¬
mon stock,
$1- par value, of* Gale
May Department Stores Co., St;
& Co., in units of one
share-of
Louis; and; subsidiaries for- the
preferred (at $25 per share)* and
year ended
Jan. .31',
1948; were' one
share of common stock (at
the largest in the
$4
company's- his¬
tory,. amounting to $358,013,576, per share), or $29 per unit. An
additional 8,250 shares are being
an increase of
$27,681,708. over the
purchased by the
previous peak volume of
underwriter, of
$330;- which,
2,000 shares may be resold
331,868 for. the preceding fiscal'
to officers and
employees of the
year.
Consolidated net profit af¬

.

•

:

assets

amounted*- to

month

shares

Co., operating in St.. Louis and!
vicinity,
:

^

19481

$432,945, while current
ties totaled; $276,839.

.

J, 1968 at 100.75 and
interest, thej
net proceeds to be.
applied toward
GEORGIA SECURITY DEALERS
the cost of the
ASSOCIATION
construction pro¬
i : ; ]:
The Georgia
Security Dealers Association has elected, officers for gram.; ofthe utility ' company'sj
the year
system.
beginning July 1st next. These are as follows:
'/•,__' ]
; '
*7
On May 7,
v".;.V
President—Jack P.

Current

-

31,

Members St. Louis Stock

Exchange

„

■

12

By DAVID M.
.

This Week—Insurance

,

Former

DEUSEN

By E. A. VAN

FREUDENTHAL*

-

. .

.

Business Consultant •
/
Vice-President and Treasurer, Bloomingdale Bros.

Retailing expert explains tax and accounting implications of last-in-first-out rule in inventory valua¬
tion. Praises it as leveling out extremes of profit or loss, and as helpful to economy in ameliorating
distortion from extremes of economic cycle.
>

Stocks

Although the market movements of fire insurance stocks tend
the cyclical swings of the stock market as a whole, there
times when they do not synchronize, but develop either a lead

.

Aspects of LIFO

The Larger

Bank and Insurance Stocks

Thursday, June 17, 1948

& FINANCIAL CHRONICLE

COMMERCIAL

THE

(2644)

.*

to follow

Generally, the need for a more accurate means of appraising the value of inventory
origin in the retail trade late in 1939, according to one authority. Many had been
studying the possibility of using LIFO for some years before that date. In 1937 and 1938,
In comparing Standard & Poor's weekly index of fire insurance
there
were
■ ■■
#■■■■..
1————
——■■■ :
—-—:—■—-—r—•—*
a—
—•
stocks with the Dow Jones Industrial Average, it is found that the
Leveling Out Profits
very rapidly even before prices
discussions on
1929 boom high was reached by both indexes in September of that
declined.
It followed
then that
Over a period of time, the LIFO
the subject at
year; likewise the 1932 lows were both recorded in mid-summer.
the saving in taxes, occasioned by method, as you can readily see,
the Board of
In the ensuing recovery to a subsequent market high however;
the lower profits
calculated on tends to level out profits as be¬
Directors'
this was first reached by the fire stocks in February, 1936 (124.3),
LIFO during a period of high tax
tween
good and bad years.
It
meetings of at
but the Dow Jones high of 194.40 was not attained until a year later,
rates and high prices, would be
decreases
the
proLts under the
least one large
March, 1937. Since then there have been other divergencies, while
paid back at a low tax rate when FIFO method on rising prices and
departmen t
from the low of 1942 the fire stocks have developed a pronounced
both
it increases

are
or

lag.

a

.v

•..

.

■

found its

.

Store.

follows:.

relative lag, as

1942 Low

June 9, '48

Advance

86.80
92.92

135.20
192.56

+ 55.8%
+ 107.2

Index

Standard & Poor's Fire Stock

Industrials—

Dow Jones

insurance stock index is sub¬

Notwithstanding this lag, the fire

stantially above the February, 1936 high, which reflected the banner
underwriting profits reported by the industry for the year 1935. The
record of the Standard & Poor Index from 1935 to 1948, showing

is as follows:

annual high, low, and mean,
Year -/

+A\A.'

A'"' A

.

"+"

v.

1936

-

-

124.3

A

80.1

—

1938

1939

A;

110.2
116.3

108.2

86.8

108.7

106.5

1945

119.2

117.6

<

111.6

1946

■

1948_

129.2

the 1936

119.0

135.7

(to June 9)

however, it is found that
several have not moved above their 1936 highs, on the contrary, they
are priced substantially lower.
Based on bid prices the record of
26 leading fire insurance stocks is as follows:
:
stocks are examined,

;

1936

% Change

June 9,'48

High

—33.9

-

69%

Aetna Insurance

•American

Insurance

*Boston Insurance

t
*

Continental

—

.

i

Insurance

Fireman's Fund

—

—

—
89
_______112
1-*--'.
46

•

:

,+34.2
+33.7
—36.5

56%

,

2.8

6.8

,

66V2

49%

Fidelity-Phenix
Fire Association

/

17%
68%
61%

—37.7

57

17%
73% +
46
v

—

__

45%..'

.

91 %

Insurance"

Agricultural

-

-.

.

—

V 102
-.+,45

—-

8.9

'

Hanover Fire

______

____

Hartford Fire

] Home Insurance
Fire

National

41%

—

______________

Hampshire
1 New York Fire___
New

25

;

29%

River

/Pacific Fire

140
110

---

/Phoenix Insurance
; Providence Washington
''St. Paul Fire & Marine___
Insurance

Security

V

—________

Fire

S.

U.

,

AVERAGE

—32.3

+ 24.4
—4-3.2

,

—18.0

'

.

:

—13.7
—45.0
—17.9

j —25.0
—19.5

88%

44% ;"+ + 33%,
46%
80
43
27
:
60%
;; 46%.+/::
;
;. 58%
54%

—25.3

—23.4
—

7.3

stocks

21

currently^

are

quoted lower by amounts varying
Falls and

46.2% for National Fire.
As

high

already noted, the 1936

reflected the excellent underwrit¬

ing profits reported by the com¬
panies for the year 1935.
The
heavy fire losses and unfavorable
underwriting operations of the
past few years partly explain the
lower market valuations of more
Several
have

of

on

Request

,

Laird, Bisseil & Meeds
Members

New

York Stock

Exchange

120 BROADWAY, NEW YORK 5, N.

Telephone;
Bell

companies,
a

however,
and

strong

steady growth over the past 10 or

Manhattan Company
Circular

-

exhibited

BArclpy

Y.

7-?500„

Teletype—NY 1-1248-49

(L. A. Gibbs. Manager Trading




Dept.)

new

more

at

He buys
price,

unit.
the

new

then having in stock 20 units, ten
of which cost him $10 and ten at

$15

Being a merchant he

piece.

a

all

marks

the units

of

up

and sells at retail half of

to $20

his stock

$200—i.e., ten pieces at $20
each. Assuming that the ones he
sold were the ones he had in his

for

opening
inventory
(FIFO) the
goods sold is $100 and the
gross profit on the $200 sales is
$100.- If on the other hand you
assume that the units he sold are
those for which he paid $15 each

cost of

(LIFO), his gross profit was only
In the first instance (FIFO)
it is the value of the ending in¬

$50.

ess—call it what you

eral

terms—it

depends

on

many

years,

of

impact

special and individual considera¬

and

corporate tax rates

whether

and

likely to go lower or stay at
present level, and more im¬
portantly: will the volume of in¬

are

the

ventory of the individual business
contemplating
the
change
be
higher or lower than the present
level?
These are some of the

both

the

on

the .price
upswing

the downswing.

Now
ten

in

change

structure,

tions, notably a forecast on how
much
higher/ prices will go—if
they will at all—or whether they
will remain at the present level,

a

good deal has been writ¬

the theory that LIFO is a

on

child

necessity. That its em¬
phasis is primarily on the earn¬
ings statement—that is confuses
an
already too involved balance
sheet and that it violates the prin¬
of

ciple of cost which is the mainstay
accounting philosophy. None
of these arguments have real va¬

of all

lidity.
Accountants have
been
must be deter¬ most farsighted in their willing*:
they
are
questions ness to adjust their thinking to
which must be individually an¬
change. And since this new era
swered.
A A++ + ' ++ of a changing world found its Re¬
But we must not be diverted
ception with the outbreak of the
from the main theme of this dis¬ second World War, change in price
cussion., There can be little argu¬ because it is maintained a distort¬
ment about the tax advantage to
ing factor in measuring results.
those who in 1941 changed to the Certainly it must have
been a
LIFO basis. The argument next to
long stride that was taken when
be considered is the accounting
in the earlier days of accounting

questions
mined

which

and

..

validity of LIFO as a device/ But
it ig perhaps difficult to separate
the'
into

genesis of the use of
separate

parts

LIFO

the first step was

ing

not

cost

taken recogniz¬

alone

whichever

market

but "cost or
is the lower."

consisting of

time go down why

some

(1)

philosophy and

sons;

assumption is that every

business

minimum amount of
inflate profits? You will note that
inventory in order to stay in busi¬
we
have up till now studiously
ness,
and that minimum is the
avoided the tax imolications of
closing inventory at the end of
the situation. They by no means
the year of change.
If, to give
represent the only valid reason another example, a copper mer¬
But the tax
reasoning is important and is not
too clearly understood, and so it
may be well to spend a few min¬
adopting LIFO.

utes

on

the subject.

for this part
all

of

the

Let us assume

of the discussion that
in value will

increase

some

day disappear

what

then this is

happens:

profits

The decrease in
calculated on the LIFO

as
compared with
turns in the years when the

basis,

FIFO
price

structure declines into an increase
in

profits calculated on the LIFO
over the FIFO basis.
Pre¬

sumably
all

that, taxwise,

course

makes it

that,
of
is not the case. An exami¬

even-steven

—

requires

a

chant needs

1,000 lbs. of inventory

nation made

a

group

was

conservative.

On the way up,

i.e., with rising prices, this, pro¬
duces a conservative answer. Now

be argued that on the way
result may be obtained
which will produce an inventory
evaluation which is higher than
it may

down

a

customers, and

30 cents a
it

at

20

sumes
were

but

by us in

Accountants have never as
objected to a method that

poses.

the demands of
at the begin¬
'cost or market whichever is the
ning of a year that inventory is lower." The answer is first: let's
valued, at 20 cents a pound, he has face that situation when it occurs.
a
total valuation in inventory of To a partial degree we have al¬
$200.
The theory is that 1,000 ready faced it. There are depart¬
pounds is the minimum under ments in stores where the index
which he could operate, and that indicates a lower price level, than
at the end of the year instead of existed in the base period year.
evaluating that inventory at the So far no accountant has said that
then current price, let us say of where
the total store index is

in order to supply
his

he

pound, he can

cents

a

evaluate

This as¬
that he sold

pound.

that the goods

which
the year at 30
is just as good

the pounds of copper

bought during

1941 indi¬ cents a pound and
cated that quite consistently when an assumption as the reverse that
the price structure was high tax what he sold was the 20-cent cop¬
rates were high and that when
per. The result, of course, on the
table whose stocks are currently prices declined, the tax rate de¬
calculation of the cost of goods
clined.
We further^ forecast or
quoted higher than they were in
experience
after
the first sold, is an increase in that cost
the
1936.
World War that tax rates declined over the first-in, first-out method,
Changes
in
capitalization in
some
under which it would be assumed
instances, such as Aetna,
*A talk bv Mr. Freudenthal be¬
Fireman's
Fund,
Providencethat he had sold the 20-cent cop¬
Congress,
Washington, etc., have also af¬ fore the Controllers'
per during the year.
fected market prices.
Chicago, May 25, 1948.

accompanied by an ir¬
regularly upward trend in earn¬
ings. In this group will be found
the five companies listed in the
12

will, is badly

were

years

Having taken that step the ac¬
(2) tax rea- counting profession, if it wanted
:
to, cannot now retreat: with re¬
The theory on which LIFO was
spect to the base period inventory
built is that the taxpayer is un¬ it is completely in line with the
justly penalized by the ; rise in previous thinking that it should
Tax Implications price of his inventory inasmuch be evaluated on the LIFO basis
+
as
such an increase in inventory which is a cost basis and refer¬
With the foreseeable possibility
value means that he has to pay a ence is here made, particularly
that the price of those same goods
tax on an unrealized profit. The
to its use for balance sheet pur¬

which gave the higher
profits. It was the profit on the
goods assumed not to have been
sold
which gave
the extra $50
gross profit.
ventory

basis

recent times.

Bank

units

for

amazing thing about this

between 2.2% for Glens

ten

would at

record is that the bid prices of
only five of the 26 stocks are higher today than their highs of 1936,
viz: Continental, Fidelity-Phenix, Hartford Fire, Insurance Co. of
North America and St. Paul Fire & Marine. The average apprecia¬
tion of these five is 39.1% vs. the index appreciation of 9.2%. The
other

$15 for each

overstate balance sheet values and

^Adjusted for capital changes
The

these items he finds he must pay

+72.0

+ -—10.9%

___.

inventory ten items at a cost of
a
piece.
His retail selling
price is $15 per unit. To replace

$10

—37.2

(

^Springfield Fire & Marine-—!

,lV,,

42%
13%
24
105 /++

!

5.3 A

+ 31.1

46%
33

49%

—

2.2

—33.3

28
104%

40%

^National Union

\ North

;

84
86

America

Insurance Co. of North
'

31%
27%
118

33%
41%
90

Great American Insurance—i—

—

—

Glens Falls

the

.

the 194*3 high of 146.7 was 18% above
high, while the 1948 high of 135.7 is 9.2% above. When the

records of individual

include

resulting from
By
paper
profit is
unrealized profits of

merchant has in his opening

A

126.6

—————

would

profit

higher value of the closing
inventory. Let us be specific:
:

111.3

-

which

basis
paper

the

It will be observed that

i\

a

inflation?
meant

116.9

1947

the

simply this: With rising prices
it a fair accounting procedure
continue to calculate profits

the
:

128.1

146.7

■

Now

to

114.8

138.5

110.4
-

—

"fungible/')

word

on

;

114.5

1944______

Freudenthal

David

like

was

—

1943

was

don't

when

than

homogene¬
inventory.

ous

profits over the FIFO
prices fall.
Stability—an evening-out proc¬

method

certainly lowei needed in a world that is best by
they would have been hac great fluctuations. If for no other
they been calculated on FIFO. reason than this, it does seem that
The saving was at an 80 odd per¬ LIFO serves an exceedingly good
cent tax rate. When prices decline purpose.
The earlier English ac¬
those savings will be repaid unless countants
tried
other
methods
there is a change at a 38% tax
(since discarded) to bring about
rate. The difference remains the the same stability. But provided
property of the taxpayer in perpe¬ the assumption is sound, it is a
tuity. Whether now is a propitious desirable thing both
from the
time to adopt LIFO is something standpoint of the individual busi¬
that many people are seriously ness and for the economy as a
considering. The answer to that whole for us to do our accounting
question is not to be given in gen¬ in such a way as to decrease the
war

where the in¬

ventory
an

*

97.8

122.5

-

1942-j.

by

indus¬

tries, but only

97.0

—-—

1941

certain

.

99.6

83.8
100.1

1940___—

ha d

used

problem that confronted retailers

A'"' 87.3

•>

107.6

;

been

was

A 101.0

91.5

+

—

prices declined and taxes de¬
And, of course, part oi
that is just what happened. Prof¬
its calculated on LIFO during the
clined.

me

.

96.7

113.2

73.6

1937

113.5

-

t i

LIFO

the

99.1

—

102.7

,

Even at

that.

(I

Mean

t

117.5

80.7

1935_

/

;
High

Low

■

.

higher than the base and
sultant LIFO inventory is
lower than

"cost or market

is lower," that

ever

the re-rthereby

whichr

for tho^e de¬

partments which are higher some
special treatment must be pre¬
Perhaps when the
is lower than the

scribed.

total

base
will of ne¬
cessity be set ud. -And besides
maybe that problem will n^ver
arise for those who adopted LIFQ
in 1941.
Nor does this problem
necessarily condemn the theory

store index
some

special reserve

.

from
It's

the

accounting

standpoint.

perfectly true that to argue
(Continued on page 37)

Volume

167

The

Number 4708

THE

COMMERCIAL

Dr.

T

Einz'g comments

implications of

on

fought

return of

Hugh Dalton

LONDON, ENGLAND.—Former Chancellor of the Exchequer
Dalton, who had to resign in November, 1947, because he
prematurely
disclosed his Budget secrets to a
journalist, is back again in the GovHe

he

even

Prime

once

more

member

a

him,
his

duties

m

->* -

ixe
x

-str

S 'if

De¬

a

r

m
r'Ak

£-■./

continue

f

for

special
tasks. But the
a

fice,

s

fore

Dr. Paul Einzlg

appointment
made

it

plain

advocate

within

will he revert to the

or

moderate

-

hi

nouncing

n

to

more

policies he pursued be¬
resignation?
The
left

his

wing of the Socialist Party

that

change

no

the

looks

would be made in
respect to eco¬
coordination which is at

nomic

present in the firm hands of Mr.
Dalton's successor at the

Treasury,

Sir Stafford

Cripps. Both he and
Foreign Secretary Bevin are un¬

him

upon

now

their spokes¬

as

in the government. He will
expected to insist on the na¬
tionalization of steel, about which
several members of the govern¬
man

be

still entertain

ment

He

will

be

doubts.

some

expected

to

continue

derstood to have made
strong rep¬
resentations to Mr. Attlee,
object¬

levy, if possible before the

ing

interference

eral

departments

expected to press the government
to elaborate a new program of
nationalizations after the general

to

any possible
their respective

with

by Mr. Dalton. And
sufficient influence to
impress their views

both
be

have

able

to

the Prime

on

Minister.

new

and

man,

office?

a

He is

a

do

strong

of action/ burst¬

man

ing with energy after his enforced
during the last six months.
His special qualifications are in
rest

the

agitate in favor of
election

elections.
to the

What, then, will Mr. Dalton
in his

to

Spheres

of

economic

Or

He will be

likely to live

reinstatement in

will

he

revert

to

now

that

views

erate

of

cacy

up

mod¬

the

advo¬

extreme views has

more

be

To

office?

more

able

to

these

answer

foreign affairs. A politician
observed that, if he is
kept out of
these affairs; his position will be

sentment

similar to the schoolboy who, hav¬
ing been expelled last term, is
readmitted on the understanding

world, owing to the reversal of
his cheap money policy, reversal
which he attributes to a sinister

that he is not to take
part
of the games. There

is, of

any

course,

was

on

the

against

City.

departments

which

policy

making progress he
fairly friendly terms with

was

technically do not belong either
under

war

But

"money

Sir

der Mr.

takes

an

economic

the

and

with
and

in

Stafford Cripps or un¬
But-the former

Bevin.

active

interest

affairs of
latter

the

in

the

Colonies,

concerns

himself

relations
between
Britain
the Dominions, so that even

those

directions

Mr.

would be trespassing
serves.

'V'! Mr.

Dalton

their pre¬

on

'.v.
Attlee will find it difficult

to assign to Mr. Dalton any im¬
portant task without antagonizing
or the other of these two in¬
fluential members of his Cabinet.

one

He

ill

can

either.

afford

to antagonize
very

to

But then he

Mr.

antagonize
ill afford

can

Dalton

who

is

popular in the Labour Party.

That

is

why

decided

he

not

to

keep Mr. Dalton out of the gov¬
ernment any
longer.
While out
of office, Mr. Dalton was making
speeches and was writing articles
which were highly embarrassing
to the government.

He advocated

capital levy and the nationaliza¬
of any firm which pays too
high dividends. He placed him¬
a

tion

self at the head

of the

left wing

is

far, particularly, as

so

This

is .the

radical policy

in

the

is

he

Stafford

sure

to

a

sound basis."

this afternoon if I try to give

linked

part; of two separate eco¬
the Commonwealth

oh

fronts

con¬

all

the

the

hand

one

Europe"

and

the other."

on

Western

dependent
supplies

of one kind

The Only Large Scale Convertible

Currency

or

For both these groups our ster¬

anotherf rom:

ling currency is of great impor¬

Western

It

tance.

Hemis p h e r e
and a very

large

is, indeed, today the only
scale convertible currency

large
been

that

those

countries

fall

within

the

Western

Eu¬

ropean

in the limits of the

sterling group,
yet it still maintains a sufficient

Sir Stafford Cripps

or

,

„

.

.

„,

t

Commonwealth categories of both
of which we have constituted our¬
selves

it

is

important element.

an

The

Marshall

ject to give
the
so

time

has

as

ob¬

we

production

our

eventual

an

its

which

can

as

balance

to

with

the

Western Hemisphere upon as
high a basis of exchange of com¬
modities

services

and

is

as

sible.

by

pos¬

We must reach that

zation

equali¬
not by
A general expansion

expansion

contraction.
of

world

trade

is

t country-for

maintaining
market

our

that

we

and

vital

it

enough

exports

to

our

is

only by
share of a larger
can hope to sell
balance

to

degree of convertibility into other
currencies to make it the most significant factor in world trade to¬

It is therefore

day.

ERP

or

for

in Western Europe

us

within

increase

reach

Plan

called

now

still

exists.
Though it has
deprived of some of its use
owing to its non-convertibility
into dollars and gold except with¬

propor¬
of

United- Kingdom

by 149%
September,.
Junef 1947 it rose by only

f For food items alone, the in¬
between July 1914 and 1920
was
156%; for September, 1939
to June, 1947 the rise was
only
17%, mainly because of the Gov¬

our

an obligation
guardian—as it
were—of this implement of world

upon

us

the

as

trade
and
you

to
maintain
the
strength
stability of sterling.
That as
know has been one of the

main

objects
of
policies,

internal

our

financial

by which we
have been attempting to hold and
indeed

to

pressure

reduce

the

ernment's

r

Similar

figures for consumer
prices in the United States, whose
experience
other

sterling
and
to
purchasing power. In

is

1914-1920:
food only

of

necessity

overseas

therefore, v

we

When,

payments.

examine,

our

contribution
tor world
economy
it : must
not
be
merely
as
an

isolated

unit but

as

a

All

*An

address

before

the

by

Glasgow

Sir

closely

Stafford

Chamber

of

Commerce, May 21, 1943.

done

we
war

much

better

after

than after the first world
we

this

war

have also done much

better than other countries.
In
the

offer to sell

1939-June, 1947: All items 58%;

prices

has

been

Western

and

nared

to

Europe as the
certainly not presacrifice
Empire and
is

the
cost

for

the

sake

Union.

pean

of

a

Western

I

think, congratulate
our
comparative
price-levels
and
I
might perhaps point out that these
figures do not tend to show any
can,

ourselves
control

upon

of

need to devalue

ERP

The

July, 1914-1920
living index for the

nor a

solicitation of

an

offer to buy

any

rowed dollars
serves

enable

about
us

sources

One

Dalton

thing is certain.
is

now

Cabinet he is in

himself felt

trusted

a

of

the

position to make

even

with

Since Mr.

member

a

any

if he is not

It remains to be

of New

seen

inner

that

conflict

is

to

from

Those

have

our own re¬

£1,000

millions
our

(Continued

on

page

Company

York, Inc.

fought out behind closed doors of
the Cabinet room at 10 Downing

v'3% Convertible Debentures, due June 1,1963 '
Dated

June 1,1948

*

Bache & Co. Branches
Out-of-Town

Be

to

Of the

The New York Stock

Bache

of

its

&

Exchange

Co.

out-of-town

$4,322,500 principal amount which

announce

offices

$57,382,600 principal amount offered

to

holders of Common Stock of the

Company, $53,060,100 principal amount was subscribed for upon the exercise
of Subscription Warrants issued to such holders of Common Stock. The

Open Saturday Mornings

cise of

will

was not

subscribed for through the

exer¬

Subscription Warrants has been sold by the several Underwriters.

Saturday mornings
Summer months for

consultation

The

purposes.

change itself is closed
days until October.

Ex¬

Satur¬

on

The announcement by Bache &
stated that this decision was

Co.

made

at

the

out-of-town
agers,

request
branch

that

and

it

of

various

office

would

people, whose business

or

man¬

HALSEY, STUART & CO. INC

enable

profes¬

sional activities take most of their
time

visit

administrative

over

on

other

the

days of the week to

branch

their

>

offices

investment

and

talk

problems.

June 15, 1948.

to

overseas

borrowed

practically

be

Street.

en¬




or

to balance

open

know what tasks he will-be able
to entrust him with.

Gives Respite

one

off these Debentures.

Consolidated Edison

will emerge victorious from

this

the

So in order to avoid a party
split, Mr. Attlee considered it ex¬
pedient to invite him to rejoin the
Cabinet, even though he does not

sterling.

$57,382^00

Euro¬

who

more

*
,

We

accounts.

period
of

Commonwealth economic relations

during

cism.

much

marked.

Sir

unduly. In matters of for¬
eign policy he is likely to clash
Mr. Bevin, as he is not so
on

100%;

food only 100%.
>
There
were,
of course, other
countries
in which inflation of

come

27)

X, All of these. Debentures having been sold this announcement appears as a matter of record
only and is neither an

working with capi¬
antagonizing

remain

friendly in his criti¬

items

106%.

with

keen

many

thing we must more
those efforts we have had quite a firmly get into our minds is that
the Marshal Plan—ERP—gives us,
marked degree of success in most
in itself,,mo improvement of our
difficult circumstances, but still
conditions.
It gives us the time,
all the difficulties are well worth
but the improvement in that time
while if we can accomplish our
can only come from our own ef¬
objective,
:
:
forts.
Let me just remind you of
If we compare our efforts in this
a couple
of figures to emphasize
matter with those of other coun¬
what I mean.
During the yeartries we find that not only have
1947 we utilized by way of bor¬
maintain its

but that

talists and is against

latter,

of

were:

<

own

them

than

be much less

typical

countries,

inflationary

upon

policy of subsidies oh

food.

Cripps who realizes the

-even

it
meant
to
pursue.
He
criticized his successor, and
showed that, if necessary, he could

rose

whereas in the period
1939 to

crease

upon

tion

slight sketch

31 %

'

countries who

the

you some

balance of payments with the Western Hemisphere is

our

which

are

<
■

.

it

Cabinet

with

clash

on

nomic groups,

pressing the government to
adopt anti-capitalist measures. In
this

you

economic life

our

major problem

for

that

more

alone

reason

influence

his

use

adopt

much

have declared
is longing to re¬

this

For

feels the

necessary,to expect that he wih

firm

a

him and

on

he

now

barons"

taliate.

of the Labour Party, and tried to
the government's hands to

force

strong re¬
the
business
a

now

conspiracy of financiers and busi¬
While his cheap money

few

other

must bear in mind

we

that he harbors

the Colonial Office, the Common¬
wealth Relations
Office, and a

.

be of interest to

may

nessmen.

in

questions

V

:

present position and link it up with the needs of Western Europe and the Common¬

concerned.
1

own

his purpose?

served

affairs

and

Is he

his

owes

1950.

gen¬

expectations of his support¬
whose pressure he largely

to

ers

in

big capital

a

hope it

our

wealth

position to debate

a

Cabinet the radical policies he ad¬
vocated in public while out of of¬

state-

liient

of

department.

The question is, will Mr. Dalton

available

official

determination

any

.

partment, and
is

I

supporters* among mem¬
bers of the Cabinet, and his word
is bound to
carry weight.
;

■
■T

without

policy of

ish efficiency "to put

;V

nobody
—

several
-

Minister

a

But

economic matters on an equal
footing with Sir Stafford Cripps,
and foreign affairs on an equal
footing with Mr. Bevin. He has

B:

3

wfc?

■

•

is

W

/*'■

will

consist of.

with the

or

the

He will be in

Ifl||

ap¬

what

Cabinet.
:——

of

Minis¬

pointed

the

duties

the

who

of

<§>

him¬

or

ter

is

not

-y

Exchequer, Great Britain

Asserting sterling, despite its non-convertibility into dollars and gold, maintains sufficient convertibility to make it most significant factor in world trade, Sir Stafford claims success of British efforts to
maintain sterling stability. Warns Marshall Plan will
only give respite and will not improve British con¬
ditions. Cites recent British industrial
achievements,* and stresses importance of Western Europe and
Sterling Area getting in balance with Western Hemisphere before end of ERP. Urges increase in Brit-

Downing Street. Says Dalton
disagrees with both Cripps and Bevin.

knows,

13

By SIR STAFFORD CRIPPS, K.C.*
Chancellor of the

to

inner conflict to be

an

(2645)

Sterling, the Sterling Area and ERP

out behind closed doors at 10

ernment.

CHRONICLE

;

British Cabinet and predicts it will involve

self

FINANCIAL

Dalton-Ciipps-Bevin Triangle
By PAUL EINZIG

•

&

re¬

to

COMMERCIAL &

THE

(2646)

14

Thursday, June 17, 1948

FINANCIAL .CHRONICLE

John Doe—Economics of His

Pay Envelope and Savings
By WESLEY LINDOW*

Vice-President, Irving: Trust Company,

New York

-

Y'

:

John Doe as prototype, analyzes disposition of national income and
between consumers' spending and savings.
Sees ratio of savings to spending returning

its distribution

Mr. iiirdow, using

tendency for individuals to put savings in government bonds or in insurance and bank
Holds, in relation to total liquid assets, present volume of currency is not out of line, andconcludes public will continue to turn savings over to government and financial institutions rather
/
*
than invest more in corporate securities.
•
^
^
;
"

deposits.

-

mighty man.
He determines a great deal more about economic events
than he thinks.
Together with his brothers, he plays an important part In determining an
economic and fiscal policy of the public which may or may not be consistent with the
a

<£-

corresponding

services he helps to

thinner.

his

respect,

policies

the goods and

of Our

produce and he saves some of

mone¬

production
for the whole nation- is called the

authorities.
Of

John

'

The

course,

is

Doe

in

./

'

income.

tary and cred¬
it

product.

national

gross

forces that are

■

thing around $245 billion a year.

do
he

never-intended
to do, because
the

impact of

superior
leaves

forces

him

Wesley Lindow

al¬

no

ternative.
The

;

main

este'd

in

leads

thing
today ' is

up

With

to

this

John

we

to

how

take

;

.

inter-all - this

are

Doe's

thought

would like

some-"

in
you

Great

stock had

Northern

savings.'
mind, I
through

Of

it.

choice

little tour of the economic 'ma¬
chine with particular reference to annual rate of about
$210 billion.
John Doe's place in it.
;
The other $35 billion does not go

a

I think you will agree that the
place to begin is production. John
Does helps
produce goods and
services.. From this production

floods

the /Pacific

in

Northwest

.'might have. The stock has recov¬
ered
well from this temporary
'setback
and/at this
writing is

in

are

there

He uses the in¬

whole is naturally the"

a

as

year

size of the new

.

\

he makes all of these decisions on

ioffset by

jthe percentage decline in avail¬

a

are

boom

-like

more pay

,590,000

(drop of $0.22 can easily be made
(up over the balance of the year.

/;

•

.

//The prospects from here on are
(quite bright. The road is tradi¬
tionally ,•/ heavily
dependent on
(three revenue sources—iron ore,

yl*\.

Chicago, Rock Island and Pacific Railroad/
[uipment Trust, Series A
Eqi

./ :;;/;

/

(wheat, and lumber products. The
Lakes opened up for traffic early;
(this year and the demand for iron
is 1 tremendous." So

iore

far .this

Great Northern's

loadings

'season

2V4%

Equipment Trust Certificates
;-rr

To be

in

consideration

important

prospective movement for the

,

(had amounted to/only $0.26.;A

mature

most

the

with

;-t Ji.

To

into

spring wheat crop
.'again within a few points of the to be harvested in the fall. It is
too early as yet to make any real
year's high.
Most railroad ana¬
lysts still consider the shares as estimate of the probable 1948 crop
but it is understood that
among the most attractive of the yield
genuinely
investment
class of conditions in most of the terri¬
tory served by Great Northern are
(railroad equity./
favorable to a heavy yield. All in
1
The road has not been off to a
all, Great Northern's traffic pros¬
particularly good start this year.
pects over the balance of the year
As with a large majority -of the
appear good.
,-//
;country's railroads the company
From press reports it is obvious
wa s
badly
affected
by
severe
that the Columbia River floods
weather conditions in the opening

the present, goods backing up on the shelves able income was quite sharp the
envelopes and and the development of unem¬ lactual per share dip was of minor
come to pay taxes, to buy some of
they are Tatter.
In a depression, ployment./:--',: /' "Y/Y /':■''///'-;v:' ,// ^importance. The early months -of
the number of people at work goei
;
However, the general tendency the year are normally seasonally
down and the pay envelopes get
/ *An
address ; by Mr.
!low in any event. Earnings on the
Lindow
ifor individuals as a group is to
before the American Institute of
(stock for the period through April
1 This involves a number of -technicail
Banking, Buffalo, N. Y., June 10/ adjustments which are explained in re¬ keep spending in a fairly con- (amounted to $0.04.
In the first
V
1948.
, leases of the Department of Commerce*
(Continued -on page 30) ^
(four months of 1947 the earnings

income.

rec¬

around the same price. Another factor
:was
presumaoly/uncertainty in
investors minds as to how great In recent weeks the grain load¬
The
ian
influence
on
earnings the ings have been picking up.

the higher costs. In par¬
spending, John Doe is laying down ticular,/ the transportation ratio
to individuals, but <is absorbed in a sort of unconscious economic was up 2% points compared with
such items as allowances for wear
policy./ The more he spends, the [the like 1947 interim, to 41.6 %.
and tear on plant and equipment, more the economic machine will Income ■
available
for
charges
undistributed profits, of corpora¬ thave to produce. Y The - less' he dropped-23.4% to $2-606,000. While
tion, etc.* In any event, when we (spends, the greater the chance of

Production Determines income

he gets

rather sharp sinking spell a

a

course, ;he
has no
have had-some influence on the
(months. Storms and prolonged ex¬
respect. to taxes and
(company's recent "traffic, and opLet us stop and look at this he
does
not
have - very /'much tremely low temperatures inters ierations. Indications are, however,
$245 billion a minute.
Think of choice with respect to some of his Fered with the normal flow oi ?fhat the cost to the road will be
the figure as the total on a bal¬ basic
cost-of-living purchases. He traffic and imposed heavy extra¬ moderate. For the full year, then,
ance sheet.
It is the same for both can
spend more, or less,, for hous¬ ordinary operating costs. Another the company should be able to
(consideration was the sharp cursides—for both assets and for lia¬
ing and for food, and for clothing,
more than offset the earnings de¬
bilities.
Similarly, in this case.; etc., but there is a ' minimum itailment of wheat shipments com¬
cline of the early months, Earnthe figure is the same for 'both the" standard which is almost
pared-with a year earlier. There,
inevita/
iings should run between $8 and
was a substantial carryover from
production side and the income* ble for a man In his circumstances
($9,
compared
with last year's
side of the economic machine.
[last year's spring wheat crop but
However, it is /still true that
'earnings of $7.28. With the debt
That is, the value of the goods
with the break in prices there was
John Doe can eat butter or mar¬
(structure vastly improved in rea general tendency to hold
and services produced is equaled
it of!
garine; he can buy a suit in the
(cent years and finances more than "
by the volume of the, income gen¬ basement store or he can buy.rh{ the.market., ,■ . - v 4 ► ' Y * / - i.
adequate the present $3 dividend
erated by that production.
-'YY upstairs; he cari ride a bus or he f "'Aided by higher freight rates
(rate is certainly well protected.
John Doe's pay envelope comes can take.a taxi./ When he feels the company did report a gain oi
It
might well be increased or
from that total value of produc¬ flush, he will do it the luxurious 11.2% in gross revenues for the
(augmented by extras in the not
tion;
Right now, the total Income way and when he feels broke he ;first four months of the year. This too distant future..
;
/// ,//
of all individuals is running at an
will do it the economical way.
As Increase, however, was more than

He may

/ to
things

a

use

than

have

this

in

Right
prerogatives.
Once he gets his
turnCd- income he has to decide how to

now, that product is being
out at a market value of

he is.

that

>

pushed around
a
bit too by
greater

clear

Doe is only a co£
machine which Is a great deal
John

bigger than he is.
! 1
At this
point, however, John
Doe begins to exercise some of his

of

value

total

is

It

The

(couple of weeks ago, apparently caused in large measure by a
ommendation by one of the large advisory services to switch
iSouthern Railway common at

to prewar level

and growing

John Doe is

i'

$153,000

on

Sale of Lonsdale Co.

.

Completed : /

Common

Maxwell,
[Marshall & Co. and associated un-,
Blair & Co., Inc., and

(derwriters have completed an

of¬

fering of 47,943 shares of Lonsdale
(Co.

common

(and

the

bated,

i

stock at $3 per

has

group

subscribed shares of

132,631

been

share

terrm-V

The stock represented un¬

(mon offered

a

block Of 1,-

of Lonsdale

shares

com-^

by Textron Inc. to its

(common -stockholders ( for sub¬
scription through issuance of war-

Tants/-;v/// A/::Z:/.//
1

/Lonsdale Co.

sold 77,-

also has

550 shares of common to its
eers

had

certain

and

been

offi-7

of; its

/directors
■and employees at $3 per share, the *
same iprice at which the ^offering <
.

Textron com-

made to

stockholders.- / The

imon

offering

(to Textron stockholders had been

share of Lons-

(at the rate of one

idale -common for each share of i
Textron common held. ^ ;
*
ning at all-time record levels. It
F/ Incorporated April 14, 1948, Am- *
as not likely that this record -level
twill he 'maintained throughout the jder, //the
laws of - Rhode Island,;
time the Lakes are open to navi¬ Lonsdale/will acquire, from the/1
of this commodity

''I

(Philadelphia Plan)

-rnrnrnmi^m—

i

each January 1, and July 1, 1949 to 1963, inclusive

unconditionally guaranteed at to p&ymetit tijprhicipal #nd dividends by endorsemWf \ i^- X : l
'by Chicago, Rock Island and Pacific Railroad Company.
// Y/ Y<Y/ ■•//•fYY/YYi;

have been run¬

gation but certainly the .1948 vol¬
ume should top that of 1947 by a

proceeds of

common/

the sale of

stock to Textron, the inventories,
margin. Moreover, in its
imo§t. recent rate decision the ICC the leases of land, buildings and/
allowed an increase -on iron ore machinery, the business and cer-J
to upper Lake ports. Iron ore had
tain of. the other assets of Lons¬
(been
excluded
in -earlier
rate
dale; Co., a
114 year-old Rhode/

good

These

Certificates are to be issued under an Agreement dated as of July 1, 1948, which vbll:JYY
provide for the issuance'of $4,590,000 principal amount of Certificates to be secured by hew'-vj-if
standard-gauge railroad equipment estimated to cost not Jess than #5,743,220.
/YY Y>

•boosts// //;/'::/r/1 •/;/'

Priced

to

yield 1.20%

2.575%, according

to

to

Lumber-/

i.

maturity

moving
at

Issuance and sale

of these Certificates are subjectHo authorization by the Interstate Commerce Commission. ' Ly / V!
Offering Circular may be obtained in any State'in which this announcement is /YYYY/
'/
circulated from only such of the undersigned and other dealers as may
',/
lawfully offer these securities in such State.
v.:'-/./'/.■ --

The

<■

Y

'

■'

.

:

:

Z-

'

:

■■'■*

•

"

-

:

■

.

'

YY,I Y:

*

y

".

'

1 *

' >■

r-

./"

/'

.

•

*,

/•

"t

'; !■.

Y YV-Y-

HALSEY, STUART &. CO. INC.

'

•.

;

"/

about the
far

so

level of a year ago

in, 1948.

Considering

the

(general economic background and
the pihspedts for well sustained
construction activity this heavy
(volume, is

/•'

Island corporation, related to the products - have
been
and
selling
of,
the company's lines, manufacturing

over

expected to

continue.

Guaranteed Stocks
R. W. PRESSPR1CH

& CO.

OTIS &. CO.

'

(INCORPORATED)

FREEMAN &. COMPANY

McMASTER

HUTCHINSON

Bonds

;'/ ■ /■

&. CO.

Special Securities
MULLANEY, WELLS & COMPANY

F. S. YANTIS & CO.
;

the properties of
Co.

and *
con-/

•:/';/■" v"-^.y// ;;v/y/:;/,/:

./

Reginald Barnard To Be
W. E, Button Partner
;

CINCINNATI, OHIO—Reginald

N. Barnard will become a partner

E. Hutton &

Co., First Na-/

tional Bank Building,

the
COAKANTEED RAILROAD STOCKS-BONDS
25 Broad Street
-




will

operation of such busi-.

tinue the

Sin W.
and July 1) payable in Chicago. Defini¬
tive Certificates, with "dividend warrants-attached, Inthe denomination of $1!0OO, registerable as !to-principal. Not
redeemable prior to maturity. These Certificates are offered when, as and if received'by us. Certificates in'temporary
or definitive form will be-delivered at the office of
Halsey, Stuart & Co. Inc.. 123 South LaSalle Street, Chicago,
Illinois. I he information contained herein has been carefully compiled from sources considered reliable and, while
pot guaranteed as to completeness or accuracy, we believe it to be correct as of this date.

June 11. 1948.

It

investments.

INCORPORATED

To be dated July 1, 1948. Principal and semi-annual dividends (January 1

'

the old Lonsdale"

except -cash, receivables

minor

ness; :r /:..

J

-of;

high-quality textiles, being all

New York 4, N. Y.

Telephone BOwling Green 9-6400

Teletype

NY

1-1063

New

Stock

York

and

members of
Cincinnati

-

Exchanges and other lead-'

ing Exchanges
Barnard

has

on

been

Ifor many years.

v..

July 1st.

Mr.;

the

firm,

with
-

..

,

Volume 167

Number 4708

COMMERCIAL

THE

By ALBERT R. KOCII*

:

Says too much rather than too little capital
may have

you

Thinks

,

sup-

are

that

businesses have
been unable to carry out their
present capital expansion programs
for lack of funds. The concern, at least until
recently, has been rather
that business
enterprises have been forced to finance their expand
si on
through ;j

loan,
than

venture,
The

the

primary

from

about

prior

ity

of equity
capital to bus¬
in

it

has

business

stocks, at

Albert

R.

Koch

the period from the rather
sharp
decline in stock prices in the fall
of 1946 to the recent rise in such

this

Much of the discussion of

problem, however, has

looked

the

ternal

funds—that

over¬

volume of

record

is,

in¬

undistrib-

uted profits and funds represented

a

business

corporations

during this period.
funds, in fact, have always
the most important source

Such
been

of corporate

country.

;

Recent

equity capital in this
". 1 /,"
■;'•^ V v/1 !••

comments

undistributed
;

corporate

on

have

profits

been

largely objections to the level of

profits and

corporations
a

somewhat

has.'Occurred-

increase

volume

of

short-lived

•

in¬

over-stated because of under-

are

depreciation of existing assets
the

of

basis

duction

current

costs.

of

ume

high

on

repro¬

However, the vol¬

undistributed
would still have

corporate

profits in 1947
been by far the largest annual
Volume on record, about three
times that in

1929,

if all the

even

inventory profits as estimated by
the

Department

Commerce
omitted and if depreciation

were

charges

were

of

i-

increased by 50%.

'■f- Even in the

case of stock fir
nancing, the dearth of new issues
today relative to prior prosperous
periods " particularly
t h e
late
twenties, appears to have been

The net

over-stressed.

new money

obtained by

corporations through
preferred and common stock1 is¬
sues—that
of

the

issues

new

dollar

less

is,

refunding and

volume

a
group
favorable

than
war.

the

despite

corporate

in

debt

to banks and in public and private
sales of corporate bonds that have

creased

much

so

billion

in

the years

each of

1946 and

in any

and

1947, probably more than
previous year except 1928

4929.

would

And certainly no one
that the roaring

suggest

bull market for stocks that char¬

acterized the
desirable

late twenties

factor

in

the

economic situation.

was

a

general

44-

years.

goes

as

I

stock

taken

alone

has

also

been fairly large relative to other

types of security issues since the
end

of

the

*Fronl

an

war.-

The

address

proportion

by Mr. Koch

three times
line

t

right, no?

am

bers;
am

when

wrong,

I

much aviation gaso¬

as

they did before the

as

war.

uses of gasoline for
boats, construction and sta¬
tionary engines are rapidly in¬
creasing, as well as naphthas and

<

no

forgets.'' I
hope you re¬

solvents.
Albert

J. Mcintosh

Kerosene for space heating and
cooking in temporary housing, or
in quarters hitherto wood- or coal..

some

*

-

-

-

'

j

*

;

the

of

use

motor

one

member

aircraft

of

Miscellaneous

re mem-,

one

kinds

you

things I am going to tell
even though you may not re¬

heated has been in great demand,

call

who

and

told

think

I

you.

;

-,.

v.:

j

on.:

may

i

•

Let

at the

that I know

one

able

was

growth

the-postwar' demand for all
of
petroleum which has
taken place.
I aba sure I didn't'.

tral

"An

address

by

Mr,

Coal

new. cen¬

heating plants installed. It has

in

use

increased by between 25%

and 30%

during 1947 alone.

Railroads
h-

oil.

been estimated that home burners

few classes of these

a

to

precedented number of

in

kinds

Let's look at

turned

by the million now burn
oil.
The latest figures show sales
of these equipment
during 1947
were nearly twice as
many as the
whole of 1946.
Regular house¬
hold oil is required for an un¬

start that

of

have

ranges

I/.-:-// ••':■'■>

admit

me

rapidly. * Tobacco

increasing

curers

be interested
in looking back over the last few
years to see what has been going
you

almost 100% for

Mcintosh

before the National Association of

and

Purchasing
Agents,' New
City, May 31, 1948.
/

now

York

the

'

while

the

work

new

international
-

of

users

-

Bunker C, or No. 6,
more and more

as

clamoring for

oil, partly because

of high labor
handling coal, or the un¬
certainty of coal supply, or for
Costs in

other

reasons.

Road

>

•

,

,

construction,

little indication that such

a

situa¬

tion has occurred for business

porations

in

the

aggregate

'4

*'

:

7',

cor¬

since

:

If

the

lack

of

equity

capital
postpone
capital expenditures during the
recent period, that lack of equity
capital has been desirable in most
caused some concerns to

cases

LPG gas.

Natural

greatly
double

>

.

,

'

<

from

the

the last 11 years, and

over

have generally allowed
companies to limit or stop new
gas installations for heating.
•
1
The chemical industry turns to
petroleum as a most economical

these

are

source

of
supply, or a supply
(Continued on page 34)
1

Trust Certificates
V:'

whole. /Under

'

when all the available

These

.4

Certificates

by

new

by

concern,

in

the

raw

production

individual
could have

an

it

only by enabling that
bid

away

from
from

Even if
their

labor

scarce

away

done1

expansion

bank credit had

so

an

Agreement to be dated asof July 1,1948 which

MATTIRlTirS

1949

1.50%

1950

1.80

1951

1952

2.00 •:

AND

YTFTDS

:

^

19561

.2.15%

I

,

.1'

1

-1953

1

...

1957

■

2.45

2.30

1958'

2.50

,:2.35

Issuance and sale of these Certificates are subject to authorization

by the Interstate Commerce Commission.
be obtained in any State in which*this announcement is
circulated from only such of the undersigned and other dealerr as may
'
'* «
*•"
lawfully offer these securities in such State,

4The Offering Circular
-

2.25

1954
1955

■

'

2.40%

2

-

'

-

~

■

-

may

tov

materials

concern

'

or

HALSEY, STUART 4 CO. INC.

{

consumers.
concerns

of

business

concern

and-

another

be issued under

standard-gauge railroad equipment estimated to cost approximately $3,555,248.

materials, labor, plant, and equip¬
in the country were being
utilized to practical capacity, more
equity capital in such cases would
not have materially increased to¬
tal production and might very well

aided

are to

4 will provide for the issuance of $3,500,000 aggregate par value of Certificates to be secured

•

ment

goods

each July 1, 1949 to 1958, inclusive

unconditionally guaranteed as to payment of par value and dividends by endorsement
4
by The Chesapeake and Ohio Railway Company

"

the
full
employment conditions
that have characterized the recent

past,

on

7*0 be

f
'

point of view, of

economy as a

/ r

-

that-financed'

GREGORY 8L SON
INCORPORATED

programs-. with

been able to ob¬

',v

.

FIRST OF

'•

WM. E. POLLOCK &

HIRSCH

CORPORATION

MICHIGAN

equity capital, the equity-fi¬
nanced expansion need not nec¬
essarily have been any less infla-,
tionary than the bank-financed
expansion. The new equity capital
might very well have come from
savings of prior periods that were

& CO.

"

CO., INC.

McMASTER HUTCHINSON &, CO.

FREEMAN &, COMPANY

ment

investment

Association, New York City,
10, 1948.

would

(Continued

on

have
page

put

24)

just

JULIEN

COLLINS & COMPANY

THE

FIRST CLEVELAND

ALFRED O'GARA & CO.

MULLANEY, WELLS & COMPANY

'4

'

CORPORATION

F. S. Y/>NTIS &. CO.
INCORPORATED

To be dated

July 1. 1948. Par value and semi-annual dividends (January 1 and July IVpayable in New York City. Definitive
Certificates in the denomination of $1,000. registerable as to par value. Not redeemable prior to maturity. These Certificates
are offered when, as and if received by us. Certificates in temporary or definitive form will be delivered at the office of Halsey,
Stuart & Co. Inc., 35 Wall Street, New York, New York. The information contained herein has been careiully compiled from
sources Considered reliable and, while not guaranteed as to completeness or accuracy, we believe it to be correct as ot this date.
'

June 16, 1948

,

.

,

.

..

■>

yet all of those who want it can¬
not get it.
Public Service Com¬

(Philadelphia Plan)

$350,000

mature

<

gas itself is in use in
increased
quantities—"

4

*

the

' 4fo

;

4.

menting natural, or manufactured
gas supplied
by auxiliary LPGequipment and, in some cases,-re¬
placing old coal gas equipment bar

the end of the war.;'
-

,

Lique¬
petroluem gas for users be¬
yond the overcrowded gas mains
is in great demand and the
gas
companies themselves are supple¬

horses of the railroads.

2%% Serial Equipment

.

fied

Equipment Trust of 1948

44444V44;-;-'';';V•"'-

,

roads sprayed with oil.

or

question that it is
for., businessenter¬

"Fifth

;

long de¬
layed because of the war, is now
under way and a fair
portion of
these are petroleum asphalt
roads,
so

no

undesirable

*

-

heavy fuel

$3,500,000

prises to rely too heavily on debt
financing from their capital ex¬
penditure programs, but there is

*

are

diesels

5,000,

■

oil

gas

locomotives

total

only about

-

.

are

missions

■■■

turning to diesels

are

their

industrial

years/.

prosperous

being held in such liquid form as
cash
or
Government
securities.
The activation of such savings into




fol-;

"When

All

'

supplying

profits before interest and taxes,
is considerably less than it was in

at 25th General Management Con¬
ference of the American Manage¬
June

which;
.

for

oil known

have doubled during the last nine

-

coal

voyages.

are

Grant! and

.

very small fraction of the

a

energy

half again as many buses than we

■.

ships

with

now

•

..

tain

Moreover/ the volume of com¬
mon

only

nearly

■

other

that the current

have

$1.3

burners

had prior to the war.
Farm trac¬
tors are steadily increasing and

corporate interest burden, as meas¬
ured by the ratio of interest to

dollar volume of cash retirements

approximately

the road

Rice
lows:

and

We have

on

trucks and

more

Navy

to

credited

have tended to increase prices fur¬
ther. Although such capital might

securities—was

cars

before.

ever

:

—-—-—■—-—

million

the postwar period.
Moreover, interest rates have de¬

other financial issues and less the

of

There

three

characterized

{ There is

large

as

more

equity-to-debt ratio today
they had just prior to the

prior

ventory profits and also that they

stock issues, busiv

new

ness

corporate profits

a

.

have

such profits, as indicated by the
available data, on the ground that

today contain

/

\As a result of the large postwar
increase, in
their
undistributed

large

to

con¬

passenger

one-third

comment \

a

have

today than

occu-«

to foresee the tremendous

prices. V V

have

available

has

goods

is

We

more

very pre- i

pation.

—————-—r———-r-—r

users.

rent

This

been

costs,/ the; demand for
capital

\$>

.

no

by depreciation allowances—that
■

been

v

tinued to be considerably in excess
of the supply of such goods at cur¬

during

prices.

has

sales

in the earlier postwar pe¬

was

moderate

issues,, partic¬
ularly
com¬
least

stock

However, with other equity
and loan funds so readily avail¬
able in large volume and at such

new stock

mon

date,
in

was

periods. The volL

prosperous

of

to

war

whole, than it

a

riod.

culty of float¬

B

is¬

stock

smaller since the fall .of 1946 than

been the diffi¬

ing

as

ume

the

short-run

and

the end of the

taken

availabil-

iness

bond

new

excluding refunding issues
represented by common s.tock has
been slightly larger forfhe period

;

concern

total

sues^

capi¬

tal.

•

of

rather
through
.

concern

.

;

predictions. It*
is

Short-Run Outlook for Financing Business Capital Expenditures i

there has been little

a

posed to make

carious

general,

"

,

privilege to be here to tell you something about the outlook for fuel oil and
petroleum products and to try to clarify for you some of the
apparently confusing state¬
ments which you see, or
hear, from time to time. If you are a professional economist
are

change in tax structure desirable and feasible.

In

By a. j. Mcintosh*

f.

It is

inflationary boom, but something

be done later to channel savings into private investment.

to

'

,

Economist, Socony-Vacuum Oil Co., Inc.

wants more and more petroleum and its
products, Mr.
Mcintosh holds outlook is for increase in
supplies equaling demand in next year. Says light fuel oil
supply will be better than that of heavy oil, and although petroleum
industry is doing good job,
everyone should help in conserving petroleum.
Foresees need of greater oil imports and
points out,
since petroleum is international product, it is affected
by world conditions.

v

;

avoiding major cyclical fluctuations in business activity by evening
out of capital expenditures.
Holds, so long as private capital out-;
lays fluctuate widely, problem of maintaining high level employ¬
will be difficult.

15

Pointing out though everybody everywhere

•

Statistics, Federal Reserve System

Federal Reserve analyst, though contending both short- and longoutlook for industrial expansion is favorable, sees need of

ment

;

-

:

term

is available in current

(2647)

'

k

*

FINANCIAL CHRONICLE

Outlook foi Fuel Oil and Petroleum Products

Industrial Development
And New Capital Sources
Division of Research and

&

.

16

&

COMMERCIAL

THE

(2648)

Freedom

More Production—The Price of
By CHARLES LUCKMAN*

Securities Salesman's Corner

President, Lever Brothers Company

the privilege of going on a business trip that
part of 36 hours of constant travel with a man
who at one time was the head of an
organization employing over
1 000 salesmen.
I would like to relate a few of the things which
he discussed, and some of his experiences and views on salesman¬
shipYou can learn a lot, or be mighty bored when you have to
spend 24 hours constantly with the same person on trains, planes,
and in cabs.
But in this case I can truthfully say that I found
every minute of this trip a stimulating experience.
Here was a man 65 years of age, as bright and alert and as

production at least 10%. Proposes it be done by "bonus" share to labor in higher
wages, lower prices to public, and higher dividends to stockholders.
Advocates immediate organization
of labor-management "Joint Productivity Clinic" to sponsor incentive production program.

to increase

took in the greater

industrial

Like all

nomic

burdened

than

Today,
nation

have

I

come

Without

getting technical, pro¬
be defined as the
process of getting more units of
production, per man-hour, per

ductivity

felt that because

the

can

with
number of workers, and
This

same

the

and

of lower

prices,

share to the stockholders in the

a

-form of higher dividends.

different

very

clear

very

a

production

These are two

things.

Suppose

call, knowing

people and doing the right thing at the right time.

as

the

Thus,

creased

bick used to cost the home

each

1J/3

owner

cents.

the

Today,.

;7:jv

said, "It's the little things in life that count," was
It is true in business as in everything else.
...

tem.

vital

a

one.

hour for

an

eight-hour day.
But, instead of
laying a thousand bricks a day,
he has reduced his quota to 540
bricks a day.. Thus, the cost to
the home owner for laying each
brick

has

IV2

from

risen

to

3 lk

V.

cents.

also

is

it

So

with

76%.

increased
the

But

craftsmen.

That

is

good.

is, their average
output of work has declined 38%
below the prewar level.
That is
catch

Here is

bad.

a

the wage-earner always loses.
He
is slower on his feet than a pork

a

nation we simply can¬

the building

new

can

circle

AmoH, Baker t Co., Inc.

.

Statistical

Manager

Goodwin, Inc.

:

&

for .Bond
c, ;

New

agement Association,
City, June 9, 1948.

:

.

Common

Stock

United States
'

PRIMARY TRADING MARKETS

>

Finishing

2

Common A Preferred-

v

y-1'

CRESSON CONS. GOLD M. & M. CO.

Maine Central Railroad
Common

&

KUTZ CANON OIL & GAS CO.

MACKINNIE OIL & DRILLING
Descriptive analysis

'

on

;

request
,

A. G.Woglom &

Co"

Incorporated

49 Federal St, Boston
HUbbard 2-0773

J

;

Preferred

10, Mass.
Tel. BS 189




\

•

7

/

• .;

•

r-

\

*

■

•

;

(

•

.v

-f •

;*

.c

•

"

Established IQ29

B. E.

Simpson 6- Company

California Building, Denver
Telephone KEyslone 3101

in

2, Colorado
Bell Teletype DN 157

1

economy.,

the pressure

a

a year

A

Any one of those three woulda strain on our productive ca¬

be

them to-:
unparalleled

three of

The

mean

an

triple strain.
Unless we produce
more goods we shall be forced to
between

own

our

needs

Europe.
No, of
course
we
don't want our own
children to have less; but we do
want the children of Europe to
have more.
At the peril of demo¬
cratic survival we must encom¬
those

and

of

both.

pass

The

:

onlv

>

alternative

is

a

cha-

otic,
despairing and ultimately
Sovietized world; in which Amer- ;

would be isolated, ;
of envious hatreds and -

ican democracy

the object

the

of attack.
The; men
in the Kremlin ;have

target
rule

who

bothered

not

to

control

to the expectation Of
economic decline and collapse in
the
United States. ' We cannot
abolish the duel between democ¬
geared

are

and

dictatorship by closing

eyes

and our hearts.
Com¬
is a disease that attacks

racy
our

munism

peoples whose physical and moral
resistance is undermined by hun¬

increase

productivity

represents over
S5
billion a year.
Today, that
treasure is buried.
It must be

ger

and hopelessness.

we

must

recovered.

security

To stop it

provide food, fuel and

faith.

put to work it would run the
whole Federal
Government for
almost
two
months.
It would
•

•

Nothing less than our

If

carry

the Marshall Plan for well

one
;

-

-

conceal the> fact

that their plans for world

to the na¬

10%

there is the pressure
demand because of the

new

Marshall Plan.

contributes

income.

,

the

from

direction,
of

lot of money.

$50 billion

demand, and

armed
services, in order to achieve mili¬
tary preparedness.
In a third

without

industry

of new

contracts

new

;

that,

direction there

.

the

convinced

American

tional
•

j

•"

am

through

one

home economy from

own

people who have been waiting a
long
time for new consumer
goods and durable goods from
people who have learned new
habits and standards of consump¬
tion.
In another direction there is

building any new plants, we can
quickly raise the level of our in¬
dustrial productivity by at least
10%.
This
conservative
per^

over

COMPANY

From

increased postwar demand

the

is

businessmen are faced

our

for our

increased produc¬

centage represents

^

VKINNEY-COASTAL OIL COMPANY

of

circulating
whole body of our
I

Verney Corp,

blood

York orous
j
i tivity

;

of other

triple set of demand pres¬

a

choose

ment

simply by blaming each
other for getting into it in the
first place. There is blame enough
in putting the Marshall Plan to to spread around; blame enough
work,
Time is of the essence in to go all around the spiral of
rearming our country.
We must higher wages and profits, laborMILWAUKEE, WIS.—The Mil¬
conflicts,
loss
of
Stephen J. Sanford has joined make the existing trees yield management
waukee Bond Club will hold an Amott, Baker & Co., Incorporated, more apples. The extra apples— products because of strikes. The
pyting at the Merrill Hills Coun¬ 150 Broadway,. New York City, as
only way for us to escape is to
*
An address by Mr. Luckman force our industrial machine to
try Club, Waukesha. Reservations Manager of the Corporate Re¬
out
more
goods at lower
at the 25th Annual Management turn
search (and
Statistical Depart¬
are in charge of John A. ToenWe must keep the vig¬
ments. Mr. Sanford was formerly Conference of the Arpgriean Man¬ prices.
plants.
Time is of the
essence in meeting the threat of
inflation.
Time is of the essence

Milwaukee Bond Club to S. J. Sanford With

Thus,

break out of that vicious

the

increases

.

products—all needed for the re- >
construction of Western Europe.

pacity.
gether

For

thousands

tractors—and

last seven years,
have
always
lagged behind a rising cost of liv¬
ing.
Neither labor nor manage¬

wage

a

2,500,000 bales of cotton; 51,000,000 pounds of meat; 1,800,000 tons
of steel; 778,000,000 feet of timber:
also
freight
cars,
trucks,

plumbers,

Since 1940, their average pay has

chop.

As

201,000,000 bushels of grain;

send:

sures.

trades

.

example, during the next 12.
months we in this country must

with

building

products."

calls for is "billions of

carpenters, electricians and all the

it takes years to
nation's industrial sys¬
so

not afford to wait for

of

John A. Toennessen & Co.,

private

For

bricklayer

same

about $2.37 an

earns

it takes years to grow an

tree,

expand

who

is

difference

That

apple

||5 West Wells Street, Milwaukee.

need to

And, in countless other
ways, the 10% increase could be
used effectively to buttress our
national solvency which has be¬
come
progressively weakened by
the erosion of inflation.

and wage-earners get into a race,

$houJff Yield More Apples

Trees

Just

pessen,

for

States

United

crying example of
decreasing productivity
and its
result—fewer products at higher
apple tree with the same yield; prices, for fewer people. ; Must
we learn the hard way, as Europe
That is more production.
But if,
and China have, the horrors of
through added skill and effort,
galloping fiscal consumption.
you get that first apple tree to
I believe most labor leaders are
yield 600 apples instead of 500,
well aware that when pork chops
you have increased productivity.

have an apple tree that pro¬
duces 500 apples.
You can double
production by planting another

Will that bottle of Scotch that was

Mold Outing Jun 25

we
and

in the entire
the next two

years.

you

rpid-western city
man

a

money
public

schools and colleges

other

of

it is most

between

productivity.

tq^sed through an open cab window on a street corner in a certain
The

to make

important
distinction

anything else at this reserved and inwardly unhappy man.
understand why this salesman became one of the greatest

Surely right.

the form of

higher wages,
share to the public in the form

we

same

At this point I think

It was probably

you

that

means

machinery,
produce
an
extra
amount
products every hour.

put his head, tossed a full bottle of Scotch at him and yelled, "Catch

That is what

that

vigor and vitality can only
through greater in¬
dustrial productivity.

tjie first time in his life that anyone had ever tossed a bottle of

be forgotten?

before you today

achieved

be

a bottle around the corner at his hotel.
He said,
"You wait right here on the corner. Don't go away.
I'll be back
jn five minutes."
The industrialist stood there. Exactly five min¬
utes later, the astonished fellow was greeted by 'a swirling taxicab,
and right through the open window his friend the salesman stuck

ever

the

run

new

tFgin but he had

makers in the country?

the

-

the 1 proposition

submit

to

using

money

the

all

follows:

as

labor in

to

year.

v

apart—that there was a wall of reserve around him that most people
Unconsciously observed when they met him.
A certain friend of
rpy friend, attended this meeting.
In his own right, he too is one
of the nation's most successful salesmen and is famous in his own
line throughout the country.
Immediately, because of this great
salesman's instinct for knowing people, he sensed the situation the
first time he met the famous industrialist.
Upon leaving the meet¬
ing the capitalist made the remark that he wished he had a bottle
of Scotch.
The other man told him that he was on his way to the

or

is

-

fright ening
reality of in¬

machine.

you

provide

share

a

half-million

a

obvious result of in¬
productivity
is
more
products, at lower prices for more
Impact of Marshall Plan
v
flation.
The people.
second is the
Now, without trying to fasten 2 Domestic shortages, which have
compel ling blame on anyone, I want to give already sent prices sky-high, will
need
to pro¬ a rather extreme illustration of be intensified by the impact of >
Charles Luckman
vide economic how this process has worked in the Marshall Plan.
In this con¬
aid to what remains of a free reverse, but to show what the nection, I think the man in the
society.
The third is the tragic problem is.; In Cambridge, where street has been somewhat misled.
necessity to rearm ourselves for I conduct my business, there is Most discussions of the Marshall
security, in a world that has not a need for at least 4,200 houses. Plan are in terms of "billions of v
This is a mistake. As
yet learned how to outlaw wari This need is not being filled. And dollars."
All three problems have a com-, why
not?
Well,
one. answer Mr. Justice Holmes once said: ..
comes from the bricklayer;
Be¬ "Think things, not \ words:" - We
mon
denominator—their depend¬
ence
on ; increased
productivity. fore this last war he used to earn must get used to thinking things, $1.71 an hour for an eight-hour not
money.
The
dollars ; are
Our; present strength, magnificent
as it is, will not suffice., : Some¬
day,,; In return, he , laid 1,000 merely a medium of exchange.
bricks a day.
Thus, tfte laying of What the Marshall Plan really
thing new must be added.
!
first

of his great wealth and the prominence of his family, that most men
never treated him the same as they did others.
He felt that he was

liquor

prob¬
The

lems.

is too late and Mr.

grin he sped on his way.

tremen¬

dous

Iriendship with
for $250,000," and he mentioned the name
Of one of his friends.
He spoke of the importance of exposing
ypurself to people who were doing things and going places in life.
|fe spoke of using your time to advantage instead of wasting it,
Of knowing people and of doing and saying the things that cause
tfiem to accept and to like you.
He spoke of the fact that you
rppst be one who likes people and that it must be natural and
ppver forced.
Here's an illustration. There was a meeting of a
bpard of directors in a mid-western city and a certain man who
is known from coast to coast attended.
This individual for years

a

our
faces

three

cussed and all of them would be of interest and value to any one
interested in selling as a profession, but there is only space for one
more here.
"Life is a matter of connections. I wouldn't sell my

and

should be divided

fore.

It was more fun-to go to the movies than
tp enjoy the added pleasures and comforts-a "better and larger
ipcorne affords.
Ten men stood out—the rest - were- average;..',;;^'
There were so many things I could write about that he dis¬

a wave

over

be¬

ever

It would build over
houses.
It would

in terms of food, fuels and mabe a bonus which

chinery—will

a

prospect has cooled off,

With

of:*)

more,

heavily

outstanding—all the others were average. Many a good salesman
hgs a prospect ready and willing to do business but an appoint¬
ment at his home that night conflicts with a date with the wife to
to the movies so he says, "What's the difference?
I'll see my

if!"

way

IS
is

life

of 35. It was evident why he was a
gyeat salesman in his own right.
He had energy, he looked on the
bright side.
He spoke of getting fun out of life. He kept saying,
»| am having fun."
At an age when most men would find their
business dull and monotonous, each day and each new venture was a
stimulating and bright experience for him.
He told me stories of
bis experiences, all of them studded with humor, or a point of phi¬
losophy, or a lesson which they taught.
His modesty was natural
and sincere and $ his observations were those of a man who had
found life the best teacher and who had learned his lessons well.
He was talking about the days when he had that great sales
organization.
He said he had a thousand men and 10 of them did
b*ilf as much business as all the rest.
Most men, he said, were
easily satisfied.
Too few are willing to pay the price of success.
Everything has a price tag on it—10 men stood out—10 men were

had been known by his intimates as a man who

working even

We must pay that price by

things, freedom has its price.

greater miracles in the future than we have in the past. We may not get the credit for
those miracles, but we shall certainly get the blame if they do not occur. For our eco¬

fpll of energy as most men

prospect tomorrow, he'll wait," but tomorrow

organized effort

societies, while having at same time tragic necessity to rearm, urges

nomic aid to free
Last week I had

inflation along with giving eco¬

nation faces problem of frightening

Industrial executive in pointing out

DUTTON

By JOHN

1948

Thursday, June 17,

CHRONICLE

FINANCIAL

national

is involved.
Twice in
generation we tried to stand
(Continued on page 23)
.

:

*

Volume 167

Number 4708

THE

COMMERCIAL &

FINANCIAL

Sad, Sony and Puzzling
"We (the British

people)

ernment hold out the

are

prospect of

doing

our

free

we

our

be

can

This island

Department executive stresses importance of competent trust
determining proper investment requirements of individual trust

position

or

Collectivist system.

*

#

Never before in the

history of trust administration has there been greater need for
competency in the handling of trust funds.
If the trust business as we know it, is to sur¬
vive (in its
present form) it is imperative that our leaders who are
responsible for the

❖

"We should be left here with

horde of safe officials

a

vast

over a

brooding

<$>-

ing
of
the
savings of our
people, be sen¬

and broken human beings.
place in the world will be
lost forever, and not only our

gry
Our

sitive and

attractiveness of securities
offered the

to

self-respect, but our
independence, will be gone.

their

nomic,

re-

for

of
enterprise and capitalism which makes America
great and wealthy and then at the same time
eagerly seek the aid which has hitherto been so
generously granted from across the Atlantic—that
is a grimace which baffles the limitations of our
language to explain."—Winston Churchill.

must

free

and

These
and

are

side of investm e n

we

Urges Planning for Hard Money Return

the

an

Na¬

tional

the

Asso-

igal

15.

out

that

had

the

but

that

now

augurate

a
to

return

a

such

soon as

in
H.

Henry

is

the

at

time

once,

in¬

to

definite program for
the gold standard as
a plan is found pracnot be able to revert

to the gold basis quickly because
the action of this nation in adopt¬

ing a semi-managed currency pol¬
icy has added to the confusion
and
uncertainty in the world's
yardsticks of value, namely their
moneys,"
Mr.
Heimann
states.

;

"Under these conditions,

and

the

paper

the

gress

be

a

lay
to

'hard money standard' is essential.
We have suffered the severe ill¬
of
monetary disease.
necessarily involves a

cure

sonable
but

to

need

a

period
return

of
to

health

that

situation

the

had

by putting into effect
monetary and fiscal pro¬

sound

aside from

war

inflation
is directly

present
causes

traceable to the action of

during

the

years.

;

our

■■

In the hope of improving our
investment philosophy in the han¬
to

review

with

gov¬

depression

in devaluing gold and plac¬
ing the country on a semi-manyears

aged currency basis, Mr. Heimann

have

taken raway

the




the function

ment

best

needs

meet

and

not

our

the

tance.

unduly

of

principal

invasions

This fact alone

important bearing on

investment

In

general,

which

trusts

most

policy to be

as

the
are

purposes

created

numerous

themselves.

as

are

the

education; to maintain

restrictions of
legal restric¬

the

a

home for

widow; to provide funds for

estate

taxes; charita'ble bequests;
others.
In addition to the above, there
are many special circumstances to
and many

be considered.

Thus,

The most

common

are:

Other

sources

the

trust

bracket

beneficiary;
the tax
of
the
beneficiary;

account will have
separate and distinct investment

tailor-made for the pur¬
pose of assisting the trust bene¬
ficiary in maintaining his or her
standard of living under varying

Banking, Buffalo, N. Y.,
1948.

whom

conditions and

Conference, American In¬

stitute of

kind.

In

view

importance

date

of

the

distributable;
Still

other

(Continued

of

income

the

right to invade
principal distribution

restrictions.

the

of

termination

of

account;

cash

elec¬

on page

38)

tinkering.",

V-vL

V

Kerr-McGee Oil

Elected Directors
The

election

Morris

of

F.

the

of

Industries, Inc.

Charles Edison

LaCroix

as

direc¬

International

Common Stock

Tele¬

announced

Sosthenes

Shares

300,000

,

$1.00 Par Value

•'

today by Colonel

Hehn,

President of the

Chairman

and

lowing

a

corporation, fol¬

regular meeting

Board of Directors.

.

*;

Price

of the
•,

$16.75

per

Share

Mr. Edison is President and Di¬
rector of Thomas A.

of the
1941

to

State

Edison, Inc.,

of^New Jersey from

1944, and

as

.

■

.

•

•

..

-

•

•
1

••

•

•

v'

<

Copies of the Prospectus may be obtained in any State from such of the several Underwriters,
including the undersigned, as may lawfully offer the securities in such State.

Secretary of

the United States Navy from 1939
to 1940.

Mr. LaCroix is Chairman

of the Board of the General Tele¬

phone Corp. and also is

a

LEHMAN BROTHERS

partner

June 16, 1948.

or

factors

of such securities. The offering is made only by the Prospectus.

that the

of

principal;
dates; to

This advertisement appears as a matter of record only and is under no circumstances to be
construed as an offering of these securities for sale, or as a solicitation of an offer to
any

trusts

Almost all have spe¬

a

*Ah address by Mr. Metzner at
the Trust Business and Invest¬

buy

for
al¬

cific requirements to be met, such
as:
to provide for the children's

policy,

ments

an

each and every

influenced by the popularity and

June 8,

support,

the

circum¬

account.

the

to

adopted.

the over-all investment
an

husband

over

is of
secondary impor¬
Thus, if the fund is hot

will have

surrounding the trust and

requirements of

the

The payment of

will be necessary.

surrounding investments in
given trust. In effect, an estate
analysis is essential to the formu¬
lation

ac¬

large enough to provide sufficient
income for the widow's comfort

interested

special

many

should

remaining assets

children

tions

people have over
the cost of government and money

tors

the

lives

pre-decease her.

a

invest¬

be

she

as

most

of

b^ake,' outside

effective

This action removed the
in the brokerage firm of Paine,
important
check
against
spendthrift actions by the govern¬ Webber, -Jackson and Curtis. He
ment. He has this to say about is also a trustee of Smith College.
very

you

investment policy in the man¬

says.

.

stand

of course, the usual
the instrument or

and the need for establishment of
an

real incentives
production. Today,
however, \with, gold unattainable,

and

is

created, to under¬

was

the

trusts are created for the
specific purpose of providing for
the wife's financial needs as
long

and

trust

stances

dling of trust funds, I would like

offering

tions

the

instrument

facts relating

many

ticular account it is necessary to
establish the purpose for which

the

over

%

•

trust

,

many

example*

to avoid

administration

trust

the

of

disclose

to the purpose for which
count is established. For

being led Method of Determining the Proper
astray by the hysteria of specula¬
Investment Requirements of an
tion or inflation that a sound* pol¬
;
Account
icy of operation must be adopted
To properly arrive at the in¬
which
will
eliminate
errors
of
vestment requirements of a par¬
judgment and make for sound

grams, an^
for increased

we

obvious

re-*
the

of

to

cured

and formerly served as Governor

;

the

ernment

in

It

plan

we

on

of

Some

confidence

review

efficient ad¬
trust.

estate

would cause Con¬
and government officials to

was

year,

basis."

people
demand,

the

of

the

will

parties.

phone and Telegraph Corporation

prescription that will put

back

of

monetary

The

gold. In this an elec¬
the platforms of both
parties should stress the need for
the type of program that has as
its objective a return to a gold
us

tion

loss

is

It

and

pur¬
trust account is

grantor, or if no estate plan has
been prepared, to draft
an estate
plan. In many instances a careful

investment

benefit of all

greatest

re¬

agement of trust investments.
It
is essential that we know what

our

gold

a

and

securities

rea¬

convalescence,
full

such

devise.
are

a reason¬

program which will
foundation for a
return

ness

towards

can
we

view

is

economical

a

established, it is necessary to

only through a clear understand¬
ing of the investment objectives
to be followed in a particular ac¬
count that it is possible to effi¬
ciently employ the funds to the

investment

our

education

as

pose for which

investment

sound

the

arriving at the primary

money

realize

able time to enable other nations

to start

by

caused

V'

"We may

trend

inflation, the shock to

to

approach

problems

av¬

spending

our

doctors.

of

ministration

lawyers
Our responsibilities
as

run

a

against profli¬

has

person

Heimann

-V

ticable.

even

the demand for gold
increased rapidly as we continued

basis
be accomplished

cannot

or

Assuming

"hard

money"

gold,

and being forced
to accept money of doubtful value.

change
a

for

get gold, is the check the

gate

many years

to

mone¬

inflation,

erage

a
"managed
currency" for

so

or

mis-managed its
spent like a prod¬

with the resultant

son,

demand
to

because

have

we

of

people could and
would demand hard money. This

He

points

affairs,

tary

on

June

government

fiscal

re¬

leased

devaluation

-

the

Business

Review

the

of

gold upon our present inflation:
"If we were on a gold basis, and

elation
of Credit Men,
in his Month¬

ly

effect

operates.
professional men

great and it is essential that
have as scientific and effective

search

early return to a "hard money" monetary basis, not
only in the United States but in other nations as well, if the world
is ever to have a workable program for international trade, becomes
more
apparent every day, declares Henry H. Heimann, Executive
Manager
of

an

business

be

well trained

that if

gold

standard currency will prevent government spendthrift actions.
Need for

which

as

sound

a

investments

the

in

•

In

a

greatly simpli¬
fied. Such an approach as this not
only clarifies the investment prob¬
lem, but also greatly assists in

Metzner

but

must

who are
and

Russell

economic and social cli¬

mate in

They

are

a

t s,

also the

of the prospects which depress
questions which puzzle a good many

Manager of National Association of Credit Men contends

of

plan

sound investment

a

a brief review of this phase
of the work will be made
at this

principles to the proper handling

only
practical

the

of

application

under¬

estate

policy,

policy for an account.
Once the
policy has been determined, the

stand not

in addition to the wartime Prime Minister.

Heimann

have

adequate

time.

discussing

mulation

officers

some

of the

some

We

invest ment
who

an

formulation of

subject as broad
as
investment policy, I find it
helpful to first analyze the basic
iunuamentals governing the for¬

social,

sibilities.

deride the system

can

an

In

moral respon¬

"How the ministers

being

partic¬

any

An investment policy
account will establish this

fact for you.

eco¬

political

public at

ular time.

sponsive

Winston Churchill

individual
national

invest¬

proper

of worried, hun¬

mess

-

regarding sound investment supervision.

great power under

as a

Socialist

a

management and outlines method of

accounts.
Advocates "prudent in¬
vestment" test in overall department
policies governing trust investments and upholds Yale and Vassar
Plans in timing securities
purchases. Lays down investment principles and standards and
gives rules

recovery.
not maintain its

can

Bank of Cleveland

Trust

hope of

no

and

By RUSSELL H. METZNER*

Vice-President, Central National

coun¬

try, while time remains, from the
perverse doctrine of Socialism,
there

17

Its

in

so

the immediate future.

"Unless

(2649)

Investment

not earning our
living or paying our way, nor does the Gov¬

own

CHRONICLE

STRAUS & BLOSSER

■*

in

are:

18

COMMERCIAL & FINANCIAL

THE

(2650)

Thursday, June 17, 1948

CHRONICLE

"Times," ployment and the economy is I tual reflection of these earnings
in much higher price levels for
1 . •
1
-« - that lists all trans¬ (operating near ;capacity, create 5
trdhnendous upward pressures on stocks."
actions on the New York Stock
And additional luel is Are Profits Too Low?
Exchange and circle with a red prices.
pencil every stock contained in (added to the fire by reason of
"These Things Seemed Impor¬
the
government's fiscal policy,
the
portfolios of the fund the
{which 'has again become infla¬ tant," issued by Selected Invest¬
salesman is selling. The salesman
ments Company, quotes Harvard's
tionary.
.
-.
Journal," the New York
or

ber

is exemplified by the

firms,

following comment of the abovementioned partner: "A client of
mine came in to see me today, and
said that he had about

$13,000 to

He also said that he un-

invest.

$13,000 in

ers, is too high for an
of $13,000." • In other

a

on

words, he

Dollar Averaging

ing, sets aside a fixed sum every
month which he invests in one of
his own funds.
Furthermore, he
.

even

the full retail price, doesn't
receive the dealer discount.

investor
40c

break.

$11,000

vs.

According to "Oglethorpe Opin¬

funds have

While most mutual

corporation,

sponsor

"break"

your

upon

request from

investment dealer, or from

RESEARCH

&

SECURITIES

NATIONAL

CORPORATION

business.

the

whether or not such a re¬

to

as

v;..

question, of course, arises

The

Y.

120 BROADWAY, NEW YORK 5, N.

duction would tend to bring more

firms and larger in¬
the mutual fund

of the larger
vestors

within

fold.

'•

vestor

who

puts

$10,000

into

a

$100 stock on the New York Stock
Exchange today pays in commis¬

sions, on a percentage basis, less
than a fourth the amount that is
paid by the investor who
$1,000 into a $10 stock.

in

then

puts

King
a

General

Merritt recently gave us

sales hint for retail salesmen of

instructs all his

salesmen,

if

stock
fund, to turn to the stock quota¬
tion
page
of the "Wall Street
they

are

More Inflation?,

Much

How

is an excerpt
from Hugh W. Long's June "New
following

The

York Letter":

inflationary gun is again

"The

i

Deing
charged
with dynarrtite.
During the next 12 months or'so,
the European Recovery Program,
the increased armament expendi¬
tures and tax reductions should
at least

$13 billion of ad¬

buying power without a

increase in goods
and
services.
Now, still -more
billions of dollars are being made
available through wage increases.
These too will compete for avail¬
corresponding

mutual funds, and it's a good one.

He

stock
than 40 cents

The same amount put into
Motors would today be
$11,000." ■

today.

create

Sales Hint

A

invested

'New Haven's'

the

would be worth less

ditional

selling

a

common

able

Such in¬
buying power at a time
already have full em¬

goods and service.

creases

when

in

we

tory

Lehman Bros.,

has been reelected

will need sub¬
stantially less of our food supplies
this year/.; It may not be long
ibefore the government is -buying
wheat to
support the price, in
contrast to last year's government
prices—well above support levels
—to go

higher.
increases mean higher
production costs for many manu¬
factured products.
This, in turn,
forces some prices up.
But wage
increases also affect prices through
even

"Wage

demand for

the greater consumer

goods which they encourage. We
probably cannot hold the price
line as the steel, electrical equip¬
ment and certain other industries
tried

have

the

However,

do.

to

CHICAGO

M.

'"-V

/<•;/« V"/

'

••

-,V*'■

*'•

Direc¬
Management

Chairman of the Board of
tors of the American

of price advances has been Association.'/>//■■ >vA:v;> //>>
slowed down, the worst sting has
been faken out of inflation, and
pace

are

we

all groups, dn<-

advantage of

the

Grayson Pleads Guilty

developing a more favorr
economy to

balance in the

able

/

cluding investors."

v

v

Group's

say

current

t

granted by the Cir-"
Appeals for the Sec¬
Circuit, pleaded guilty upon
retrial to all counts of an indict¬

a

ond

ment

convinced 'market
influence

(whole

trial

new

cuit Court of

;about stock prices:

now

technicians

the Department

reported on June 8 that

of Justice

"The continued advance in stock

prices has

and

Commission

Exchange.

and

Securities

The

-

Stanley Grayson, whose previous"
conviction had been reversed and

Bullish

G."

lowing ito

I

Hancock

John

r'

"Investment Report" has the fol¬

$TR£F.T.. NKW YORK 5. N Y.

Axorus

attracting

Europe

Distributor's

iNcOirOii Alio

'.OS

the

are

Indications

and abroad.

that

are

"D.

HUGH W. LONG A CO.
■15 WALL

of profits must always be
practical test of the market:
profits large enough to permit
industry
to
attract
adequate
amounts of equity
capital?'
In

quacy

buying which caused high wheat

in case
they are entitled to a
preferential price over the oddlot buyer.
In this connection, it
is worth pointing out 'that the in¬
feel

lots

9roip«ctut from your Investment Dealer or

a

equity capital, inven¬
profits do not count—the
available for consumption.
So- prospective
investor wishes to
called soft goods are generally in know what operating profits the
(adequate supply in contrast to enterprise can earn. Nor is he in¬
what
rates present
the many shortages that existed terested in
during 1946 and early 1947.
Of profits yield on plant and equip¬
{further
importance
is the in¬ ment bought at prewar prices. He
creased- production
in Western wishes to know what return pres¬
{Europe.
It is expected that our ent prices and costs make pos¬
exports will be smaller and im¬ sible on new and up-to-date plant
at
present
prices.
ports will be larger than last year. constructed
This will add goods to the supply Measured
by .this test present
(available for domestic consump¬ profits in most industries are too
tion.
■''/
:/ T •' \
small—they do not permit enter¬

at home

risky new business. *
"One hundred dollars

valued about

Many buyers of goods

Investors Inc.

Large dustry as
the part excessive.

scale load, the first ions," issued by the Southern Se¬
generally comes around curities Corporation of Savannah,
•
the $25,000 level. Considering the Georgia:
"Possibly most important as an prises to attract venture capi¬
"Prior to the First World War,
fact that 90-odd percent of sales
New York, New Haven & Hart¬ offset to the disagreeable effects' tal.:'.'.
today are in units of $2,000 or
ford Railroad's stock was consid¬ •of inflation for the average citi¬
less, a reduction in the load on
Hancock Chairman
purchases amounting to more than ered a suitable investment for zen is the outlook for moderately
Latest crop
widows
and
orphans.
General lower food prices.
John M. Hancock, partner of
$5,000, or possibly $10,000, would
estimates are very favorable both
not affect the vast majority of Motors, on the other hand, was a
sliding

a

Prospectus

large but profits in in¬
whole have nol been
The lest of the ade¬

been very

set off.

the portfolio capital expenditures on
of industry
have increased our
over-all capacity to produce and
in
many
instances to
produce
more
units per man-hour.
In¬
ventories
have
been built up
and pipelines filled until almost
of a leading all of the output is currently

believer in dollar averag¬

firm

a

sliding scale to

a

President

The

pays

the $10,000-$20,000

was

prospectus first. In effect,
the salesman obtains a full-page
"ad" on his fund for the price of
his morning newspaper!
in the

fund loads should

felt that mutual

reduced

investment

tionary gun

1

infla¬

the

when

1947

and

strong Professor Slichter as follows:
during
"Profits in a few industries have

are

not exist

did

that

tation than showing

enjoys making mutual fund

but we feel that the 'load,'
although fair for small purchas¬

money,

be

much more effective presen¬

I told

of them.

one

him that our firm

give

is

a

there

"Fortunately,

offsets

Mr.

we

ably typical of many large mem¬

»

marked page to him.
Merritt has found that this (1946
the

shows

talked to a partner of one of the largest stock ex
change firms in the country—a firm that three months ago began
recommending mutual funds for the first time. However, the firm
has been advising the purchase of^ mutual fund shares only to their
smaller
clients,
mostly odd-lot<$—
—
buyers with securities or cash on derstood that we were recommending mutual funds, and asked
hand amounting to $3,000 or less
me if I thought he should put his
The attitude of this firm, prob¬
Recently

calls on a prospect ana

he

when

Suggestion

A

with him

carries the paper

then

HENRY HUNT

By

paper

any

violations of the
17 (a)*
1933), the
fraud and conspiracy statutes*
charging

anti-fraud section (Section

on

of the Securities Act of

is widespread)
depression which mail
they erroneously
believed was (Sections 215 and 337 of the Fed¬
forecast by the price decline in eral Criminal Code) -in connec¬
investor

opinion

that the business

eystone

Custodian

their

Lord, Abbett & Co.
INCORPORATED

Fumls

New York

Chicago

—

New Orleans

Los

—•

Angeles

value

the

of

irrespective

change in
further
restorative of confidence, for con¬
judgment,

-Values

STOCK OF

{v

/

BONDS
(iSeries B1-B2-B3-B4)

have

combination

"(1)
IN

•

"(2)

; v.

a

*

time

first

in

many

6

and 26 he received a

"(4)

Massachusetts




also

should

and

shifts

funds

of

from bonds into stocks,

Prospectus

of Boston
* '
,

*

your

THE

may

Jocal investment dealer, or

PARKER

„

an

that

he

may

William

not

States District

City.

terprises
record

in

leading en¬

at

relation

..

"We

expect

maintained at

BOSTON 8, MASS.

close
to

to

their

earnings and dividends.

CORPORATION

ONE COURT STREET.

-

our

available

lows

.

in the.

engage

the said*

Sentencing was by Judge"
Bondy in the United.
Court at New York:

■

Kullman Visiting

the Coast

Philip C. Kullman, Jr.,

of John.

Jr. & Co., 42 Broadway,

New York

City, is now making a

tour

of

business

the

Far West

with

visiting

improving foreign situ¬

ation, and
many of

stocks of

be obtained from*

3

J. O'Kane,

years,

promote

Keystone Company

Boston 9,

counts

combining

a

earnings

to

be

long a period ahead as can rea¬
sonably be ^forecast—and the even-

Grand Canyon, Los

Springs,

the

San Francisco,

Seattle.

Portland

Mr. Kullman is ac¬

companied by his wife and
Robert,

high level for as

Colorado'

Chicago,

Angeles,
and

He is

pleasure.

"

investment dealer or

Congress Street *

Grayson was,

year

period.

vestment
Prospectus from

sale of various oil

sentenced to one year and a day
on all counts except 6 and 26. On

remarkable

a

/

"(3) relief from taxation, which
jnust surely encourage in¬

(Series S1-S2-S3-54)

'50

the

interests.

-

COMMON STOCKS

The

;

gas

securities business during

political trend favorable
investment capital for

the
-

frour local

~

..

increasing intrinsic values
for most common stocks
(measured in earnings, in
asset values, in dividends),
to

PREFERRED STOCKS

now

of—

have

and

are

extraordinary. r

"We

SHARES OF CAPITAL

investing their capital

their

and

suspended sentence and was
fidence J has* been
the ^ onlyT in¬ placed on probation for that pe¬
gredient lacking in the securities riod, with the "further .prohibition
been

INVESTMENT FUNDS

might place on

one

attitude is important as a

markets.

Certificates of Participation in

(Series K1-K2)

tion with

September, 1946, has receded into
ithe indefinite future',

who

rows

on

his son

the Iona

College 'varsity crew.
Mr. Kullman

will be back at his

desk in New York on

June 21.

Volume

167

Number 4708

THE

"

Our

Reporter

COMMERCIAL

"ly

FINANCIAL

CHRONICLE

(2651)

19

Fundamental Facts onFoieign Trade

j

President, U. S. Steel Export Company

Governments

on

&

••?.

By GEORGE W. WOLF*

k
*

/

\

By JOHN T. CHIPPENDALE, JR.

';;'T

•

K

\

•

-v, ">.'•? ?-••?

the latest to pull the unexpected.

•;

.

The announcement^that from

.

July 1 through July -15, 1948, inclusive, non-bank investors
will, be
allowed to purchase
$1,000,000, while commercial banks with sav¬
ings deposits will be permitted to acquire $100,000 of Series - ^F'.'
and "G"

it

'

f

several thirty-seconds.
Selling was reported in most
and this combined with the reluctance of dealers to' add to
fairly full positions, put the entire list on the defensive. '
Mark¬
ing down of quotations tended to accentuate the apparently none'
.

/

l*en©ficial than

more

.

.

too

vigorous technical position of the market,

{

DOWN

"

"

i.

,

'?■»

1

,

CP AND

>

?

'

>

■■■■■

-V,

It

'■ *

)

...

This

up again, down again policy of the
money managers to-]
prices of government securities has the money markets
pretty
well contused, to put it
mildly.
1
First, the Treasury comes along
;and refunds with 1%%
certificates, when the market was looking
for a 1*4% rate.
Up go prices of government obligations and' it
.

.

has been
Was

never

,

beginning
of
this country

.

as

-indicated that;the Treasury was not
particularly distressed by
tthe market's response to the retention of the 1
V& % jcfertificate - rate.
1;;'. Then the Federal Reserve Board had to have its
say and it in-;
(creased reserve requirements of Reserve
City Banks from 22% to
:24%.
; This action cooled off the government market and
prices
.

inde¬

an

some

showing signs of stability > when the
Its piece" and put the market into'

took

ypon

.

.

Treasury

was

place following
Quotations were

.

along,

came

.

government market
it on the down side.

;

the

on

up

George W. Wolf
7
v;; ■?
'??"

predictions
than

all

run

way

matter

a

Is true of
world at

founded

put

may even

of

is

conjecture, although

few hundred

millions to more?

.

YIELD

f

that

are

.

\

*

.

;

r

i

? ?

insurance

most

companies • will buy their
Savings Bonds, because the yield is favorable.
probably be selling by some of the smaller concerns
that do not have readily available
cash, in order to take on the
new bonds.
Savings Banks will also be buyers of these secur¬
'limits

of

There

will

the

.

.

.

.

.

.

ities but there does not appear to be too much
enthusiasm for nonmarketable bonds.
? Commercial institutions, in the country
bank classification and non-member commercial
banks, are plan-;
?ning to buy their limits of the "F" and "G" bonds, since these secure
ities meet their investment needs
very nicely.
The larger com¬
mercial banks that are allowed to
purchase the "F" and "G"?bonds
can take
on their limits and still
be looking for bargains in the
(marketable obligations. .
\ ?/????,??????;
??'? f <r>
.

.

.

.

America is true of the
individual freedom is

on

/]???'.'■././■?.?■'•

.

.

aim

of

of

measures

economy

[ Recognition

of

?

.

this

/

state

world affairs has caused

ministration

our

of
ad¬

to undertake the Eu¬

Recovery Program. Funda¬
mentally, ; this program was set

ropean

,

their tops for

some

time

to

especially in the longer¬
-term obligations, there are
many institutions that will take advan¬
tage,of price weakness to purchase selected issues,
especially the

partially-exempts.
?

[\/)

? in

|

There

are, however,
operation, since

this

the separate countries, and there¬
in the [world, at

fore

will from

thenceforth

supporting

their

lives.

to

v

)?

no

market

after

ban

revivify

day
be

are

mutilateral
This

to that not

when we,

as

and

internationally
and

a

faith

in

willingness

to

can

■?; *An

address? by Mr. Wolf at
33rd?Annual International Con¬

strong,

Purchasing

"

New ) York

Agents,

'?

'June 2,1948.

is

ever

f

-

?.

?

Essential Imports to Ouf
Economy
Let

'

virile

'.;

> •:

;

to

us

sider

and

first consider those vital

;,? ;■

,

Must Import More

,'...

)

near

?

to

future prospect of reduc¬

ing such imbalance, it is more
important than ever that we, as
a
nation, give serious thought ,to
the importance of imports and do
to

can

stimulate the flow

and

Otherwise,

services

our '

remain

•

a

national

cerned—wiR
continue the

,

foreign

this
„

;,

;

the

so

far

' be

as

reality,

as

cerned,

are

more

important

power.

world's

This

is

strength and, at the
is
-

our

The

same

vulnerability.
of

measure

indus¬

our

very

time, it
?

.

such

vulner¬

ability varies almost directly with
the continuation
tion

of

or

non-continua¬

vital

imports into this
.country of huge and ever-increas¬
ing quantities of raw materials

The United States has. reached
the highest level in the develop¬

ment and

vital imports, so

national; well-being is

one-half of the

trial

?

bankruptcy and
•??;?.?."??'.?,

our

the

high employment and dangeroUa
unemployment.

our
productive and national
wealth at the current rate can btrt

In

con¬

today

tain the delicate balance between

To

prodigal expenditure

of

exhaustion.

to

pause

that

raw
material imports
control, in large measure, the level
pf • our industrial
activity, the
•level Of bur employment and sus¬

con¬

nullified.

to

fact

necessary

route
whole. pur¬

well-being, is'

well

from all parts of the world. These

trade

one-way

of such trade—iri

pose
our

to

/); '

be

the

United States with but 6% of the
world's
population and a mere
7 % of its area possesses
one-third

ex¬

Today, when exports exceed im-*
ports by billions of dollars, with

far

becoming
morrow.

amenities

we

distant

remains

economy

,

healthy,

panding.

vention of National Association of

and

the amenities of today
the necessities of to¬

—

would

world

'/outbound,'? ^ind

and " regenerating
t y p e.
by filling the distribution
channels in the yarious countries

dividing, line between the

Shifting

assure

that

own

productivity of the wealth
-

ever-expanding

strong

our

will

ating
Only

the

that

healthy—importing to

and

?

sound

economy

sustain

no

be

can

on a

Imports necessary and essential to,
pur economy. Before doing so, it

crying heed of which is increased
gener¬

The

nation, shall

a

goods

war-ruined world—a world the

that

for

necessities

striving

too

there

make
up ? the
A merican standard of
living.
• ?

■

importing—importing first

of

a

needed

interna¬

means

which

expanding economy
and lasting basis.

a-sound and last¬

on

basis.

must look

we

without

no

amenities

of

,..?■■

country. •,? 5-.;•'

integration of industrial

enterprises

yet

known

to

man.

The channels from which it draws

con¬

(Continued

now,

on page

40)

.

;

very

the

advertisement appears as a matter of record

*

of these shares for sale,

.

1*

;■

or as an

»

The

only and is tinder no t'xrcum stances to be construed as an offering
offer to buy, or as a solicitation of an offer to buy, any of such shares.
offering is made only by the Prospectus.

t"-

150,000 Shares

ACADEMIC

."G"

?

""

X

indications that they will be rushed

the?

?

essentials as well
the amenities of our economic

life

economic

; own

that

means

tional trade

ing

capable

?.-

This

;

large, that
given point .in the

some

future be

from the colossal

? ??'

well remember what-?
offering of the Series "A";
214s ih the fail Of last year.
i ? Conditions are different now
from what they were then, but the
psychological factor is still ?with us and it has done some
very strange things to the gov- /
ernment market in the past.

% happened to the

?

come,

empty promise.

,

lead to economic

made

an

Imports can be classified into
two categories—viz.: those needed
for:
the
essentials;
and
those

economy—an economy in each of

we

currencies

.????; Although it seems to be
quite?generally believed that the
offering of Savings Bonds means that government bond prices have

is

as

loving nations is to help them to
help, themselves establish a viable

all

import needs of

?

emergency
aid to, peace

to take care of the heavy imbalahce in foreign trade resultant
up

)

r

>

our

world

now

fundamental ways.
;

FAVORABLE

And what

generally recognized.
It
is discouraging that there exists
so, great a lack of understanding
of'what, must be done to preserve
and strengthen these concepts in

the

?•?< ? Indications

r e e-

is encouraging that this fact

It

of?

some

.

.

.

po-

large'. World civilization

at the crossroads.

billion.
The last Offering of non-marketable
bonds?
Series "A" 214% due 1965, which was made in the fall
of?
v1947, did not turn out to be any great ball of fire. ?
;
a

and

-? litical; f

,

degree they do today.

.

side, and
a

from

cial

The

so¬

dom—stood in the balance to the

As to how many of the non-marketable;

bonds will be sold is purely

r.

founded—

economic,

spoke

of uncertainty have been coming fast and furl-;*
ous in the
money markets, and it is not surprising that
invest?)
ors, traders and dealers have
again taken to the sidelines to?
wait and see what will happen. ;
Purchases of limited amounts?
of the "F" and "G'?
Savings Bonds will take pressure off the

;

na¬

concepts
which it

very

???/ Injections
.

Jvt:

pendent

tion when the

.

ground after the sharp rise that
the maintenance of the 114% certificate rate.

:.t

a

time since the

was

gave

planned

everywhere.

women

said that there

ward

.

a

„

this second
group, we must strive to 'keep America strong—as we have become
under?
,
:—1
1
" ;■ .■■** "' ;
:
:—;—
—-———
our system of
j work and toil and sacrifice in or- and
always, than our exports, beFree
Enter¬ der to produce be implanted in cause
these vital imports enable
the minds and ihearts of men and us
prise.
to obtain the

issues,

'■!

Asserts

exports.

>.We are engaged in a cold war. On one side we have an
ideology that believes in the
vassalage of man; on the other hand, an
ideology believing *in the dignity of man.
As
world leaders of
„

Savings Bonds, caught the market flat-footed, and knocked

down

..

Mr.. Wolf stresses need of greater U. 5.
imports in order to reduce world trade imbalance and revive
multilateral;international trade. Cites need for imported essential raw materials
and decline in our
domestic reserves.
Says granting foreign loans is no substitute for imports, and
proper imports are

'

•

>' The monetary authorities appear to be taking
turns, springing
surprises on the government securities markets, with
theYTreasUTy

Raising of funds by the Treasury through the sale of "F" and
Savings Bonds, in addition to influencing the trend of mar¬

ketable

obligations, could be? mildly deflationary if the money,
to buy -the non-marketable
obligations were .diverted from
speculative loans.; ?
However, there has not been very much of
Jhis type of finahcingrbf. late.
;;;To the extent that non-bank in¬

Common Stock

tused

.

?

'

•

:

•

Par Value $5 Per Share

V '?'?•?

■i

vestors

buy the r"F" and "G's'?with cash resources it will be
only
a shift in
deposits to the Treasury.?.
If marketable .eligibles are
/sold to commercial banks in order to
buy the Savings Bonds, de¬
posits will bo created and the results not deflationary.?; ?;; Com^
.

mercial bank purchases will' also

;

.

create deposits. ?

.

?•

•

Price $12.50 per

"At.'.

share

•:'???

/??r

% Since the amount of money that will be obtained by the?
;?'Treasury through the sale of Savings Bonds will not be sizable.
?. (enough to make much of an ! impression on the

? Copies of the Prospectus

l':S;

whom the

undersigned

he-obtained from-the undersigned only by persons to
legally offer these shares'under applicable securities laws.

may

may

inflationary?
?

? forces, the question as to whether the financing is
deflationary
?or not appears to be largely academic...
.

REACTION LIKELY
After
the

-

-

.

Kidder, Pcabody & Co.

the sharp rise in prices of
government bonds (particulonger maturities) since the middle of May, following the

(continuation of the

1*4*%

certificate rate, a reaction of some
portions would not appear to be unhealthy for the market.
may be what is being experienced
.

.

.

The Milwaukee

This

.

.

The technical position of the market, however, will be im-

settling buyers should come
'The tap issues will have

?, jfairiy sizable offerings of corporate -obligations
V gibles could continue longer on the defensive.




so

-the

?

Incorporated

.

Central Republic Company

*

~

-

(Incorporated)

—

Woodard-EIwood & Co.

W. E. Hutton & Co.

Equitable Securities Corporation-

Stifel, Nicolaus & Company

;
>

and -?

.

Kebbon, McCormick & Co.
The Illinois

Company

Incorporated

Whiting, Weeks & Stubbs
.

>'-

ineli-

E. H. Rollins & Sons

Piper, Jaffray & Hopwood

Incorporated

IC

and as quotations show signs of
into the eligible obligations.

comjpetition in the Savings Bonds

-

Kalman & Company, Inc.

J? proved with price adjustments
.

Company

Robert W. Baird & Co.

pro¬

and since we very seldom
do things except in a
big way, the adjustment might be carried to
excess, v..
It may be that a "larger part of the
price rise that has
taken place in the last month will be
lopped off the list.
/

,
v

now,

^

Merrill Lynch, Pierce, Fenner & Beane

BIyth & Co., Inc.

•.

June 16, 1948
■*

,

Laurence M. Marks & Co.

Pacific Northwest

Company

;

COMMERCIAL

THE

(2652)

20

ment

Angeles Stock Exchange to
Permitted to Conduct Special Offerings

SEC Adds Los
List

safety

one-piece

patented

razor.

the

Since

of

end

the

the

war,

Canadian Securities

company's large plant in Ndrwalk,
Conn., has been reconverted from

Commission on May 28 announced wartime activities and an exten¬
that it had declared effective a plan of the Los Angeles Stock Ex¬ sive modernization program un¬
change for "Special Offerings."
The effect of the action taken by der taken which is now nearing
the Commission will be to exempt distributions conducted in accord¬
completion.
Considerable
new
ance with the plan from rules of£
high-speed
and
labor
saving
the Commission
prohibiting the the Commission may suspend or machinery has been installed.
terminate the effectiveness of said
payment of compensation for in¬
Due to rapidly growing build¬
ducing purchases on the Exchange plan by sending at least ten days'
-*

Thursday, June 17, 1948

FINANCIAL CHRONICLE

&

The Securities and Exchange

The Los

under certain conditions.

is the
eighth
national Securities
Ex¬
change to file and to have declared
effective
by the Commission a
plan for special offerings.
The
plan of the Los Angeles Stock Ex¬
change is generally similar to the
plans heretofore declared effec¬
Angeles

Stock

the Exchange."

notice to

written

Exchange

Floyd D. Cerf Group

Segal's builders' hardware sales
and earnings are the most favor¬

Offers Debentures of

able in the

Cerf Co., Inc., Chi¬
cago, and a nation-wide group of
change, New York Curb Exchange, investment bankers made a public
San
Francisco Stock Exchange,
offering June 16 of a new issue
Philadelphia Stock Exchange, De¬
of $2,000,000 15-year 6% convert¬
troit
Stock
Exchange,
Chicago ible
sinking fund debenture bonds
Stock Exchange
and Cincinnati of
Segal Lock & Hardware Co.,
Stock Exchange.
A summary of
Inc., due May 1, 1963, and priced
the more important features of
at 100.
these plans appeared in Securities
Segal, and one of its three
Exchange Act Release No. 3146 is¬
wholly-owned subsidiaries, Norsued on Feb. 6, 1942.
walk Lock Co., ranks as one of
The text of the Commission's the five largest manufacturers of
action follows:
builders' hardware and the largest

the Los
Angeles Stock Exchange, pursuant
to Rule X-10B-2 (d)
under the
Securities Exchange Act of 1934,
filed a plan for special offerings
■contained in Chapter XI of the
Rules of the Governing Board of
the Los Angeles Stock Exchange.
May

10,

1948,

Floyd

D.

manufacturer

key duplicating

of

and

machines
locks.'

■'

;

will be used for

financing

the

from

Proceeds

proof"

"jimmy

general corporate

including the contem¬
plated expansion of the Sumter,
S. C., branch plant of Segalock
Inc.,
a
subsidiary
"The Securities and Exchange Fasteners,
Commission for good cause finds manufacturing patened "zipper"
that the notice and

public proce¬
specified in Section 4 (a) and
'(b) of The Administrative Proce¬
dure Act are unnecessary in con¬

dure

nection with the consideration of

this plan, since it is generally sim¬
ilar

to

plans heretofore declared

purposes

Neither

fasteners.

debt

funded

the

company

have

subsidiaries

its

nor

any

stock

preferred

or

outstanding with the exception of
this issue.
Segal common stock is
traded on the New York Curb

Exchange.

effective for other national Secur¬

The

ities Exchanges, and the Commis¬
sion finds further that, Paragraph

vertible

bonds

debenture

into

stock

common

5/7

285

for

are

con¬

of
$1,000

shares

each

amount at $3.50 per
time prior to, and in¬
cluding May 1, 1950, and increas¬
Therefore the Commission, having ing thereafter at an annual aver¬
given due consideration to the age rate of one-half point per
;i "7--'v.""'-'r- ;l'-/
terms of such plan, and having share.
due regard for the public interest
Net sales last year were $3,324,and for the protection of investors, 185 as against $2,391,268 in 1946.
pursuant to the
Securities Ex¬ Net profit before Federal taxes
was $396,172 last year as against
change Act of 1934, particularly
$253,411 in the previous year.
Sections 10 (b) and 23 (a) thereof
Distribution is through many of
and Rule X-10B-2 (d)thereunder, the
country's, largest hardware
hereby declares such plan to be jobbers and about 30,000 hard¬
<d) of Rule X-10B-2 being exemptive in nature, such plan may
be declared effective immediately.

effective,
any

condition that if at

on

time it

appears

to the Com¬

principal
share

ware

in

necessary

the public

protection of

or

appropriate

interest

for

or

investors

the

to

do,

so

■

any

retailers

in

the

United

States, Canada and abroad.
A

mission

history of the business.

Segal Lock & Hardware Blyfb & Co. Group Offers

tive for the New York Stock Ex¬

"On

ing
operations
throughout
the
country
and
the prospects for
continued activity, the outlook for

third

wholly-owned

subsid¬

iary is the Segal Safety Razor
Corp. which manufactures safety
razor blades and
a triple-adjust¬

Montana Dakota

By WILLIAM J. McKAY

Despite fervid

of the Canadian administration in

vis-a-vis the U. S. dollar is becoming in¬
creasingly apparent.
In the light of actual developments, per¬
haps the only valid criticism that<fc>
*
can now be levelled at those re-^ imports from this country are bemonth
by
month
sponsible for this step is dilatori- ing reduced
while exports to U. S. markets are
ness in restoring the currency to
its original parity.
If the decision steadily increasing; that as a re¬
had been taken before the strong sult there have been substantial
U. S. speculative interest in Cana¬ savings in U. S. dollars since re¬
dian securities prior to the reval¬ strictions on imports and capital
uation of the currency had gained goods and equipment became ef¬
dollar

Canadian

to

par

overwhelming
momentum,
4 subsequent
exchange

its

Canada's

have

would

difficulties

largely avoided.

Common Stock
>

Blyth

The

Co., Inc. and Merrill

&

Lynch, Pierce, Fenner & Beane
jointly headed an underwriting
group which offered to the pub¬
lic, June 16, a new issue of 150,shares

000

Utilities
par

Montana-Dakota

of

Co.

value,

common

$12.50

at

Proceeds

the

from

added

$5

stock,

share.

per

sale

will

be

the

to

company's general
funds and will be applied toward
the cost of additions to its electric

and

gas

properties.
program

for

been

,

spectacular influx of U. S.

capital funds attracted by the 10%
level

discount

the

of

Canadian dollar caused

official

gratify¬

a

ing increase to an all-time high
level in the Canadian exchange
of U. S. dollars.

reserve

the

to

turn

in

This led

pardonable

com¬

placency that existed at that time
concerning the strength of Can¬
ada's exchange position.
Insuffi¬
cient attention was given to the
impermanence of these reserves,
and deluded by the imposing na¬
their

of

ture

construction

The

criticism and foreign misgivings, the
raising the

domestic

wisdom of the action

authorities

size, the

were

Canadian

slow to check the

1948, including the balance of the
cost of projects underway at the
beginning of the year, will in¬
volve
gross
expenditures
esti¬

buying spree in this
country that subsequently devel¬
oped.

mated at

however, speedy and effective ac¬

$3,570,000.

Canadian

this

When

realized

was

error

was
taken
to
arrest
the
which is not af¬ tion
other public alarmingly rapid decline of the
Fur¬
utility, carries on a natural gas Dominion's exchange fund.
thermore' the resultant austerity
and electric public utility busi¬
ness
in Montana, North Dakota, program
has not been merely
South Dakota and Wyoming.
negative, but has produced also
some
unexpected benefits to the
Total operating revenues of the
Canadian economy.
No false illu¬
company for 1947 were $10,227,sions born of apparent affluence
776 and net income for the

The

with

any

year

-The company has
a funded debt of $19,056,680 and
99,115
outstanding
shares
of
4.20% cumulative preferred stock,
$1,705,106.

$100 par value.
Giving effect to
the present offering there will be

1,066,434 shares of common out¬
standing.
Dividends

on

the

and 60 cents per

the

■

v

■<

'

•

'i

'7;

■

Divi-

years.

totaling 40 cents per share

have been declared
At

in 1947

share in ■ each of
-.4

preceding two

dends

stock

common

totaled 75 cents per share
:

economic

been

furthered

the

end

of

so

far in 1948.

February

the

company

had total assets of $54,-

235,190.

Current

$4,911,270

assets

compared

totaled

with

total

now

$3,874,727.

position

reserve

the

strong,

was

ever-present Canadian weakness
constituted by over-reliance on
U S./Britsih/

time-honored

the

Canadian

exchange triangle
conveniently neglected.
With

was

Dominion in order to avoid loss of

Canadian markets. This movement
has also

avoided. With characteristic real¬
ism the Canadian authorities then

austerity

current

adopted

the

measures

and re-oriented the of¬

ficial

in

course

the

of

direction

greater economic independence.
Even
able

at this early stage

results

have

commenced

to

view-point as several of these
plants will manufacture not
only for Canadian and Empire
markets but also for export to the
world markets even including the
United States.

Thus the effect of the raising

of
present
parity has been instrumental in
placing the Canadian economy on
the Canadian dollar to its

a

realistic basis.

more

dian

uation

removal

capital

llivj
oiu;M 'o.f

can

prerequisite would be a
degree of uniformity of
and
Canadian
price

greater
the

U.

S.

levels.

the

bond

inactive

the in¬

week both

market

of

sections

external

and

and

dull

were

the

internals

were

in

and

sympathy

with

marked-down

the reaction in free funds follow¬

ing the recent long period of
sistent strength.
caused by
for future

offerings of free dollars
delivery in connection

the

bond

Dominion

November

In view of the

redemptions.

approaching
funds

tion

demand

accelerated

•

for

tourist

purposes

offerings should
readily absorbed.
during

there

will

in the

per¬

This decline was

the

be

mining

North

be
In addi¬

soon

summer

intensified

of the Cana¬

areas

U.

and

months
activity

S. investment

interest is then likely to be on an
increased scale.
Stocks after their

'
'

Canadian

current

foreign trade and
be, contemplated, a

on

necessary

dian

ii

the

of

restrictions

more

*■

exchange
step in the

long-range
policy of gradually
permitting Canadian prices to ap¬
proach the U. S. level. One de*
sired objective of this policy can
be readily deduced — before the

these

-

the

was one

Raising

level therefore

announced

Y<y.;

undesirable

exert

could

pressure.

Canada's dollar conservation

exchange position; that

long

cognizant of the fact that the
unduly- large differential between
U. S. and Canadian prices that ex¬
isted before the exchange reval¬

Minister Howe has just

.WSiV-llii

having been sold, this advertisement appears
as a matter of record only.

also

been

for

is beginning to exert a
beneficial influence on the U. S./

The Cana¬

have

authorities

materialize. Trade and Commerce

program

Canadian

the

new

with

favor¬

fa¬

more

even

an

from

turn

During the

at

precarious level and cold facts
of the case could no longer be

Canadian
All these shares

taken

vorable

ternal

the exchange reserves

a

that

current liabilities of

While the exchange

remain.

position has also
strengthened fol¬

lowing,, a new wave of U. S.
branch-plant installation in the

company,

filiated

was

fective last November. The Cana¬
dian

.

recent

CANADIAN BONDS

NEW ISSUE

•

1,132,631 Shares

i t •:

•/

■■■•'

*.«

•

v-iiiiv

GOVERNMENT

apathetic
showing
dis¬
played signs of greater animation
with the industrials reflecting the
upward trend in New York.
The
gold issues however still remained
in the doldrums and declines fol¬

lowed

Lonsdale Company

PROVINCIAL

the

dividend

announcement
reduction

on

of

the

Dome

Mines.

MUNICIPAL

Common Stock
Par Value

$1

per

CORPORATION

H. Henlz & Go.

Opens
Dep'l

New Canadian

Share

H.

CANADIAN STOCKS

Hentz

&

Co.,

60

Beaver

Street, New York City, members
of the New York Stock Exchange
and other leading securities and
commodity exchanges, announces
the opening of a Canadian De¬

Price $3 per Share

partment to specialize in Canadian
securities.

A. E. AMES & CO.
INCORPORATED

In connection with the

opening of the department, which
will be under the co-management
of Allen Manus and Cecil Manus,

■

TWO WALL STREET

BLAIR & CO., INC.

MAXWELL, MARSHALL & CO.

the

NEW YORK 5,

tion

N. Y.

firm
of

a,

announces

direct

the

installa¬

private wire

to

Angus & Co., 304 Bay Street, To¬
WORTH 4-2400

June 15, 1948.




NY-1-1045

ronto,
and

members

Montreal

of

Stock

the

Toronto

Exchanges,

and the Montreal Curb Market.

Volume

167

Number 4708

THE

COMMERCIAL

CONSOLIDATIONS
NEW BRANCHES

Bankers

and

OFFICERS, ETC.

REVISED

CAPITALIZATIONS

John

•

of

C.

the

Traphagen,

Board

of

Chairman

Bank

New

of

York and Fifth Avenue Bank, has
the

announced

Charles

M.

appointment

Blisq,

the

Credit

Department,

39th

Street and 7th Avenue Office, was

appointed

Assistant Cashier.

an
*

of

*

*

•

.

t

S.

heretofore

Sloan

Bankers

Colt,

Trust

nounced

President
Company,

of
an¬

June 16 that S. T. Ma¬

on

Frey.has been elected vice-

son

president and

William

assistant treasurer.
in

Mr. Frey began his bank career
the
Foreign Department in

1932, following his attendance at
Kent

School

versity.
sistant

and

Columbia

appointed

was

Uni¬

treasurer

in

1943

as¬

at St. Paul's School and Yale Uni¬

versity, joined the bank in 1938.

Charles

Bliis

M.

Roderick

Since his return from the
Navy in
1946, he has been connected with
the Banking Department.

McRae

1

*

■

The

*

election

serving
as
Vice-President * in
charge of Investment Counsel, to

son,

be

*

Administrative

Vice-

of

James

Vice-President

and

S.

Car¬

Director

Foreign Power Co.,
Vice-Chairman of Colonial

President of the institution. Other

Inc.,

appointments

Trust Co., has

time

made

the

at

same

Roderick McRae, Vice-

were:

as

been

nounced

be

K 1

the

with

Chief

Investment

vestment

by

Arthur

S.

activities;
formerly
ViceDepart¬

tion

Mr.

of

Em¬

son

ployee Relations; Karl A. Simson,
formerly Accountant, is appointed
Comptroller; R. W. Kaiser, Vice-

has

ment,

the

becomes

President

Trust

Director

heretofore

and

troller, will

serve

Comp¬

Vice-Presi¬

as

has

^Philip Young, Dean of Colum¬
bia University School of
Business,
on June 10 was elected a Director

bank's

Young
was the principal organ¬
government

a

establish- *

lumbian

Later,

Philip

Young

as Deputy Administrator.
Subse¬
quently, he became assistant to the
Foreign Economic Administrator,
as well
as
foreign trade adviser

officer, he directed the
*

appointment

Company
on

of

of

June 11,

John

Schwoon, formerly assistant

H.
sec¬

retary, and Clifford R. Rohrberg,
formerly asistant treasurer, as as¬
managers

and

of

the

Foreign
John
G.

of

Khatigan as an assistant secretary
in the Banking Department.
V

*

&

*t

meeting of the Board of

a

Directors

of

Sterling

National

Bank & Trust Co. of New York,
Robert J. Kiernan, Vice-President
at the
bank's main
office
was

elected Vice-President and Senior

Loaning Officer, it
on

in

was

announced

act

as

Vice-Presi¬

charge* of <^ur

DivMnfl;

*

Interna¬

*

.

E.

Chester

*

ft

Gersten,

'.V/"

.

President

of The Public National Bank and

V>

■

Co.

nounced

of

that

Mr.

Executive

Taylor

Councilman

was

Vice-PresidenV
with

the

The

officers

elected

were

and

Haber

elected
of the

of

Honorary
bank

the

dent.
At

a

N.

•

.

&

Co.

.;•*! "

was

*

it

pointed

was

ceeding

Y

board

Peterson
;./•

meeting,

and

to

(Jock)

Vincent

'

a

both

Sewickley

and

in

the

June

Murray, who began his ser¬

ofjer to sell,

an

The

■

nor a

the

Union

Square

Savings Bank,

according to an announcement on
June 14 by R. H. Brownell, Presi¬

his

connection with Fir

years

as

messenger

a

.The

was

taken, went

suc¬

of the

Fidelity

in 1932 and President in 1934.

B.

September,

Herman

M.

Chairman

1945, he
of

the

(Continued

page

New

York,

an¬

Douglas Savage of




1,1963
initially issued bj

Sega! I.ock

Company, Inc. to the holders of its Common Stock as set forth in
This announcement relates to the debentures not subscribed for
through the exercise of Subscription Warrants.

This unique

exhibit, which will
open in the bank lobby on Wed¬
nesday, June 23, and continue
through July 2, will comprise
originals and facsimilies of 1848
newspapers and periodicals which
are still being published in New
York;
The

bank, dean of financial in¬
stitutions in Union Square, was
officially opened for business on
July 1, 1948, as the "Institutions
for
the
Savings
of Merchants'
It

has

been known

un¬

der its present name since 1905.

Price 109%

Copies of the Prospectus

may
as

be obtained from such of the undersigned and jther registered dealers

may

FLOYD

legally offer these securities in this State.

D. CERF COMPANY
INCORPORATED

The

publications to be featured
in the exhibit and the dates they
their

founded
Post"

direct
are:

and

antecedents

"The

"Home

New

News,"

were

York

1801;

120 South La Salle

Street, Chicago

was

board

on

Fifteen Year 6% Convertible Sinking Fund Debentures

were

in 1912,

company

Vice-President in 1917, a director

Segal Lock & Hardware Company, Inc.

the Prospectus.

above

to say;

on

$2,000,000

dent of the bank.

the

Pittsburgh "Post Gazette"

of June 8, from which the

solicitation of offers to buy, any of these securities.

Subscription Warrants for these debentures

with

Tradesmens National Bank.

June 16, 1948.

& Hardware

mes¬

delity he also had worked for two

NEW ISSUE

due May

a

with that firm last February.

offering is made only by the Prospectus.

and

as

in 1898, celebrated his 50th

v

'-' :V~

He
1

Prior to

Schaefer, President, announced on

This announcement is neither

7

Hospital.

Valley

with the Fidelity

senger
year

business

71.

Mr.

vice

and

Pittsburgh

died

John

Dr.

Sutherland,

Chairman of
Fidelity Trust

"Mr. Murray became Treasurer

Pittsburgh

late

the

banking

in

Sewickley,

serve

director of the Keystone

the

of

with

interests

*

*

National Bank in

by John Adikes, Presi¬

"

Councilmen

Murray,

board

ated

was

Artemas C. Leslie has been ap¬

meeting

trustees,

same

."

Vice-President

.

the

Y.,

recent

■

Robert !F.
,...:'

at

board*of

announced

■■

\

Maeder, Manager of

Jamaica,

11.

,

Brothers Harriman

Bank,

Institute of

They are: Jo¬
seph F. Cornelius, Vice-President
of the First National Bank, Spo¬
kane, Wash.; Albert H. * Gabel,
Mortgage - Department,
Savings
Bank of Utica, N. Y.; W. Frank
Phillips, Vice-President, Commer¬
cial
National
jBank,
Charlotte,
N. C.; and Martin J. Travers, Ex¬
ecutive
Vice-President,
Power
City
Trust
Company,
Niagara
Falls, N. Y.

trustee of the Jaimaca Sav¬

a

ings

1

American

three-year terms.

has

y' y '
*

June 10

on

Company of Pittsburgh and affilir

The convention also elected four

Bank^in Septem¬
*

of the

Executive

Assistant Vice-Presi-

as

United

of Newark-

announced

was

Eugene
the

Banking, in session at the Hotel
Statler, Buffalo, N. Y., June 7

June 16

Mr.

it

of

board

an

of the In¬

stitute since 1945.

Sav¬

Trustees

the

news¬

periodicals of a cen¬
a feature of the
100th Anniversary celebration of

or

Trust

of

of

Savings Bank

.

'

.

N. J.,

President.

Harry

Madden, President

Board

States

a

Institute
of
Banking,
by Benjamin Fairbanks, President.
having served as Vice-Presi¬
Mr. Jackson, a native of Newark,
dent for the past year.
Hartwell
is a director of the Federal Trust
F.
Taylor, Assistant Vice-Presi¬
dent of The Bank of Vriginia, Co., it was stated in the Newark
"News" of June 10.
Richmond, Va., was elected Vice-

Boulevard

on

member

tury ago will be

Clerks."

June 14.

Board, Mr.
special con¬

An exhibit of New York
papers

*

Trust

New York announced

5r At

the

our

; vv-'fft

Navy's International Aid Division

Department;

of

has been

after

& Trust

Industrial

'

Michael A. Jackson

of

Cuban

will

Carson

Relations Staff. From 1944 to 1946,

sistant

President

elected

was

:jt

N.

American

C.

announces

new

*

Co¬

Chamber

sultant to Mario Diez,
tional

the

Association,

Vice-Chairman:of

to the FEA and chief of its Trade

*

11

Honorary

becomes

Chairman of the board.

Inc.,

Commerce,

'

American

Mexican Chamber of Com¬
of the U. S., Inc., Peruvian
American Association,. Venezue¬
lan Chamber of Commerce, and
American Asiatic Association. As

dent

Y-:;

Com¬

merce

istrator,
Mr.
Young served

Guaranty

the

who

Turner,

'

Inc.,

Lease Admin¬

>

Ameri¬

of

Chamber of
Commerce
in
the
U.
S.,
Inc.,
Ecuadorean American Association,

named

T.

Emigrant

Brown

Bolivarian So¬

the

of

,

Commerce,

Edward

naval

Carson

Executive

Chile-American

i nistra-

first Lend-

a

affiliates

of

the

and

the

Director

Chamber

Stettinius, Jr.,

as

S.

Foreign Power Co., Inc., a
of

■

tion

Howard P.
James

ciety and on the Directorates of
the following international organ¬
izations: Argentine American

to

ment', of
the
Lend - Lease

was

at its

*.'•

Council, Inc., and Pan American
Society (of which latter he is an
Honorary Vice-President for life),

program

when

the

Com¬

and

dent. r

South

&

-

installed at the final general ses¬
sion of the 46th Annual Conven¬

a

Eastern

'

Hauser, Vice-Presi¬
dent,
First
Wisconsin National
Bank, Milwaukee, Wis., on June

Office in Forest Hills, have been

ber, 1945

American and
Far

commercial

*

elected Assistant Vice-Presidents.
Louis Steinmuller, in charge of

to

mittees of National Foreign Trade

of the

tion.

the

is

the

all

*

*

Schwoebel

L. Durland,

came

Board

he

of

banks in New York State.

advanced Mr. Alexander P. Haber

Directors.

member

Mr.

m

Peter

that

member of the

can

of the Bank of Manhattan Co.

A d

*

ings Bank, announced

-years
been
a

of

,

Pierre

Edwin

Company of New York

Director of

'

th6

15

part-?
McCloskey,

A.

95%

over

Central

Trust

June

on

Mr. John

several

'T,.;

led

of

and

*

that

on

was

i :
meeting of

Sterling National Bank

of

for

Also,

which

Na¬

York

to

Car¬

dent in the Banking Department.

izer

,

•••*

Trustees

Bank

Y\

of the law firm of

-

Donnelly was appointed an Assist¬
ant Secretary and Peter E.
Sny¬
der, an Assistant Treasurer.

President of

over

institu¬

in

*

v

;

.

■
•
■
at
Bretton - Woods, Best & Leslie."
;
$
*
June 14.
He succeeds
Kielmann, President,
Charles A. Winding, attorney,
Peoples National Bank of Lyn- who in 1943 served as Assistant
brook, Long Island.
Counsel to Gov. Thomas E. Dewey
Harry W. Davies, President, The and as Executive
Secretary of the
Syracuse Trust Co., Syracuse, was New
York State War Council, was
e 1 e ct e d
Vice
President,
and named on June 8 Chairman of
Charles
S.
Andrews, President, the board of directors of the Ef
Bronxville Trust Co., Bronxville,
mira Bank and Trust Co., accord¬
was named Treasurer.
'
;
ing to Associated Press advices
The
Association,
founded
in from Elmira on June
8, which
1894, includes in its membership added: He succeeds Samuel G. H

H.,

William

,

that

President

*

regular

held

pany

The

New

"

ican Bar associations and a
ner

Assistant Cashier.

an

of

Hanover

of

of

15 Carl Kriech

added:

"Mr.

convention

N.

Chairman and

also

Counsel

Carey,

Bank

Association at its 52nd annual

ers

;

appointed
a

•

it was stated in the Pitts¬
burgh "Post Gazette" of June 4$

President,

Cleveland,

dent of the New York State Bank¬

Vice-President.

e e m a n

In¬

supervision

James

Officer

Directors

June

Board

■ .■■ v

-

June 3,

which

*

21

.Leslie, formerly District
First National Bank of Cortland, Attorney here, is a member of the
Cortland, N. Y., was elected Presi¬ Allegheny County, Pa., and Amer¬
P.

the Bank's Rego Park Office, has
also
been
elected
an
Assistant

an¬

President, now in charge of the
Security Research Department, to

of

City

on

*

appointed Assist¬
*

*

Burr

regular meeting of the

tional

At

*

,

the

Board

held

.i'1:.

'

of American &

the

/■'

\

were

•

'•

At

(2653)

ant Secretaries of the bank.

"Herald
Tribune,"
1841;
"Brooklyn Eagle," 1841; "Ameri¬
can Journal of
Psychiatry," 1844;
"Police
Gazette," 1845; "Scien¬
tific American," 1845, and "Town
& Country," 1846..
v,

an as¬

and

sistant vice-president in 1945.
Mr. Moore, after his education

A. Carroll

York

.

He

CHRONICLE

1834; "American Banker," 1836;
"Forth," a 'Protestant Episcopal
magazine, 1836; "Commercial &
Financial Chronicle," 1839; New

Moore

H.

FINANCIAL

"Missions," international Baptist
magazine, 1803; "Morning Tele¬
graph," 1805; "The WatchmanExaminer," also a Baptist publica¬
tion,
1819;
"Journal
of
Com¬
merce," 1827; "Railway Mechani¬
cal Engineer," 1832; "New York
Sun," 1833; "Staats-Zeitung und
Herold," German-language daily,

News About Banks
NEW

&

In

named

and

22)

was

12

succeeded

President by.

as

Alex¬

ander P. Reed.

explained, was made necessary by bank's boart},
i June 8.
the rapid growth of the bank." ,
''

■

*

Murray was Chairman of
the Advisory Committee of the
Sewickley office of the Mellon
National Bank and Trust Co.; a
director of the National Union
;

Guaranty

Title

Union

and of

Company

Fire" Insurance

Com?
pany; Chairman of the Advisory
Committee of the Home for Aged

the

Protestant Women and a member

Committee of the'
Protestant Home for Incurables."

of the Advisory

#

*

*

Downes, retired Phila¬

Carroll

and New York banker,
May 31 at his home in
Atlanta, Ga., it was indicated in
the
Philadelphia "Inquirer", of
delphia

died

on

June

3, from which the following

is taken:

1

\v\.-

"Mr. Downes was an officer of

Philadelphia

the

National

Bank

President of the

1937, he became director of

the Southern Governors' Confer¬
ence.

He resigned from

in 1924, frith the title
of;
Vice-President/and was active as;'
"His resignation and: retirement a senior executive at the head of- :

Eferald" of May 30s said:
.

'< ■

*

fice of the bank until bis retire¬

certificate

A

retirement of Robert Mc<^

ment on Feb. 5 of this
William

the post in

L.

year.

,

Lary and Ralph-J./

Voss have been elected

.

Assistant

Vice-Presidents of California'

.

Bank,

Los

Frank

L.

Angeles, according to
King, President. Voss
assigned to the bank's
Hollywood-Vine office and Lary

has

been

will

continue

vision
Both
1946

in

the

loan

super¬

department at head office;
joined the bank's staff in
service

after

in

the

armed*

forces.

<

t

*

%

George W. Bourke, Vice-Presi¬
dent and managing director of
the Sun Life Assurance Company
of

Canada,

pointed

on June
1 was ap¬
director of the Bank of

a

Montreal.

Mr.

Bourke

has

been

associated with the Sun Life for
33 years.

.

Liberty Na¬

tional Bank in New York.
"In

accepted the resignation. In re¬
porting this the Dallas "Times Bank

on

*

*

v

Chief National Bank Examiner oI
the 12th Federal Reserve District:
He became an officer of the Anglos-

■

from 1918 to 1920 and later served
as

i

*

directors

of

President Flippin said that it was
with deep regret that the directors

,

approving and from active business terminates
more than 17 ye^rs of outstanding
making effective at the close Of
Evilley as Vice-President of the
service with the First National
business on May 31. the consoli¬
First National Bank of Cincinnati
dation of the First National Bank Bank, it was emphasized," *
was
announced "on June 1 by
*
*. "■*
of Columbia, S. C.f and the Miners
W. E. Pierson, President, follow¬
W. W. Crocker, President of
& Merchants Bank of Charleston,
ing a board of director's meeting.
Crocker First National Bank of
c., was issued by the Comp¬
Mr, McEvilley has been in the
troller-of the Currency on May 28. San Francisco, on June 10 award¬
bank's employ for more than 50
The Consolidation was effected ed the customary gold watches for
years and was an officer for 47
under the charter and title of the completion, of 25 years .of service
years, serving in an official ca¬
First National Bank, with common to the bank to the following three
pacity longer than any other since
capital stock of $500,000 (par $10) employees: Charles A. Corrasa,
the bank was organized,, according
new
business department; Owen
and a surplus of $300,000.
to the "Cincinnati Enquirer" of
R. Kane, Teller, and Warren M
❖
*
June 2, which added;
securities
department
John L. Gibson, previously in .Johnson,
"Mr. McEvilley will continue as
This brings, to 93 the number of
charge of the
Dallas National
a member
of the board and its
employees presently with the bank
Bank's industrial loan department,
Secretary, Mr. Pierson said. Born
who have served for 25 years or
has been
appointed Vice-Presi¬
in Cincinnati iri April, 1874, Mr.
more.
dent
of
the
Republic National
McEvilley joined the bank in 1890,
The board of directors also an¬
Bank in charge of the time credit
left in 1893 and reentered the
nounced the promotion of George
department effective June 15, it
bank's services in 1901 and was
M. Doyle from Auditor to Cashier
was reported in the Dallas "Times
elected Assistant Cashier shortly
effective July 1,1248.
Mr. Doyle
Herald" of June 8, which also
afterward: /HH'/;:
succeeds J. A. White, Vice-Presi¬
" 'H'H-- V'/r' :V; said: ■,
;
V
//'
"He was elected a Director in
dent and Cashier who retires on
"He had held the former posi¬
June 30, 1948, after serving the
1911, Cashier in 1913 and Vicetion with the Dallas National since
bank for 42 years.
President in 1917. He succeeded
Ira Ci Chaney
Joseph Rawson as Secretary of 1939, excepting for a period of 'succeeds George
M.
Doyle
as
military service.
He was previ¬ Auditor effective the same date.
the Board in 1927.
v
'
ously
connected with
General
'Mr.
McEvilley
served
two
Motors
Acceptance
Corp.
and
terms as President of the Ohio
Harry
Lyon
Machen*
wellUniversal Credit Corp."
Bankers Association. He is a Di¬
The

"Mr.

V

Thursday, June 17, 1948

,

Bankers

News About Banks and
(Continued from page 21)

FINANCIAL CHRONICLE

&

COMMERCIAL

THE

(2654)

He is Vice-President of

the Actuarial Society of America;
a member of the Canadian Cham¬
ber of Commerce and

the

ideal of

Past Pres-

a

Canadian

Life

,

Of¬

ficers Association.
'

;

#

^

■

1946 and since

then had devoted

himself

A branch pf the National Bank
of India Limited was opened at
H/HV. rector of the Hobart Manufactur¬ \ The Dallas "Times Herald" of President of the Anglo California
New Delhi on May 24..
June 9 also reported the follow¬
of his death Mr. ing Co., Troy, Ohio."
National Bank, died on June 4 of
ing:' ;\ V: H-Hf:;y;
years of age.
coronary trombosis at St. Helena.

largely

interests."
At

the

Downes

banker and retired

known

Vice-

|

.

•

time
70

was

philanthropic

to

;

.

1

"

''

The National City Bank of New

/ "Announcement was made on Calif,
-v;■',v
F. Florence, Presi¬ U.A native of Missouri and de¬
Northern
Trust
Company, dent of
the
Republic National scendant of
Trust Company, Philadelphia, Pa.; The
distinguished early
announced the following new ap¬ Chicago,- retired on June 11 after Bank of the promotion of four American
colonists, he was edu¬
49 years of service with the bank. Assistant Vice-Presidents to full
pointments as of June 10: George
cated in that State and spent the
• H>.: :•
W. Junginger, Assistant Cashier; He joined the bank in 1899 when Vice-President positions.
earlier part of his banking career
He was 16,
"The new Vice-Presidents are there. After working his way up
Joseph F. Binns, Assistant Cashier. it was 10 years old.
His retirement marks the comple¬ C. W.
♦
❖
*
,/
' /
Austin, Jr., who has been to become Cashier of the Sturdition of the longest record of ser¬ with the bank for 20
years, the ivant Bank of Cape Girardeau, Mo.,
Stockholders
of
the National
vice of any officer or employee.
last 11 in the oil loan department, he was appointed' Chief National
Capital Bank have authorized an
"•

*

"

'

*

#

:\'t y

■/

Wilfred H. Bell, Assistant Sec¬

V

,

York

June 9 by Fred

retary in the Trust Department of

Tradesmens National Bank and

June

announces

14 of

Champs Elysees.
the

unit

49th

In

his

close

half

to

with

century

a

service, Bell has seen the bank
George A. Didden reported oh grow from 48 people occupying
June 9, according to the Washing? modest' quarters on the ground
floor of the Rookery Building to its,
ion
"Post"
of
June
10, which
present personnel of around 1,200
added:
and its present bank building.:
"As a result, he said, an addi*
*
*
tional 10,000 shares of $10 par

"Pat

past

,.

tional Bank of Detroit

Bank

declared-

Stock
share.

stock

the

on

Exchange

Washington

at $35 a
Present stockholders Will
.was

be given 'rights' to buy the addi¬
tional shares
new

the basis of

on

one

for each three old shares, now

held:

It is

1948.

in the annual dividend rate from

$6 to $7.

-

/

•

*

public sale.

for the 'rights' at $6.66 each.

The

warrants, to be mailed today, will
noon

of

St.

Louis

Scott,

formerly with
been
four

Wallace,

Jr.,

presently

*

#

has filled

ecutive.

The

Memphis

was

Bank

at

of

elected Ex¬
the

Commerce

meeting

a

First

of

in

the

Texas,

by

<.

.

'

'<

*

resignation

Ownby,

of its

Vice-President:, of

*

*

c■■

manager

number of responsible

positions since his affiliation with

Pollard, Vice-Presi¬
and

a

as

was

-

-

*

of

'

.

'*

Jordan" C.

Vice-President of the

National

Edgar

.

Bank

announced
L.

Flippin,

of

May 29

President.

York

as

(France)

when

the

through

for

July

1948,

15,

in

amounts'; in
of

excess

ex¬

limita-

line

:

this' of¬

in

is

with

! Sept.

the

calendar year

1948,

pro¬

he

...

tions and building and loan asso¬
ciations, and cooperative banks. HX

(4)
Pension and
retirement
funds, including those of the Fed-:

his

era!,; State and local governments.,
(5) Fraternal; benefit associa¬

5,. 1947, i

! when

an-

the

tions.

John

! offering, of the

H:';

vHH.

'

(6) Endowment funds.

W. Snyder

(7.)

.

;2V2%Treasv":vv/ :
!ury Bonds, Investment Series
A-1965-, when he said that "Fur¬

Credit unions.

(B) Each

,•>

r

-

fcommercial

*

-

-

«

;

-

in¬

and

dustrial bank holding savings de-;

posits or issuing time certificatesdeposit in the names of individ¬
uals^ and of corporations, associa¬
available whenever the situation tions, and other organizations not;
operated for profit, will be per¬
warrants such action."
:
/
mitted to purchase F and G sav¬
i
The special offering of Series F
ings bonds combined up to $100,000:
and G bonds will be open to in¬
stitutional investors holding sav¬ (issue price) from July 1 to July:
ther

price $1.00 per share

or

>

,

offerings of securities suit¬

able primarily for institutional in¬
vestment needs would be made

dealer

H

(1) Insurance companies.
< .*! *
(2) .Savings banks. ,?. ■
/
.(3 X, Savings , and loan • associa-

<

!nouneed

your

the

.

fering

by

the

bonds in excess bit
the existing limit of $100,000' must
be purchased during the peribd.
from July 1 through July 15, 1948:;

! statement Of

Orders executed

elosed

was

Occupied

vided that any

in-

clusive,

that

COMMON STOCK

S. A.,

Germans

Buy More Series F-G Bonds

The Secrer;
Ifary stated

FLEET OIL CORPORATION

former

icity in June, ,1940.

;

296,000 SHARES

The

France.

Treasury Secretary Snyder anooupces purchases may. be made during period from July 1 through) July 15 In amounts exceeding
\HrV
existing limitations.
'
'

Mr, Ownsb.y's action, it is stated,
isting
is prompted by ill health,; and 'tions.

We Offer

serve;

>

!H Secretary of the Treasury Snyder anonunced on June 10 that
institutional investors of the classes defined in Department Circular.
No. 814, dated Sept. 22, 1947, will be permitted to purchase United
States Savings Bonds of Series F and Series G during the period
from
July
i f

Dallas,

on

will

and

with National City branch in Paris/
Subse¬ The National City Bank of New

to San Francisco

came

in

facilities

Eighth

transferred to the

was

Institutions Gait

of the credit department,

the bank."

...

Memphis branch,
National

June 30.

"The increase in capital, Didden

quently he

y:i' HiHV)

manager

dent of the Federal Reserve Bank

"A market has been established

R.

"E. :-E.

15,

This represents an increase

the

is
City's

branch

National

District,

headquarters in St. Louis.

•

to stockholders of record June

William B.

no

been

years.

$1.75 per share payable June 30

shares left for

or

"John

quarterly dividend- of

anticipated that there

will be few

expire at

a

has .for ,the
associated

Jr.,

years

.

the oil loan department, has
with the bank for the past

June 11

on

Henry,

27

of

Reserve

business development department. 1921 he

Director's of Manufacturers Na¬

stock will be sold at $10 a share.
The last sale in National Capital

Examiner

Bank

on

of its

exporters,/importers
and other
businessmen
requiring
banking

;\yith the bank iif various depart-, office of the Comptroller of the
hients. At present he is in the Currency in Washington, D. C. In;

'

-

previous experience in the

tjrust and re^l estate departments. Federal

This

in

system

overseas

•

of

opening

affiliate, the International Bank¬
ing Corporation, at 52 Avenue des

.

increase in capital stock to $400,000
from
$300,000,
President

the

Paris branch

a

ings, insurance, and* pension funds,

investment

which?

undersigned

were

eligible to purchase

the 2^% Treasury Bonds,
ment

Series

A-1965,

Invest¬

under

De¬

of

15, 1948, inclusive.

\

*

^

•

It: is stated further details with

to

respect

this

special

offering;

will be announced later.

partment Circular No. 814, dated

Aetna Securities Corporation
111

Sept. 22, 1947.

BROADWAY/NEW YORK 6, N. Y

Telephone WOrth 4*6400

*

Subject to the fol¬

lowing limitations:
J

(Special

(A) Eacb investor in the follow¬

ing, categories will

be permitted

to purchase Series F and G

sav¬

ings bonds.combined up to

June 15, 1943

total

a

j amount of $1,000,0.00. (issue price)

*'■!,*»»»

-.4

»

a

0

*

*




♦

With King Merritt & Co. J.
to

The- Financial

Chronicle)

ST. LOUIS, MO.—Frank G.

1

Sib-v

ley has joined the staff of King
Merritt & Co., Inc., 408 Olive St.
He

was

previously connected with

Slayton & Co., Inc.

.

.

Volume 167

Number 4708

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(2655)
sible for them to be, and; still have

More Production—The Price oi
:

(Continued from page 16)

v

aloof

from

twice

failed-

we

"finally
must

world

a

tive

crisis

Most of us have
the lesson.
We

learned

remember

accepted

it

reluctantly.

we like it or not,
we
are
part of the global ,com.munity, sharing its common des-tiny.
After a time of blundering

and fumbling,
'

fixed

our

We

course.

alt became

convinced

that

selves

I

the

We

for

am

our-;

prepare

all attributes of this attitude^
This
human
factor
cannot
be

still feeling

American

primi¬

more

a

made

we

of

the

Well, gentlemen,

will- not guarantee
peace, but cer¬
tainly peace cannot bet achieved
without
preparedness.
We
are

by

have inherited that

we

whether

like it

we

is to

now

or

figure out

new

can

our

job

ways

of

done.

The

to

cepting

men as
process

dealing with

men

-

,

•

-

idea

dignity

and

chines.'---vr-'-

Nations
;

basic

productivity to

could have

never

F realize that

a

of

in¬

place of!
the eyes
our

ma-!

ing: their

freely

creative

energies

technical skills,

We

bar

voice in

men

from

war."
This is proof that dictators
"understand and respect the word

solve

the

problem

of

productivity.

There

a

labor's

a;', few

ac¬

concerted

management
the

out

drive

just
the

as

to

national

and

did

we

time

cision.

for

Let's

for

labor
result

same

produce

our

concept

of

can

them.,.. Labor

what

no

is

should

but

common^ search

for

all-

an

for

This

war.

be

*

v

in

higher

ductivity. ?y'

the

erly

pro¬

"'Vv';:;1 :

for

people.
A

Labor Should Share in Fruits

,

the

benefit

of

all

Joint

own

public-be-damned
egomaniacs

those

attitude; these
proving that the
baron attitude,
past and)
present, is not a monopoly of
management.
'J
1
We know that we can't expect
a
healthy economy by sweating)

productivity,

of

dinlo-

our

.diplomacy.'
Carry

Bigger Production

a

.

Stick

The only way for peace to
us to talk fairly

labor

and

and'

carry
a
bigger productive?
stick than any other nation in the
This can only be done if!

world.*

juststupid as the theory of less!
pay for more work.
What both'j
and most efficient system in the'
groups really face is a challenge1
world.
to get together, to drop the
name-;
From whatever angle we dia*-*
calling and to devise a plan which;
nose the sick and uneasy world,;
will produce both more
pay'and'
the medicihe prescribed1 is: always
more work. ;
the

smoothest,

as

best-oiled

>

the same—increased

How then can

productivity^

achieve it?

we

Defects of Old Incentive

1! A

|

r

low-down
the

should

dividing! This is

is not only a matter'
'! It-is also a matter of

of morals.

that

in

fruits

expediency. This
worker's

be

at

least in

direct

pay

New

r

Type of Productivity

Planning

Systems

s

'

'

• -

even? a

theoretical limit upon the

ektent to which this process'

bdicarried;

majr

/ y;h:

t

May ' F add' that my faith in
these two premises is fully- backed

!

simultaneously to increase
11

cents

hour: and

an

This

mention here.

given

-

financial! important

extra

an

over

and above

a

wages

The first and most

principle

fair

in

any

•

of the good things of life.
On this basis everyone gains;
more

.

;

to

away

unions.

In fact, I am pretty keen
management's rights myself., If
think, therefore; that: any of you can?find: a tighter se¬
everyone would buy this idea. But ries of clauses for
protecting the

•

It

needs

your

to

this is not true.
are

derwrite

the

to find out

year..

I

for

.•

believe

■■

in

highly; pnechanized:

In order' than

why, I think

have'

we

to

go back in our history to the* CIO, I would like to see them, i I
era when our robber barons first
really would!
That will give us

■f7-

•r

r.T

!^:

began to falsify their incentive something new to discuss' when
bookkeeping. To put it bluntly, the boys come around next year
they rigged their wage calcula-i for another increase.
.-tions

so that
an average
compe¬
tent worker couldn't make a' liv¬

ingand

-•
,

.

wage

able

human

tx

unless
to

he

give

output.

*

than

more

ductivity ?plahs, add istill

\

a

\ \ :'

Thus, the old-fashioned incen¬
system, adopted in so many
factories, was in fact a big league:
tive

shell gamer Labor was the victim'
'of this
now-you-see-it-now-you-

sleight - of - hand
racket,
-played with slide rules and loga^
v

-rithmic equations/
course,

many

operated

u

centive

There were, of
manufacturers who

honorable

plans.

too

few

and

and

fair

in¬

But the exceptions

to this economic

To put it simply, I am convinced

agree to full union rep¬
resentation
in
formulating ; pro¬

"

;"don't

r

willing;

was

1 ^

-

■

skulduggery

were

you

can

as

abstract

lick

ness

has

a

the

to

economy,

Without

should

market

rights just

as

strongly

as

,

H3tl

upon

more
goods we
problem of a run¬

and the berserk
which it may lead.

more

goods

we

The

fact

is

that

labor's

us

to rebuild the

military might

less

sorry substitutes for resolute faith.
Freedom
from
fear
through

about

present

ness

strength is where freedom begins.
Dedication to such

program will

a

justify the claim that America is
living, growing, dynamic society.

wouldn't dream of introduc¬

a

In the years that lie

ing new products without spend¬
ing hundreds of thousands of dol¬

both

!

need

a

it is pos¬

labor and management.* This
group
should be assigned the task
of

formulating the methods
cedures

we

and pro¬

should

Leo Roseler Co.

JOSEPH. MO. —The Leo
Roseler Company has been formed
with offices at 110 South Fifth
Street to engage in the securities

With Westheimer & Co,

Third—Just

as

we

(Special

use

sample
cities for the testing of new
prod¬
ucts, so* should we take our newly

developed plans into
some

prove

pilot plants.

a

group

Here _we

of

can

to all that satisfactory tech¬

to

The

Financial

CINCINNATI,

Chronicle)

OHIO—Philbert

H.

Hartman has become
ed with Westheimer &

*Walnut

New'

Street,

York

.

As

a

result

of

these

low

prac-1

workman

became

illusioned

about

sour

and

so-called




dis¬

incen¬

g:|:

4#> Sinking Fund Debentures
Due

June 1,1963

Reynolds & Co.

.

,

•

and slide rule.

It

the-

is

an

door

June 16, 1948

attitude
to

economics and

which

opens

understanding

the

mechanics of pro¬

Co.,

326

of

the

members

Stock
\

.

with

.

*tices in high places, the American

$5,000,000

:r

late to salvage' the heart and spirit and then pro¬
industry's tarnished reputation in ceeds through mutual consent and
the eyes of labor.
understanding, to the stop-watch
*

llll!?;

connect¬

and-Cincinnati

Exchanges.

^:,l:v.4^

;'y

too

Opens

ST.

installation.

search

starts

we

as

employ to se¬ business.. Officers are
Leo
A.
cure increased
productivity. This Roseler,
President; Mildred Rose¬
would require agreement on the
ler, Secretary and Treasurer; and
techniques of developing wage in¬ Frank
J. Welch, Vice-President.*
centive plans, the basis of select¬
ing them, and their method of

"point of view not with a for¬
Incentive planning: is the
search for the sustained plus value
It

ahead,

"togetherness"

really think.

Second—Let the clinic arrange
conference with the leaders of

a

effort.

un¬

face the future
thoroughly
with
confidence
in
the

we

armed

techniques for trying to increase
productivity. This vital area of
opinion research has, up to now,
been neglected.
Yet we in busi¬

mula..

human

es¬

sential to prevent war.
We cannot hope to

run

for higher productivity starts with

of

cannot

triple demands made
by our expanding home

management think

15-Year

he does

f

..

economy, our commitments under
the Marshall Plan, and our
need

research

believes in labor's

in management's rights.

*,

produc-

superiority of our way of life.
Fear, anger and desperation are

NEW

busi¬

a

..

..

the

meet

continue

right to manage

unless he

first

inflation,

away

These Debentures have been» placed privately. They -are'not- offered for sale and* this' announcement
J;tappears, as a matter of record only. ,;V fy'/if
y

to operate your own business with
a
full
complement of manage¬
ment's rights.. My point is that no
one

un¬

the

increased

basic

functions
of ? management
the clauses we' have .nego¬
tiated with both the AFL and the

tested

Company will

costs

on

Some labor lead¬

opposed- to it*

be

own

You would

ers

intel¬

tuned

triumph

clinic

full-scale

the

on
the problem of
productivity.
We must find out what labor and

to-reduce

dollars. Because our prices were
plan lower, more people could afford
for increased productivity; is toj
to buy our products.
And so we
day's, pay, in<. return- for better insist that it be the
joint product, sold mbre.v Because we sold
than a normal daily output. Thus
more,
of employer and employee think¬
we had to
produce more.* This in
the employer gets an increased'
ing. ; If there is any place in the; tufm meant that
there was more
output which translates1 itself into? industrial
process where, the .con-, than ;
enough? wbrk? available tot
lower costs,
and therefore into
cept of partnership has,
validity, all hands ready and willing to do
lower prices, bigger markets, and!
this is it.
!>■
the* j ob;» '*
high profits. The worker receives'
;^!*f
;''•
;v
;:v?
Does
this
sound
like
major
That is the kind of squirrel cage
a bigger pay and
cdnsequently li¬ league heresy to some of the em-:
able to enjoy higher standards of
I'd like tot foe caught, in for the
battled defenders of
management's rest of
living. The public is able to buy
my life.
And, mind you,
rights? Don't worry, gentlemen,!
that happened to us despite the
more at lower prices, and so- i,S<
I am hot suggesting that
you give; fact
able to make its dollars purchase
that all our plants are as
your : businesses
the

be

for

group

our

Lever Brothers

manner:

First—This

some

.

inducement,

time

no

we've
by the experience of my own
lars to find out what our cus¬ never needed it before.
If we
company. During 1947, Lever em-,
tomers think.
Before introducing have a togetherness of the
spirit,
ployees. gave us a big enough
a
new plans to labor and
communion of
manage¬
purpopse,
the
boost in productivity to enable us
ment, let us find out what they material power will come.
;
up

type of productivity plan¬
-prices!: by* '5%. Oh" yes, I' almost
The original theory behind inning raises some questions of ,prin->
forgot.!-The stockholders of the
centive systems for increased pro-'
ciple. Two in particular warrant;
company also made a few extra
ductivity was that a worker was?
to

the

v, -

!: The

nesslike

pro-'

portion to his extra; efforts. Amer¬

not

theories,

approach?, to this business
problem must be made in a busi¬

means

incentive

ican

of more pay for? less work is

make the American industrial!

we

system

productivity.? Justice

of

practical expe¬
rience and background.
I realize,
of course, that funds will be
nec¬
essary to support such a project.

labor

cutting wages.; They
industry can well afford to
have got to learn that it is
equally increase a worker's wage by 30%
impossible for them to expect a; in- return for 30% more
output
healthy economy by freezing out¬ or by 50% -in return " for 50%
put and raising wages. The theory- more output.' In
fact, there is not

en-j

dure is for

"

against

can't

their

are

represent

idea.

an

I propose that we create a Joint
My second basic premise is that?
We should
shall be permitted to share Productivity Clinic.
launch the work of this clinic
fairly in the fruits of its/increased?
along completely practical lines.

robber

think

qualified than you,

unique production
system, to give assistance to such

Productivity Clinic

streamlining- too.
id
way,
and with theih

*ace nations possessing equal of
greater power.
Without the big

productivity

Without

in

who;

oiherr

"Mayo Clinic,"

the

can

ligence of

the

some

house

sort of

more

-vvV,v..: ?

*

from

land to the

for

I

men

who

place a round table, around
which the unity and togetherness
all elements in our
economy
can be allowed to function
prop¬

gentlemen

mats cannot wield the big stick of

,,

of

that table has

need

"stick

•

ment.

its

an

management

headaches of the American indus¬
trial system.
;
I know this is a large assign¬

for: of

good

not

So far,

as a

doctor

a

been .a square one.
It has a side
for management and it has a side
for labor. We must substitute in

tiate in good'faith except as
they!

"

-

operate

20 years

us

syllable, dnd sell it

Fifth—Let the clinic continue to

is

talking.

already taken

and

one-end of the

vision—and' for de¬

stop

one

labor

peace

"power."
And, being dictators;
they will not come to the bar-;
gaining table prepared to nego-

■

.

words of
to

We need

The
trouble with this
country is that
it has too many wide
open spaces

ing' table.

and

longer

planning;

partner

a

Fourth—When
this
body
of
practical working knowledge has
been fully
developed, then let the
clinic put that information
into*

should

to get labor and
management to
sit down together at the
bargain¬

own affairs and still
expect
them to exclaim with
delight over

increased;

are

we

organize and mobilize

It has

their

antagonist

•/,/•

change of think¬

ing by management alone will not)

the

won

a

respect in
of the people wno man

out American machines the United

*

■

the

creased

Teheran when Stalin said: "With-!

*

,

restoring

who have great

respect for might—and practically?
no respect' for right.
Surely, you
remember
the
famous, toast at

by

achieve-

to

achieve

equals in the pro¬
and by challeng¬

-

*

for

a

,

drive

be created only by

ductive

So

mess.

not,

well

large

and

has

circle"

instinct to do a good1
entirely surrounded by teeth. Let's
job and to take pride in the job
go to work!

retreat

a

circle"

throughout all industry.

can't measure it or control it with
dials or pushbuttons.
Since it is
natural
for
Americans to
take

commit—whethef by design
neglect—is to, corrode
this

"vicious

companies, I think

drive
to

in

"virtuous

a

launch

now

synthetically nor in an
atmosphere
of
inferiority.
You

can

the

become
some

created

jungle
law1—which
the
ideology boys call "class- strug¬
gle."

is our only
hope
Preparedness for watf

peace.

are

hangover from

.o!

war

for

to

a sense of con¬
tiie desire to excel

and

are

cruel game of cheat¬

a

ing cheaters.

must

other choice.

no

white

hope of
To him the word "pro¬

tive time when

We have

«

Pride,

tribution

pro¬

feather-bedding and other delib-* pride in their work, the greatest'
restraints on production. It crime that either
industry or labor

hold to it!

;

about

srate

have found and

we

talk

the

as.

distrust, duction.

to

grew

ductivity" too often had come to
mean
only false1 promises, backbreak, heartbreak, speedup, and
layoff. 'Frequently labor retali¬
ated by restarting to'
slow-downs;

-Now, whether

j
I

He

fancy

America.

it

well, for the
role
of
leadership
has
been
foisted upon us by history.
We
have

plans.

mdustry's
ductivity

and

niques have been well conceived
theory and fully submitted to
the acid test of
operations.

people working in them.
Since

23

"•

THE

(2656*

24

COMMERCIAL

maintain

Industrial Development
And New Capital Sources
(Continued from page

15)

taxes, principally personal income
taxes. Therefore, it will probably
not be
possible to reduce such

high-level of employ¬

a

will

ment

be difficult indeed.

much pressure

however,

remain,

would

problems:

two

mean

What probably deserves more
consideration than it has received

If

we

make

can

dampening

some

progress

cyclical

fluctua¬

existing short¬

the timing of ages in plant and equipment would
be made up gradually rather than
private capital expenditures over
the years to make up the shortage; precipitously.
On
the
second
problem, the
and, second and most important,
maintenance of a full-employment
the problem of maintaining a fullemployment economy so that the economy, obviously no solution
has been found in the past and no
long-run needs for industrial de¬
pat solution is going to be found
velopment will materialize.
in the immediate future.
How¬
On the first and less difficult
problem, it may be noted that ever, the spreading out of private
expenditures
would,
it
business cycles in the past have capital
seems to me, help in the solution,
generally been characterized by
extreme
fluctuations in private not only directly through tending
first, the problem of

to

Looking at

capital expenditures.

the business cycle as a whole

there

even

out activity in the capital

goods field, but also indirectly by

and more to be

security

than

tions, particularly insurance com¬
panies, and the formation and
development of different types of
new financing agencies to provide

enabling'individuals to average
gains and losses over
number of years in order to

of

equity capital, especially to small
companies.

their capital
a

determine
In

on

the

case

a

be abandoned.

even

suggestion often men¬
connection with
the

A second

in

tioned

problem
of
adequate
equity investment is to

long-run
business

high return

income.

taxable

their

preferential
capital gains income might

such

rate

the

liberalize

from their savings. According to
Securities and Exchange Commis¬
sion

gains

gains tax, from an
investment point of view, might
be met if a method were devised

seeking safety and

rather

capital

estimates,

individuals as a
group Increased
their currency
holdings bank deposits, savings
and
loan shares, insurance and
pension
reserves,
and
United

the

open

investment

most

Expects Delay in Sale of
New World Bank Bonds

oppor¬

to

Dealers Association of

Bank has almost

Canada,

billion available and does not

half this

pect to lend

arguments

common

In

over-investment

tending to dampen price fluctua¬

tions.

So

address before the Invest¬

an

relaxing
the
legal ment Dealers Association of Can¬
restrictions on such opportunities ada at Murray Bay, Quebec, on
are
(1) the necessity for the li¬ June 14, E. Fleetwood Dunstan,
States Government security hold¬
Director
of
quidity of the assets of such in¬
ings over $14 billion last year stitutions, (2) the need for such
Marketing of
while increasing their holdings of institutions
The
Interna¬
to
value
assets
at
and of state and local
securities only $l*/2

corporate

tional

price and (3) the possibil¬
ity of concentration of industrial
control by life insurance compa¬

for

holdings of liquid as¬
sets and individual equity in both

nies. ^

Development

private and public insurance and
pension
reserves / are
both
in¬

met, at least in part.

market

government

billion.

As

result of this trend,

a

individual

'-"v

pension plans involve
substantial regular saving of the
same type.
Although such saving

amounted

to

little

a

over

arguments

valuation problem, a plan

permit the

like

annual balance

insurance

it would make up a
larger proportion of the total in
1947,

years

when employment and

sonal

incomes

fraction of the

a

reserves

can

Only

in

Numerous
as

suggestions have been

But

to how to make more

changes

make

tax

our

tax

rates

in

structure

would

more

are

fa¬

volume

fidu¬

equity capital problem for busi¬
ness.
Many individual concerns
at the present do not have con¬
venient access to the savings that

taxable

that

*

of

seeking investment and others
no access at all.
There may
a need in this country in the

What

long-run for new types

lines,

often

over¬

ing agencies to meet this problem,
particularly for channeling equity
capital to small and medium-sized

be

has

been

estimated.
Railroad Fair to be held

on

Chicago's lakefront, July 20

—

September 7,

Take

the

personal income tax
for example.
There is no doubt
that

additional

some

of financ¬

enterprises both new and old.
Conclusion

individual

impossible, to tell how much ad¬

lical

corporate

equities

To

personal income
particularly those in the
higher brackets are reduced. But
it is extremely difficult, if not

takes place when

Chicago Railroad Fair

sum

up,

summer

millions will attend

a

brilliant

progress. An entirely
afternoon Twin Cities Hiawatha will add

exposition of railroad
new

luster

to

this

history-making Centennial.

A fine

4

•

•

.

.

"

example of Milwaukee Road car building
that will be on display is the car pictured here.
Its distinctive Skytop Lounge is an observation
room
designed for more enjoyable sight-seeing.
These Skytop Lounges are on the AM and PM
Twin Cities Hiawathas between Chicago-Milwaukee and St. Paul-Minneapolis. Cars of similar type will be on the Olympian Hiawatha
between Chicago and the Pacific north coast.

in avoiding.(major cyc¬
fluctuations ( in i,business ac¬

given tax reduction.

ment and national income at home,
it is

to

153

being delivered, The Mil¬
waukee Road will amplify its Hiawatha services.
H. Sengstacken, Passenger Traffic Manager, 708
Union Station, Chicago 6, Illinois.
new

cars

more

than

a

tax

equities.

:

'

-

There is another type of reduc¬
tion in individual income taxes to

consider,, the reduction in itaxes
on
the lower incomes and more
liberal

provisions for carrying for¬

or

backward losses for busi¬

operations. Such tax changes
would do much to encourage di¬

ness

rect

small

investment

by

owners

in

unincorporated enterprises.

However, there is

one

availability

of

new

industrial

expansion, to my mind there has
been too much rather than too

gate investment of individuals in
corporate

the

to

capital to finance this

reduction

increase materially the aggre¬

ward

With

As

extremely likely that it will

take

on

000

hand approximately $475,000,available for lending or in¬

This

vesting.

As

Milwaukee Road
Speedway of the Speedliners




the Bank

000, so you can see that we have
$225,000,000 to lend before any
need for raising additional loan

capital is anticipated. The condi¬
tion of the investment markets,
institutional demand, loans pend¬

determining factors in
financing. A particularly im¬

would
such

be

would

feature

the

be

As you

pending.

know, interest on
is

considerations

similar

and

ing

borrowed money

expensive,if the funds are not

employed. Therefore,
borrowing is

profitably

timing of new

hav¬
ahead of

ing financing run too far
demands

loan

conversely

or

ta

use."

lag too far behind

angle of

little capital available during the
current inflationary boom.
Total

Bill to Exempt

SEC Gonfrol Blocked

have

should
to

done

more

dampen all types

tures.

In
may

'

-

•

•••

the

long run, however, we
have to do something to

facilitate

the

flow

SEC

registration, which has been
consideration

under

of

"Chronicle,"

on

was

June

ceive

individual

investment.

However, too

penditures—and as a

the

4);and

passed by the Senate
is not likely to re¬

vented ' from

House,
Bricker

by

result total

the

less

a

this

the

session.

occurs.

sent

House

to "the

Senator
In

the

Interstate

Committee has tabled

measure,

some

being

motion of
reconsider.

to

meantime,

sideration

ible.

*

the bill passed unani¬

Although

much should
not be expected from tax changes
alone, for total government ex¬

This means continued large
Government
expenditures, and
these
expenditures must be fi¬
nanced in the long run out of

both

by
(see

10, p.

final "passage

Commerce

ing an increasing role in our econ¬

June

15,

Changes
in
our
tax structure
would be both desirable and feas¬

private

Congress

of

houses

savings

into

bonds from

Bank

World

of

of expendi¬ mously in the Senate, it was pre¬
- -

■

recently

for exemp¬

bill providing

The
tion

expenditures in the economy for
which
consumption and investment have
constantly been in excess of the
available supply
of goods and
services at current prices.- We

Bonds

Of World Bank From

The Federal Government is play¬

omy.

matter

practical

a

tax reduction that must be faced.

the

is more than

sum

currently need or have any
desire to hold in the cash drawer.
we

progress

tivity. The* smoothing^out of in¬
With fear dustrial expansion over the years
so rampant today both as to the
rather than overdoing it, as in the
future peace of the world and as current inflationary , period, will
to our ability in the long run to contribute to avoiding such fluc¬
maintain a high level of employ¬ tuations.

a

will

particularly if we can,make some

ditional investment is induced by

This

we

more

important in order to avoid

,s*

taxes,

in

"when

said,

bonds but not
before late this year and perhaps
not until 1949. The Bank now has

the

the outlook for in¬
dustrial
expansion. •> in . both the
short- and long-ruht is. favorable,

investment

Dunstan
;

offering

be

amount of loans

equity financing.
done along these

however,

of
Mr.

course,"

portant

business
can

coming,
E.Fleetwood Dunstan

be

for

large

"The time is

have

vorable

a

its

of

bonds.

should not be far below $250,000,-

ciary institutions, there probably
still
would
remain a long-run

types of reduction in Federal in¬
taxes. There are a number
and

issue

if legislative changes
in regard to taxes

investment outlets for

and

come

specific

even

feasible

were

early

an

management feels that under pres¬
ent
conditions
cash
balances

by

institutions.

suggestions most often mentioned
iny this
connection are various

base

that

contem¬

plate

insurance

control

industrial

private savings available for in¬
vestment in business equities. The

of

concern

single in¬
company would limit the
possibility
of
concentration of

of funds, they have to as¬

advanced

industrial

could be acquired by a
surance

debt obligations.

sume

of

proportion of the securities of

given

a

cor¬

porate
stocks.
Consequently if
business concerns want to tap this
source

years

value

the

pension

and

invested

be

of changes in the
their preferred
stock holdings.
Finally, limits or
riod-of

market

per¬

funds flow¬

new

insurance

into

ing

lower.

were

the Bank does
not

gradual reflection in
sheets over a pe¬

the
that

opinion

is cur¬

being studied by the life
companies that would

rently

third of total liquid saving of in¬
dividuals in
a
prosperous
year

and

expressed

undoubtedly be regarded as per¬
manent investments.
As for the

one-

Bank

Recon¬

struction

'•

..'•v.

these

But

and

ance

An idealized view of the

ex¬

sum.

against

can
be
The problem
long as private capital
during the prosperity phase and
of the liquidity of insurance com¬
under-investment during the de¬ outlays fluctuate widely, the prob¬ creasing relative to their holdings pany assets need not concern us
of corporate stocks.
unduly in this ; connection since
pression phase. Demand and lem of government in trying to
Moreover, payments to insur¬ the great bulk of such assets can

has always been

In¬

Dunstan tells

Fleetwood

E.

vestment

fiduciary insti¬
tutions, particularly the life
insurance companies.
Three of
tunities

financing problem would in¬
the liberalization of laws

clude

the capital

to

in

long-run busi¬

our

concerning the investment oppor¬
tunities open to fiduciary institu¬

Much of the objection

time.

over

of

volatility

the

is

aids

Other

world.

the solution of
ness

in

that

unsettled

taxes materially.

Financing Business Capital
Expenditures

the limited

on

government taxes—will undoubt¬
edly have to remain high in our

The Long-Run Outlook for.

profits tend to be overestimated, tions in business activity, the
and costs underestimated, during
long-run problem may not be a
supply of goods as bank credit ex¬
prosperity; whereas, just the op¬ shortage of investment
opportu¬
pansion. Only if the new equity
capital came from current savings posite attitudes characterize de¬ nities and demands. There may,
In the long-run, it however, be a problem, in some
that would otherwise have been pressions.
would seem advisable from the
periods at least, in connection
spent would it have been a less
point of view of many businesses with the external financing of
inflationary method of financing
as well as the community at large,
investment, either by bank credit
capital expenditures.
It is probably true that the ag¬ to try to dampen rather than to or by private savings invested di¬
accentuate fluctuations in business
rectly or through fiduciary insti¬
gregate of business plant and
expenditures
over
the tutions.
equipment on hand today is in¬ capital
course of the business cycle.
In
As
to
the
supply of private
adequate for a sustained, fullfunctioning economy.
There still the current boom situation this savings, individuals seem more
as

Thursday, June 17, 1948

FINANCIAL CHRONICLE

&

so

can

no

be

unusual

further con¬
expected

un¬

development

Volume 167

THE

Number 4708

COMMERCIAL

ies, Inc.

Pacific Northwest Tours Sponsored by
San Francisco Exchange Great Success

of

FRANCISCO, CALIF.—A group of 35, representing the San
Francisco Stock Exchange, partners of member firms, San Francisco
banks and financial editors of the Bay Area newspapers, left the San

Stock

furnace. Pacific Car makes

visiting industrial plants of that
area. The purpose of these visits
is to better acquaint members ot
investment

and

banking

The

report to their readers about the

On

first-hand view¬

a

' ■>

'

i

■

Thursday morning, June 3,

the

visited

group

Zellerbach

the

Motors

Crown

in West
N. Young-

Linn,

Oregon. Frank
man, Vice-President in charge of
operations in the Pacific North¬
west

for

Crown

for

visitors
was

guides

through

show

to

had

seen

the

operation. A
was built in

tion

speed

or

paper

sible

machines, it makes it

stand the

The

spection

of

the

by in¬

which

for "Time," "Life"
Publishing Co, at the
rate
of
1,250 feet per minute.
Newsprint
and
various
other
paper products are also made at
In

.

,

,

the afternoon the

spected

group in¬
Doernbecher Manu¬

the

facturing
which is

Company,

one

Floyd W., Mark C. Elworthy
& Co.; Pflueger, Paul A., Max I.

an

and

automatic

no

Koshland & Co.;

Richards, Earle,
Co.; Schwabacher,
Albert E., Jr., Schwabacher &
Co.;
Smith, Ferdinand C., Chairman,
Public Relations

the

Committee, Mer¬
Pierce,
Fenner
&

rill

Lynch,
Beane; Soher, Hubert J., Chair¬
man, Listing Committee, Walston,

Portland,

of the largest domes¬

low-priced furniture. Here rough

&

Goodwin;

Mejia.

dried,

cut

mills

is

milled

and

as¬

sembled into the various types of
furniture. Veneers and plywood
as

well

as

products

The plant

pany.
and

made

of the

some

by

the

com¬

14

acres

covers

buildings

stories high.

to

,7

and

the

was

next

that

was

night

held

Seattle. E.

Hyster Company adjoins Doern¬
becher

the

stop.

at

K.

Seattle

merce,

the

Rainer

Club

Chamber

of

of

Crown

Corporation, but due to his
pointment

as

E.R.P.,
by
Mr.

read

of

ap¬

of the Italian

for

program
was

head

were begin¬
ning to consider themselves ex¬
perts in pulp-making and were
able to understand a smattering

Zellerbach

>

his - speech
Youngman.

Other representatives of industry

Exchange

Halsey,
associates
15

Stuart
won

&
the

Co.

'

morning)

June

of

$3,500,000 Chesapeake and
Railway
fifth
equipment
1948, 2%% serial equip¬
ment trust certificates, maturing
$350,000 annually July 1, 1949 to

what

Ohio

they saw. A different
type of hydraulic barker, built
and patented by Puget, was in
there.
Both
operation
barkers,
however, must have merit as each
company
considered theirs the
best.
Puget
has
benefited
by

group

Salem,
Lines
over

departed

Oregon
DC

6.

the flood

bia River

for

for

via
The

area
a

Seattle

United
plan

grain

„

from

Air

circled

of the Colum¬

birdseye view of

the devastation.
•i

of

At

the Seattle airport, officials
Pacific
Car
&
Foundry

the

Company met the
corted

group

and es¬

them

to-, the
plant
at
Renton, Washington. Of particular
interest here was the foundry,




waste

trust

1958

of

inclusive.

The

certificates,

from the

the

2.50 %,

liquors of the pulp mill and

the utilization of the wastes from
alcohol

plant

to

make

,

k

The

according to maturity
certificates

to provide

will

be

issued

for not exceeding 100%

"Lignosite," which is an additional
of the cost, estimated at $3,555,bonding agent used in linoleum
248, of new standard-gauge rail¬
paste and concrete aggregates.
Puget
Sound
was
host
for road equipment consisting of eight
luncheon at the Leopold Hotel in
switching
locomotives;
four
Bellingham. Mr. Turcotte spoke
freight locomotives; and two 6,000
and
called
upon
others in his
h.p. steam turbine electric drive
company. John A. Green, Presi¬
dent of Pacific American Fisher¬

the

meantime,

as

the result

of internal friction in the

operated
lose

succeeded

independently,

would
$1 million a year in
(as compared with the

about

earnings
present

setup)

creased

because,

Stone

Stand¬

overhead.

Paul

B.

about

testimony

year

ago

was

order

to

manage¬

fight the

j(some

of the

were

be considerable interest in

course

as \ to,
the
possible
"break-up" value of the common
stock.
During 1946 one brokerage
house study arrived at a figure
of 24, and the stock sold above
20 in that year.
With shortened

Street

the

Hartt, well-known'utility

a

new

opposed to the
fight in the past), If Philadelphia
is to be dissolved, there will of

(associated with Standard &
Poor's) made a detailed study of
the system, and his methods and
figures
were
checked
bfy Jay

Coffman's

the

continue

directors

Inc.

Samuel

will

dissolution

Coffman, President of
Research
Consultants,

Standard

whether

ment

in¬

of

by Edward Boshell ot
It is not yet

Webster.

&

clear

given

market

and on June 2,

yardsticks,

ations would

current valu¬

lower.

run

•

While the setup and

accounting'
is extremely complicated, the fol¬
lowing will sketch the general
layout of the system in 1947:

j

Net to Phila*

Principal Cos.
Duquesne Light

Revenues

Co.

(Mil.)

(Mil.)

$47

$8.4

18

1

;

4.5

; •

Equitable Gas
Pitts. & West Va. Gas

Ky. W. Va. Gas

Pittsburgh Rys.
53 Underlying or

Miscellaneous

23

cos.

Various

.1

The

in

company's relations with
Duquesne
Light
(100%
con¬
trolled) are very simple.
Rela¬
with

the

natural

gas

addition

to

owning the entire
stock of Pittsburgh Railways, ap¬
pears to have claims for advances,
matured bonds, back interest, etc.,
of $67 millions compared with $26

com¬

Others

locomotives.

Total

$3.9
3.7

Stock

$27.6
The

plan evidently contemplates
drastic
write-offs
in
plant ac¬
reduction

and

count

of

net

cur¬

the

im

8.5

Mortgage Bonds
Common

Inc. and

award

issued
under
the
Philadelphia
talks, more in the
spirit . of
levity.-, One
speaker /other installations in the area, as plan, were immediately reoffered,
stated that his company had re¬ no part of its plant was built
subject to Interstate Commerce
cently done some public financing earlier than 1936. A unique op¬ Commission
authorization,
at
and had received the "treatment" eration of Puget
is the manu¬
prices ; to yield from 1.50% to
Early
Friday
the facture of
alcohol

short

gave;

and

gas

specifically directed against Phil¬ ard Gas directorate (which is di¬
adelphia Company was issued in vided into several groups repre¬
December, 1946.
The company, senting different classes of stock¬
then under the Presidency of Leo holders) Leo T>
Crowley resigned
T. Crowley, fought the dissolution as
Chairman ' and ^President
of
order, and employed experts to both the Standard and Philadel¬
prove that subsidiary groups, if
phia companies.
He has been,

tions

Halsey, Stuart Offers
G. & 0. Equip. Issue

By

this time the Visitors

Zellerbach,

In

order

& Subsidiaries

Executive Vice-President of Puget

Co.

Stock

the

.

Com¬

was

Pulp <dnd Timber

Francisco

Banks

in

Sound

first

of the

aspects

of

in

that,

Holding Company Act.

'

Skeel, President of

ably emceed by Sid Wood¬
bury, of Woodbury & Co., makers
of heavy logging machinery. The
principal speaker of the evening
was

to have been J. D.

The

retention

case,

increase

maintained

and

broader

on

transit interests would not square
with
the
requirements
of
the

and has ordered

its

based

complicated, but a
Patrick, Bond Invest¬ panies are
ment Department, Bank of Amer¬
partial streamlining job will be million owed to others. In addi¬
tion to property carried at $68
ica, NT&SA; Kelly, Paul B., Vice- effected in connection with EquitPresident, Anglo-California Na¬ able's bond issue on which bids million net (which includes in¬
tional
Bank
of
San Francisco; will be received about June 22. tangibles) the System at Dec. 81,
Litchfield, Frank S., Investment Relations with Pittsburgh Rail¬ 1947 had current assets (after de¬
accruals
for
payrolls,
Department,
American
Trust ways and its subsidiaries and af¬ ducting
claims
and
taxes)
©£
Company; Long, George I., Jr., filiates are still more involved, damage
Asst. Cashier, Wells Fargo Bank & and may take years to straighten about $19 million (the result pi
Union Trust Co.; McMicking, J. R., out. ;
7 ■.
7
'
good wartime earnings). On Aug.
■:7
Pittsburgh Railways has been 7, 1947 the Reorganization Trustee
Banking
&
Insurance,
Manila,
P. I.; Merkt, Arthur, Asst. Trust in bankruptcy for over a decade filed with the Bankruptcy Court
Officer, Crocker First National and its properties and those of the a revised plan under which a dis¬
Bank of San Francisco; Schiefer, 53 "underliers" are operated by tribution would be made as fol¬
Arthur W., Assistant Vice-Presi¬ trustees.
Philadelphia Company, lows (millions of dollars):
dent, Bank of California, N.A.
Philadelphia Co.

a

met with the visitors. The dinner

President

tinued existence

estimated

overhead

Byrne,

the master of cere¬
Here were seen lift trucks and
monies. Speeches were kept to a
straddle trucks, used primarily in
minimum with Reno Odlin, Presi¬
the lumber industry, in various
dent of the Puget Sound National
stages
of
completion.
Hyster Bank of Tacoma as the principal
makes winches and other products
speaker. Mr. Odlin is an accom¬
designed for use with Caterpillar plished after dinner speaker and
tractors, which are sold through had most of the group in stitches
Caterpillar dealers.
during the greater part of his talk.
Thursday night a dinner was 0;. Saturday morning after an air
held at the Arlington Club, in trip by United (fAiF Lines to Bel¬
Portland, Oregon. Bankers, in¬ lingham, Washington, the group
vestment men and industrialists
was met by*'Lawson PATurcotte,

was

r

lations & Statistical Depts.

dinner simliar
of the previous evening

Friday

six

are

7-:7

Kaehler, Ronald E., President;
Schick, Carl, Manager, Public Re¬

ception of 3 holidays.
Present
production is at 525 tons per day.

the mirrors used in the

are

delphia Company. Dividends have
been paid on the common stock
continuously since 1886.
Despite its long and honorable
career, the SEC thinks the com¬
pany has no justification for con¬
dissolution.

anil

the Empire Contract Company

wa<<$
the Phila- showing

affiliated
San

required by 115. Four
pulp machines are in operation at
Soundview
24
hours
a
day
throughout the year, with the ex¬

kiln-

and

'

Press

formerly

the

as

as

name

1948, the SEC released its 74-page
findings and opinion, which was
highly critical of Coffman's report
and testimony.
In brief, the SEC
was
unimpressed by the figures

reduced the number of employees

from

changes of

Davies

&

M.

tic manufacturers of medium and

lumber

incorporated in 1871

valuation expert, and E. C. Stone,
a retired officer of the
company.

bus,

U.

important sub-holding company i»

Stewart,
Berwyn E., J. Barth & Co.; War¬
ren, Walter, American Brokerage
Company;
Weber,
Brooks
D.,

Hoffman

trans¬

clutch.

first

was

after several

Dean Witter &

time.

Kenworth

G.,

an

the Standard Gas & Electric
System. Its history antedates that of the
top company, which was incorporated in 1910. Philadelphia Company

Alexander, C. N., Financial Edi¬
tor,
Oakland
"Post
Enquirer";
sonally; conducted
one
of
the Allen, Sidney, Financial Editor,
San Francisco "Chronicle";
smaller groups through the plant.
Arthur, Lindsay, Financial Editor, Electric
The hydraulic barker, installed
by
San 7Francisco
"Call-Bulletin";
Worthington Pump Co., was one
Piper, John S., Financial Editor,
of the outstanding features here,
Gas
San Francisco "News"; Reinhardt,
as
well
as
the
chipper which
Robert, West Coast Editor, "Iron
chews huge logs into small chips
Age"; St. Peter, Charles, Financial
at the rate of 132 feet per minute.
Transit
It was stated that these machines Editor, San Francisco "Examiner."

paper

this mill.

has

new

Douglas

Dickey, President of Soundview
Pulp Company, was host and per¬

Curtis

and

the

mission

paper machine that makes coated

magazine

in

made

the

man,

afternoon
the trip to
Washington, for a tour
of Soundview Pulp Company, was

Fourdrinier

new

Oil

one

on

& Youngberg; La
Boube,
Kenneth, Henry F. Swift & Co.;
Lawson, Richard, Lawson, Levy &
Williams; McCampbell, Andrew
H., Mason Brothers; Meyerson,
Harry, Kaiser & Co.; Monasch,
David, Jr., Hooker & Fay; Mosi-

Everett,

process..

climaxed

was

be seated at

group

Stone

the

In

pos¬

neophyte to under¬

paper-making

visit

persons can

the

Chair¬
Dean
George F.,
Raggio, Reed & Co.; de Martini,
Albert A., Shuman, Agnew &
Co.;
Dickover, Stanley R., Mark C. Elworthy & Co.; Gray, Eugene H.,
J. Barth & Co.; Gross, Richard
P.,
Member,
Board
of
Governors,

desert

in

of

were;

Atkinson,

ably the largest cafeteria in the
country as more than a thousand

1875 is still in opera¬

for the

luncheon

at

stand¬

man, Board of Governors,
Witter & Co.; Carson,

employees cafeteria. This is prob¬

that

here, and due to its slow
in comparison
with
the

newer

visitors

the

educational
every

Philadelphia Company
Philadelphia Company is

reorganized in 1884

Stratocruiser by
Allen, Assistant to the
President.
William
M.
Allen,
President of Boeing, was host to

the

machine

paper

the

from

Member Firms

passenger

This

plant.

pulp

a

in

highly

was

success

Members

tour

was

used

a

point.

freight

Norman

the first time that most of the

group

be

to

quick trip through his plant.

a

and

Boeing Airplane Company was
next on the itinerary. The group
was
shown through the new 74

Zellerbach, and
P. T. Sinclair, Resident Manager
of the plant, were hosts and ar¬
ranged

stop

Bellingham Plywood Company

journey

buses,

by
the
Arbian-American
Company.

mill

paper

on

Kenworth
Motor Truck Corporation, a sub¬
sidiary of Pacific Car. Here were
seen
buses, trolley coaches and
heavy duty trucks built on assem¬
bly lines. Of particular, interest
was
the amount of heavy alum¬
inum
being
utilized
and
the
manufacturing of special trucks
powered by 300 H.P. Hall Scott

fraternity with top management
in industry, to find out what in¬
dustry
is doing
and
what its
problems are and also to give fi¬
nancial editors an opportunity to
companies from
point.
•

next

highlights about his

Comments from all members of
the
party
indicated
that
the

school
buses, logging arches, used in the
lumber industry and castings. The
Company currently has 3,000 em¬
ployees on the payroll.
interurban

cars,

25

(2657)

also spoke and invited the visitors

for

with its electric furnaces and the
drawing of the hot metal from the

by the San Francisco
Exchange, headed by Mr.
Ronald E. Kaehler, President of
the Exchange, and covered three
days in the Pacific Northwest
sponsored

the

DC 4 for Portland, Ore.,

gave

FINANCIAL CHRONICLE

company and invited the group
to be guests of the
company in
Alaska.
Victor
Olson, President

SAN

Francisco airport on a United Air Lines
the night of June 2. The trip was 5s

&

20.0

$16.1

7

15-20, though long

of

range

analysis would be required to
rive at any accurate figure.
»

'

,r

ar¬
I*

'■

>

rent assets to normal levels. While

has

there

been

some

that
Philadelphia's
interest
Pittsburgh
Railways should

"subordinated"

"Deep-Rocked,"
apparently found

little evidence to this effect.

ing

the

in
be

Tak¬

stock at its face
assuming that the pres¬
ent plan will be consummated,
Philadelphia
Company
would
realize an amount equal to over $5
share

on

Without
transit

Company,
cents

a

its
any

common

stock.

income

from

business,
Philadelphia
last year earned 77

to be substantial write-offs.

Con¬

increasing value of
gas properties, eventual break-up
value

(Special
1

to The

Financial

Chronicle)

;

ATLANTA, GA.—Guy R. Jones

has become connected with Thom¬

the

(under

present

son

ing.

&

McKinnon, Healey Build-*

Mr. Jones

was

formerly with

Abbott, Proctor & Paine in Fayetteville, N. C.

'

the

share after what appeared

sidering

& McKinnon

new

value and

a

Jones With Thomson

or

has

the Trustee

*/

contention

market

standards) would appear to be in

With Barclay
Investment Co.
(Special

to The

CHICAGO,
Donovan

staff

of

has

Financial

Chronicle)

ILL. —Timothy
been

added

to

G.
the:

Barclay Investment C«x,

39 South La Salle Street.

26

COMMERCIAL

THE

(2658)

FINANCIAL CHRONICLE

&

Thursday, June 17, 1948

panies and textile

Changes in Commercial Bank Portfolios

Postwai
creation

employed to fill the

was

From the end of 1941 to the
end of 1945, the public debt hold¬
gap.

ings of all commercial banks rose
by approximately $69 billion. In
addition,
loans against govern¬
ment obligations
rose by
about
$5 billion.
These two amounts

represented

the

contribution

commercial banks to

of

financ¬

war

ing and accounted for the rapid
rise in deposit totals.
The

wartime growth in
of individuals and
business concerns, along with the
sharp
deposits

the

expansion in their holdings of cur¬
rency and government obligations,
gave rise to considerable discus¬

solution

ranged as structive

have

of interest

Rates

(Continued from first page)

low as

the housing

of

program.

the

Although the volume of farm
mortgage debt increased slightly
in 1946 and 1947, total debt, in
contrast with urban mortgages, is

paid for the property.
a higher proportion of
are
mortgaged now than

homes

before, with debt service and
amortization
payments,
not to
ever

speak
of maintenance charges,
constituting an important lien on
of

income

the

consumers.1

many

ability of borrowers to main¬
tain payments is dependent upon
the continuance of current high
The

incomes.
A

growing

of

awareness

the

present
situation
is
gradually
bringing about a re-appraisal of

Debt

offerings in the postwar period.

occurring

consumer

The postwar
Farm Mortgage

there

companies

reflecting,

expansion

volume of

4%; maturities, as long as
and, in numerous cases,
the amounts loaned have equaled

25 years;

price
Probably

sharply,

the

concerns. Loans

finance

sales

10

rose

also

in part,
in the

In view of the magnitude

loans.

lending standards.

whole,

term

tional

income

and

enormous

an

,

The postwar

loan

increase

has

occurred in such categories as real

estate

loans,

business

loans and

consumer

loans.

Contrary to the
categories, loans
purchasing and car¬
rying securities have fallen sharp¬
ly, Tl?e decline in this category
trend

in

granted

these

for

■has, in the main, reflected

a

re¬

payment of loans extended earlier
in

connection

with

the purchase
obligations during
drives. Loans against

of government

the

war

loan

other securities have shown rela¬

tively little change
several

over

The

years.

the past

existing

low

level of security loans makes this
credit category of minor signifi¬
cance, as

with

the

security

contrasted, for example,
situation

loans

in

were

1929

of

when

dominant

importance.
Doubtless the high
margin requirements established
by the Board of Governors of the
Federal Reserve System have had
a restrictive influence in this con¬

nection.

■

Increase

in

Residential

Mortgage

insurance

will

tend

to

inflation.
In

the

in

of

case

rental

All of these provisions

housing.

aggravate

current

■

the

of

absence

adequate

an

supply of labor and materials, an
excessively liberal loan policy will
not solve our housing problem. It

merely

causes

inflation

an

of

those

estate

Only

violent

in

inflation

this

swings,

be

way

so

can

charac¬

teristic of the construction indus¬

try, be reduced.

..-

Surely no general anti-infla¬
tionary program can prove wholly
effective
the

,

long

as

as

Congress and

Administration

continue

to

give support to current inflation¬
ary practices in the home mort¬
gage
field.
Easy credit means
easy debt.
Easy debt at a time

*

the

of inflated

Credit \.J

,

In

rapid

increase

resi¬

of

dential

mortgage credit, totaling
about
$10 billion through'1946
and 1947, commercial banks have
played an increasingly important

role, in financing both the
struction

The

net

and

con¬

purchase of homes.

increase

in

mortgage

loans

oyer the past two years of
$10 billion has resulted from the
extension

of

about $20

loans and the

new

amortization

of

billion in

repayment and

about

$10

billion

prices

means

extremely

burdensome debt when prices de¬
cline.

A

period

period of inflation is a
in which debt should be

Inasmuch

governmental pol¬

as

dominate

mortgage

loan

the

field

residential

and

create

the inflationary trend to which I
have just referred, lending stand¬
ards

should

be

carefully
re¬
by commercial banks.
Study should be given to such
questions as the matter of ap¬

examined

of old loans.

praisals, down payments, and the
term

more

liberal

terms

than

the

old,
inherent

thereby increasing the
Rapid increase in volume

risks.

has

been

accompanied

by

a

de¬

cline in quality.
Undue liberality in the making
of home mortgage loans, at a time
of

extremely high national in¬
come, has contributed to the great
inflation

of

real

estate




prices.

stalment
tion

was

credit,
not

and

pattern

amortization.

of

mortgage

It is extremely im¬

portant that urban mortgage credit
standards serve the best interests
of borrowers and lenders and

tribute most
1

effectively to

a

con¬

con¬

"Business

Conditions," Federal Re¬
Chicago, May 1948; and
Supplement; "Monthly Business Review,"
Bank

of

Federal Reserve Bank of Cleveland. April,
1948.

this

resolu¬

adopted by the House

of Representatives.

While

total

low

relative

weakening

credit is

consumer

to

nevertheless
position of many

personal in¬

the

financial

consumers

collections

and

counts at commercial banks. Since

is

tending to slow down. Since this
augur an increased use of
consumer
credit, thereby aggra¬
vating inflationary pressures, it
would

that the situation may

seem

of

amount

business

policy has been
couraging^ debt

it

in

that

order

of

such

the

credit

moted and its

constructive

be pro¬

may

inflationary misuse,

averted.

lem

for

calls

appropriate
taken

and the end of

loans.

about

The

business

1947, and
48%

now con¬

of total

bank

postwar expansion in

loans

resulted from

ris¬

ing prices, larger inventories and
receivables, increased capital ex¬
penditures
in

the

cerns.
ness

a

of

rapid

increase

business

con¬

Virtually all types of busi¬

increased

funds

their

of

use

bank

during this period.

The
cial

and

number

rapid

credit

rise

in

included

commer¬

substantial

amounts of both current and term
Current

loans, extended
mainly to carry larger inventories
receivables, increased rapidly
in the case of chain and depart¬
ment stores, food processing com¬
and

en¬

-and

to

careful

measures

promote

study and
must
be

the

supply

of

risk

capital. Not only from the
point of view of the individual
firm but also of the economy as a

intermediatedebt

and

longshould be

corporate

held to

conservative amount.

a

hausted, the Treasury has had to
rely largely on its current cash
surplus for the retirement of debt
and

has confined its

for

the

redemptions
part to securities
Federal Reserve

most

owned

by

Banks.

This has put pressure on
of commercial banks

the

the

reserves

old problem in American

an

banking—the

proper capital-loan
Obviously capital accounts
must be large enough to warrant
the
assumption
of
loan
risks.
These risks, which are generally

ratio.

dormant in

a
boom, come
den and dramatic life in a

to sud¬
depres¬

sion,
Since

the

meet their

banking holiday

in

1933,

capital accounts has resulted

in the main from, the retention of

earnings, made possible by

con¬

servative dividend

Fur¬

policies.

substantial; increases in cap¬

common

will; require the sale
stock

to

private

vestors. ;•)Commercial
be

permitted

tary

public debt have declined. Unfor-'
tunately, however, there seems to
little prospect of further sub¬
cash retirement of com¬

be

stantial

mercial bank held debt in the
ap¬

proaching fiscal year.' The reduc¬
tion in personal income tax rates,
plus the cost of aid to Europe un¬
der
the
Foreign Assistance Act
and proposed expenditures for re¬
arm ament, would seem to point to
a budget deficit in fiscal year 1949.
Sound fiscal

vital need for

tures

banks

in¬

must

sufficiently

balanced

are

the

basis,

structure

is

a

public.
strong

better

A

cap¬

able

to

withstand economic vicissitudes.

In contrast to the sharp postwar

increase in loan portfolios; a sub¬
stantial decline has occurred in

investment

mercial

banks.

holdings of
Since

com¬

the end

of

February, 1946, just before the in¬
ception of the Treasury's debt
retirement

program,
commercial
holdings of Government ob¬
ligations have declined by ap¬
proximately $28 billion, or bv
about 30% from their peak $93.8
billion.
Their holdings of other

bank

securities,
risen

about
form

by

on

the other hand, have

nearly

25%,

$2

billion,

principally

in

or

the

of obligations of states and

political

subdivisions

of

be used for the

in

debt

the

system .2

port¬

?

,

l'i-\I v >

•

f- ''

-

•/

*

1

$£ $1

\v i

-i

Monetary and Credit Commission
The
clear

action, of
the

in

inflation

current

the

need

for

makes

constructive

long-term character,
of
monetary
and

a

field

banking legislation.

In order to

determine the constructive
which is
credit

required,

a

tablished

action

monetary and
should

commission

be

es¬

with

authority, powers t
and expert assistance to make the,
necessary studies and
report its
findings to the Congress.
'■
\
should be

Attention

given not"

only to the problems which I have
mentioned, but also to such ques¬
tions as the 'future place of gold
and silver in the American

mone¬

tary system, the role of the United
States Treasury and of the Fed¬
eral

Reserve

System

in the

con-*

trol of credit, and the question ot

i

appropriate interest rate policy.
Federal

The

Reserve

Act

itself

of thorough re-exami¬

nation from the point
its administrative

relation

of

the

of view of
framework, the

Federal

Reserve

System to other banking supervi¬
sory
agencies, ? reserve require¬
ments, discount and open-market.

Investment Portfolios

the

can

of

is in need

to- the

budgetary
cash to the

on a

inflow of

trust accounts

add
to
their
capital
accounts
through retained earnings and to
stock

a

present

an

their

policy points to the

balanced budget,
time, even if this
requires the raising of tax rates.
If Federal receipts and expendi¬
the

at

large
earnings to be able to continue to

sell

inflationary-

it is particularly salu¬
that bank holdings of the

pressures

the increase in commercial

bank

of

requirements, V:

reserve

In view of postwar

retirement

The rapid rise in total bank
loans, by causing a sharp decline
in the ratio of capital accounts to
loans, has given renewed empha¬
sis to

for them to;
obligations to

Government

folios of the commercial banking

Capital Ratios

ital

industrial

and

in

financing,

divi¬
dends,
have
militated
against
equity financing. The whole prob¬

loans of commercial banks nearly
doubled between the end of 1945
stitute

factor

a

banking system with

The' commercial

a

certain types of taxes such as the

ital accounts

use

A

to

double taxation of corprate

ther

instalment cred¬

financing.
financed

structure, able to adjust itself
quickly to changing conditions;
Undoubtedly the low interest rate

Congress must again consider the
temporary restoration of the au¬
thority of the Board of Governors
of the Federal Reserve System to
consumer

equity

structure

considerable extent by equity se¬
curities
is
a
flexible: business

well develop in such manner that

control

last June, however, when the war
loan; accounts were virtually ex¬

and made it necessary

are

may

loans.

serve

in¬

consumer

but

Business Loans

ever,

The new loans, how¬
have been granted on much

Governors to control

reduced, not increased.
icies

r This

reserves,

sell

financing.

In¬
deed, one of the chief problems
.confronting the American econ¬
omy is the need to stimulate the

whole,

Regulation W,
confining it
solely
to
instalment financing.
The termination of Regulation W
took place in accordance with a
Congressional resolution approved
on Aug. 8, 1947.
In December, the
Senate, by S. J. Res. 157, pro¬
vided for a temporary restoration
of the authority of the Board of

come,

real

their

need for bank reserves was occa¬

degree of response of the capital

term

still

essential, therefore, that fur¬

be attrib¬

can

markets to equity

System made extensive revisions

It is

checked.

intermediate- and long-term cred¬
it will depend, in part, upon the

in

prices and lays the basis for se¬
rious readjustments in the future.
ther

debt

de¬

in the case of the chemical, elec¬
totals. Far
sioned primarily by the retire¬
trical
mers made judicious use of their
equipment, machine tool, ment of Federal Reserve held
increased war earnings to reduce oil, food, textile, public utility and debt and the
expansion in the vol->
debt, and the relatively small size shipping industries. Through 1947, ume of bank loans.
v
of present debt will enable them as interest rates rose, a tendency
The greater part of the direct
to
make
quick adjustments to developed to shorten term-loan cash
retirement
of
commercial
~.v, v .V
changing
economic
conditions. maturities.
bank held debt, almost $16 billion,
Farmers now possess a flexibility,
Commercial banks as a whole took
place from March 1, 1946, to
which they did not have in the are giving increased
emphasis to July 1, 1947. During this period
the quality of their business loans of 16
period following the first World
months, debt reduction was
War when
farm mortgage debt and are
endeavoring to restrict effected mainly by the use of
was very large.
loans to legitimate production re¬
funds accumulated in war loan ac¬

by the legislation volume of liquid assets in thd
Since the middle of 1945, the enacted by Congress;/ £wq govern¬ hands of individuals;
ment agencies are empowered to
increase in the loans of all com¬
Over the
past 30 years conmercial banks has approximated make mortgage insurance avail¬
sumer credit has come to play an;
able
to
millions
of
American
$15.5 billion.
In 1947 alone it
important and constructive Vole in
on
amounted to $7 billion, the great¬ families
excessively
liberal
the credit system.
Like all types
est expansion to take place in any terms—the Federal Housing Ad¬
of credit extension,, however, it
and
the
Veterans
single year in the history of our ministration
can have very definite inflation¬
American banking system.
The Administration. Through the ac¬
ary implications. The termination
loan expansion has resulted from tivities of both agencies, the gov¬
of Regulation W on Nov. 1, 1947,
several basic factors. First, hold¬ ernment is assuming huge con¬
eliminated
control
over
down
ings of liquid assets, resulting tingent liabilities.
payments and maturities, both of
from war finance, were not, of
The bill now pending in Con¬ which are of
great importance in
course, spread evenly among in¬ gress,
commonly known as the determining the volume of con¬
dividuals and business firms. Sec¬ Taft-Ellender-Wagner
Bill, v ex¬ sumer credit. It will be recalled
ond, the postwar rise in prices, tends the inflationary mortgage that
Regulation W first became
itself caused largely by the use insurance
program of Title VI of effective on
Sept. 1, 1941, and
of existing deposits, reduced the the
National
Housing
Act ,to rested upon the authority of s an
real
purchasing
power
of
the March
31,
1949,
and increases Executive Order of the President
liquid assets, forcing individuals substantially the mortgage insur¬ dated
Aug. 9, 1941, which was
and business firms to resort to ance
authorization; it introduces revocable either by the President
bank loans. Third, net savings on
excessively easy mortgage credit or by an Act of Congress. Effec¬
the part of consumers experienced
provisions as a permanent change tive Dec. 1, 1946, the Board of
a very sharp postwar decline.
in Title II of the National Hous¬ Governors of the Federal Reserve

ing Act. It creates a governmentsponsored
secondary
mortgage
market
and
includes
a
special
supplemental
program
for
ex¬
tremely liberal mortgage and yield

the

holdings

still far below prewar

must be shared

Decline in Security Loans

replenish

Such loans have increased

have

inflation in residential real estate

Postwar Loan Increase

of

new

redemption by the
Treasury, while about one-third
represents net sales of obligations
by commercial banks in order to

equipment expansion at ris¬
ing costs and the refinancing of
existing debt accounted for the
sharp rise in the volume of

abundant

two-thirds

of the public
uted to cash

financing of plant

Lenders, as a
quirements. In calling particular
little confidence in
Consumer Credit
attention to the essential need of
the permanency of present hous¬
of these liquid assets, there was
Since the middle of 1945, the this tpye of
lending policy, the
ing costs and prices and feel that
some question
as to whether in¬
total volume of consumer credit American 1 Bankers
Association,
interest
rates
permitted
under
dividuals and business concerns
granted
by
commercial
banks, under the able leadership of its
would need to increase their bor¬ government-insured mortgages are other
types of lending institutions, President, Joseph M. Dodge, has
too low, in view of the risks in¬
rowings to finance their postwar
retail
establishments,
etc.,. has rendered an invaluable service.
volved
and
alternative uses of
operations. This question has, of
risen from $5.6 to $13.6 billion.
Future reliance of business con¬
funds.
;
course, been answered—total bank
This increase occurred despite an
cerns upon commercial banks for
loans have risen sharply.
Responsibility for the present unprecedentedly high level of na¬
trends in bank

sion about future

Nearly

been

cline in commercial bank

credit.

and

loans.

have

which1

powers

and the issuance of Fed¬

Reserve notes.

eral

These- are only a few of the
questions which should be on the
agenda of such a commission. The
membership of • the commission
should not consist exclusively of
members of Congress but should
also

include

authorities

and

ex¬

This is the
opportune time for th^ es¬

perts from the outside.
most

tablishment of such
to

examine

our

a

commission

monetary

and

banking laws and to recommend"
whatever modifications will serve
the best interests of
2 Cf.

our

country.

address: "The Control of In¬
flation," May 2, 1946.
my

Volume

167

Lehman

Blosser headed

(Continued from page 13)

Shares;

end

and

reached
would

&

Straus

and

our

level

a

a

be

for

ing of

sterling

our

waters

the

of

sult

of

first

this

exploration,

class

were

salt

from

a

other

re¬

the

and

prospects
leases
pur¬

State

of

feet

omies

sands

has

been

producer
400

encountered.

were

well

It is

with

barrels

pent

we

tain

50

acres

oil

barrels

of

the

of

or

mate¬

raw

which

we

can

we

to

are

on

fields

be

of

ahead

production

of

figures

prewar

others

in

to develop
by directional drill¬

company

though

—

ing from the present platform and
such

to maintain

drilled.

The

well is

in

being
independent petro¬
now

an

the

capital

and

goods

$1,200 million—from

the

third-quarter

risen to about 12%
and in each case

of

well

were

i to the fore in increases.

in

increase of $4,800

million

over

j

has taken

and

of

ance

decent standard of

tries; and in engineering
124%

Summing up the change that
place in Europe's bal¬

(

7

v

1938

between

payments

can say that there
total deterioration of

1947,

we

of

we were

with

compared

prewar

the average of 110% for 12 others*
We are therefore already making
a

recovery but from the fig¬
I have given you you will

I have given you a good many
figures and statistics—to what do
they all amount?

excess

of

in

deeper
plug.

around

zones

the

we

fit

our

and

Western

Europe

State
in

of

Louisiana

the

Gulf

of

First

of

Mexico,'off

and

;

lie

to

within

its

tend

producing leases in Oklahoma,
Texas, Kansas, Arkansas, Wyom¬
ing and Louisiana, covering 54,000 gross and 34,000 net acres on
located

521

wells.,

oil

and

74

>

Net

proceeds of approximately
$3,000,000 to be received by the
<

company from the sale of 200,000
shares will be, applied to the re¬
tirement of secured
short term

notes, which totaled $1,448,000 on
May 20, 1948 and the balance of
will

proceeds

be

the

the

to

and

sale

of

cap¬

comprise 1,030,796
common
and
59,504

cumulative

For

convertible

nine

months

March

31,

1948

were

solidated

net

and

V r'F/'p;:V J7:■

changes:
•

Thomas,

dissolved
•

*

The

Exchange

following, firm-

Bates

on

&

of

Hughes

was

•

' W.

Brown, limited partner in Vernon
C. Brown &
became

Co., effective June 2

Gertrude

W.

Hawes.




that

on

of j

is

a

;
•

their

increase
proved

in

severe

a

of

sale

export

some.

in¬

to

large

The

exports.

has

prices

handicap to the
European
goods

! abroad, particularly in hard cur¬
markets, and it may well

against looking too hope¬
fully to a change in the terms of
trade to provide a solution of our

to

the

in

Democracy

the

have as you know of¬
cooperate economically

attempt to make Western

less dependent

long in which to do it.

upon

I

prove

necessary

in

prices

;

to

order

to

warn us

the ten¬

export-import problem;
dencies

in fact in the wrong

are

Problem of Western Europe

direction at the moment; it should
Eco¬ >also keep before us the dangers
nomic
Commission
for
Europe of inflation for it is precisely be¬
cause we
have held inflation in
there was a very good analysis
In

the

of

recent report of the

a

European balance of pay¬

ments

with

countries

overseas

European

countries

—

more

therefore

than

progress

isome

of

showed

its

visible

with

have

marked

the

other

our

export

contrast

to

countries

in

with

a

million in
overseas

as

and

we

| coming if
the

is taken to make
fully conscious not

care

workers

Good
sound

teamwork

based

on

a

understanding of the issues

involved is the best way to carry

Those

to

this.

That

efforts

own

are

so

con¬

of you who have visited

factories as I have over the
last few years fully appreciate the

many

unevenness

ciency

of

were

to

up

industrial effi¬

our

how

and

much

improve¬
brought about if all

ment could be

the

standard

the

of

best.
It is the

the
of

willingness to profit by

experience
others

reach

that

these

and
will

experiments
enable

us

heights of
duction
without
imposing
impossible or expensive load
new

to

pro¬

any
upon

the workers.
There

is

doubt that

no

succeed but it needs all

of

brain

and

muscle

can

we

our

efforts

to

win

through.

have made

a beginning
unhopeful beginning.
higher we climb
the

not

a

But

amount
our

cerned

the

steeper

we

are

unbalance
what is

people

and
were

more

easy.

were

Consolidated Edison

to get over

between

all

the

materials

raw

expect, and

this huge

the situation eased

production in¬

creased. We got gradually into the

tempo

of

peace-time

production
and we did not find any difficulty
in disposing of all we could make.
Need for Continued Good
Teamwork

But

now

increasing

the

further

stages of

production for ex¬
port are much less easy. Sales
resistance is building up, we have
almost

our

reached

limit

the

of

raw

material

supplies especially in
key commodities like steel,

some

and

there

is

no

labor

more

to

Subscriptions to the offering of
3%
convertible deben¬

15-year
tures

of

Consolidated Edison

Co.

of New

York, Inc., to company's
stockholders
totaled
$53,060,100,
or
92.5% of the $57,382,600 of¬
fered ifnder rights which expired
at

the

close

of

June

business

8.

Halsey, Stuart & Co. Inc.,

as rep¬
several under¬

resentative of the

writers, received competitive bids
June 10 for the $4,322,500 3% con¬
vertible debentures due June 1,
1963, which were not subscribed
for through the exercise of sub¬
scription
warrants.
Thirty - two*
bidders entered bids for a princi¬

pal amount of $14,453,000 deben¬
The

tures.
fered

the

six

of¬

who

bidders

hjghest

prices were
debentures,
at prices ranging from 107.09% to

awarded the $4,322,500

107.25%.

back. ';

come

;

v

^

We must therefore increase our

efficiency. That is the absolutely
cardinal need of this new stage in
the production battle.

Halsey, Stuart Group
Offers Rock Island Iss.

We need to do that both to get
more

production in volume with¬
quality—which we
never do—and also, which is

out sacrificing
must

equally important, to keep down
and bring down the price of our
products.
In some units in some industries
been

achieved

have

results

remarkable

most

by study

and re¬
apply¬

search into methods and by

ing new ideas to the deployment
of machinery and labor. In others
there has been no progress, yet
our
whole future depends upon
such progress not
but

time

E.R.P.

some

of

a

few years

now

while

preaching this need

years

issue of

Island & Pa¬

$4,590,000 equipment trust

certificates due

1949 to

1963 to a

banking group headed by Halsey,
Sutart & Co. Inc. at a public sale.
The

winning

2J/4%

bid

coupons.

was

terstate

Commerce

for

99.41

Subject

proval of the financing by

to

ap^

the In¬

Commission,'

the certificates were reoffered

to

yield 1.20 to 2.575%.

Columbus Stock & Bond

affairs

but every
and the more I

I

from

become

Club to Have

now

my

present

post of observation the more con¬
vinced

The Chicago, Rock

cific RR. awarded June 10 a new

yet gives us the time.

month that passes
see

in

and

here

and

substantially the Western
Hemisphere we must increase Eu-

could

we

as

our

somewhat

Debentures All Sold

more

dustry; we were getting ourselves
reorganized; so far as world sup¬
plies permitted we were getting

for

Europe

More and

coming back to in¬

I have been

Europe.
If

trade

we

Europe's Need

Europe

deficit in 1938 of $2,100

with

in

—

the 18 E.R.P. countries.
This

that

been able to make such encourag¬

all 'drive

the

outside

Britain

in

check

ing

U.S.S.R.

Gertrude

crease

outside Europe which covered

June 11.

name

some

own

countries

these

of

ERP

Western

i\

The New York Stock

our

of Western Europe

we

Europe

ended June 30, 1947.

Exchange
Weekly Firm Changes

when

1952

difficult for

more

Hemisphere. That is the
first object of Western European
cooperation and we haven't very

in

con¬

New York Stock

Western

the

fered

income

has announced the

But this is not an

war.

lower export
achieve the
necessary expansion in the volume
of
exports.
The experience
of
other European countries should

world,

$922,167
compared
with
$8,023,663
and
$344,903, respectively, in the full
fiscal year

been any sig¬
nificant worsening of the terms of

before the

much of

depends

Progressive

ended

company's
consolidated total operating rev¬
$9,225,905

so

They
far

pro¬

whole there does

a

For i trade between 1938 and 1947. This

Europe, 7 and
since
political and economic

strength

the

enues

by

Since

a

to get there.

duction

as

to

-the

only

long way to
short time in which
a

path. The initial increases in

Europe

not appear to have

do.

we

j operation of his employees. That
! cooperation will only be forth-

the

vital factor in the maintenance of. rency

dividend per year.

the

;

mutual

ties.

go and

have

difficult

made it all the

the

value, $1.20

par

had

trade

still

we

of

Western

,

cumulative

of

terms

see

moved against us. But in the case

We do not in¬

want

! with

Hemisphere

italization will

of

we

balance

prosperity

preferred, $22.50

rela¬

Sterling Area must aim at getting

company's outstanding stock

shares

the

words

Both Western Europe and the

ends.

of

a

unmixed blessing. The "favorable"
turn in the terms of trade1 has

,

the 200,000 shares of common, the

shares

the

due to

been

in

added

issuance

reason

with them in all

|

company's general funds.
After

was

had

tively greater rise in import prices
in export prices: in other

countries

of

those

there

help in i means that for the rest of Europe
Europe, too. Indeed, we hope and
(excluding Britain) there has acbelieve that a more co-ordinated ! tually been an average improveEuropean economy will help all ! ment in the terms of trade, though
the Commonwealth, who will be I different countries have of course
able to expand their trade both i varied results*
with this country and with the
j At first sight it looks as if de¬
rest of Europe the more prosper¬
velopments have on the average
ous we all become.
We hope that
favored other European countries
they will work closely in with us more than us, because they are
in our desire to strengthen West¬
now able to obtain a larger quan¬
ern Europe and we shall certainly
tity of imports in exchange for a
keep in the closest consultation given quantity of exports than

The company owns interests in

are

ties

deficit

that

than

Commonwealth

our

trade

$3,600 million to the general
increase in prices. In the case of
Britain a considerable part of the
post-war

want to continue

weaken

to

that

188

gas

;

and the

other

trade and support.

borders

jurisdiction*

which

we

increase

and

the 27-mile limit which the State

the

the- British

with whom

the coast of Louisiana and within

claims

come

of

and

Commonwealth

covering

in the volume

changes

fact

The company has interests in a
total of 74,762 acres of leases from
areas

•

to

we

cooperation.

our

dif¬

our

manage

in to work with
have promised
' / ; '

economy

-

the

must

we

those to whom

salt

in

not alone

are

ficulties

currently indicated
as proved might be
developed in
the presently producing sand and

or

and should ask
for the full and understanding co«*

real contribution to Euro¬

very

pean

said

in

reserves

;

fact

-

reserves

man¬

with

In chemical production we were ; through improvements in methods
of production.

I

siderable oil
the

Every

;of his production

above prewar
we

port jthat it was highly probable
that, after additional drilling, con¬

re¬

us.

examine

1947

ures

engineer indicated in his

before

should

ager

living for our people. We haven't has been a
by any means got there—but we $7,500 million—$2,700 million due
have quite definitely started on
to decline in income from invisi¬
the
right road.
But as I have ble transactions, $1,200 million to

leum

should be the main ob¬

now

;only of the economic situation of
the country but also of their own
unit of production.
the level of these industries had
By

this

level,

1938

1938.

our

a

living.

More production out of existing

a

to $3,300 million. i at 146% of prewar compared with
'an average of 120%
for 9 Euro¬
prices more than
In iron and steel
doubled between 1938 and 1947, pean countries.
we
were
111% of prewar com¬
and therefore the deficit in 1947
actually came to $6,900 million— pared to 104% for 6 other coun¬

well

the first

horizon

of

re¬

to enable

so as

power and steel.

million

$2,100

efforts to get our economy
into balance and at the same time

this

ards of

resources

means

done

accomplish our object with¬
having to cut down our stand¬

out

a

;

jective

more

visible trade would have been

But

many

notably textiles — we
are
still lagging behind. In sum¬
mary we can be stimulated by our
achievements to hope for success

to

at

increased by

are

we

of

be

to

| f acture

would have meant that the deficit

.

figures show that in

importing one-fifteenth

stayed

main¬

Production Progress

apply to the
company's
one-eighth
of
the
working interest. It is the inten¬
tion

of
if

do

in

55%

cannot

more

of all kinds

sources
us

great increase in I
; Europe of for instance the manuThis

(at 1938 prices) than in 1938 and
exporting between one-quarter and
one-fifth less. Even if prices had

cutting

or

something

tb economize in effort and in

a

was

production at its highest

our

The

-

5,000,000
521,000 barrels

which

estimated

were

to

reserves

foodstuffs

to

by

proven

reserves

neither

point.

well, has estimated the proved

gross

our

on

afford

day.
An indeengineer, on the

per

of

rials,

of

in¬

the other.

on

,

we

will consider
in every
unit of
production in the country whether

place in visible trade since 1938, I new
important differences are at once
| tion. It would require an increase
apparent. For whereas Britain in I of something like 40 to 50% over
1947 was
importing about onej. prewar in these industries to meet
quarter less in volume than in I all these needs and to close the
1938 and exporting
about one- gap and
they would of course re¬
twelfth more, Europe as a whole
quire
the
necessary
fuel
and

econ¬

and

of

combination

a

—

our

without expert assistance what he
construction and re-construc- ican do to improve the efficiency

very great task and unless
succeed it means either the

down

a

allowable

an

petroleum

basis of only

as

hand

or

nearly

today
in

succeed

—-

I do therefore beg of manage¬
ments and workers alike that they

close one, but when we con¬ ! chemicals both
for export and to
sider the changes that have taken
meet the European demands for

non-re¬

partly by

one

:

So far the parallel with Britain

a

loss

This

completed

the

on

part of each.

is

be

This must

through

creased production

176

some

partly

decrease

a

imports

i

Contrast With Britain

help
they

to

year

accounts—and

current items and

saturated, highly porous
extremely
permeable
oil

atid

this

surface,

last

balanced.

be

achieved

of

the

than
our

must

Louis¬

Drilling of the first ex¬
ploratory well, located several
miles off-shore, began in Septem¬
ber, 1947 and'at a depth of 1,510
from

gold

or

ping, tourist traffic and other in¬
visible sources,

somewhere

have

we

balance

iana.

feet

words

i

of income from investments, ship¬ ! exports

about £ 600 millions less in dollars

several

dome

and

mapped

chased

As

increasing the ex¬
change of commodities internally
in Europe.
' ;

ideas

doing

enough

not

of

advantage
and

not

are

27

great
endeavor to put our economic life
upon a sound footing.

;

million. Thus between the j
To restore equilibrium in Euthere was a total deter¬ i rope's balance of payments on the
ioration
of $7,500
million, just basis of the figures I have quoted
over one-third of this—$2,700 mil¬
earlier would require either an
lion—being accounted for by loss 'increase over 1947 of 125% in

in

year;

the Gulf of Mexico off

Coast of Louisiana.

stuffs in par¬

two years

common

.

shall

ticular and by

was

fullest
methods

we

thoroughly

$600

banking

area

system—for that is what it is—■
stock, but also we must have them when
at $16.75 per share. Of the shares
by the end of the ERP period we
offered, 200,000 are for the ac¬ no
longer have any gifts or loans
count of the company and 100,000
from overseas to rely upon.
for certain selling stockholders. r
Compared to that £1000 mil¬
The company was one of the
lions we spent last year we hope
pioneers in the seismic, explora¬ that
ERP may be in the region of
tion
of
the
lands
underlying £300-£400 millions in a

Industries, Inc.

which

needs in food

own

the

modern

rope's dependence upon itself by
increasing its production of its

$6,900 million, and this was aug¬
mented by an invisible deficit of

need them for the current financ¬

16, 300,000 shares of Kerr-McGee-

deficit

visible

the

1947

In

to

us

not only

We

offset by

was

surplus of the same amount on
invisible transactions.
a

it

which

unwise

most

this

' countries but

'

have

reserves

below

allow them to fall.

group of under¬
writers that offered publicly June

Oil

(2659)

the Sterling Aiea and ERP

Sterling,

:
an

Bros;

CHRONICLE

take

Ration-Wide Group
Offers Kerr-McGee
Oil Common

FINANCIAL

&

COMMERCIAL

THE

Number 4708

that unless

we

COLUMBUS,
lumbus
hold its

Stock

&

Outing

OHIO.—The
Bond

Co¬

Club will

annual golf party at

Columbus Country Club.

the

'

The

Moie Investment Needed te faciei ise Real Incomes
lead

and

duction,

undercon-

to

depression; they be¬

sumtion and

in fact, that high profits
are the major cause of depression,
They oppose large incomes, be¬
cause large incomes lead to over¬
saving; the more extreme '"consumptionists" wish to discourage
saving, even to the extent of tax¬
ing
savings
accounts and
life
insurance premiums.

of employed persons. I
assuming, of course, that no
change in prices and no change
in production methods occur.

"

Finally, the advocates of in¬
creased consumption look favor*
;

ably on a considerable degree of
regulation and control of the dayby-day conduct of business and of
individuals by the Federal Gov¬
ernment in order to make people
the

do

things they should do

—

less, equalize

more, save

incomes—fop the benefit of those
who, without this help, would
little.

too

consume

The

"consumptionist" program
will be recognized as a familiar
part of the Democratic Adminis¬
tration program of the past 15
years. Very recently, this position
lias been confirmed by the Presi¬
Council

dent's

Economic

of

Ad¬

visors, in their "Second Annual
Keport to the President," of De¬
cember, 1947.1 It will also be rec¬
ognized as a large part of the
legislative program of the CIO.
Those

who

potentialities

greater
to

ment

in

believe

promote

stability, offer

of

invest¬
and

progress

that is

program

a

the

the exact opposite of the "con¬
sumptionist"
program
that has
just been outlined.
Those

who

first believe

investment

place

that

for investment

if

expenditures
maintained at

are

a

sufficiently high level, ■; con¬
sumption will be automatically

their incomes

am

As

lieve,

consume

Americans, when free to spend
as they choose, have

number

(Continued from page 6)
exploit the other factors of pro¬

long

as

expenditures and in¬

everything
goes on without change at a fixed
level, and this stable condition
continues as long as there is no
change in expenditures, either by
an
increase
by reason of new
funds put to use in our hypotheti¬
cal society, or by a decrease in
expenditure caused by part of the

the careful studies of the National

being

hoarded

ratio of consumption

over

Now

this

of

decade

by

some

the
78.7%
1889-98; the

1869-78,

and

put

The economic machine

of

decades

six

be

preference

given

time,

same

figures, com¬
piled by the Department of Com¬
merce, we can obtain a similar
ratio of consumption expenditures
to gross

national product for each
year from 1929 to 1947, but this
series cannot be compared with
the figures given for the 1869-1929
period, because they are not the
same kind of figures. The Depart¬

this

higher level of output
(goods and income) just as long
the input of expenditures is
kept at the new higher level. If
a
still higher output is desired,
more funds — more working capi¬

and

State

funds

tional

for

used

accounts, and

bank

addi¬

that

defeat the

so

All six classes of investment

penditures,

is

shows

record

that

They do not,
to

maintained, large
savings and high profits should be

extent

In

few words—the difference

a

in

programs — and, remember,
both programs are
designed to
reach the same goal of increased

consumption

purchasing

—

be stated

may

power

as

profits.

versus

Having thus outlined the nature
of the controversy as to the best

purpose

nature

or

the

of

come,

providing the spending is

-

way to

achieve progress and sta¬

bility, how

arrive at

can we

related to the production process.
A dollar spent in the production

by

process

some

person

is

dollar

a

person,

real

^answer

ideas
I

that

need

exist

not

tell

both

on

this

sides?

audience

of

engineers that the only effective
way is to go back to first prin¬
ciples to discover how the Ameri¬
can

economic

machine

works, and then test
against

our

really
answers

field

experience. I will
try to do this, but you must not
expect too much in the short time
at my

disposal.

Fortunately, I can start with one
principle about
no
controversy.

which there is
Factors

Determining Income

And Employment

is the basic answer: The

income

aggregate
any time is

at

earned--

by

determined

by the immediately
preceding level of aggregate ex¬

now

approach the con¬
troversial question: What kind of
funds

new

for

should

what purpose

be

my

consumption
;r

original
funds

new

or

question:

be

spent for
for investment?

I stress the fact that

new

funds

additional

working capital —
are
necessary to reach a higher
level of income and employment.
Even when full employment is at¬
tained, we still need new funds
to
provide jobs for a growing
force, and
funds to improve
methods in

order

we

need

new

facilities
to

and

increase

the

production per capita—to increase
per-capita real incomes
and
—

must

the

in

ber

of

the

absorb

sumers'

well-to-do
the

goods.

indefinitely
the

surplus

will

possible
Nor

in
all
the
The small num¬
not

be

able

output

of

con¬

accumulating
above

needs

for

some

go

ownership

their

and

plant

they

can

restricted

on

of

consumption

investing it in ever-enlarging
expansion of goods for
part of the population.
The enlarging production of an indus¬
trially efficient nation must go increas¬
ingly to filling in the consumption de¬
ficiencies of the erstwhile poor."
future




not inexhaustible.

wish to

is that during
relatively normal times of peace
and good employment, the con¬
sumption ratio has been remark*

in the

ists

the

real

reasons

-

produce

are

spent

the

decisive

factor

discussing. I

therefore, to discuss,
in
detail, the behavior of funds
for

behavior

consumption
of

funds

our

spent

and

for

.<

of

analysis—which I cannot
undertake to go into here—that

under conditions of limited invest¬

constant

consumption

the

ratio,
additional
funds spent for consumption are

in¬

very

likely to find their

idle

savings—into

economic machine.

The

deposits.
Behavior of Consumption
Expenditures

Consumption expenditures are
readily defined as expenditures
for goods or services in domestic
markets for near-by consumption.
By common consent,
consumer
durable

a

goods, such as automo¬
biles, electrical home appliances,
and home furnishings are included
in
consumption
goods,
even
though they are more - durable
than other consumption goods.
-

new

way

inactive

credit

funds "are off¬

funds.

You will note that I made two

that

government^* subsidies
current taxes

out of

redistribution

income

of

getting better

Thus,

we

desirable

start

consumption goods
services; and (2) that the de¬

getting worse.

nor

the

with

of the bus¬

some

get
capital, and

community

new

factory; they put new

for

construction

new

factory

and

equipment.

While the factory is being built
and

other costs

funds.

ample

as

of

the
of

sources

vestment.

analogous
new

Here we come back to expendi¬
tures for consumption, and should

a

important fact—that
spending for in¬
proportional
increase in personal income, and
an
increase in personal income
may
reasonably bei expected to
result in a proportional increase
in expenditures for consumption.
This assumption is reasonable be¬
note
an

of

for

in¬

;'v' "?■.

,

a

cause

that
Behavior of Investment

•>"

we

is

'■

ess

evidence

appears1 to
be
depending on increased
consumption expenditures for in¬
creased general welfare (and not

against

limited

to

the

welfare

of

stronger

case can

will

now

case.

essary

relief

An even

be presented in

favor of investment

expenditures.

look at

the

invest¬

First, it will be

nec¬

to define just what is in¬

cluded

ited.

investment

in

investment

funds

expenditures.

learned from the record

the way people

cannot be counted
assurance.

same

The

in

normally

behave. The reversal of this proc¬

Expenditures

.

very

increase

vestment results in a

situation

funds

\

■

personal income is spent, partly
consumption, and partly saved.'

funds for consumption such
we will find when we come to

consider

'

for

from

sources

1

.

Then, during the next produc¬
tion cycle, the larger aggregate

new

mand for investment funds is lim¬
■

of

new

a

ment

do not find any very

nor

ment

for

•

"!•:K

that

assume

together

those who pay taxes to those who
receive the government benefits.

is

or

-

VV'

.

new

funds; such payments represent

We

•

\

In order to

explain the behavior
of
expenditures for investment,
I will use again a model of a selfsufficient community whose cur¬
rent income and total expendi*.
tures
for
production are equal.
Business in this community then
is on an even keel; it is neither

paid

not

are

dollar of personal income, 90 cents

:

complete picture of
expenditures is to be

*

a perma¬

clients and the indigent).

and

a

presented.

deficit spending for
ofT,various kinds. Note

subsidies

assumptions: (1) that
the consumption ratio is constant
—that^ let us say—out of every
spent

than is

investment

bank

by additional hoarded saving,
and there is not net gain in in¬
come
or
employment from the

conditions

if

cluded

another

is

gain unless there is

into

set

new

broader:

a

investment

of

?;

commonly used, but all six kinds
of
expenditures, should be in¬

government

for

be shown by sound meth¬

ment demand, and with

consumer

These six classes of investment

definition

The largest' source of new funds

for government con¬
trols
to
increase
spending, for
consumption. This ratio of spend¬
ing to saving is not easily changed
if people are left to their own de¬
can

that

equipped, salaries, wages and
are paid out to work¬
ers;
personal incomes are in¬
creased by the amount of the ad¬
ditional expenditure of investment

net

the pressure

It

take

expenditures comprise

for consumption is to be found in

of

to

fear

power ex-?

goods off
especially during
periods of expanding business.
;

creased

ernment

one

those who
purchasing

new

very

have

an

funds in use—this time for invest¬

considerable amount of gov¬
control
of
spending,
prices, wages, and incomes into
our
American system. Here we

introduce

is

the market, and

nent increase^ in, outstanding con¬
sumer credit.
•

to

currency,

This

that is completely over¬

by

insufficient

no

a

wish

we

the'

behind

only while loans are in¬
creasing. There is no long-term

not

easily changed .in an
economy.
It is not
possible for governments or labor
unions to do very much about it,
unless

Soviet Union.

looked

increase.

Consumer

of

Source, but that is also limited to
short-term loans. Spending is in¬

uncontrolled

ods

they

is

"reform"

consumers

Moreover, sav¬

expenditures.!; There

purchasing

reason

important consequence of invest¬
ment spending for the benefit of

inessmen

net

excess

the

was

recent

Now

ture

of

It

merely subtract from current ex¬
penditures in order to add to fu¬

draw

con-'

of

produce^

became obvious during

the

be used, and this is
source—but certainly

can

common

value

currently

war.2

inexhaustible

no ■*?

excess

sale in domestic markets.

kind

ings held for future consumption

The conclusion I

and

employment

•

with

power

of

savings
a

from these figures

is

is

there

market

goods

on

This

permanent funds ; that
be used for consumption. Past

can

reasons.

income

have

consumption

lower and middle ranks.
to

future

vious

vices.

We

produce, we
higher

considerably

up

during the depression, and it went
down »'■ considerably
during
the
war
years—both for rather ob¬

achieve progress.
So new funds and the additional

vestment in

much

went

tion

to

Should

"If

are to achieve and stabilize
maximum
production according to any reasonable
interpretation of America's capacity to

It

turn

some

says:

total

and

be obtained.

source

ably stable. The ratio of total
product that is spent for consump¬

expenditure continue equal, there
will be no change in the
aggregate
income, volume of production, or
19,

ratio.

in order to increase aggre¬
gate income, production and em¬
ployment most effectively? I re¬

wish,

page

and

source,

in the problem I am

on

spent,

and from what

that income and

Keport,

variations

we

rently spent,

IThe

other

some

penditures for production. If all
income currently produced is cur¬
so

consumers

the

,

that

>-v

labor

The
question
is
this:
What
determines the level of aggregate
income and employment? And this
national

But

—

fundamental

investment

sumer

A little consideration will show

1940 there were wide
in
the
consumption

and

-

income

that
will
break
through the prejudices and fixed

one

\ In between these two terminal
years

represented

purchasing power over and above

—

the

current

time, they

American consumers,
expenditures

by

provide

the

.

to

costs

these

—

spending. Spending for any pur¬
pose will produce additional in¬

for

same

that the

chased

American

can

the

by these kinds of investment ex¬
penditures are not reflected in
the market prices of goods pur¬

——

encouraged and not frowned upon.

At

goods

consumer

contribute their full quota to cur¬
rent ■ consumer
income.
To the

■

be

may

common;

domestic

competing

markets,

-

tures

in

ex¬

have

cause consumer

in

appear

income.

—

increased and maintained; and, in
order that investment expendi¬

just defined,

as

characteristic

one

,

.

*

equipment and facilities.

long

,

,

Local)—

(6) Other purchases from busifirms,
including
military

s

,

and

ness

—

,

:

.

all kinds. ;

of

consump¬

spending and savAng habits of the
people are not easily
changed by indirect pressures, and
union programs designed to in¬
that new funds spent for con¬
the
tal
will be needed. Each in¬ crease
consumption
ratio.
sumption are not likely to keep
jection of new funds produces an These tremendous efforts have -on circulating, and to
produce ad¬
equal increase in output of in¬ had very little effect on the con¬ ditional
incomes-through many
come,
and the higher level of sumption ratio. The consumption
production cycles. In order to in¬
output continues as long as ex¬ ratio, for the relatively prosperous crease consumption—and this,
may
penditures remain at the higher years of 1929, 1937, 1940 and 1947, I remind you, is the
goal of both
level, and no funds are taken out changed very little. The ratio de¬ parties to this conflict—it is nec¬
of use.;;•:;■ \:;;VX
clined slightly from 75.9% in 1929
essary to increase total income.
I have gone into this rather
to 71.2% in
The size of the pie must be in¬
theoretical question in some de¬
On a different and more signifi¬ creased.
1
r
tail, because the one point I wish cant basis, the ratios of consump¬
As I have already explained,
to
stress
is
that
to achieve
a
tion
expenditures to disposable total income is increased
by the
higher level of income, produc¬ were:
,•
injection of new funds into the
tion and employment, new funds
production process—by the famil¬
Year" ,f
'{ ^
<
additional funds
must be
iar method of increasing the total
1929
_(L_95.5
found and used. This point is im¬
money capital used in production.
1937
l94.0 '
portant because one of the crucial
If our national program is to in¬
1940
——95.1:'.
questions concerning the choice
crease total incomes by the injec¬
;1947
-—93.8
between consumption spending or
tion of new funds for consumption,
investment spending is this point
Disposable income is aggregate we need to consider, therefore,
that new funds must be found.
personal income less personal in¬ where new funds for
consumption
So far, I have said nothing as
come tax payments.
spans the entire
of government and labor

period

/

Jv

(5) Public Works—Construction

find their way into idle

tion will

The

esting because it

excess of exports

imports./,

the Govemmentirlnvestment (Federal

at

ment of Commerce series is inter¬

as

chiefly the

over

what happened during
depression of the '30s.
During these years when the gov¬
ernment was pumping new funds
into the system, largely by relief
payments to the unemployed, it
was,, discovered
that
the
new
money accumulated after a while
in idle bank deposits. New funds
supplied
by
the /government,
largely for consumption, did very
little to improve the general busi¬
ness
situationand employment,
although they did relieve distress.

product

kinds.

"

This

was

goods.

all

of

(3) Changes in inventories.
(4) Foreign investment—usually

w

conclusion

This

the

national in¬

recent

more

and

come

have

we

all

of

From

com-*

work

to

decade

80.9%.

mem¬

self-sufficient

and;

the

average

imagined will continue to operate
at

the

was

Producers^ durable
Construction

consumption and investment can¬
not

v

(2)

encouraged,

and

program, is not only good theor>
—it is confirmed by experience.

for

in
production.
Additional
workers
will
be
employed,
or
present
workers will work longer hours.
More
goods will
be produced;
more income will be generated.
munity,

stressed

is

•

(1)

which

in

<•

Private Investment—

logical, because in a society
immediate consumption

and

81.1%

consumption ratio

for

additional working capi¬

is obtained

—

elude these categories:

whole purpose of the consumption

age

additional

that

assume

—

Expenditures for investment in-

been

has

by the historical record.
The second condition is reasonable

1869 to 1929. The maximum aver¬

spent.

bers

slightly, decade by decade,
a
period of 60 years from

only

minimum average ratio was

funds

tal

(the flow of

goods And services to consumers)
to gross national income, varied

not

and

Research, the

Bureau of Economic

income received from current pro¬

duction

condition

first

covered

the
made a remarkably stable choice
and
the conditions
between spending for consump¬ atmosphere
tion and spending for investment. necessary for a high level of in¬
vestment will not be present. Both
From statistics made available by

remain the same,

come

Thursday, June 17, 1948

FINANCIAL CHRONICLE

&

COMMERCIAL

THE

(2660)

28

and
-

An

with the
increase in

on

expenditures for consumption can¬
not be counted on to

increase

ex-

purchasing power of this_ kind
is provided
by investment expenditures
for the excess of exports over imports,
2 Excess

for

increases

ment

in

inventories,

for

governs

expenditures
for
public
works,
equipment and
other govern*
purchases from the business sector.

military
ment

Taxes

are

not

an

offset

to

excess

pur*

power
from government invest*
because only a small part of tho
taxes are paid by people who receive the
greater part of the income generated by;

chasing
ments,

government spending.

\

L

;

Volume 167

tal

is

States

:

the

mention

to

The record of capi¬
accumulation in the United

from industry.

for

and

investment

in

used

are

result

consumption,

for

it

certain that an in¬
crease in expenditures for invest¬
ment will result. Consumers, col¬
by

means

no

lectively,

spend

Business¬

their collective income.
do

men

of

surely spend out
The motives, in¬
conditions are quite

not

so

centives

and

different
The

income
dollar

of

duces

one

in

two

fact

cases.

remember,

to

the

investment

new

dollar

of

1869-78

cycle

production-income

1919-28

in which the additional funds are

spent.

/

,

1946

■;Fi;

,

important fact is
that this increase in income usu¬

These

ally results in an increase in con¬

ment

The

second

New funds, introduced

sumption.

for

through

work

;;

create additional payrolls
and other forms of income; and
additional income generally re¬
process,

,

that

in

saving. And so the process
continues;
consumption
is
in¬
creased as long as the injection of
new funds for investment is main¬

V

•

wish

I

more

vided

this behavior
expenditures 5 as

stress

to

strongly as I can — that increased
expenditures for investment re¬

if the

amount of new funds

same

•

the

duction

This
mine

the

past

19

national product for current
consumption—appears to be the
division
that
private
industry,

gross

government and consumers prefer
under
the
conditions -; of
free

period is a veritable gold
of experience for the ex¬

the answer to the
question I posed at the beginning

of

bearing

choice.

'

Of this paper.

of

case

important.

is

funds

new

;

;

,

,

.

funds for

new

consump¬

tion, the only large or relatively
permanent source was found to be
in increased government borrow¬

banking system

—

in the creation of new money

by

ing from the
the

is

inexhaustible

source

even

When

funds

we

.

I

turn to the

hand

an

itself.

Next,

".,i

.

I

a

1947.

d

a n

picture of depression —
from 1932 to partial re¬

covery
years,

point
with

There

are

we were

military purposes.

Table I

<*v;F

INVESTMENT

There

was

National

Year

-Private

1929—

1937.

Amount

The

$103,828
90,213

$16,577
11,502

71.1

100.477

14.492

: 70.3

19401946—

80.1

'

1947-

j,,„

;

36,550

229,600

■■

29.7X 20,608'

6,116
9,443

11,800

FF

Private-

FymY?--

Product'

•

$58,340

1932-

per
employed worker; if
figures are deflated to 1939
price levels for finished goods
prices (BLS Index), the invest¬
ment funds per employed worker

Amount

22.3

$1,055

55,760

1934..

64,868
72,193

;

■1,456

3,236

1935-

1936.
1937..
,

,v

■

•

-i '". ■..

84,705
90,213

Funds to

31.0

....

Total

% I'

$3,611
3,240

77.4
r:

68.9

;

$4,666
4,696

are:

G. N. P.

'

$486.

'
Such

8.1

v

ii.4

43.8

4,148

53.2

7,384

6,092 F 60.9

3.917

39.1

10,009

10,447 : " 70.1
11,502 F 71.1

4,455

29.9

14,902 i

28.9

16,167

F

17.6

4,665

17.9

employed
INVESTMENT FUNDS—WAR YEARS

ft

«r-\£*X'V'

Product

Year

;1940..
19411942..

{3943..

$100,477
■>

125,294
159,628
192,573

Amount

4

$14,492 F.

70.3

$6,116

18,335 V
9,123

54.5

15,290'
44,437

3.6

2.346

1944—

210,551

3,559

1945-

213,120

.8,304




17.0

-

5.3
14.9

62,391

63,633
47,293

Total

.%

Amount

/;...

•

G. N. P.

$20,608

20.5

33,625

26.8

53,560

33.6

.

65,037

29.7
45.5
83.0
96.4

33.8

\

94.7

67,192

out that—with
currently bal¬
peacetime

point

—

of
out

all

come

ness.

ll.

these
of

V.'V

anced

;

private busi¬
/

'/: /

V'.'X ■I'¬

Depression Years

During
the
1930
depression,
government expenditures for in¬
vestment were relatively stable,
despite widespread impressions to
the contrary. Government invest¬

expenditures increased only
$1 billion from the low point of
the depression in 1932 (before the
Roosevelt Administration began)
the year of

to

up

\

if about $3 billion of
(at 1940 prices)

relative pros¬

perity of 1937. State and local
government expenditures actually
declined during this period.
Private

for
in¬
disappeared;

expenditures

vestment

almost

they declined from $16 billion in
1929 to only $1 billion in 1932.
At the bottom of the

depression

in 1932,

private business contribu¬
ted only 23% of total investment
expenditures,
and
government
agencies contributed 77% —but
investment

total

of gross

10%

than

less

was

national product—

one-half of the ratio of more pros¬

new

per

investment.

,,

55,597

26.1

In

.

„

1940 this division was

1946 and

70-30,

1947 it had

"re-

covered" about half way. Condi¬

/

CHICAGO, ILL. — Homer P.
Hargrave, Merrill Lynch, Pierce,
Fenner & Beane, newly elected
Chairman

change,
ment

of

of

ernors

the

the

has

of

Board

of

Gov¬

Chicago Stock Ex¬
announced

the

appoint¬

following

standing
committees, to serve'for the en¬
suing year:
'• F;
Executive:
Reuben
Thorson,
Paine, Webber, Jackson & Curtis,
Chairman; Walter J. Buhler, ViceChairman; Ralph W. Davis, Paul
H. Davis & Co.; John J. Griffin;
Charles R. Perrigo, Hornblower &

FF

Weeks.

Admissions:

Barrett

* Wendell,
Higginson Corp., Chairman;
George F. Noyes, Illinois Co. of
Chicago;
Vice-Chairman;
John

Lee

W.

Billings;

John

R.

Burdick;

Robert F. Schenck, Jr.
Finance: George E.
Bros.

son

Booth, Lam-

&

Co., Chairman; Nor¬
man Freehling, Freehling, Meyerhoff & Co., Vice-Chairman; John
W.
Billings; James J. McNulty,
Ames, Emerich & Co.; Leonard J.
Paidar, Goodbody & Co.
;
Floor

Procedure:

Chancellor

Dougall, Chairman; John R. Bur¬
dick, -V Vice-Chairman;
Elmer
Kurzka, Fred W. Fairman & Co.;
Sampson Rogers, Jr., McMaster
Hutchinson

&

Sills,

Minton

Sills,

Frederick

J.

Co.;

William HL
& Co., Inc.;

Stannard; Alfred E.

Turner.

"■/.

Judiciary:

,/■

Sidney

L.
Castle,
Co., Chair¬
man;
Hulburd
Johnson,
ViceChairman; Chapin S. Newhard,
Newhard, Cook & Co.; Frederick
J. Stannard; Edwin T. Wood.
Carter N. Harrison

New

Investment

Business

lations:
Co.

of

&

Public

and

Re¬

George F. Noyes, Illinois

Chicago, Chairman; Edwin

T. Wood,

Vice-Chairman; Andrew
Baird, A. G. Becker & Co.;
John
W.
Billings;
Irvihg ' E.

M.

Freehling, Meyerhoff
FF'-FF'-'
Stock Listing: John J. Griffin,
Chairman; Charles
R.
Perrigo,

Meyerhoff,
III.

The

War Years

&

outstanding feature of in¬

vestment

funds in

the

war

years

is the transfer of

practically com¬
plete responsibility for income
and employment to the Federal
Government.
During /the
peak

Co.

;

Hornblower & Weeks,
man;

Vice-Chair¬

Walter R; Brailsford, Brails-

ford &

Co.; William H. Sills, Sills,
& Co.; Reuben Thorson,
production years—1943 and 1944— Paine, Webber, Jackson & Curtis.
James E. Day was reelected to
about 95% of total investment was
provided by government. Funds the office of President, and the
for investment come partly out following
officers
were
reap¬
of private business and partly out pointed:
of newly-created money. Total in¬
Raymond KL Day, Vice-Presi¬
Minton

.

vestment funds increased to onethird

of

gross

national

product,

which is reflected in the reduced

personal consumption of the war
qponomy,

..

,

.

for the behavior of
investment expenditures and con¬
So

expenditures.

sumption

conclusions have

we

At what

arrived con¬

cerning the answer to the ques¬
tion with which I began?
Which is the best road to the
destination we all desire to reach
—the

Carl E. Ogren, Vice-Presi¬
Secretary; Walter R.
Hawes, Treasurer; Martin E. Nel¬
son, Treasurer Emeritus; George
J. Bergman, Assistant Secretary.
dent;
dent

and

much

destination " of

incomes

and

larger

real

of

greater stability

Allen B. Beaumont Heads

Dept. of Wm. R. Staats Co.
CALIF.—

FRANCISCO,

SAN

/

Beaumont is

Allen B.

now

asso¬

ciated with William R. Staats Co.,
Ill Sutter Street,

in charge of the

municipal department.

y

incomes?

My own conclusion is that the

road—not merely the best
but the only road—is by
way
of steadily increasing ex¬
penditures for investment; and to
travel this road, over the long-

only

Kingston Now Proprietor
NEW

road,

and
of

savings and out of profits. There
reed have no fear of over-saving.
Our
rate
of
progress
depends

and in

Officers; Committees

times.

employed
worker was only $120. The large
part of employed workers were
in occupations that required little
r.

term, we need to encourage
safeguard
the
accumulation

ether 20%.

31.9;

85.1
\

also

the national budget

funds, and governments (Federal
State
and
local)
provided the

»

Funds to

—Government—

would

for investment.
A second interesting fact is that
in 1929 private industry provided
about 80%
of total investment

Investment

Investment Funds
Private-

;

additional funds
Ratio

National

;!

had been spent

(Millions of Dollars)
Gross

;

workers in 1940 would have been

Table III

.y;v.

X

figures
are
only
the
kind of approximations,
but they are, nonetheless, inter¬
esting and useful. Thus, it can be
roughly estimated that the 7 mil¬
lion
excess
of
unemployed

33.9

X

1929, $336; 1940, $440; 1946,

K 8.4 p roughest

-

,

'

•

>

Investment

•—Government—

Amount
: v

1933-

employed worker was
same
($432 against

these

YEARS

Investment Funds

National

was

years

and the invest¬

$700

FUNDS—DEPRESSION

Gross;

two

Investment in 1946 works out at

(Millions of Dollars)

t

the

same,

$447),

Ratio'

fix

the

in

per

about

workers

unemployment in
number of employed

The

ment

'20.5

very

of

roughly the

•

and

are

than 7 million

excess

1929.

'38,798'/- 19.1
24.4 v 48,300
21.0
24.3

na¬

total invest¬
nearly the
but unemployment in 1940
product

workers

Table II

:

INVESTMENT
■V-

75.7

i

19.9";'1$20.693->:T9.9
28.9 fn516,167°* 17.9

$4,116
4,665

75.7

29,355

203,679

Funds to
itl
G. N. P.

in

interesting. Gross

funds

more

was

Ratio,

1929

comparison between

tional

Xtal

XXX

production. 4

same,

Amount

Product

and

-1946,

increase in price level, and not by
an increase in volume of physical

Investment

•,}
—Government--r.

measure

a

ment

\

over

expenditure,
a
of the separate in¬
terests of the two parties. But I

rough

perous

<

12% increase in gross na¬
tional product, and most of this
increase is accounted for by an

only

YEARS

1?.;.
Investment Funds

;

,

25% increase in in¬

a

vestment ■■ funds

(Millions of Dollars)
Gross

.

1947, especially," investment
expenditures were above the level
required for full
employment.

op* •>*."

FUNDS—PROSPERITY

be

In

and 1940 is

! •-

would

*

not compelled to

spend more than we like for ex¬
ports in excess of imports, and for

these

in

implications

significant

investment

foreign
lower if

investment

of

strictly

post-war years the share
of government investment and net

many

so

not

In these

in 1937. Finally, the war
starting with ~ 1940, j as a
of reference, and ending

1945.

is

statement

true for 1946 and 1947 conditions.

the years

the production proc¬
need not labor this

Hew funds in

going to show you a few
pic¬
of
investment & funds
for

1929-1937-1940-1946

of

source

war.

grouped according
to the three major kinds of ex¬
perience we have enjoyed
(or
suffered) since 1929. First, five
selected years of different degrees
and kinds of prosperity—the years

we

inexhaustible

depression, and years

of
of

am

ture

per¬

question of
find at

years

selected years,

for

funds for investment,

ess

of

world

normality;

charts which will give you a

consumption,
in the government.

manent

■

There

Government.

Federal

'

no

a

the

In

reasonble

extreme

said that the source of

I have

<

-

This

shows incomes for some few years

on

prosperous

the ratio of total investment

perimental economist. This period

were

in each

that

noted

relatively

em¬

ment

national product is in the
neighborhood of 20%. This figure
of 20% — which leaves 80% of

years.

placed directly in the hands
of consumers. It has an obvious

XX

be

to

business

low,

are

and

job. It is a partnership job,
especially in these days of Euro¬
pean
reconstruction
and
"cold
war." It is important to note that
v/e have in these all-over figures

funds

activity

to gross

/•

over

they

these

years

invest¬

profitable to look at
investment expenditures and
corresponding national pro¬

the

if
is

It
of

truly benevolent

a

war

■;

.

of income

do the

complete, inclu¬

a

will be poor.

will be

It

higher total

is

for

funds

more

Here

spiral.

income and
higher
total
income /leads
to
higher total consumption; and this
result is much more certain than
in

sult

ment.

have

we

good,

which produced
income; more income pro¬
for more consumption and

still

also

/■/

•

business

level

Chicago Stock Exch,

interesting subject, except to
point out that neither private in¬

sive picture of investment funds.
If they are large, business will be

investment goods,

:

investment

of

here

expenditure of these funds for

the

of

investment

only to the
stagnation

of

and idealistic the advocates
of these programs may be.
f:

dustry alone nor government can

depends principally on the level
of investment expenditures, and

production, income, and em¬
ployment came from increased ac¬
cumulation of capital funds and

and

■•'.FFvF;/';'•'
level

The

and

leads

disasters

cere

very

.

pre¬

the

in

en¬

decline—no matter how sin¬

and

ployment in the whole economy.
I cannot take time to go into this

other

the

are

items

years."

in Ameri¬

vast increase

this

dominating

,

,

facilities

and

ment

the

for

purchases
from
the
business
sector, in which military equip¬

saved

were

rough measure of the division
responsibility between private
business and government agencies

of

Government investment in¬

can

the habitual ratio of consumption

tained.

They

the

on

discouragement of capi¬

accumulation

economic

division

this

that

as a

(4) Net foreign investment.

from govern¬

come

deficits.

the

of investment funds may be taken

(3) Inventory changes.

and

is

ratios

these

(2) All types of construction*

works

years

Another interesting point about

heading of private

public

of
war
that
" -'F

and the
and world

intervened.

investment

(1) Producers' durable goods,

cludes

periods,

depression

four

"

inevitable

expenditures,

funds

investment:

production—by individuals
and by business firms. Production
provided its own income-generat¬
ing capital.
■
And I don't want you to forget

production

sults in increased consumption

under the first

of

because

Any program based

two

allowances.

of

idle

tal

are

the

remain

ideas that occurred between these

private invest¬

definition

broad

invest¬

private

depreciation

despite the changes in
economic
and
social

80-20,
political,

kinds of investment I listed in my

out of

investment,

the

expenditures

by

not

did

ment

for

funds

funds

funds. includes

ment

(in current prices)
$784,000,000 *
$7,863,000,000
$18,315,000,000

.

of

investment

This total of gross

Formation

pro¬

income

new

by which
conditions

investment

Private

include

Annual Net Capital

Period

total

ment.

they were over 20 times.
Here is real multiplication of in¬
vestment funds and aggregate in¬
come. These are the figures:

investment-expenditurerelationship, is that one

this

in

the

in

first

of

private in¬
vestment and government invest¬

1946

In

the

made up of two parts:

earlier figure.

10 times this

just

capital funds.

sets

two

will

ab¬

couragement of purchasing power
and
consumption primarily and
directly, and the consequent and

be measured. Note first that

may

the

reference

still

were

lack of investment opportunities

as a

serve

1946-47

29

normal, and it is quite conceivable
that the division between private

figures—that for the

years—will

of

other

the

only $784 million for each year
during the decade 1869-78. In the
decade of the 1920's they averaged

fixed part of

a

of

standard

consumption habits, we learn that
70 years ago expenditures for net
private investment (not including
capital
replacements)
averaged

is

set

prosperous

search, that I referred to jn my
earlier
discussion
of
American

to

but

consumption;

The conditions illustrated by
first

National Bureau of Economic Re¬

expenditures for
if new funds

increase in

an

expenditures

certain

are

j

...

Suppose we look at this record.
From the same researches of the

Expenditures for

for consumption.
investment

needed.

The Prosperous Years

I.

(2661)

industry and government will, in
time, return to the 1929 division

comment

and

briefly.

very

evidence

only

4

them

in

tions

figures that I shall only attempt

point before this audience of men

penditures for investment; and, in
that way, maintain the chain re¬
action necessary for, continuous
income generation.
J
This is one of the important
differences between expenditures

CHRONICLE

FINANCIAL

COMMERCIAL .&

THE

Number 4708

funds
:s

no

of
other road to progress. We
for

absolutely

investment

on

—

D.

of

ORLEANS,

LA.—Walter

Kingston is now sole proprietor

Canal

Kingston,

&

Lamar

Kingston,

D.

Walter

Building.

firm.

Jr., is an associate of the

out

the amount of sav¬

ings we can accumulate. Neither
need we fear that capital funds

N. R. Real Co. in N. Y. C.
N.
from

New
name

R.

Real

offices

York

is
at

City,

doing
79

business

Wall

Street,

under the firm

of N. R. Real Co.

,

.

..j

,

30

THE COMMERCIAL

(2662)

FINANCIAL CHRONICLE

&

Thursday, June 17, 1948
be

Indirect Investments Through

John Doe—Economics oi His

Insurance

Nbw let

us

vestments,

Pay Envelope and Savings
(Continued from page 14)
sistent proportion to income.
As
income goes up, spending goes up,
too.
As, income
goes
down,
spending goes down, m a roughly
similar pattern.
Consumers' Spending versus

ber

different

of

Let us

forces.

all individuals as a see
how John Doe influences the
group, the spending and savings results
and how he in turn is in¬
relationship has been getting back fluenced
by outside forces.
much closer to the prewar situa¬
First of all, I have already
tion. In the first quarter of 1948,
pointed out how John Doe can
individuals saved about 7% and,
increase or reduce the proportion

-spent about 93% of their income
total

a

volume

of

consumers'

tures at

an

annual rate of about

$175. billion.

v

expendi¬
:

.

,

The choices expressed by John
in making his expenditures

Doe

show up in a constantly changing
picture; You have doubtless read
some Of the news articles recently
about the declining trend In sales
of

luxury goods. John Doe is not
going so often into night clubs and
cocktail' lounges.
He is spending
considerably less on alcoholic bev¬
erages this year than last year.
The Federal tax collection figures

case

of U. S. Government

of his income after taxes which is

spent

goes

or

He

into savings.

do this within certain limits,,
but collectively, he is also very
much influenced by ext ern a 1
can

events.

Thus, if the government

is running at a large deficit as
the

in

years, the savings figure
will have to be higher.
This is
war

extra

because
out from

will

income

flow

the government spend¬

ing, but the supply of 'civilian
goods will not increase corre¬
spondingly, so the people will
have to save more.
You saw it

which about two-thirds

are

sav¬

during the

war

In the

K

of food, John Doe

case

is .getting more and better food
than before the war. He is eating

meat,

more

more

chickens

and

the widest latitude.

He

may save

by putting money into direct in¬
vestments like government secur¬
ities or corporate securities.
Or

more

he may save by placing funds in

packaged fruits

and "vegetables.
It Is true that he doesn't like the

insurance—either in private com¬

high prices, but he is responsible

surance.

/turkeys,

more

eggs

and

panies

government types of in¬
may save in the

or

Also, he

for them- by insisting -on buying; form of hank deposits of; various
these better" quality foods now kinds and even currency. Finally,
that his income is higher. In other he may also save by making pay¬

words, John Doe has bid up the
prices of these foods. He doesn't
literally bid against his neighbor
for a pound of pork chops in the
style of an auction, but he gets
the' same: effect as he goes into;
the grocery store and tries to con¬
vert his greater income into a

ments
the

on

debts—although this

other

way

around

when individuals

curred

debt

will have

as

balance.

net

on

to

a

be

was

last year
group in¬

brief

I

skim

and

little

than $1 billion of new

more

corporate issues or about onefouth of the new capital raised by
corporations. In these direct puras

contrasted with

ties

taken up by

insurance

com¬

.6

:

—>'

,4

■ ~

3.1

■

Corporate Securities

1:2

Subtotal

.

(leading to direct investments

/"

.1.8

Government

1.3

.'.7 /./,/

Commercial Banks:

;

//// ;

Demand Deposits
Time Deposits
Savings Banks
Postal Savings
Savings and Loan Associations
Currency

IS

•

■§

'

*4

/'•:

.

;

/

.1

il- h;
.2

.8

•

■

62

corporate securities annually ab¬
sorbed upwards of dne^fourth ofnew

occurred over the war years

and;

by the impact -of Federal income
taxes.
A large proportion of bur
savings today is being made; by
the many millions of persons-in
what we may call the moderate
Increases

brackets.

iri

,4

porate

issues

have

less

money,

while the people with more money
♦Gross Total New

Sources:

Liquid :Savings..__.._»

SEC, and Board of Governors

>6.2

15.7

of the Federal Reserve

System.
♦The gross total for new liquid
savings reconciles with the SEC
figure on net liquid savings if an allowance is made for the net
increase in debt outstanding on the part of individuals.




reserves to take

of the expansion.

,,

1

,

It is usually takrin for granted
that the sequence of events here
•

•

is

(1)

an

bank

increase in commercial

loans, (2)-

corresponding

a

increase in deposits and (3) the
absorption of the new deposits shy

riCwsayings./
; I wonder 'whether this is a log¬
ical sequence.
I am Inclined to
believe that John Doe might have
been more active than passive in

primary reasor
why three-fourths of the new
money raised by corporations las;
year came from bonds.
Here,

;

we see an

important

con¬

tendency
in the form Ot life insur¬
ance; New corporate capital must
come from life insurance compa¬
nies to a much larger extent and
such new capital tends to be pro¬
vided
largely / through
bonds
Accordingly, there is a decrease
in the proportion of corporate fi¬
nancing represented by equity
capital, even .though the corpo¬
rations themselves would prefer
sequence oi tne growing

to

to

.save

volume

the

reduce

of

bonds

sold and to increase the volume of
stocks.,,.

preferred

wanted, to..

They had large

;

ac¬

cumulations in deposits on .hand

they

and

were

making heavy new

savings from income.

But the two

groups were pot able to get to¬
gether.
The conflicting desires
had to be bridged by the banks, !
It was in this way, then, that
John Doe exercised

fluence

deposits arid loans.

consciously

arid

little

heavy .In¬

a

commercial

over

bank

He did it

there

un¬

cer¬
that this

was

awareness

the ease..-

'

,

have overdone the
here. - My purpose is

Perhaps

to John Doe's

come

on

might have

^ .»Vj

corpo¬

get the money from individuals,
arid / primarily in the
form
of
e
q u i t y securities.
Individuals
could have complied if thgy had

tainly

we

to meet the

Through all of this, the
rations

Deposits

Now,

loans

related rieed ol borrowers.

was

Indirect Savings Through Bank

influence

increase in

an

This is the

the banking business

As you know,

accoumulated

salaries have brought,
many more families into this im¬
3.2
portant group.
Yet these people
are usually not inclined ;to invest
their savings" in corporate securi¬
ties. ■"
V;;'i
Generally, people In the Upper
1.4
income groups are more Inclined
1.3
to buy corporate securities.- But
.3
these people are saving, far, less,
••"»T
today because of the impact* of1.2
high Federal income taxes; So

11.1

stocks.

form

the people who would buy corn
Subtotal

adequate barik

that there

.

necessity be rough, it appears that

wages and

.

,

..' Private1
Banking:

are

care

bank

corresponding amount.

a

course, assumes

.

the figures for. the .1920-s must of

income

by others):

banks

effect M

I

argument

only to show that John Doe -in¬
fluenced the

course

events in

of

the volume of bank
panies.
:
'
"
banking even though he did «dt
deposits held by individuals has
fit The
situation last year < was
realize it.
In the final analysis,
gone-up sharply" since before the
the volume of commercial barik
sharply different from that in the war. individuals
today own about
latter part of the X920ts. At thatloans and deposits was the product
$50 billion in checking accounts
of a number of forces pulling fei
time, individuals also invested on
$3$. billion in time deposits ir
the average only a little over
different directions,
John Doe
coriimericial/banks and about $1T
billion a year iri corporate .securi¬
warited to save in certain forms.
billion of deposits in mutual sav¬
ties. However, it should be noted
Corporations
warited p to
raise
that this was a much larger pro¬ ings banks.;
money for expansion.
The >ero«Last year;, individuals continued mercial banks wanted to
portion of total new savings than
provide
it represented last year; Although to, save additional, amounts in the credit to their customers in order

f

-•V

the

as

a

concentration

a

in bonds in the case of the securi¬

,

Insurance:

This, of

form of life insurance has created

Chases, individuals took: all stocks

individuals*

U. S. Government Securities.
State and Local Government ^Securities

individuals

commercial

this picture. Look at it this
way:
This pool of funds has become
If Johp Doe wanted to save $2%
major source of mortgage money
billion in the form oi commercial
rind corporate capital... Last year/
a
pleasure to note that .cash-ins in fact, the life insurance com- bank deposits, what would hap¬
pen?
( 1) Corporations could not
have been relatively small and primes
provided corporations witli
sell securities to individuals to
that the total volume of savings aboiit
$314 billion of" new fund si
absorb those ne.w; sayings. : (2) f
bonds outstanding has continued or about: three-fourths of the new
They would have to borrow froqi
to increase.
John Doe has shown
capital
raised
by
corporations
commercial banks as an alterna¬
his usual good sense by holding
from new securities.
Practically
tive source of funds.
on to his savings bonds and by
(3) The
all the securities, of course, took
banks would be the passive elefbuying more of them an a rather the form of bonds.
The life in¬
steady basis since the Victory surance company pool of capital ment in providing a simultaneous
increase in deposits to meet the
Loan.■;/■;/:.
x. -f.";//'////
is confined mostly to bonds anc
demand on the part of savers and
This is an example of how John some
of the. bet t e t preferred
amounts and " that it
mistake to give them bonds
redeemable upon demand.
It is

savings in. the
over some
of the figures pretty
latter part of the Twenties; .as
quickly. For those who are in¬
compared with less fhanvJfr%; of:
terested
in
more
details,
see
higher quality food basket; >
Table I.
*9a
y: gross new liquid savings last year;
Perhaps corporations can per¬
suade John Doe to buy more
///■:
TABLE
stocks directly himself in the fu-i
Liquid Savings Made hy Individuals
ture. The problem is cornplicatedv
(Billions of Dollars)
however, by the change In; the;
Direct Investments:
1940
1947 distribution of income wMch hris

Institntional Savings

credit of

by

tremendous

was a

iSS?

Individualsare
pre-1 mo^e because the goods produced
go to businesses rather than con¬

pattern.
More money is
sumers. v.v.';- •., v •
'
again
going
into automobiles,
Types of Savings
tires and tubes, parts and acces¬
Now we come to the matter of
sories and, of course/ gasoline and
oil, than was the case during the what form new savings are. to
take.
war.
■••...
Here, John Doe exercises
v
*

saving

in

be taken

iricrease iri commercial

an

of the most

for

be

ings bonds. During the war, you a tremendous pool of capital. The,
life insurance industry today has
remember, it was widely pre
dieted that savings bond holdings assets of over $50 billion.
This
would collapse with the end of bdjaprires with only $1% billion at
hostilities. It was said that people the turn of the century and $6*4
would redeem savings bonds ^irr billion at the end of World War I,

war

has'*}

with the

one

to

come

year

would

may

Doe exercises an economic policy
when the extra of his own.
By increasing his
income of the people, in contrast holdings of savings bonds, John
show this trend very clearly. He
with the limited supply of avail¬ Doe has helped the Treasury to
is also buying less furs arid less
able goods, resulted in the great¬ reduce the volume of its securities
jewelry arid is spending less est
volume of savings in our his¬ held by commercial banks.
This
money on amusements generally.
tory.
On the other hand, if the has been an important aid to the
In the case of clothes, John Doe
government is running at a sur¬ Treasury in the fine debt manage¬
is tending to shift from higherWhich
has
been
plus, such as the $6 billion surplus ment' record
priced goods with a relatively
of the first quarter of this calen¬ achieved since the end of the war.
high mark-up to lower-priced
dar year, savings are bound to go
John Doe does not tend to pur¬
goods with a smaller mark-up.
chase many corporate securities.
down.
This shows up in an increase in
The total amount of savings by He seems to prefer government
/basement store sales in contrast
individuals is also influenced, of bonds since he has so little expe¬
to the main store sales of depart¬
rience with the corporate issues
course; by the actions of business
ment stores.
'and they are not generally'avail¬
On b a la n ce, John Doe
able in small denominations. Last
shifted a larger part of his spend- i ?
^5 <>utput
ing back into the automobile
pushed into saving year, individuals took up only a
group more in line

This has

insurance;

last

hie

with

important vehicles
John Doe.
Most
bonds, John Doe has been wilLng families carry some kind of life
insurance and 'they try to keep it
great deal about the money ana to undertake a huge volume ol
liquid assets held by the commun¬ direct investment. Last year, in¬ going even in bad times. - Last
ity.
Our economic system is a dividuals invested more than $3 year; individuals saved about $3%
complex one and the volume of billion net in government bonds; billion4 net iri life insurance com¬
new savings each year is deter¬
and, today, they own a total of $87 panies.
\
•
The growth of savings in the
mined by a compromise of a num¬ billion of government bonds, of
In the

When it comes to savings, we
find that John Doe determines a

Taking

That meant

turn to indirect in¬

beginning

in deposits of

crease

-

Savings

rafter taxes.

,

increase of $1 in: deposits.

an

Accordingly, the "$2% 4nil±on in¬

Companies

don't buy corporates.

while, there is
away

a

And, mean-,

general trend

from direct investment by

individuals toward 'What weimay
call the Institutionalization of in¬
vestment.

■,

.

of v bank'

deposits. ' They
$1.4 billion ii^ de¬
mand deposits and $1.3 billibn ir
•

help conduct their business «o®i
profitable basis.
The govem-

to
a

risent/wanted to restrainbank
s,: in commercial credit because of its inflationary
banks,// $9Q0 million was placed irriplications. A11 of those forces

li.pi'q/vU'.'c.pVo

juwiayingabrii^/ahb $100 millipri
in. / postal savings; accounts,

total,of, $1.2 billion was placed in1

savings,

loan I ■ associations

and::

Holdings, of Currency went down
about,$400: million.;; Now, it may

be;/argued
some
are.

'as

.lo how permanent

these

of

forms

In many cases,

of saving?

pullirig rind, tugging and my

Were

idea is that John Doe was a very

iriiportant

His voice
he east as

decision to accumu¬
savings in the
deposits in commercial
'
"
/'
•/

he made the
late

some

form

of

banks.

acr

of, his

-

the funds may

hav^been only iemporarily

element.

■

heard by the vote

was

Savings In Currency

.

/:

cumulated

Now, let me turn to currency.
ing ?them at -a .later 4ate.; How-, John Doe's influence is more ob¬
vious in this case, v the volume;
ever, for the country as a whole,
sdeh* ; temporary V accuiriiilations -of currency outstanding is deter¬
must'fecounted as savings made mined by the demand. The people
in4i<juid^ form just like any other ask the banks for the supply of
savingsf"; We can no longer be currency they wish to use. / The
sure^tfeat savings in currency or bariks in turu vget it ifrom the
demand -deposits are less perma*. Federal Reserve v Banks. / John
nent than savings ini time deposit?" Doe's voice is supreme./
^ ^
^ ,
or

even

matter.

dn

savings bonds for thai
-

*

i

,

»\

,/

■

.

.

»

The-'total

v

volume of

.

curremgr

has multiplied over
three times since before the war

outstanding

; ; Let us stop lor a minute to con¬
sider the significance of the inf. to a level pf about ,$25 billion out¬
side banks today.
The increase
crease of $2% billion in individ¬
uals' deposits in commercial bariks duling the war years was about

last

Thecustomary ap-,
1 a b el them a?,
inflationary, or, at lCast as ?
symptom of inflation.
That is
commercial, bank deposits are sup¬
posed to represent a kind of
barometer \of the contribution of
brink credit to inflation.. The idea
is that if commercial banks, inr
crease their loans and Investments
year.

proach

is

to

$5

billion

After V-J
slackened off

per. year.

the increase

pay,

last year there has
small decline.
/

over the

and

been

a

The
years

growth during the war
seemed to Proceed at "jat:

pretty constant ratio in -relation
to the growth, of liquid assets gen¬
erally. Viewed in prespective in
relation to total liquid assets, tbe
volume of currency outstanding
.

bv $1 for example, the opposite •
jtewi" on the balance sheet *of the does-not seerii significantly- out 'of
John Doe has merely said
commercial banking system will line.
"

:
■■

,'C-v

;

Volume

this week following a three-cent
The advance reflected tightness in the sup¬
ply position and marked strength in primary markets.

cocoa

Jthat he prefers to have more cur¬
now

->!

'sugar bowl up in the cupboard a
little more fully packed with fold¬

ing

for future needs.

money

improvement in

demand for the refined

K.

are

foreign scrap seems to

The controversy over

,

,

somewhat firmer, reflecting
product. f

Raw sugar was

(Continued from page 5)

underway we might as well be at war as far as
availability of. steel is concerned, "The Iron Age" points out.

program

prices rose another two cents

gain the previous week.

The Stade of Trade and Industry

that he can afford it.
The growth in his liquid wealth
has permitted him to carry/around
a
fatter wallet and to keep the
rency

(2663) .31

& FINANCIAL CHRONICLE

COMMERCIAL

THE

Number 4708

167

r'

in the Chicago primary market and
with -choice heifers selling at $35 per
hundred-weight, the highest in five months. Lard prices, however,
Hog prices turned higher
cattle prices continued to rise

involve some mud¬

li
e!

not anxious to have scrap
,
,
hauled over here from Europe—only to turn around and ship fin¬ trended slightly easier. ,■
; increase in currency has occurred
Trading interest in domestic cotton markets was relatively slow
because of black market opera¬ ished steel abroad under the ERP. Their thinking on this problem
during the past week.
•
tions and -tax evasion,
ft is my is cold logic: (1) let Germany make steel for rehabilitation with what
Prices were irregular and trended toward lower levels, under
opinion, however, that such illegal scrap she has; (2) if there is still scrap left, let German interests sell
the influence of favorable weather in the cotton belt and un¬
activities account for only a small it to other European nations, and (3) if there is still some left, let it
be shipped to the U. S.
certainty surrounding credit allocations to European countries
jpart of the currency growth, with
In other parts of the world scrap is scattered far and wide.
To
by the Economic Co-operation Administration.
the major explanation lying in the
Another depressing factor was the possibility of a much larger
-simple fact that John Doe is bet¬ get it together and to prepare it would cost too much by the time it
ter off financially today and that was delivered to this country, the trade paper concludes.
cotton crop being produced this year. Progress of the new crop was
The American Iron and Steel Institute announced on Monday
he has chosen to hold more cur¬
reported good, especially in the southeastern area. Steadiness in
?
of this week the operating rate of steel companies having 94%
rency as part of his total liquid
early dealings was attributed to fairly active mill demand and priceassets.
'
[ of the steel-making capacity of the industry will be 96.0% of cafixing against sales of the staple to Japan. New export inquiries were
pacity for the week beginning June 14, 1948, a decrease of 0.1
slow. Sales of cotton in the 10 spot southern markets were reported
•v
Effect of Savings on Bank
point, or 0.1 %, from last week. A month ago the indicated rate
at 37,500 bales for the week, against 38,000 in the preceding week and
\
Reserves
was 95.4%.
J
33,300 in the corresponding week a year ago. Carded gray cotton
This week's operating rate Is equivalent to 1,730,400 tons of
■:v As you know, the changes
cloth markets .continued slow. Inquiries picked up somewhat but
Which occur in the outstanding \ steel ingots and castings as against 1,732,200 tons last week,
bid prices continued to be ^under current market quotations.
volume of deposits and currency j; 1,719,600 tons a month ago, 1,676,400 tons, ,or 95.8% of the old
;
Print cloths declined further and some sheetings dropped
have heavy repercussions oh the
capacity one year ago and 1,281,210 tons for the average week
below former OPA price levels.
j
reserves
of the

d

i

•

thinking.

dled

.It is true also that some of the

Some steel leaders are

.

-

1

'

-

banking

For

when

example,

the form of

in

Saves

account,

John

in

Loadings for the week ended June 5,

re¬

are

"7

7''',.7

:•

•

•

V"

icars,

or

-'

8.8% below the corresponding
decrease of 8,915 cars, or 1.1 %

Savings in the form of currency resent a
an even more drastic effect
on
bank
reserves.
When John ELECTRIC

have

Doe takes out

one

dollar of

8.8% UNDER 1947

1948, totaled 821,213 cars,

according to the Association of American Railroads. This was
crease of 83,635 cars, or 9.2% below the preceding week and

on

to 20%.

9.2% FOR WEEK AND

July and August delivery.
/
• Activity in the Boston wool market
following the substantial buying of the

ji

3, 1948.

effect June

RECOVERS FROM HOLIDAY

PRODUCTION

continued on a broad scale
past several weeks.

Much of the activity was prompted by the announcement
79,534
week in 1947. They also rep¬ 7 by the Department of Agriculture that there would be a new
below the same week In 1946.
schedule of selling prices for all shorn wools, which went into

CLOSINGS—HIGHEST SINCE WEEK ENDED

;

l

cur¬

a de¬

in sales for

goods showed some pick-up

Heavy industrial gray
CAR LOADINGS OFF

the part of the commer¬
cial banks—at an average of close

quired

1940, the highest prewar year.

Doe

checking

a

reserves

new

system.

MARCH 20

markets indicated continued firm¬

from foreign wool

Reports

ness in
prices with continental interests said to be the principal
The amount of electrical energy distributed by the electric light
the banks lose that entire
buyers.
dollar as part of their reserves. It and power industry for the week ended June 12 was 5,131,811,000
has approximately the same effect ikwh., according to the Edison Electric Institute. This was an increase RETAIL AND WHOLESALE TRADE SHOWS MODERATE
on
commercial banks as if one of 286,353,000 kwh. over the .output in the preceding week which
ADVANCES FOR WEEK AND YEAR AGO
dollar
of
gold
were
exported. included observance of Memorial Day, and was the highest produc¬
There was a slight increase in consumer buying during the
This
causes
a
whole chain of tion reported since that for the week ended March 20, 1948, when
past week.
While retail dollar volume was moderately above that
events, including the necessity of '5,145,430,000 kwh. were turned .out. It was also 429,819,000 kwh., or of the
corresponding week a year ago, unit volume in some lines
action by
the Federal Reserve <9.1%, higher than the figure reported for the week ended June 14, was below the 1947 level, states Dun & Bradstreet, Inc., in its cur¬
System to take appropriate steps 1947, and was 1,101,753,000 kwh. in excess of the output reported rent
survey of trade.
to restore bank reserves.
During for the corresponding period two years ago. V'%
Practically all types of seasonal merchandise sold well with
the war period, the increase of $20
the advent of graduations and weddings increasing the demand
AUTO OUTPUT REACHES HIGHEST WEEKLY TOTAL SINCE
billion in currency outstanding
for suitable gifts.
MID-MARCH , ,%V" ■%;. >;
was responsible for a very large
Instalment and credit buying continued to increase.
Col¬
0..
: -v
part of the Federal Reserve pur¬
Production of cars and trucks in £he, United States and ^Canada
lections were prompt, but were slightly slower than a year ago.
chases of government securities in .advanced to the highest weekly total since .mid-March last week as a
the market.
These purchases pro¬ result of resumption of work at Chrysler plants. Output was esti¬
Summer clothing and sportswear continued to be very popular
vided corresponding reserves ' to mated at 110,688 units from 75,607 (revised) units the previous week
with increased demand for work clothing and shoes in some areas.
the banks, % I mention this be¬ according to "Ward's Automotive Reports."
Graduation, formal and bridal gowns were sought. There was a
cause it is a
nice illustration of
brisk demand for watches, rings and some other types of jewelry.
Output a year ago was 97,943 units and, in the like week of 1941
how
John
Doe's economic be¬ it was 134,682 units.
Promotional sales of men's clothing emphasized Father's Day and

rency,

'■■■•

.

t

consisted of 78,333 cars and 26,585 trucks
made in the United States and 3,530 cars and 2,240 trucks made in
Canada;%f
4^
%: % ■; - ■
; '1%.?
^5

fiscal and
monetary authorities into appro¬
pushes

havior

priate .action.
'V- '•*,

-.

•

BUSINESS FAILURES ADVANCE IN

'Conclusion

1

week's output

10, commercial and indus¬
week's 91, reports Dun
,& Bradstreet, Inc. They were almost twice as numerous as in the
I believe that John
Doe is ;comparable week of 1947 when <66 succumbed and almost 10 times
the 12 occurring in 1946. In terms of prewar mortality, however,
likely to continue the policy of
casualties remained low, claiming about one-half as many as in the
turning his savings over to finan¬
trial failures rose to 110

this story one step further
and consider the future.
carry

•

institutions and

cial

week of 1939.

*

_

Most of the week's increase

in-,

than

rather

primarily

ment

same

the govern¬

>

,

.

occurred among failures

involv¬

ing liabilities of $5,000 or more, totaling 92 against 77 a week ago
and 57 last year.
Small failures with losses under $5,000 rose

vesting heavily in corporate se¬
curities.
Two main problems will
therefore remain with us.
The

to continue since
of

trate
.

bonds.

on

The

<.

implications

the

creases

V

-

s.'

problem .concerns

second

There will
apprehension over

certainly

be

increase in bank credit which
occurs even though it may stem

any

to

large extent from the desire
Doe to save in form of

a

of John

The fiscal and monetary

deposits.

18, twice

as

heavy as a year ago when

may

be

try fto counteract
though oersonally

get

our

preting

signals mixed in inter¬
the statistics which go

with this act.
Gf
lemS
could

be

I have just

alleviated

change

only

would

f

both of these nrob-

course,

that

%

mentioned

if John

his

level

was

stantially in this direction.
•„

£<

J

i

iiv ;

if'*' ... -P.*

»»•.-/

S

vr

f i

t

}

■

rt

'7




,

steadily sought, the

t

in

demand. ;
Sporting goods volume

large

7

not as sharp as the retailers.

the Middle Atlantic States where
against 25 in the previous week and 27 a year ago.

Mortality was heaviest in
concerns

failed

.

were

.

■

numerous

like date
;

Doe

a year

ago.

of strength, wheat and other grains
as the
result of selling prompted
largely by the threatened cut in foreign aid funds.
Other bearish influences included the

in spring wheat areas

receipt of beneficial rains

the corn belt,
in European crop

in the Northwest and in parts of

advices from abroad indicating improvement

be

and South 3 to 7.
The

England 5 to 9, East and Middle

volume

of

V;>%'V:'';.:7

?'.v 7

West

to 14 and Pacific Coast

Northwest 6 to 10, Southwest 10
,

'

re-orders for seasonal

.

merchandise remained

large and many retailers increased their purchasing of some
types of goods for fall promotions.
The total dollar volume of
wholesale .trade increased slightly during the week and was some¬
what above that of the corresponding week a year ago.
Buyer
attendance at some of the wholesale centers increased substantially.
very

remained selective and were cautious in placing com¬
.'V7v'.'I"'.77Cy 7777'7 %/7%'1
•,

Most buyers
mitments.

77 Department store sales on a country-wide basis, as taken from
Board's index for the week ended June 5,1948,

the Federal Reserve

the like period of last year. This compared
(revised) in the preceding week. For the
weeks ended June 5, 1948, sales increased by 7% and for the
to date by 7%.
'

decreased by *4% from
with
four
year

an

increase of 19%

Cool and rainy weather
and resulted in little or no

store sales from that

week
department
in the similar week of 1948.

obtained in New York the past
change in the volume of

recorded

According to the Federal Reserve Board's index, department
store sales in New York City for the weekly period to June 5, 1948,
decreased *8% below the same period last year. This eompared with
an

increase of 24% in

June 5,

four weeks ended
7% and for the year to date by 5%.

the preceding week. For the

1948, sales increased by

comparisons for the weeks ending June 5
should be made for the fact that in regions
observing the Memorial Day holiday store -closings this year occurred
in the week ending June 5 whereas last year they occurred in the
expanding. New bookings in the domestic flour market continued
previous week. >
*
'
r
slow up but an increase in shipping directions was noted; Spot

prospects. Wheat purchases by the CCC during the first week of June
continued at the brisk pace set in May.
Movement of new winter wheat in the Southwest was said to
to

7

move

"
After an early display
suffered substantial losses

and

4 to 8,

SHARPEST RISE IN NINE

in a narrow range, the daily wholesale com¬
modity price index compiled by Dun & Bradstreet, Inc., closed at
286.25 on June 8, compared with 285.53 on June 1, and 256.76 on the
Continuing to

lowing percentages: New

36

MONTHS
While grains trended lower last week, a continued rise in other
staple foods resulted in a sharp uplift in the Dun & Bradstreet whole¬
sale food price index.
The latest figure rose 14 cents to $7.11 on
June 8, from $6.97 a week ago, .or an increase of 2.0%. This rep re-,
sented the sharpest weekly advance since the 31-cent rise registered
in the week of Sept. 9, last year. The current index level is 16.2%

FOOD PRICE INDEX SCORES

He

deposits; this, in turn, would re¬
duce the expansion of bank credit.
But I venture to say that it w'T1
be a difficult task to nersuade
John Doe to shift his savings sub¬

were

■

policies.

could solve the eauitv problem
by buying more corporate stocks
and bv saving less in the form ,of

meats

promotional and clearance sales of furniture encour¬
aged consumer buying with living-room suites among the more
frequently requested items.
Luggage, linens and china were also

only nine were

expected .to
the trend, al¬
I hope that above the $6.12 for the like date a year ago.
1
Last week's sharp uptrend reflected higher prices for oats, beef,
they will not be influenced too
much by the banking statistics
hams, lard, butter, cottonseed oil, cocoa, rice, beans, raisins, steers,
per se. After all, it is deflation¬ hogs and lambs. Declines occurred in flour, wheat, corn, rye, barley
and potatoes.
ary when Joe Doe saves, even if
1
"7 ■.
he prefers save in the form of
COMMODITY PRICE INDEX HOLDS TO A NARROW RANGE
v
bank deposits.
We don't want to

authorities

frozen

Special

level.There

in¬

further

of

in bank credit.

and

canned

decline in total food volume but the
remained at a very high level.

buying of fresh meats decreased somewhat.
In some areas sand¬
wich spreads and picnic items were in large demand.
Beer and
soft drinks it was noted continued to sell well.
Both fresh and
frozen fruits and vegetables were heavily purchased, demand for
canned foods was moderate.
%
;

v

capital may be expected
institutions will
necessity tend more to concen¬

equity

slight

a

7v
remained above the corresponding 1947
requests for garden supplies and
;;g reported.
'7^-7:
equipment, while paints, hardware and building supplies also sold
>
Retailing with 40 and manufacturing with 39 accounted for a well.
7; 7^7y:%;v,>-'v.:.,71',%.. 7
• V"■.
major portiop of the total failures. In retail trade, mortality re¬
^ Retail volume for the country in the period ended Wednes¬
mained the same as in the preceding week but doubled the 20 a year
day of last week was estimated to be from 5 to 9% above that
ago.
Manufacturers failing, on the other hand, increased consider¬
of the corresponding week a year ago.
ably from the preceding week's 21 although their rise from the 1947
Regional estimates exceeded those of a year ago by the fol¬
from 14 to

first problem concerns equity cap¬
ital.
The
relative shortage of

was

for most foods

While

v.-

considerable at¬

,

There

from the preceding

men's wear attracted
7,'-

of

.

demand

Rebounding in the week ending June

I would like to

conclusion,

In

tention.

POST-HOLIDAY WEEK

sales

mark-down

some

•' ••. V,. v.' Vv-•& 7

•>■" .*1

j*

This

our ■

*In

using year ago

and May 29 allowance

'-V

COMMERCIAL

THE

'(2664)

32

FINANCIAL CHRONICLE

&

duction of

was roundly criticized for not
using the powers the Board al¬
Mr. Eccles and his
ministrative changes in our mone¬ ready had.
tary standards in the 30's further experts knew full well the powers
they had, but they also knew that
complicated the problem confront¬
ing the bankers of the country. happened when drastic credit con¬

Cooperation
Administration
expenditures
of
and increased
be pointed out that some $7 billion;

Federally chartered, and in many
cases
Federally subsidized, com¬

likewise,

petition,

added

the

to

burden of the commercial banker.
And now, as

if the others were
not enough, our world-wide relief
policy adds a further direct com¬
plication to the already heavy
problem of being a banker. When
Washington buys to put the world
back on its feet, it directly affects
the welfare of your depositors. By
the

token

same

when Washington

stops buying, the welfare of your

trol

measures were

1920.

undertaken in

Fortunately for all of us,

should

It

he

there

armament

of
administration
circles on the whole problem of
credit control.
As you will re¬
call, after Mr. Eccles' testimony
before
the
Joint
Congressional
differences

strong

are

opinion

$3

within

Committee

Economic

the

on

how

ings,

of the various methods
they could use, and refused to re¬
peat the meat-ax methods of 1920.
Drastic use of the open market
and discount method of fighting

quoted

admit

country

inflation advocated by so many

is

dangerous as it might cause such
the

in

break

a

Administration

the

not

was

and

price of govern¬

and

and capital

equipment to the coun¬
suffering from economic dis¬
organization. Of course, we had
tries

more

than

our

share of economists

and

experts who said it couldn't
be done.
They insisted that our
huge debt of one-quarter of a
trillion dollars would make effec¬
tive

credit

control

measures

im¬

would

,

find

no

Increased

expenditures for re¬
European relief

and

and

decreased

of the

the

force

revenues

because

income tax reduction

thorities

Federal
to

Reserve

change

their

Let
may

credit

restriction
policies.
However,
please note that as long as there is
a Treasury cash surplus available

and

at

the

time

same

keep

the

of

long-term government
bonds above par.
For example,

from the beginning of the heavy
sales,of government bonds in Oc¬
tober, 1947 to April 1, 1948, the

Feder&l

Reserve

Bank

reduced

their total holdings of government

obligations

by $2.9
billion al¬
they bought almost $5
long-term government
during the same period. True,
they were able to do this largely
through the Treasury utilization
of the surplus in its cash budget
for selective redemption, but they
had others
powers
which they
could have used if they had been
though
billion

of

r

forced to do
Credit

so.

Restrictions in

1920

As you will observe, this is not
the classic method of credit re¬

striction

through

open

market

the

Federal

short-term

Reserve

obligations,

method

was

used

by the monetary

authorities in 1920 and it stopped
the inflation all right; in
fact, it
almost stopped the country.
v

\

have

they

can

sell them in the market and sup¬

port the long-term issues through
purchases as it really makes no
difference

whether

they hold
long or short maturities.
They
now
have
some
$15 billion of
short-term obligations which they
can
use for "swapping"
as long
as bankers are willing to be "out¬
swapped."
Of course, this ex¬
changing does not reduce the
credit base but it does support the

long-term government bond

own

so

that

we

can

without increasing the credit
base.
The successful use of these

to human¬

,

there were many indications
long-delayed business re¬
adjustment
was
getting
under
way, since then, new forces of in¬
flation have taken such an import

year

that the

position

that most

expect

in ; the' economic
people now seem
more or less indefi¬

a

levels..

/

>!

most

site.

economists claim the
'

■

V;y\

oppo¬

production

some

way

cutbacks

centers.

and

,

Men's

clothing inventories are
higher than any time since before

the

war

sistance

out and

and

consumer

has

become

result

mated

that

a

price re¬
problem.

down with

are

there

is

esti¬

an

over-all

drop of 20% in
unit purchases from manufacturers
compared with last year, with the

"Why should we worry about
The government did it."
The
is
that
bank
deposits in¬

creased $9 billion in the last half

unbranded,

of

bearing the brunt of the decline.

1947

alone,

had

the

and

little

to

<

What Federal Reserve Can Do

Well, what if the foregoing two
are not
enough to keep
things in line?
•
methods
In

the absence of

new

legisla¬

cated that he does not expect any

during the present session of the
Congress — Federal Reserve au¬
thorities

do

govern¬
with that!

The

.

marginal

weakest

link

in

producer
eco¬

our

any

the

ones

the

loan

is

make

it;

about

a

you

loan

don't

reserve

require¬

when

really

ing

know

it

are

greatest infla¬
tionary pressure has been the un¬
precedented level of capital and
consumption
spending.
Heavy
course,

capital

the

expenditures

boom

last

Fall

and

was

causes

one

of

reserve

of

our

breaks out.

as I am convinced that the
"boys" in the Kremlin have their
hands full without tackling us.) ■»''

war,

Here, in brief, are a few of my
for believing that the new

reasons

spendings
much

more

will not cause very
general inflation:

-

goods

prices

Although
prices

are

Furthermore/the law in¬

goods.

structs the Administrator to

the

duct

program

con¬

and direct the

expenditures in such a way that
the American economy will not
be

unduly disturbed.

Imports must not be over¬

(4)

If the Economic Cooper¬

looked.

ation Administration succeeds, we

than
during the years of
Also, Japan and India,

should have imports of more

billion

$30
the

plan.
well

as

the rest of the world,

as

getting back into production.
As I have often pointed out, goods,
are the real antidote to inflation
and it looks as if we are going to
are

have

lot of antidote!

a

study by the Federal
of Chicago shows-

recent

A

Bank

Reserve

credit, higher prices and

tighter

consumer

have

resistance

the

financial

ened

mid-Western

many

in

Whereas

1944

amounted to 22%
securities

were

weak—:

position

ot

companies..

and

1945

casli

and marketable-

22% of current as¬

sets, last year the cash dropped to*
20% and the securities to 12%. Im
the

same

from

28

period, inventories rose36% and receivables;

to

from 28 to 32% of current as¬

rose

sets, with collections slowing up;:
In conclusion, may I say that it
seems
to me that business and

Such a distortion of prices are at, or very near, a mod¬
price structure cannot be ex¬ erate downward turn in the busi¬

The

present

world

outlook

is

ness

for

a

cycle.

In my opinion, now
for adverse

is the time to prepare

food

crop in 1948, which developments.
They
say
"you
prices, but most par¬ can't have your cake and eat it,
ticularly agricultural prices. This loo!" but bankers can do that very
will adversely affect farm income thing.
By cleaning house now

will affect all

which,

and setting up

and

you

thanks to bumper crops
high prices, reached an un¬

precedented level of $30.5 billion

ments
peace

$9 billion annual income in

if I

year

before the

war.

significant to bankers
farm

a

good

Even more
was

the net

income, after interest and
of $18 billion last year,

wages,

which is in

sharp contrast to the

$4 billion left in
year.

a

normal prewar

past

of mind. On the other hand,
wrong, and contrary to all

am

experience,

trived
at

adequate reserve®,

face adverse develop*with equanimity and real

can

last year, compared with less than

1

must be added tax re¬

product

pected to last much longer.

cities

pressures

sharply or a shooting war
(And I do not expect

crease

200% higher.

In

Chicago and New York from

securities, particular level!

farm

way

only some 80% above the 1939
level, the prices received by farm¬
ers
for farm products are nearly

of the

Winter.

that

headed downward.

manufactured

fact, capital expenditures for new
plants, machinery and inventory
since V-J Day are estimated at
22% to 26%.
(2) Continue the public cam¬ nearly $70 billion as compared
of the disastrous effect of the 1920
paign against inflationary and with an average annual rate of
break on business, may I
point out speculative credit extension, im¬ some $10 billion before the war.
that
total
corporate
profits plementing it with direct pressure Consumer expenditures have been
dropped from $6,419 billion in from the examiners and
super¬ running at the unprecedented, yes,
1919 to a deficit of
$55 million in visory officials.
fantastic, level of some $170 bil¬
Consumer credit has
(3) Withdraw their support lion a year.
Last year, when Mr.
Eccles, on from the government bond mar¬ reached a new peak of $13.4 bil¬
behalf of the Board of Governors ket.
While it is unthinkable that lion.
And, as for mortgage lend¬
of the Federal Reserve
System, they would do this under present- ing, the least said the better!
requested additional powers to conditions and
outlook, as you Surely, with figures such ds these,
control
the
growing
inflation, well know, there is no law which we are getting to the "bottom of
particularly the authority to re¬ requires them to maintain the the barrel!"
quire the banks to hold special price of
government bonds at any
Now, to these basic inflation
ments in the central

machines showi the

off!.' .v/:. admits
Of

I.:

the
wind is blowing.. Even the United
States Department of Agriculture

you

loan until you charge

War

Widely advertised
manufacturers',;.prjee reductions
on radios, refrigerators, and wash¬

about getting the
Remember: Every

good

a

World

who will have to do

the most important

can:

(1) Raise the

In

price level should be
I feel that we face
somewhat lower prices and a mod¬
erate decline in business activity
during the remainder of the year
unless armament expenditures in¬
the present

has

Unemployment in
eastern shoe manufacturing

don't take

easy

which

heavy

Unit sales at retail

worrying
money back.

resulting
break
in ' commodity
prices was too drastic; and what
is more important, when we re¬
late
the
1920
developments to
present conditions, was the serious
break in the price of government
and other high-grade
obligations
caused by the sharp increase in
money rates.
To give you an idea




level

lot of economic ammunition! And

ment

While I

are

and three times as much
demand deposits as pre-war is a

fact

which is in the making?

the

forced

money

it?

either pres¬

are

the

are

tion—and Senator Taft has indi¬

of short-term

boom

a

caused

■■■////vj:

,■

greatest inflationary
pressures is the swollen total of
our
money
and - credit coupled
with phenomenally low interest
rates.
Four times as much pocket

say,

a

or

,

One of the

the

"chill"

the

to

event, regardless of who nomic chain is the. sustained high
level of prices. (Everyone will ad¬
caused the credit expansion, bank
two alternatives during the last
loans increased $7.4 billion in 1947 mit that all prices £.re: too high ex¬
eight months conclusively demon¬
to a total of $43.1 billion at the
cept his own!) pprVpostwar price
strated that a large public debt is
beginning of 1948, the highest to¬ break is 18 months overdue on the
not an obstacle to credit
control,
tal of all time, and you bankers basis
of past;,wars, particularly
if
skillfully managed, although

The

reserves

"fever"

a

of the inflation

nite continuation

as

the readjustment

,

4

tant

serve

inflation

more

,

answer

scene

or

with

ity's oldest question: "Where do
we go from here?"
Whereas at the beginning of tyiis

mar¬

ket

t

sales by the Reserve Banks fol¬
lowed by an increase in the dis¬
count rate. This traditional

Banks

outlook

our

to

(1) President Truman estimated
beginning to appear—
exception, of course, ol that of the $3 billion increase in
armament
appropriations
and
high interest rates.
Inventories reached $42.7 billion $375 million for stock-piling of
at the end of February, and the strategic materials, only $1.7 bil¬
lion would be spent through the
pipelines of distribution are full
in most lines; in fact, there arc fiscal year ending June 30, 1949.
indications that the pipelines are Even if this amount is increased
further by the Congress and the
reaching the bursting point in
some
lines.
In connection with expenditures are speeded up, the
totals actually spent will be rela¬
inventories, don't forget that in¬
ventory losses after World War I tively insignificant in an economy
amounted to $11 billion on much running at the annual rate of $245
billion.
' '
V
;
;
smaller inventories.
(2) One indication of how much
Price cutting and trade-in evils
the
impact of rearmament has
have become serious problems in
been overemphasized is that the
some
lines, especially in house¬
hold appliances.
In the automo¬ military needs of 150,000 tons of
steel will require only 1/6 of 1%
bile
field,
heavy and medium
of our annual steel output. (But,
trucks are much easier to get al¬
of course, this can be changed.)
though the lighter types are still
(3) The Economic Cooperation
nearly as hard to get as passenger
Administration
expenditures
pf
cars,
(Since July 1, 1945, some
some $7 billion in the next twelve
2,800,000 trucks have been manu¬
months will not have the same
factured. These, together with the
inflationary effect as previous re¬
war surplus
army trucks sold tc
lief
expenditures
which
were
veterans, should go far toward
largely concentrated on food ma¬
meeting the accumulated de¬
terials.
The demand now will
mand). Retail inventories of shoe;
be more for machinery and capital
have reached
ent

examine the business and

us

form

to

the

the end of

Here?"

From

Go

financial

cushion

a

maintained,

•

of its
expansion
approaches.
Interest
rates have perceptibly hardened.
In fact, most of the money and
credit phenomena associated with

au¬

possible or, at least, would neces¬ for debt
retirement, the Federal
sitate the removal of all support
Reserve Banks can buy bonds and
from government bonds so that
support the market and reduce the
long-term interest rates could rise credit base at the same time—that
and seek their own level.
Well, is, the reserve balances created by
they
know
better
now!
The the
purchases can be wiped out
monetary authorities have amply
by Treasury redemption of securi¬
demonstrated that they can reduce
ties held by the Federal Reserve
the credit base, (reserve balances)
Banks.
Furthermore, as long as
price

We

Do

press

/;*„■

sively that surely the end

these developments.
"Where

....

stage in most localities. Consumer
credit has been utilized so exten¬

the

it

armament

,

tious. Mortgage lending has passed

Treasury politician wants to fight what he
impossible to re¬ calls "prosperity." \ So, those who
fund, on any reasonable basis, the are trying to slow up the break¬
speed
of
our
economic
$50 billion of obligations maturing neck
in one year.
Also, other high- machine wil be very lonesome
you cannot escape the impact of
It is my
grade bonds would be adversely until after the election.
world forces.
Inflation, the aftermath of all affected, mortgage money would feeling, however, that even though
become even more difficult to se¬ the politicians continue to "duck
wars, is raging violently through¬
out most of the world. Through cure, and a real financial storm the problem," natural economic
In fact, if forces will come to the rescue of
debt management, money man¬ would probably follow.
our monetary authorities.
Either
agement and credit control, we 1920 is any criterion at all, the
all-out use of credit control meas¬ a drop in prices or a decline in
have so far at least managed to
business activity will solve their
ures might even precipitate such
escape
the
kind of
disastrous
paralyzing inflation from which a serious break in business ac¬ dilemma through a reduction in
It seems
most other countries are suffering. tivity that it would cause a de¬ the demand for credit.
And what makes this achievement pression with large-scale unem¬ as certain as anything can be in
an
economic world where you
•
so
remarkable is that we were ployment.
have so much management at the
able to do this and at the same
Will Federal Reserve, Change ^ top political level, that we shall
time extend billions of dollars
Policy?
PP have one and possibly both of
worth of assistance in food, goods

depositors is also directly affected.
Politically you can be an isola¬
tionist, if you desire,' but eco¬
nomically you have no choice—

that

issues

ment

to

' ;

Indications of End of Boom

from

election year

beginning

are

Lenders have become more cau¬

wind."
an

of

downward.

growing inflationary pressure, is
another
heavy
"straw
in
the
This is

springboard for
as

ques¬

put prices up, and important of¬
ficials have indicated that at least

the

despite

July,

expenditures

new

must also recognize
the basic economic

we

most

factors

saying he had not heard
Also, Treasury mainten¬
of the Vk% certificate rate
as

June

the

the $64

Will the tax reduction and

tion.

recognize that the government can
boost business activity and can

that

of them!
ance

must frankly

that

ward, but

backing the proposals, and the
Secretary of the Treasury was

for

way

we

The $64 Question

This brings me to

practically all of the
artificial factors are pushing up¬

port, the President made it clear
that

our

At the outset,

Re¬

they carefully weighed their re¬
sponsibility to the government
bond
market and
the probable
economic effects on
the whole

"smart"

on

it is too much

to expect that such favorable con¬
ditions will continue indefinitely.

some

increased spendboys say that
upward again.

these

the

are

of

the Congress knows
billions of dollars.

many

Viewing
we

expenditures

only

to

As I said before,

$5 billion; pros¬

some

Economic

pective

Banking Economics and the Inilafionaiy Boom
(Continued from first page)
World War II. Legislative and ad¬

Thursday, June 17, 1948

an

economy

we

have

con¬

which will stay

perpetual boom levels, you will
your reserves and you

still have
can

then

"whoopee"
blessing.

make

with

economic
my

fatherly

Volume

167

COMMERCIAL

THE

Number 4708

&

FINANCIAL

CHRONICLE

(2665)

units started in

Savi xtgs
(Continued from page 2)

heritage of freedom, free private
enterprise, and individual initia¬
tive; and then turn to government
lor

to

answers

subsidize
.correct

these
and

our

the hands of the

you

both.

Where

choose the

you

the

up

to

conflicting
incompatible.

have

not

can

tell

graduated income tax, and the ex¬
clusive centralization of credit in

are

fundamentally

You

I

excesses.

views

two

find

second, you give
If you value and

first.

would

retain

day is

what

most

to¬

cen¬

public policies and acts

on

which

need

we

public attention

more

tered

the

first, you must
to avoid the second.

ways

I think

create

flation, and

contribute

or

in¬

to

action directed

more

toward

of

State-owned bank

a

We do not know what lies ahead
of

But, I am sure of one
thing—that we have reason to be
deeply concerned about
lic and
sive

see

Over
our

period of too

a

tax

structure

seen
only the
appropriations.
We

has created no
for equity
capital have been drained off by
taxes into government uses. This
is not replaced by an even greater
total. ;of savings by the average
new

process

Funds

sources.

He

wage earner.

can

not be

ex¬

pected Jo use his reserves for risk
capital? Savings today flow into
bank
accounts, ? life ? insurance,

pensions,? .Government f/Savings
Bonds,; and

payment

as

on

per¬

sonal debt, not directly to capital¬

ize industrial expansion and pro¬
duction or new enterprises. -; It
reaches

thelatterprincipally
through institutions which invest
in promises to pay, not capital.
Last year only about 13% of new
security issues were for equity
funds, the rest

debt, in

was

one

form or another.
As

a

pend

result

either

on

the

business

borrower

or

the lender, and both know it. It
is not a healthy direction for the
future

development and stability
Everyone should

of the economy.

understand

It

that.

raises; the

questions of where our future
■V, capital- is coming from and are we
going to be able to continue to
expand enterprise and
produc¬
tion?

*; Getting Capital From Earnings

One of the effects is that busi¬

;•••

and

industry have to capi¬
by retaining a
larger and larger part of their
earnings. The need to pay sub¬
stantial taxes on earnings, and to
expand and improve and to carry
large
volumes
of
business
at
higher dollar costs means setting
aside larger reserves and retain¬
ing larger amounts of undistrib¬
uted
earnings.
If
appropriate
ness

talize

^

themselves

,

As

tends

capital market. /
this
to

situation

dry

proposals to

new

There

' V

progresses

it

capital sources,
i. causes
greater
dependence
on
? loans*, and leads .to larger and
larger business units.
None of
I'these is healthy or desirable. Obup

is

one

the largest, /most
firmly entrenched and most profCarried to an
extreme, it could bring about an

.

unwanted:and complete change in
our economy.
/
/

the form of
r
-■

/

^his is what

can happen under
.system of taxation which stifles
enterprise and abolishes the pos¬

a

,

sibility

of

relatively

substantial

incomes because of

large demands
expenditures.
About

Karl

produced
festo.

hundred

one

Marx

In

extravagantly
for government

and

the
it

years

Friedrich

ago

Engels

Communist Mani¬
they
advocated




too

indifference.

Credit and Government

Easy

Guarantees

Where

do not

we

give it

actually spend
the

away we use

for

ever fancy name you call it, it is
still' "debt" and there is nothing

about

easy

debt,

most

as

people

and

more

is

better homes.

even

But

greater need for

a

lower costs, lower prices, and bet¬
ter
values.
The
flood of
easy

ment in home construction.

is

It

for

problem to find

a

increase

the

the

in

popula¬

For borrowers and lenders gov¬
ernment
guarantees are merely

years—estimated at

deferred

subsidies.

is

Government

more; of

with

so

for

he normally could not persuade a

used

to

borrower

encourage

and

into

debt

go

risk

much

a

attached

to

it

lion

let

in

the

last

over

two

not overlook

us

1 lfz mil¬

years.

But

the fact that

while

building was held up dur¬
ing the war and we were growing
in numbers and families during
since the war,

and

many persons

private lender to accept his ob¬ were taking advantage of inflated
ligation. The lender is encouraged incomes and controlled rents to
to make a loan he normally could
the decades to come.
v;?:
spread out or take over more and
not afford to make.
And, if for better
living
accommodations;
V Estimates of Government
:
any reason the borrower repudi¬
leaving less space and less desir¬
Spending -•' ■
'■
ates or fails to pay, both borrower
able quarters for the late comers.
I have seen one pessimistic es¬ and lender are protected against
That
is
part
of the problem.
timate for the next three fiscal loss by ultimate payment from Fewer
people are using more of
public 'taxes.
years
(1949-1950-1951)
which
; what was already available. The
suggests we may spend $60 billion
This is used mostly in the real veteran has been left to compete
for defense, $24 billion for foreign estate
mortgage field and is art with his buddy for the new high
aid, and $63 billion for other gov¬ easy and effective way to in¬ cost housing coming into the mar¬
ernment purposes. This is a total
crease
private
debt
and
bank ket. Costs have risen to the point

is that loans and grants under this

proposal will total $8 billion over

•

■

them

of

some

the

to

other

continue
have proposals for easier credit*
which puts Spurs to a demand
for homes now greater than the
supply, and further a demand lor
building labor and materials not
taxpayers,

we

sufficient for
have

our

needs.

Also

we

proposals for using billions

of dollars of the

taxpayers'

money

tial

homes

tion and the large number of new
families formed in the last few

a

government guarantees
mortgage loans. One estimate

for

should know.

help

reversal of our present eu>
tremely high level of activity, thegovernment will become the larg¬
est

home

large

history.

liquidation

covered

guaranteed
the

in

owner

scale

erties

loans

by
government
will throw «m

market, at cut prices,

plus

a

sur¬

of

that

Anpr

prop¬

of

the

poorly built structures
original buyer had suteh.
a, debt
against and so little invested in he was without incen¬
tive to protect his ownership. i|f
this should happen, it will ef¬
fectively
stop
building
in its
tracks and destroy with it other
and better values.

-

t

of

$147 billion.

It is

an

average

of

$49 billion a year, and about
$7 billion a year more than op¬
timistic

basis.

view

of

government

the present tax

revenue on

It does not include any ex¬

penditures for

reestablish

to

economic

While

of

forms

controls,
living.

the

this

Bear

in

mind

when

consider the problem of infla¬

you

tion
(and how it comes about, and
attempts to acquire controls over
the

extension

of

credit

halt inflation.

so

;

v

as

wartime

and

lower

a

situation

term

near

Where is there any consistency
in demands for new credit con¬

trols,

as a

factor in halting infla¬

tion—and easier and easier terms

private

on

mortgage

debt,

sup¬

which

use

financial

the

-

banks

institutions

and

as

other

the prin¬

cipal source of the credit?
This
is outright and definitely infla¬
tionary. It turns present housing
costs into more purchasing power.
Actually it illustrates a policy of
and determined effort to avoid it
There are too many instances of attempting to impose restrictions
on private lenders while encour¬
proposed Federal programs which
call for large and direct cost in¬ aging the most inflationary type
of
loan
expansion by
private
creases in the next few years.
lenders
through public sources.
While specific proposals are made
Lost Fear of Debt
to restrict the general supply of
The fact is that we seem to
faced with

danger¬
ously inflationary long-term out¬
look unless there is some general

have

drifted

dream
lost

or

been

in

world

fear

our

a

led

which

of

into

think

to

seems

No

debt.

taxes

we

what

pay

it

or

owe.

we

one

one

no

matters

what

we

a

have

we

to fear deficits and

seems

or

are

what

spend

This is the first

step toward losing our future.
Because

of

the

the

notes, the debts are not real
to
them.
They forget that the
present and any future taxes also
and

are

a

first

lien

on

what they earn or what they have.
There are wails about the high
of

living
or

National

or

realization

expenditure
the

sources

As

or

the inflation

or

the acts of city, state,
Government—and no

of

the

and

fact

debt

that

which

it

is

arc

of the trouble.

I think we have
acquiring family habits we
not afford, if we intend to re¬
nation,

a

been
can

tain

stability and protect
solvency. With public

our

future

our
ex¬

penditure, as with family expend¬
iture,
any
and
every
project
which costs money has some ap¬
peal,
some
justification,
some
need, or some desirability.
But—
in

family, and in particular one
already heavily in debt, many de¬
sirable
things
and
even
some
a

government

indirect

lending, or
government direct lending agen¬
cies.

It is difficult to

flation

see

how in¬

is

stopped by imposing
lending restraints in one area, and
encouraging loan expansion in an¬

?;??

Recently

we

have

seen some ex¬

from official
mounting total
of real estate loans and the heavy
private
debt
being
created
to

pressions of
sources

build

concern

about the

and

buy homes.

I

wonder

what was expected Under a gov¬

ernment-sponsored
easy y
credit
policy? It is reported that at the
end of March this year the gov¬
ernment
had
guaranteed $7,125
milion
of
GI
loans
which in¬

Policy and

Credit

Expansion

Government

policy has

encour¬

both a larger demand for
and
a
larger supply of credit.
Prices are high and values low
because
we
have
had
a
large
number
of
government creditsubsidized buyers entering a sell¬
ers market.
Competition substan¬
tially has been eliminated, except
between
purchasers.
Practically
anything built could be sold re¬
gardless of price or quality. The
responsible, experienced, and ef¬
aged

ficient builder

was

forced to

com¬

pete with the newcomer, the spec¬

and the

ulator,

irresponsible for

available

limited

the

supplies of

labor and materials.

In

an area

:,

-4?

of shortage and com¬

for materials and labor,
restrictionest labor practices

petition
and

all this
served to
bring on a supply of houses at
high cost and with a heavy debt
against them over a long term of
years.
It has developed a larger
and
larger group of shoestring
home owners with a large longand

low

labor efficiency,

credit

easy

term

of

country do not personally ne¬
gotiate the public loans or sign

debt

credit for other purposes, no sim¬
ilar restrictions are proposed for

other.

individuals

the

are

Government

Inconsistency of Credit Controls

tainly little better than in balance,
we

are beyond
with his purchas¬
ing power subsidized by govern¬
ment guaranteed loans.

his purse, even

to

■

ported by government guarantees,

not get out of hand, it is cer¬

and

where veterans' homes

.

standard of

may

loans.

actual war.

an

Anything remotely like this will
mean
substantial budget deficits,
higher taxes, a larger government
debt, more inflation, and attempts

the taxes

inh favor- of

and

many

credit

cost

l itable enterprises.

public funds.
a
subsidy

use

now

for public housing, more
credit, and $1,600 million

viously the trend worjcs against
enterprise

too

easy

small business and new

;

has

methods of borrowing and
increasing its income, assisted by
well organized appeals and public
easy

program

amounts ;can not be, paid out in

} dividends, that again shrinks the
jiew

been

not

yearly

business has to de¬

credit and less on
pew capital for
its needs.
New
enterprises are not easily capital¬
ized, whether large or small. This
is
not
a
healthy direction for
more

large
know, these

know that continuously there are

availability

get this way because gov¬

we

ernment

in¬ government guarantees. As a mat¬
ter of fact there is no such thing
We
initial as "easy credit" because by what¬

inhibited

has

fairs

the

and

program.

many years

equity funds and risk capital

and in the

aid

defense

accompanied by
any
marked reduction in other
government expenditures.
We

the accumulation and

of

foreign

No one will deny there is a
housing shortage or a real need

bute

mortgage credit has served to cre¬ over decades for the purpose Of.
ate
and
sustain high costs and building public housing.
prices.
The only low cost itemDangers in Housing Program
in new home ownership has been
I doubt whether many people
the interest rate on the mortgage.
believe public
housing will be
Until the volume of high percent¬
low
cost
and
good value.
We
age loans on high priced prop¬
qhould not make the mistake of
erties had begun to use up its
letting
this
housing
shortage
proper share of institutional in¬
hysteria drive us into turning the
vestment funds, and the low in¬
job over to any governmental au¬
terest rate began to appear less
thority and taking it away from
attractive
when
related
to
the
private enterprise.
long-term risk and other invest¬
We are in danger enough from
ments, mortgage money was the
the government guaranteed loans
only freely available material ele¬
because, if we have any substan¬

In public af¬

device of so-called easy credit and

of

cost

the
previous high of last October. Is
it any wonder that loans go up?
over

ful of th'eir futures.

are

money or

creased

month under

17%

there

we

We do not know the final

have

Tax Structure and Risk Capital

likely

one

inspection,

to
label the people who do them im¬
provident, wasteful, and unmind¬
consequences,

private debt and progres¬
in public expend¬

have

consequences

things which can be made to ap¬
pear
absolutely
necessary,
just
are
not done.
If they are done,
regardless
of
circumstances
or

pub¬

our

increases

starving out capital formation.

the

FHA

us.

to

of

monopoly.

happened in Europe, that should
be warning enough.

itures.

some

means

help of these tools they
believed capitalism could be de¬
stroyed and Communism brought
about.
With
what
already has

of

;

State by

With the

eliminating or modifying
them. As one example, there are
indications that we are beginning

-

and

(among other things) the elimina¬
tion of the right of inheritance,
the
establishment
of
a
heavy,

to

problems,
failures,
and
our

our

1 Debt

33

debt.

has

only

It has added substan¬

tially to the inflation and taken
from builders and local and gov¬
ernment

authorities whatever in¬

they might have
better standards of
workmanship
and
quality and
achieve lower prices. ;/
centive

or

power

had to impose

is to do
something to reduce the cost of
housing so more people in the
The

really vital need

Easy mortgage credit has been
pushed along with a well main¬
tained hysteria over the immedi¬
-

ate

housing shortage which it tonic
to create and will take some

years

time to correct.

The war brought
inevitably will be cured
period of time.
Last year
nearly 850,000 new dwelling units
were completed.
In April of this
year 90,000 new permanent hous¬
ing units were started. At this

it

on

over

and

a

will

there

rate

be

effect.

some

Already it is beginning to be
parent.
Some restraint and

ap¬
se¬

lectivity on the part of the vet¬
eran, in particular, and the home
buyer, in general, will produce
more
and better results in price
and value and for the future than

anything the government can pos¬
sibly do. I recommend it.
.

Our

The

Objective—Stability

most

important objective
of us is the, con¬
and
financial
stability and the long-term pros¬
perity of this country. The major
problem of the American economyis to avoid any of the extremes
of

every

one

economic

tinued

inflation

or

deflation which have

plagued its past history.
These
have
brought about easily re¬
membered problems of great seri¬
ousness to
the public and to the
government.
of

everyone

If
us,

to do this,
whether in bank¬

we are

or any other form of business,
must act with more foresight and

ing

intelligence than we have some¬
times in the past.
We must Joe
willing to give .more considera¬
tion. to the economic net product
of what

we

do.

Any way you may figure it we
have plenty of problems ahead of
us.
And our problems are com¬
plicated by the fact that we have
not succeeded in correcting all of
the financial unbalances and pro¬

duction

carried

dislocations

the

from

The

war.

over

inflationary

possibilities arising from m«ee
government spending, foreign aid,
middle and lower income groups and another arms program of u»«can
have homes.; The
answers certain magnitude piled on fte
cluded 1,155,000 home loans.' And
proposed are more » government Rresent situation easily can be¬
the FHA, created in depths of de¬
guaranteed loans, lower down come serious. No one can accept
pression to breath some life into
payments, longer terms of pay¬ the present trends complacently,
the
building business and the ments, and government subsidies
We must be sure to pursue
economy is doing its largest vol¬ for
public
housing and
slum: sound policies in our own busi¬
ume at the height of an inflation¬
clearance.
nesses and take vigorous action
.

,

ary

boom.

The

In 1947 the FHA insured 1,389,961

loans

totaling $1,786,771,284,
the largest volume in
An all-time high was
set in January 1948.
Recently it
has been reported that in April a

which

was

its history.

new

all-time

lished.

_

of

record

35,555

was

new

estab¬

dwelling

housing shortage is not a

credit
tees

problem and loan guaran¬
are no fundamental solution.

obvious to anyone
that this will not reduce the basic
It

should

Cost

of

be

housing

at

all.

It

will

perpetuate what has been
going on.
If it does anything
about costs, it will only redistri¬
only

insure

that

do

others

The economic safety

of

this

country

is

the

same.

and security
not only of

importance to every citizen
but also to the rest of the world,

vital

which depends

so

largely

on our

And—our fate is much
in our own hands than mq^t

strength.
more

persons are

inclined to believe.

34

COMMERCIAL

THE

(2666)

FINANCIAL

&

CHRONICLE

all-out

an

Outlook loi Fuel Oil and Petroleum Products
(Continued from page 15)
hitherto not known or utilized.

Jan.

Look down the list and you

Jan.

to

—seems

want

and

more

On

low.

will
everybody—everywhere

find that

the inventories

1

more

the

East

tories

lower

rels

than the prior year.
the comparative figures

are

much

it has its headaches too. You have

was

accentuated by

the

it and
transport it and those facilities
which are being used now to ca¬
pacity will have to be expanded
considerably.
They
are
being
built, but it takes time, steel and
vast sums of money. The oil busi¬
is

ness

refine

oil,

of the unfortunate in¬

one

dustries where you
over

dollar to

a

worth

dollars'

be able to sell

of

The industry is

have to invest
goods

a

a

year.

short of all facili¬

ties because of the war which lim¬
ited

normal

Since the

building.

lack of steel has also ham¬

war,

pered expansion plans.
While the topic assigned to
the

program

that

same

crude mate¬

The

rials.

requirements, there¬
fore, for the other products of pe¬
troleum to

some

available

the

weather

extent influence

either
light or heavy fuel oils. At first,
therefore, I am going to suggest
that we look at the whole petrol¬
eum
problem and then examine
more closely the situation for the
supplies

better.

and

condition

This

unusually cold

severe

storms

snow

with the results which you
as well as
into talking

prob¬
I do.
about

for

next

ably know just
When

get

we

oil

fuel

and

kerosene

that last

winter, I cannot forget
the

winter

bad

oil

fuel

tight.

pretty
how

was

show you just
let me tell you

To

it

situation

was,

what

happened to a friend of
He got an invitation
to
a
house warming party from a
newly-married
couple.
On the
mine.

bottom

right

R.S.V.P.

was

after
the
usual
special request:

the

fuel oil."

They wanted to be sure
and have a warm party.

you,

made from the

now

"Please bring along five gallons of
me

is "Fuel Oil," I
as purchasing
agents, are interested in more
than just fuel oil.
The fact is
you really cannot paint the pic¬
ture for fuel oil without bring¬
ing in the general story of the
other products of petroleum. The
reason
for this is, as you know,
that
all
of these
products are
on

assume

of

as

almost 10 million bar¬

were

Right

find

Coast

1, 1948, the principal inven¬

petroleum in one form or another.
That's great for our business, but
to

quite

were

of

fuel oils themselves.

The

industry

is

every¬

this

happening
that

means

it

again,

a

and

should

have

substantially more finished prod¬
ucts in storage next October. The
Interstate
sion

Oil

Compact

estimated

that

it

Commis¬

would

quire about 75,000 barrels
all products and crude
added to inventories

day

a

of

be

re¬

oil

to
the

over

next 12 months to assure that the

industry would have enough prod¬
ucts in the right places and at
the right time to serve all the
customers

and

shortages.

This is just

demand

on

available

as

not

into

run

the

spot
much a

as

materials

raw

is the demand by the

ion, it is

The petroleum industry has re¬

cently been furnished with two
important reports which are prob¬
ably the best available at this

Will

Have

suggest

that

might watch for these kind of
as
they come out from
time to time because they are the
ones which the industry itself uses.
you

The

first

report

-

referred

to

is

that made by the

Sub-Committee
Short Term Availability of the
National Oil Policy Committee of
the Apierican Petroleum Institute.
on

This

report

dealt

primarily with

the

supplies
which
would
be
available, according to their best
estimate,
during
the
next
12
months ending
March 31, 1949.
These supplies were from the pro¬
duction of crude oil, natural gas
liquids and the imports of crude
and products from foreign coun¬
tries.

The

we can

indicated

report

expect

an

that

increase in these

Increase

Imports

materials

> and

over

those

above

forecast by the Short Term Avail¬

ability

Committee,

or
it
will
increase the imports.

have to
is

There

that

very
little
demand for

the

products

be

will

probability
petroleum

less

than

that

forecast

by
the Interstate Oil
Compact Commission's Commit¬

that

tee,

so

that

the

demand

ing

to

V all

supplies

the

best

and

are

affect

sumer

''

the

within

the

which

'

' V

;

United

States

the

United

to

supply
cies, then

the

United

States.
ways.

place, it is forecast

than

.reports which
or

three

of

one

come

times

a

series

a

of

out about two

It

year.

deals

primarily with estimates of
mand, including exports and

de¬
sup¬

plies for the military. The most
recent report indicated that the
increases in demand would amount
to about

period

6.4%, covering the
the API report.

as

be seen,

increases

pated

same

demand

are

can

in supplies
substantially

and

the
same.
This would appear fine at
first blush, but there is one
thing
that

we

have

to

consider

in

ad¬

dition, and that is that

the indus¬

try

its

needs

to

increase

inven¬

tories

quite considerably to take
of the filling of new
pipe¬

care

lines
new

age

tanks which

are

ran

winter

was

just that much less available for
within the United States.

use

The

consumers

of

the

within

States

on

hand

at

will

coming

export during the
months period. Over

12

the last quarter

of

century the
a large ex¬
porter on net balance, and this is
the first time in all of that period
a

also be interested in the

develop¬
foreign coun¬
tries, just as much as they are
interested in the development ol
ment of crude oil in

the

same

the

United

that

materials

raw

States.

additional

To

greater etxent than they de¬
upon

us.

Therefore,

what

happens in the rest of the world
very
materially- affect the
petroleum available for domestic
consumers.

Europe,

Asia

and

the

Caribbean

take

can

of

care

coun¬

of

more

other

hand,

sources

not

are

grammed,
will be

these

external

developed

then

these

as pro¬

countries

bidding against the United

States

will

if

in

the

be

Caribbean

looking

or

area,

to

the United
States
for
additional
supplies
which they cannot get any place
else. Petroleum is

international

an

product and world conditions af¬
fect

in the

United

States

greater

extent

than

us

much

to

a

most

the

present

time.

One

large refineries located
at the

eastern

end

of

at

the

of

the

Haifa

Medit-

ferences

transporta¬

as

improve, these dif¬
probably be mini¬

will

mized.
In

the No. 6 fuel oil,

regard to

so-called

or

bunker

oil, which is
quantities by manu¬

used in large

facturing plants, the situation her*
is substantially different from thai

sons

Fuel Oil

to exist

future.

and in the near

now

Just what does this

applied to fuel
burners or

as

oil

power

and

for

oil

used

the

in

for

used

heaters

space

heavy

mean

residual

industrial

fuel

power

The

rea¬

all

at

not

are

the

maximum

and

light

minimize

amount

products

the

of

and

production

of

heavy residual fuel oil. In this
the refiner is able to produce

way

products which give him

better

a

overall return from his operations,
and in a free economy, price de¬

termines

to

is made.

large extent what

a

The oil industry is mak¬

ing to

look¬

are

these products, but be¬

use

it pays them better to make
of the other products if it

cause

Over the last 25 years prac¬

the

of

total

some
improvement during
favoring coal. I do not know

was

1947

that

count upon

we can

petroleum
supply all of the
energy
requirements

natural gas to

or

increased

here

from

whether

I

out.

atomic

do

fuel

we

soon

load

get additional

to take c&re of that great
in users in the face of a

mous.

a

unusual

should

It

the

time,

these

season

number

and

extra

supplies

of

can

also

the

that

of

think

I

sup¬

plies in sight to provide oil heat
homes if the percentage of
those homes looking to oil is not
to

new

I

do

cl

believe

not

provide

homes by any means,
would mean a load

new

that

600,000

these

or

new

range

the
industry
2 fuel oil for

No.

in

700,000 burners. If
home

-

installations

the s neighborhood

of

that these

the

period, then it should follow
there

tional

would

supplies

modest number

be

some

available

addi¬

for

a

of conversions to

oil from coal, or from other non-

petroleum fuels. There surely will
not be any

substantial supplies
conversions

can

be

so
on

more

capacity

available

in

the

I also believe that

these

of

ply and demand of
There

is

lubricants

no

commodity.

a

in

assurance

frfee

a

economy that prices will at all
times cover costs nor, on the othfer

hand, is there anything in a free
economy wlrch limits prices to
just enough to cover costs, with
without

or

small

a

goods

more

are

available,

are

proLt.
When
desired than there
is bid out

someone

the

of

market, or
substitutes.
Any

is forced

into

uncalled

for

profits would, in

free economy,
and
decrease
to again limit

a<

national

is

only

of

more

capita thai

per

standard

with

it

a

of

look

not

much

more

next

12

months

tend

take place.
During most of its
history petroleum has not been1 a
scarcity commodity. * The long¬
time history of prices has been
down and in no recent year have
petroleum prices been anywhere
near
the general price level of

other

commodities.

■

Petroleum

price increases have lagged behind
other commodities since the

war.

Savings

from * tecnological
im¬
provements or lower cost opera¬
have

tions

passed

almost

been

entirely

to the consuming pub¬

on

lic in the form of lower prices. * I
don't see anything in the picture

which

would stop that.
,' ;
However, costs of operation in
.

business

are

labor

direct

similar to
pf

very

other.- Our

percentage

costs

be some¬

may

what lower than the average, but

other industries' labor costs affect

indirect costs just as much
and, therefore, labor costs in gen¬

our

eral are what

just what

really affect

us,

not

call our own pay¬

we

rolls.

1

materials, which are
other big oil company costs,
way up.
You don't have to

Building

substantially
of

supply
and

profits: after the time has
elapsed for such corrections to

'

very

imports

does

be

'

demand

fuel

heavy
as

the
are

tell

there

total

have

me

addi¬

if

these

considerations

during the last 12 months.;
is surely no basis for be¬
lieving that the; industry /will
make
any more heavy fuel oil
than its equipment will economi¬
cally turn out.
I do not think
that I am in a position to state
which are the preferred users of
heavy fuel oil, but it does seem

enough

are

quality

next

of all

10%

facilities. ri.V-vf
V';
Now, what about prices. Prices
should be a reflection of the sup¬

that

care

which

arouhd

will improve because of these new

conclude

winter.

next

there

the

plants

capacity

a
day of finished
production.
This will

now

and

avail¬

the

over

tional heavy fuel oil available for

materials

States

to

is

the

for

will be completed in

United States.

only

the present users of light fuel oils

during

mean

than

these

a

plant-by-plant
during the next two

barrels

of

Looking at the

take

our

our

1

,

Even

will

supplies needed
raw

energy
increase

increased

season

ditional burners there would be
of

add

16,000

I

living. High standards of living
and high energy used are synony¬

oil.

looking for a complete year's sup¬
plies. Therefore, without any ad¬
lot

more
can

appre¬

burners will be

same

detailed

that

for

installed

were

of

part

be

during the past

considerable

burners

weather

and
we

or.

it.

on

energy

well-being
because
it
through the utilization

and

will

any

burners, space heaters and
engines. Last year, as you
know, there was a record-break¬
ing number of installations of all
of these consuming devices. The
industry simply was not geared

tankers

study,

our

the least sacrifice to

of

Nevertheless, we have
informed, as the result of- a

carefully

just where

of

increase
shortage

1951.

years there
the
Umted

broad view

a

rate of increase in the installations

diesel

not,

or

count

can

must take

we

can

we

will pick

energy

this

of

some

up

know

not

of the situation and see

the

There

used.

energy

think

upon

present to taxe care of
any
demands
on
this
country
which we can foresee tnrougn the

such

ing oil. The situation around these
contingent

the

in

at

like the industries which

fuel oils, or so-called No. 2 heat¬
is

S.

stimulate

how

oils

capacity

U.

ing less heavy fuel oil opt of the
barrel, not because it does not

plants, large office buildings and
in railroads and ships?
First, we will discuss the light

new

as

lubricant

tically all of the increase in the
energy used in the U. S. has come
from petroleum.
Up until 1947
coal had remained practically sta¬
tionary and supplied less than half

will have to be made up from the




but

the

can.

the next few years.

over

because

at

States,

tion facilities

situa¬
in

areas

true

all the

much disturbed

United

various

day, it is going to be increasingly

know, the conditions in the Mid¬
very

the

more

dle East

are

not as

are

people realize. If this is true to¬

could

you

in

to

the

As

probably

difference in the

some

tion

gasoline

radically changed from the past.

countries.

are

their

the

lubricants go, that is
oils and greases, there
appears to
be
sufficient

been

rapidly increasing demands
On

far

year

others

their

sources.

Lubricants
As

while

fortunate. It is also true that there

from

own

day.

nies may be more favorably situ¬
ated
than
the general average,

make

in

in the Middle East, then

or

Africa receive most of their sup¬
plies from the Middle East and

Caribbean

compa¬

States

veloped

industry

a

distributors. Some

the countries outside of the United

dependent
pend

country and prob¬

mysterious
The new cracking plants, and par¬
ticularly
those
called
catalytic
cracking plants, are designed tc

in which the United States will be
to

industry

overall

light distillate fuel oils.

de¬

able and the demands forecast, it
seems
to me that the petroleum

countries

the

extent

are

that purpose alone.

other

is

whole

just described in connection with

the

supplies

the

within

United States has been

upon

painting
for

should

beginning

the

season

j'

petroleum

and that by

they did not have enough inven¬

heating

United

fighting which is going on in that
area. This refinery supplied con¬
siderable petroleum products to
Europe and the nearby countries.
If the Marshall Plan
program is
to be lived up to, then the supplies
which are not being made at Haifa

being built.

this last
caused by the fact that

tories

be

200,000 to 250,000 burners during

into -during

of the

those anticipated

net result will pre¬

that

the trouble that the in¬

dustry

have

teranean Sea has been shut down
for several weeks because of the

and for working stocks for
refinery equipment and stor¬

Part of

it

can

It

therefore, that the antici¬

upon

vail, which is that there will

ciated that

nomics

is

called

of these deficien¬

over

same

conditions.

that the United States will import
about 110,000 barrels more a day

This

is

exports will

our

on

The other report, which has
just
been published, is that of the Eco¬

sion.

States

to increase

and the

as

some

con¬

petroleum

They affect him in several
In the first

go¬

things going

many

which

the

are

breaks

visualized,
of

see

closely matched,

very

Outside
there

can

for the products

be

be

can

we

new

with

even

supplies amounting to about 6 ¥2%.

Advisory Committee to the
.Interstate Oil Compact Commis¬

large a surplus
the United States. If

to export to

seems

to

particularly emphasized
that I have been

that the picture

many

have

petroleum are to be
So much for the general broad
able to get their required suppUes
'picture of petroleum in the Uriited
whenever they need them.
States
and
in
the
world as it

They have the advantage of
From
this
rather
quick
and
representing the opinions of a
overall analysis, it can be seen that
fairly large group of well trained
the industry as a whole will have
and competent people in the pe¬
to increase its production of raw
troleum industry.
I

should be

ably would not fit the conditions
ol'
any
individual company, or

not

of

time.

reports^

where

looking at it last October. " I do
know of anything that.would
change tnis general conclusion to¬
not

will

opin¬
preferred demand if the

a

consumers

were

they* come
from because if they are made up
completely from the Caribbean
countries, then
those, countries

actual consumers, and in my

The General Problem

they

taiKing about this subject it

in

tries,

doing

thing possible to prevent such
situation

just

like

basis

last year.

Caribbean countries, or the United
States. It does not make much dif¬
ference

Thursday, June 17, 1948

than

there

demand

only, suppjy

costs,

and

the

From

that.

you

you

may

trends pf

probable

period.

was

prices

There

Another thing which has a bear¬

that
of

in

the

case

of

mobile

heavy fuel oil. such

as

users

railroads

and

ships, that there are so many
advantages for liquid fuels as
against solid fuels in these par¬

the, nearby

over

that prices of competitive
Fuel

ing is

fuels have increased greatly.

oils have at some times been con¬

sidered

but

by-product,

a

a

by¬

product which . everyone wants
may" in time, or under certain
conditions, be as valuable as the

previous principal product.

then

summarize

To
have

talked

the outlook

about,

'

ri"ri'ri'

iSummary

what

we

find that

we

for increases

in

sup¬
installations,
that
they'
probably would be able to outbid plies and increases in demand
other users if the competition be¬ over the next 12 months is that
came
severe.
* This
may
point they will probably both increase

ticular

then

to

a

users

of

heavy fuel oil in

facturing

I

plants,

for

was

factories

visit

version

of

oil.

,As

to

Milwaukee

said

plant to heavy fuel
recall my answer, I

.that

made

fuel

could

con¬

a

I

unless

the

economies

unless there were
special circumstances which
great,
it

oil

or

highly desirable to use
place of coal, that I

in

not

at

the

about

recommend

conversion

at that time in view of the
and demand situation as

supply

we

were

and

rate

same

industry will have to do
most to make even

available

whether I would recommend

very

or

asked from the floor dur¬

my

were

the

manu¬

plants.

power

ing

consideration

so

more

the

its ut¬
supplies

that the short inven¬

tory situation within the industry
which

prevailed

several

months

be greatly improved.
a quick look at the
world situation and tried to bring
out the increasing importance in
ago

would

We also took

developments

o u

t

United States upon

ity

of

United

pressed

oil

for

States.

the

s

i d

use

of

within

Then

the

be

we

the
ex¬

conclusion

general

that there would

e

the availabil¬

a

larger in-

Volume

THE

Number 4708

167

crease in

over tne next

burners

Supplies of light fuel oil

available

will

than

done

has

try

fthe materials
soon

permits.

real

much

people

effi¬

agree

duPonts,

Fords

The study
one-third

ten

of

the

America."

admit

like

men

Rockefellers

most

own

in

and

corpora-,

Eight out of

they have

idea

no

to the number of persons who own
a

five guesses that big corporations

It is to the self-interest of

conserve
petroleum
today's prices they can
save
an
appreciable amount of
money over a year's time. *

It would help the situation very

as

greatly

are

100

to

because at

if

increased

consumers

their storage tank

buy the higher priced new equip¬

capacity mate¬
rially so that they would not be
so
dependent upon frequent de¬
liveries
from
their
suppliers.

ment

big corporation.

One person in

usually owned by fewer than
people.

Most

people simply do not real¬

ize that the

owners

rations

the

are

of

big corpo¬
public—

general

ordinary people who have spare
to invest; that more women

money

than

men

own

stock; and that
widely
scattered
throughout the country, not cen¬

These tanks should be filled dur¬

higher than in the previous year,
have been made, but a major part
these

of

earnings is

required

to

produce, refine
and transport the ever-increasing
quantities of petroleum which are
being asked for by almost every¬

one.

necessary to

.

of how
Petroleum

carefully
eum.

in

been

generally

has

and

supply

ample

petrol¬

use

we

carelessly.

times i rather

we

that

know

its lowest

at

expect the

we

600,000

barrels

a

/./////'./^ -.'v'/'t

;

of

•*'
the •efficient

and

.great

supplies of
petroleum will make it possible

for

From

our

/

ever-increasing

numbers

of
supplies

to share these

new

users

and

oil

most

be

to

Conservation
use

tests and studies with which I arr

familiar,; I

Next winter

ation.

In my Opinion, I think
used
petroleum some¬

have

we

is

Early
fill-ups would help to smooth out
some of this large seasonal vari¬

have become accustomed to using

jit freely.

.industry

day over the summer rate.

think

all

ebb.

months when the

summer

on

demand

;■■

.

(2) That we rshould

.,

ing the
load

benefit

their

from

use.

owners

to dramatize

that General Mills' stock is broad¬

"take"

designates.

the stockholders.
It

to each stockholder who re¬
quests the gift box.
;
r
;
•

goes

.

.

A special

letter from the Presi¬

dent also goes to every

employee
.who becomes a stockholder, mak¬
ing the same offer of free prod"welcome"

These

ducts.

off

start

relationship
Our files

letters

owner-management

the

in

friendly

a

way.

:

full of appreciative

are

letters from owners who are sur¬

prised and delighted at this per¬
sonal interest.
/;/;.//

} Another

stockholder if

is

This
and

also

President,

the

hope that

the

the

caused

no

stockholder

to sell and- that he will

to decide

again be numbered
the company's owners. *
soon

'

the

to

the part of the manage¬

on

has

ment

sent

sells his stock.

he

from

expresses

action

is

letter

to

the President.

)

Stockholders and the 'Company's

%

■

f : An important though secondary
benefit which

we

hope to derive

stockholder

cooperation is
word-of-mouth salesmanship
owners
can give to com¬

the

which ;

products. ,7: We found that,.,

pany

when it

job
the

reads

next

is

follows: "As

as

mailed out

.

dividend

check/It

one

of

some

12,800
stockholders
of General
Mills, you have, invested part of
your savings in this company. You
therefore
all

h^ive a real interest in
your/company's products

of

for the

hom£, for agriculture, for

HowC

industry.
name?
the

As

can'

many

reminder,

a

you

of

some

principal/General Mills prod¬

ucts

pictured in this pocket
(wbicn we will be glad

are

calls

attention

it

is

Jto

consumer ;

our

(oii- ttfe back page), and

products
also

spite of

to

a

familiarize

products
make

;

In

an

attempt
the

with

owners

the? company,

of

them

active

and
and

users

boosters of these products, we

augurated

in¬

Christmas gift pack¬

a

and made it available at cost
td all stockholders and employees
for mailing to their friends.
Sev¬
age

eral thousand of these boxes

shipped in the

Christmas season,

owner

who

indicates

a

desire

to

receive it by mailing a return post
card inserted in our stockholders'

publication. When Apple Pyequick
Fall

owns

cause

of

General

its

Mills?!' Be¬

subject

matter,

we

believed it would be of particular
interest to stockholders,
and if

placed
of

on

1946,

the market in the

50%

of the

requested packages.

the

facts

combined

efforts

positive

effect.

very

will have

decade. Our General Mills reports
have
from

the

undergone

hope

transition

dry, conventional, strictly fi¬

nancial'statements
are

maries

of

to

what

we

modern, readable sum¬
the year's work.
In

addition to the /necessary finan¬
cial data, they now touch oh the

philosophy
discuss
face

the

of management, and
major problems we

the

and

current

situation

with

respect to such matters as
labor relations, research and the
rof

new

products,

owners

\




and

an

effort

is

small

made

to

avoid

print and sta-J

it is not feasible to issue interim

quarterly financial statements,

or

of

stockholder

/ interests.

You

have before you sample copies of
both.
Before "Horizons" was in¬
troduced

truth

about

ownership,

company

would have made

tribution-toward

a

small

clearing

con¬

a

up

dangerous misconception current¬

Control •'

■/■•

Last

year

Psychological Corporation made
scientific

study

for

the

trollership

Foundation

interviews

with

sons

in

28

a

cities

thousand

from

-

a

on

per¬

coast

to

we

mailed

stockholders

a

in

in which

good percentage of our owners

are

Comp-

based

year ago,

interested

are:

•''

the

and

to

by

the chair¬

motion picture—specially
produced for the occasion—is pre¬
sented.
This leads naturally into
discussion, and is followed by a
question-and-answer ses¬
A social period, with coffee
and cake and samplings of com¬

lively

stock¬ pany products, brings the meeting

policy of keeping

through

well-informed

publications

and

informal meet¬

ings.

to

The entire

close.

a

affair" is

well-paced and lasts less than
hour and a half.

one

Many asked for Betty Crocker

The motion picture films devel¬

This is a reflection of the

oped for these meetings are based

(recipes.

the annual report.

They inter¬
the report in easily under¬
women.
stood' visual form. Later on, they
Quite a number suggested that become important tools in our
stories on distribution, sales, ad¬ public relations program with em¬
vertising, human relations, home ployees,
business
organizations,
appliances, products control and students, and other groups. Some
(nutrition
should
be
printed in of you, I know, have seen our 1946
"Horizons."
movie, "Operation 46," which was
Among the questionnaires re¬ awarded the firrt "oscar" to be

growing number of women stock¬

on

holders—44%

pret

turned
a

were

of

owners

our

several that reflected

I

good sense of humor.

minded of

are

am re¬

in particular.

one

questionnaire had several sug¬
gested subjects for the new stock¬
holders' magazine. One was, "biog¬

and most of the founders led

pany

given by "Financial World" maga¬
zine for an annual report film.

The

We

of the

One

the

cation of the New York Stock Ex¬

change:
"The personalized slant of Gen¬
eral Mills published matter is evi¬

dent; and this approach to the
public and stockholders has long
been followed.

What results

in evidence?
"The

:

,

are
.,

stock ended 1946.

common

50%, representing a rise of

points

major points made

on

meetings next fall.
As evidence
of tangible results, I quote from
"Exchange" magazine, the publi¬

at

Stockholders' Meetings

currently at work

are

film to be shown at our informal

.■■■/•

in

sharp
prices.

marked
of

year

a

relapse

general

by a
share

Dow-Jones average

The

by Lewis Gilbert in 'his discussion
of the rights of small stockholders

for

•is that they should receive a full

declined over 15V2

points in 1946.

At

Mills

formal annual stockholders' meet¬

afforded

ing., Surprising as it may seem, a
number of corporations are still
resisting the issuance of such postmeeting reports to their stockhold¬
ers.
The majority, however, have
recognized this as one of the re-

(sponsibilities

management to
are putting out

of

stockholders, and
(attractive,

specially prepared re¬

industrial

30

50%,

an

General

in

yield

of

4.26%

for

group.

the company's stock¬
content, during the

were

market

furore,

holdings.
existed

common

Dow-Jones

the

Obviously,
holders

stocks

yield of 2:95%, against

a

average

stocks

common

A

retain

to

casual

their

relationship

stockholder

between

sta¬

bility and the management's per¬
sistent
program
of enlightened
stockholder relations."
-••■'

Standard Oil Company of
I am convinced that if each in¬
New Jersey sends every stock¬
holder a full stenographic report dustrial enterprise will take the
»of ihe proceedings.
We have fol¬ trouble to explain its operations
lowed the practice of including the honestly and thoroughly—not only
minutes of the meetings in our to stockholders but to employees
ports.

stockholders'
zons."

We

taken

"Hori¬

publication,

also

include

and

the general public as well

to

pictures

at the

(making sure that those policies
meeting, as well as
operations are honest1 and
other graphic material.
ethical to begin with)—then busi¬
'
1 :«
v
Even better, however, is <a re¬ ness as a whole will be well along
port given in person.
This was the way toward eliminating most
the idea behind Mr. Bell's inaug¬ of the unfair criticisms leveled
and

uration

a

decade

of the in¬ 'against it. " y,
:/,■./■
• ;;
meieting. Our
A company that is "a good cor¬

ago

formal stockholders'

formal annual stockholders' meet¬

porate citizen," that produces a
ing Is held in Wilmington, Dela¬ good product at a reasonable priceware/in August. Considering the that pays its employees fairly;
midsummer heat and the no't-too-'
that rewards its owners with rea¬
convenient location, it Is not re¬ sonable returns on their invest¬
markable that only a handful of
ment; that plans for the future
owners
attend
it.
At meetings with new and better products to
held in the fall in convenient met¬

ropolitan

centers,

Bell

Mr.

has

Fi"st: New products -new

facili¬
ties, research, and plans for the
future.
Second:

year's

and
'

financial

Third: Current problems

the company.

facing

such a company,
the

to

work and also report to

chairman must have personal con¬

with

tact

informal and personal
throughout, starting with a per¬
kept

invitation

from

the

chair¬

Displays of the
company's products, activities, and
man

to

services

ing

attend."

are

room,

on

cannot

written

be

on

the

books

And it can never be
written to stay there without sub¬
overnight.

the stockholders.

troit, Minneapolis, San Francisco,
and Los Angeles.
The meetings
are held over a period of about a
month's time.
The atmosphere is

sonal

Profits

outlook.

raise the general living standard,

if its story is told
public, provides the best
the own-i possible testimony for a free econ¬
ers on what happened at the for¬
omy.
•
'• v ■
•'// ;'■ ; •
mal annual meeting.
He regards
But to accomplish anything of
the chairman of the board as a
lasting value in human relations,
"peisonal ambassador of the stock¬
the program must be continuous,
holders
to
management" whose
long range, year-to-year in scope.
duty it is not only to interpret
Dr. Samuel Johnson once said:
management to the owners but
"A
man,
sir, should keep his
also to be their active and direct
representative in the affairs of friendships in constant repair.'/
His admonition might have been
the company which they own. To
Goodwill
discharge this responsibility, the addressed to business.
been able to summarise the

of sub¬
Some owners come as far as 200
ject matter would be most in¬
miles
to
attend these informal
teresting to them. A surprisingly
gatherings in New York, Buffalo,
large number of responses—over
Washington, Boston, Chicago, De¬
2,500—were received arid they re¬
a

"

•/> /

Link

Dr.

a

questionnaire

vealed that the subjects

Impression of "One Man"

//;,!;/

brief talk

a

a

.

development

order to learn what type

we

After

•report of what takes place at the

their ownership,

they could be influenced to talk
about it, so helping to spread the

intro¬

we

duce a new product, we send a
complimentary package to every

was

"Who

ly existing in the public mind.
whenever

present

ly distorted fiscal picture. -;
Instead we publish, in addition
to the Annual Report, two small
quarterly magazines for stock¬
holders: "Progress Thru Research,"
which
keeps owners up-to-date
on the technical developments of
our
research
laboratories,
and
"General Mills Horizons," which
attempts to cover the whole field

were

1947.

Likewise,

these
a.

also

respect to

pf {the national insti¬

the reading
tutional
•

friends.

to

them

will

because they would reflect a bad¬

to

good many praised the com¬

pany's
holders

as

stimulate

calculated

ments.
A

Attendance

sion.

fathers!

have, labeled /"Read About
tistics.
self I iftgthf / Nmiqrial/ Maga-I
zines," was1 rrmiled ■: to General f/ Because <lf the character of our
Mills
stockholders with their divi¬ business—necessitating as -it does
dend checks lasi month} This one tremendous purchases of wheat
has a dual purpose. It once again throughout/the harvest season—
you

to give us some
suggestions and com¬

people have about

many

columns of

fairly active stock¬
adveiftisement which * is
holder program and a very low)
reproduced pnf the inside page of
rate
of stock turnover^ only a the folder.
This particular ad ran
little over half of our stockhold¬ in four colors in the' "Saturday
ers
were
able
to
identify the
Evening {Post,"y "Life,"
"This
company's
nationally-advertised Week," the "American Weekly,"
products; still fewer used them in and several farm
magazines, and
their own homes or recommended
attempted to answer, the question,
in

so

filled far you). When you plant expansion,' advertising and
takie notes, /pMssel take note of public service. Pictures, drawings
and charts help liven up the pages,
these products if yours!" - • -/
y
The other dividend insert which

additional

Accordingly, we have included no
biographies of the founding

the

to keep

Each stockholder who mails in

from

good

the trouble

took

27 million readers,
erroneous
ideas

some

familiarize owners with com¬
The Annual Report
pany products.
The little memoThe annual report is the most
pad which you have before you is
a
case
in point. vAs a reminder, important document prepared for
We are all aware of
it shows our major products in stockholders.
four colors. > It is attention-get¬ the evolution that has taken place
ting, and we hope it will do a in annual reports during the past;
with

but also

folly to imagine ing lives that their biographies
despite its ex-i would make very dull reading!"

ownership of corporations

nies

also be used effectively

can

only

not

owners

ad,

one

correct

with

dividend

500

Some

marked the questionnaire,

35

between 150 and 500 people.

man,

such hard-working and God-fear¬

to

among' notebook

his proxy for the annual meeting
receives a letter of thanks from

Products. ■

checks

be

would
this

the

\

Enclosures sent with

follow-up /letter

A

six times that of

over

was

revealed in Dr. Link's survey. But
it will help.
And if other compa¬

-

Fifth: The company's products
and services.

hotels.

large

the

of

runs

ly held by many small stockhold¬ raphies of the men who built Gen¬
ers
throughout the country, that, eral Mills."
After this statement
women stockholders
predominate, the stockholder had written, "I
and that last year our employees'
have read a history of the com¬

which

To Stockholders
,

typical stockholder

a

form, the boy's -mother points out

will

(Continued from page 4)

the

in

situation—a widow and her highschool son.
In simple dialogue

posure

1

and

If ; you have time to read the
ad, you will see that we have tried

that

Management's Responsibilities

Street

Wall

East.

V

~

are

in

tered

and the reasons behind them.

as

They can keep their cars
good
mechanical
operation,

everyone

Earnings,

Fourth: Policies of the company
<

re-1
of'
with the state-!

almost

ment that "A handful of

tions

effort,

more

the

the

be¬

economy.

with little

can,

gasoline

times.

con¬

available and

are

lines

that

vealed

drive at reasonable speeds and. be
conservative in their use at all

forward as soon as

time

as

those

These 1,000 persons were a
or the nation's actuU

urban papulation.

(2667)

CHRONICLE

in

ftjiat there is every reason to be¬
move

should

FINANCIAL

section

cross

burner in¬

&

ciently.

remarkable
job in making greatly increasing
supplies available, r It has done
.this as the result of the operation
of the free enterprise system and

tinue to

oil

creates

Motorists

very

lieve that the industry will

that

cause

use

a

probably

The

along

couraged

petroleum indus¬

(l).That the

coast.

save

Many old out¬

dustry is actively campaigning to
do just that.
They should be en¬

leave with you.
-i

adjusted to

burners

be replaced.

fuel oil and these dif¬
naturally, affect

would

these two categories of users quite
differently.
In
closing,
there
are
two
thoughts wnich I would Lke to

-

be

can

lot of oil.

a

moded

be available

probably

for heavy

ferences

quite

12 months

COMMERCIAL

view in the meet¬

which is usually in one

sequent entries.

All ink tends to
public opin¬
make our entries

fade in the ledger of
We

ion.
every

must

day.

West &
West
way,

the
will

&

Nammack Admit
Nammack,

115 Broad¬

New York City, members- of
New

York

admit

Stock

Exchange,'

William J. Nammack,

member of the Exchange, to partnArchin

nn

.Tnlv

1

36

THE

(2668)

publican party had definitely determined not to have any¬
thing to do. with these river valley pork barrels, either this
year or any other! What a relief it would be if in the course
of the past year or two it had been made plain as a pikestaff

As We See It
(Continued from first page)

;

r

,

ulariy true, of course, of those candidates who are now
members of Congress, and most of all those who are in
positions of influence in that.body. Since the President,
has by no means always commanded the support of
members of his own party in the legislative balls of
Washington, he is, of course, skating on somewhat thin
ice at times, but as such things go he is probably taking
an orthodox course in the campaign he is now opening.
It is about the same, strategy that President Roosevelt
so often employed — albeit with greater finesse, and
subtlety. It was what was to be expected in the cir¬
cumstances.

Republican party perceived clearly that these bribes
we are
now
offering and actually delivering to peoples
abroad to persuade them from adopting the communistic
form of government, are more or less certain presently to
prove a snare and a delusion!
,J
Suppose some Daniel Webster in the Republican
ranks in Congress had risen and persuaded his comrades
and if that is possible, Democratic members—that it
would be the sensible thing for us in the future to keep
that the

—

our noses

Charges

charges are in essence that Congress
has refused, or at all events failed, to do' what* he has. de¬
manded of it. Such an allegation is not, of course, wholly in
accord with the facts, but is as to domestic matters at least
substantially so. In this sense Congress is ^vulnerable" to
this attack
as much so as was the Republican party in

Roosevelt made such effective use
of battle. In brief, the President,
on the whole
accurately, asserts that a Republican controlled
legislative branch has not been willing to take orders from
a Democratic Chief Executive.
There is certainly nothing
particularly unusual or strange about all this. Whether
Congress is to be condemned for such a course is, naturally,
another matter
although, as usual in such instances, the
President would like it very well if the voters would easily

■

we

shall continue

that such behavior is to be

assume

attitude and hence

regarded

as a

"do-nothing"

much clearer and

blameworthy.

:

;

The

part which the American
play in the future of
the industry is significant.
A re¬
cent study prepared for the Na¬
tional Association of Housing Of¬
ficials indicates a potential de¬
home

dramatic campaign

material in
his hands. Its weaknesses, in our view at least, less that
it would not always, or perhaps even usually, do what
the President demanded, but that it mapped out no com¬
prehensive course of its own which differed basically
more

there is little doubt that the eco¬

nomic maturity of the country is
not even in the foreseeable future.

Our own complaint is not that Congress has given
the President this "issue," but that it has failed to place

»

is the
future of the country itself, and
power

from that of the President; and that it did,.not, makei(|
clear

units by 1951 and 20 million by
1960. This is an average inci'ease
oVer the

period of nearly 1.7 mil¬

-

80O

.

...

Avg. annual issue of bonds
Avg. annual issue, of com-;
,

and preferred

jnon

525

;

,.

,

325

it

cannot be ; said#
the action of the bond

on

months, that the

utility companies 'gener¬

in

raising
preferred

of

stocks if

money.by

and

the

common;

recent past market perthese stocks is any

formance of

5

guide to the.future, or unless we
are able to dispel in the minds of

additional

Additional Revenues

;

v

Since
stock

kwh,

would

sold

be

annually if the 250,000 schools,
1,500,000 stores, and 100,000 office
buildings were raised only to the
standard of good practices of to-

dav''J.
It is estimated that

proximately all of
occupied farms will be
with
electricity,
which

and

common

prices

depend

preferred"
largely

on

dividend ratios and hence on earn¬
ing capacity, it is interesting to»
see

what this proposed construc¬

tion

program

way

of helping the net earnings

picture.
In

by 1951 ap¬
the nation's

should

do

in

the

;,

addition

stantial

to

producing sub¬

amounts

additional

of

the new facilities
built under this expansion pro¬
means
gram will produce certain econo-*
that some 1.8 million farms will
mies in operation that will un¬
have to be connected .to utility
doubtedly help the net income o|
lines between now arid that time.
the electric utility companies* ' i
The pent-up demand for better
Recent studies by this* organic
street arid highway lighting which
zation, as well as by others, have
served

gross revenues,

.

by its own words and acts that it had convictions ' lion units annually, a rate un¬ could not be satisfied because of
own quite in contrast to those of the Chief Execu¬
shortages
precedented for any period of this material
during
the
war is now taxing the
tive. This shortcoming of this Congress, and to be more
country's history.
!
;
capacities
of equipment
The rate of growth of appliances
manufacturers.,
specific of the Republican party which controlled it, has ;
has been phenomenal, illustrating
These foreseeable increases in
^ left the Republican candidates for office, particularly
riot only the increased purchas¬ utility load, together with the in¬
Presidential candidates, under the necessity of spelling
ing power of the residential cus¬ creased power requirements of in¬
out some sort of policy,
program or course of action for
tomer, but also the high use value dustry, which recently was esti¬
which attaches to these appli-; mated by a large manufacturer of
the party in order that the voter
may obtain a definite
electrical equipment to amount to
ances. ^:v■:
Idea what the real issues are between the two
parties
approximately 18 billion kwh. for
this year.
i
Expanding Markets
the period from the end of 1947
.

2,100"
2,100 .

investors any misconceptions now
existing as to the industry's fu¬
ture earning power.

will

mand need of 4.5 million housing

-

sale

(Continued from page 7)
of

Preferred and- com.- stock
Surplus,

cultes

—

future

4,266

Bonds and debenfuresi...:.

ally will encounter much diffi-:
culty in that part of their financ¬
ing program involving the sale of
bonds or debentures., Companies *,
may, however, experience diffi-

Electric Utility Financing
the

$6,000'
t
\
1,800,.

"

except surplus^—__—.
Balance to be financed fr.
1*
surpl's & outside sources
4

market in recent

"showdown" this autumn.

that

surplus (in millions):
Total constructs program
Cash generated internally

electric

— and, for that matter,
indefinitely to be able to do
so.
There are literally dozens of other matters of real
importance which the New Deal philosophy has foisted
upon us-—and neither Congress nor most of the members
of the Republican party have faced them squarely and
unequivocally.".
If only they had — then we could have a real

whether

be done under a formula requiring;
50%^ debt and the balance in pre¬
ferred and common stocks arid

based

such influential figure

some

figures show what would have to

Certainly

Con¬

derwriting the British Empire

The President's

the years when President
of the same general plan

that

us.

figures had brought squarely to the fore the question
to whether we are wise to continue our policy of un¬

as

;

which do not concern

out of matters

sider the possibility
or

,

The president's

Thursday, June 17, 1948

CHRONICLE

COMMERCIAL & FINANCIAL

of its

indicated
of the

new

'

•

that

considerable

sav¬

ings are inherent in the operation
modern plants as com¬

to the present average ofthe industry. Analyses of several
pared

proposed
power
stations shows,
that with the new arid more effi¬

cient plants burning .coal and
fuel costs based

oil#

present prices
will be cut something between' •
I.5 and 2 mills per- kwh. depend¬
on

•

•

The

general
high cost and
The President in the course of his recent travels has gradual disappearance of domes¬
tic
servants is stimulating the
on mbre than
one
occasion attacked Confess as parsi¬ market for major labor saving ap¬
monious, or words to that effect. He has told this or that- pliances. While the use of some
of the heavy energy consuming
group hungry for dollars from Washington that he would
devices is fixed by competitive
like to accommodate
them, but Congress in its small-minded¬
•

The Bill of Particulars

';''1 '

has refused to vote

ness

the

funds.

grandiose

tion is

so

and necessity value so high

made

that

substantial

valley developments on the order of the TVA — it
an excellent
topic in the Northwest 'midst the floods,
past, present and prospective —- but he sees no
very good
prospect of getting them so long as such a Congress is in
Washington. These same legislators are in the act of cutting
funds for the Department of Labor so short that the
poor
workingman is certain to suffer
and the country perhaps
—

knowledge of the degree in which prices
or may

are

,tTh,e labor unions do not like the Taft-Hartley

Act.

?nt« He would like much broader social security
,

t

cannot interest Congress. He wants
compulsory military training and service, but
Congress turns a deaf ear. He wants vast powers over
virtually all aspects of American life
just in case, so
he says — but the
legislative branch does nothing about

broad

.

:

4;

—

it.

And

more

of the

same

has estimated that at the end

1947

there

electric

without

water

of

houses

93.1%

were

heaters,

85.5% without electric ranges* and
.

pliances cost the nation $958 mil¬
lion in 1940, $1,400 million will be
spent in 1950 and $1,800 million
in 1960. Furthermore, the report
states, and this is highly signifi¬
cant, "As late as 1960 purchases of
mechanical household appliances
will be expanding more rapidly

legislation in the field of labor;
Congress appears to be quite indif-

legislation, but he

use

without i r o ri e r s
The
Twentieth Century Fund has esti¬
mated that while mechanical ap¬

He has asked for other
he is not getting it.
,

growth and ex¬
of such appli¬
ances as water heaters, ranges and
ironers can be generally antici¬
pated. "Electrical Merchandising"
pansion in the

92.7%

rise in the future.

Well, they know well enough who is responsible, and if
nothing is done about it, the fault will be their own.
.

than

consumers'

heat pump

coming

a

order.

The

holds promise of be¬
of proftiable in-

source
'1

come.

The

income."

•'V.'-.-!

commercial group of

GOP Failures

fices,
small

How much better it

would be if
Congress, under the
leadership of its Republican majority, had by decisive ma¬
jorities^ cut the President's peacetime record budget pro¬
posals by some ten or fifteen billions of dollars
by taking
uut clearly non-essential
programs in toto and vigorously
reducing the size of many of those which, though possibly
are

today vastly swollen with all

inessential elements

be if the record of

or

parts!

sorts of

wholly

How much better it would

Congress clearly revealed that the Re¬




one

warehouses,
and
light and power

cus¬

of¬
similar

users,

1950.

hand

during the period 1948
Lighting goes hand in

with

modernization.

been estimated that

over

It

;

v

large manufacturer

electrical equipment made an
estimate for 1951, which indicated
a
total installed capacity for all

plants contributing to public sup¬
ply of 71.4 million kw. Assuming
that the existing ratio of private
to public plant will remain at 4:1
the

capacity of private plant in

1951 will then amount to 56.9 mil¬
lion kw.

This compares with 57
million kw. derived by adding the

17 million kw. less 2
million retirement to 41.9 million
proposed

kw. installed at the end of

1947.

It is interesting to compare this

proposed increase of new capacity

has

16 billion

ing

on

conditions of loading.

The

heat rate for such hew plant

will

11,000 and 11,50G>
kwh. generated as com¬
pared to a nation-wide, average
for 1947 of 17,000 btu. per kwh.
The present program contemplates
the gross addition of some 16 mil-:»
lion kw. of new steam plant arid
the retirement of an unspecified
amount of existing plant. Assum¬
ing tha t the average heat rate; of
the new plant will amount to
II.500 btu. per kwh,, it has been
estimated that the composite in¬
dustry heat rate will fall from
17,000 btu. per kwh. to 13,600 btu.,
or a decrease of 20.0%, reducing
the existing pounds per kwh. from
between

Vary

btu. per

1.31

1.05.

to

On

recent proj ection

the

basis

of

a

mentioned pre¬

viously in this paper fuel econ¬
omies in 1951 are expected tp
save the industry approximately

$150 million.
The

.

savirigs do

.

not stop here,

plants

with the years

These

World

smaller operating crews than

faced

following the first
when the industry
somewhat similar growth.

War,
a

For the four-year

period from the

end of 1924 to 1928, some 9,250,000
kw, of net additional capacity
were

added to the system, repre¬

senting

increase of 55%. While
four-year
period
growth in capacity is larger, per¬
centagewise
it
is
much
less,
amounting to only 2-3%.
an

current

is

today.
A recent Survey of
16*,000
department,
chain,
and
independent stores indicated that
74% of the chains, 72% of the
departments and 31% of the inde¬
pendents plan some type of mod¬
ernization

a

of

Estimates of Financing

of the best markets for utili¬

ties

to

Recently,

the

,

tomers, consisting of stores,

essential,

reach; 17 million kw. of new ca¬
pacity and will cost over a fouryear period ending with 1951, ap¬

low and their conveni¬

ence

rising, have risen

1951, portray the story as to
why the electric industry is be¬
ing called oil tnplari; art expansion
program
which * is ' expected to

fuel, the present degree of satura¬ proximately $6 billion.

He wants

river

left without

to

A

*

number

have

of

estimates

been made of the probable financ¬
ing of the proposed construction
program which is already under
way.

Obviously, it is impossible

to tell at this date how the finan-

ing will be done; but to get some
as to the magnitude of the
job of raising outside capital by
idea

classes of

securities, the following

modern

require
'ex¬

isting ones because of the' larger
size generating units and, plants,
greater mechanization, better, lay¬
out, more labor saving devices,
etc. Estimated payrolls for these
new
plants will be only about
half as much per kw. as for the
average of the existing stations#
and some of the highest cost plants
will be put in standby service or
retired.
The amount of payroll
savings for steam power
has been estimated at $35
in 1951.

plants

million
;

-

The

savings from these* two
sources total $185 million.
On a
ten-times-earnings ratio they are
capable of supporting $1.85 billion
of
common
stock capitalization.
To further appreciate the

tude

of

these savings,

proximate 50%

magni¬

they ap¬
of the $380 mil'*

Volume

lion
in

167

Number 4708

dividends

common

THE

declared

fied designs, larger capacity units

1947.

and,

Another

point

important

COMMERCIAL

perhaps

of

greatest

impor¬

&

FINANCIAL

CHRONICLE

that without adequate rates these
companies may fail in their prin¬
cipal duty which is to serve the
public.
Of course
Commissions

mission

know

ing of depression among many
utility people. However, a care¬
ful
reading
of
the
Supreme
Court's opinion indicates that its

utility industry is the
decreasing increment of costs as

tance, the ability to operate lines
and equipment at higher depend¬
able
loadings. For distribution,
the more extensive employment
of
higher
voltages
with
their

the volume

much greater circuit

cial condition, and from the long-

well

range

very

that should not be overlooked in

of

considering the cost structure
the electric

business increases.

of

capacities as
simplified and improved
designs are making it possible to
carry the continuously increasing

While total costs increase with the
Volume of

business, such increases
in proportion to the vol¬

not

are

ume

per unit

duced

"across the

on

A word about

of

ties

to

as
compared
industries.

tration

at

lower

a

pacity.

this

around

of

was one

erated

con¬

25%

30%.

to

reliability ^
equipment generally,
ated successfully on
smaller margins and

proved

price index. Kwh. gen¬

privately owned utili¬

by

sys¬

effi¬

The

ciency of the private utility indus¬
try
has
been
such
that
with
increasing interconnections, im¬

siderable capacity expansion, and
also a period of a relatively stable
consumer

for isolated

it

carry 50% reserve plant
capacity, whereas, before the war
the
percentage had dropped to

concrete illus¬
point, the period

from 1926 to 1930

ca¬

ago

years

tems to

other

most

plant

reserve

Twenty-five

not unusual

was

more

a

of

electric companies are

as

only

cost

better

and

it has oper¬
smaller and
there is no

con¬

for

in

creases

few

a

rates

have had fuel

far have

so

board"

but

in¬

number

a

adjustment clauses

issued

its

opinion in the

Hope Natural Gas case, and this
opinion was later upheld by the
Supreme Court, there was a feel¬

effects

both

utilities

on

try

As far

asked

pro¬

the

on

sumer.

residential, farm and

concerned

the

give

added burden

an

costs

money

investment per unit of service.

unit

the cost structure of electric utili¬

To

place

viewpoint high

additional

producing
the preceding unit of output. This
is one of the major differences in

'

of

money is obtained at
favorable rates only if companies
are in a strong and
healthy finan¬

commercial customers with lower

be taken

can

than

cost

demands

cost

average

that

output decreases be¬

of

each

cause

The

output.

of

as

(2669)

throughout the
first

at

was

or

confiscatory

tions.

For

say

they

the

regular

a

part of the rate structures.

the

past

year

or

interesting to

note

a

over

comments

that

two.
few

It

is

of

the

made

were

by

Commissions at the time some of
these increases were granted:

it

fact

went

to

Gas

Pipeline

'regulation
the

Company

does

business

case

that

insure

that

produce

net

not

shall

revenues'. But such considerations

aside, the investor interest has a
legitimate concern with the finan¬
cial

integrity

whose

rates

From

the

of

the

company

being regulated.

are

investor

or

reason

billioh, an increase of 32%. Dur^
ing that same period operating ex¬
penses' rose from $609 million to

will be reversed and that industry
has to return even to the pre-war

$723 million, or an increase'of
19%. Unit costs per kwh. gener¬
ated were 0.93 cents in 1926 and

fact,

0.84 cents in 1930

or

a

margins

20.63

million,

increase is due to the increase in

decrease of

to

amounted

only

$114

cost

equal to an incremental unit cost
of 0.55 cents. Thus, the increment
cost

59%

only

was

average cost.

in

installed

1926

total

000 in

costs
to

to

per

cost

incremental

of

rehiring

men

try

:'

.

the

ability of the industry to
operating costs.
It will without doubt serve a simi¬

B

averages

the

picture of averages. In those
when

cases

.

^operating

increased

or

Engineers' Progress

in

creases

a

open

economies
not suf-*

further inr
the

apy

operating

to

route

bearing on the net operating re¬
sults of electric utilities.
Engi¬

<

revenues are

iicient to absorb

B Some comment is pertinent on

increased

revenues

is

1

•

Rate

Questions

Generally speaking, state utility
laws provide not only that utility
service be rendered at rates which
are

1926

example, using

For

costs

as

index

an

figure of 100, by the end of 1947
the index had

cost of 1 kw.

in 1926

was

risen to 182.2, The
of generating

plant

$100, whereas in 1947

such cost had risen only to

$118.

Thus, during this period, simpli¬
fied and new designs and im¬
proved methods of construction,
larger size generating units, in¬
cluding boilers,' and better and
Jnore reliable equipment had off¬

set all but $18 of the increased
cost'per kw. While

it is

appre¬

ciated that the construction index

all forms of utility con¬
struction, nevertheless, the figures
covers,

shown are an indication of the
extent to which unit costs of ca¬

pacity have been reduced by these
items.;
A
:;B
of steam

Location

;

plants adja¬

shall

render

service

missions have to

for

•

circulating water has

made this practice possible.

In- the fields of transmission
and distribution, there have been
>

advances

instrumental

in

lower¬

come

to their aid.

their

respective

commissions

because of the unfavorable impact
of economic conditions arose after
the close of the first World

War.

During fhe post-war period the
price of fuel rose sharply and the
increase in utility expenses which
this increase occasioned; seriously
affected the net income of many

companies. In order to obtain
lief

from

utilities

these

conditions

sought

board

increases

others

introduced

in

re¬

many

across-therates

into

while

their

rate

by

means

increased

fuel

cases

position
had

of which charges to
costs.

some

arose,

made

In

cus¬

with

in¬

the first

commission

op¬

but when utilities

their

situation

clear

commissions generally authorized
the
introduction
of
these
rate

changes.

been

one-

Take

them.

has

asset

balance
that

situation

for

where

a

completely

written off and still is in

of

public

utilities

and

is

not

balance

the

Not

use.

and

loss

overstated.

do about it?

and

following

immediate

to

nues

statements:

critical

needs

"The
of

for sufficient

are

its

meet

the

ble detrimental effect

seem

possi¬

any

the elec¬

on

utility industry, quite the con¬
trary, the contemplated expansion
should

program

be

of

great

as¬

in keeping the
industry
healthy condition by provid¬

sistance
in

a

ing greater revenues and decreas¬
ing unit costs, so that net revenues
will

be

cient

in amounts suffi¬

earned

to

will be

attract

the

capital

that

required to meet the de¬

mands that will be made upon

the

industry in this future period.

Internal Revenue lent

year of
that it's

of

the

do

life

you

of

an

with stating
writing it all off in the

compared

acquisition,

you

ex¬

a

deaf

taxpayers.

It said taxpayers. The
Bureau said it couldn't be done—

so

just

had

and

we

the

method
was

one

to

of

ods such

a

develop

We might have
other meth¬

score of

the use-of

as

a

indexes

of

use

the method.

used

a

number

accurate

av¬

con¬

deemed the most

were

that

mature

on

method.

is

ment

inventory and the

indexes

the

But

this

argu¬
been
a

has

"metamorphosis from a method of
inventory pricing to a substitution
statistics for cost.

of

does

not

cost.

It

cost

recognize

pretty darn good!

Wider Application

only

ear to our early pleas that the lawsaid LIFO might be used by tax¬
payers. The law didn't say certain

of items in

and

.

substitute

LIFO

.

anything for

statistics to arrive at

uses

that

is

not

the

to

new

accounting profession. Inventories

reve¬

operating

would

erage value of each—but we didn't

and taking into considera¬
the
importance of stating

none

contained

it

having

the

you can

Burritt's

memorandum

at¬

the

to

what

And

value

but

statement

Well you do the best

phone Corporation, Commissioner
the

sheet

understatement

an

profit

as

of Theory

have been costed

Then there's the argument that
LIFO is bad because you don't

the

on

basis of

and fixed charges (interest
charges), and to make it possible
for the company to obtain the

know

engaged
the
National
Industrial
Conference Board" to

funds

to

prepare

be

in LIFO.

penses

to
construction

necessary

plant

which it

is

now

the
program
in

carry

is engaged,

on

.

..

Thus

that immediate relief
the' form
of
interim
rates

appears

in

should
pany.

be
.

The

granted

BBB:i -BBB/'

,

North

in

the

Carolina

ruling

com-

said

among other things:
situation (reduction in net

pany

"This

this

Commission

that

a

Com¬

pany

its

unprecedented

expansion
by the, sale of stock and

program

bond

issues.

It

is, therefore,

this

to

Commission

ap¬

that

the
several
regulatory
bodies, including this Commission,
provide rates which will provide
a fair profit to the Company the
expansion needed will be crippled
or negated.
.
it is obvious to
.

novice

the

even

that

unless

the

Company is put in a position to
give good service and provide
the necessary expansion the re¬
sult would be disastrous, not only
to the Company but to the public
as well.
in view of the above,
the Commission is of the opinion
...

that

the

charges
tioner

(increased)

and

rates

requested by the peti¬
which'
are
considered

reasonable should be granted.»,
The
United

Court
of
in upholding

Supreme
States

Federal

Power

the
the

the

fixing of 'just and

reasonable' rates, involves a bal¬

ancing

of

consumer

the

loss

sheet?

ance

of

investor

and

the

course,

than

asset

a

Com¬

bal¬

the

here

we

different kind

inventory.

Its dif¬

with a
difference in length of life.
We
have not gotten away from the
depreciated cost theory in fixed
asset accounting nor do I believe
we should.
This may seem incon¬
sistent, but to write up or down
annually (other than by way of
a
depreciation rate) the value of
fixed assets and
thereby affect
profit and loss would seem to be
a
mistake.
And although it is
primarily

deals

,

perfectly true that we have many

(particularly insurance
problems) which stem from our
failure to do so, there are other
problems

which

differences

make

would

opinion inapplicable
to fixed assets. It would be diffi¬
cult to establish that any business

LIFO

in my

requires to remain in business any
given number, value or amount of
fixed assets. Look at the balance
sheets
the

companies engaged in
kind of business and
variations as between

of

same

the

note

companies in the ratio of fixed to
total assets or to sales. But even
if it

were

need

true, which it is not,

for such a fixed asset

should

dling

the

han¬

interfere with
LIFO
The two kinds of

for inventory.

numbers

long

before

the

the retail indices for
And

only real objection toithe in¬
by the Bureau of Internal
was

indexes

pared

but

by

a

not at arms

not that

they were
they we're pre¬
private agency and
length as they would
that

have been if prepared by
a gov¬
ernment agency.
Some of us, I

might add parenthetically, argued
in the early days of LIFO in favor
of

the

arms

length

those

against
store

No I don't think

of

approach as
wanted
the

who

home made index.

or

LIFO

should

our

application

downed

be

accounting is based on
a
purely statistical formula.
It
strengthens the case if the case
is right.
,,
: B.;. - >
'.
All of which is merely to say
that to our way of thinking LIFO
is a true measure of inventory
evaluation, as true a measure as
exists, and under present circum¬
..

stances

a

better

.

,

measure

for those

than FIFO.
That it tends to level out the two
who adopted it in 1941

extremes of profit or loss as com¬
pared with FIFO and is, therefore,
very desirable from the standpoint
of the user.
That the effect of

this

leveling if used generally by
would be most helpful

industry
to

the

in

economy

softening the
the eco¬

impact at both ends of
nomic cycle.

Lapham & Co. Formed

New

Now let's come to

the

we

of LIFO to

—the
into

way

fact
the

be¬

the

cause

formed

with offices at 40 Exchange

use

use

matter of fact,

as a

dexes

Revenue

Criticisms

of

the

Retailers

Lapham & Co. has been

different—that's all.

assets are

index

not

the theory behind the use of

the criticism

have aDplied the
Retail Inventories

that

method

we

of

numbers has not too

interests."

When the Federal Power

Of

dealing with

ference

and

statement

Commission's

Opinion in the Hope Natural Gas
Company case stated that "The
rate-making
process
under the
i.e.,

and

..

Commis¬

the application

on

where the theory is going
stop. Should, for example, it
applied to fixed assets? If it is
so
applied, what further will it
do to the inviolability of the profit

are

for increased rates by the Southern
Bell Telephone & Telegraph Com¬

act,

Commissions

structure




fixed

the

estimate

unless

of

Cubstatio£> these

simpli¬

overlook

example

many

weaknesses

situation

asset

ties had to ask generally the aid

For transmission and high voltage

include

this

so

to

which

some

parent

generally have
taken full cognizance of the in¬
flationary pressures on the cost

ing average unit investment costs.

parallel

are

respect

values

Tele¬

Perhaps the first occasion utili¬

few

towers

r

■

for

ability of a utility to render
and adequate service com¬

bution

cooling

:: •

of Rochester

case

the
safe

in

mainte¬

the

in this plight is not in a
position to get new money needed

creases

of

In

and

to

utility

<;ooiipg water and fuel results in
savings in transmission and distri¬
and

duty

the

were

use

various

which is safe and adequate. When
economic
conditions
jeopardize

tomers-

Greater

in

criminatory, but also provide that

structures fuel adjustment clauses

investment

relief

income) is giving this Commission
grave concern because it is obvious

fair, reasonable and non-dis¬

cent to load centers rather than
jn relation to available sources of

nance.

of rate

there

with

cannot

sion

plants have helped materially to

pacity.

The Bell System out of a total
application for increases amount¬
ing to some $200,000,000 has al¬
ready been granted $130,000,000

expenses,

keep costs down in terms of ca¬
construction

sheet

through regulatory channels.

progress

struction

history of increases in the
telephone industry is well known.

a

But

defects

The

company

throughout and that
undoubtedly there are going to be
companies that will not fit into

absorb increasing

and continued
in the art of con¬
and
design of power

tion service for the Nation."

be

soon

I would like to remind you that
have been dealing with indus¬

uted substantially over the years

neering

railway transporta¬

as

so

to

and
,

conclusion,

tion

maintenance

will

we

improvement

vincing.

efficient

In

quoted below.

'J This economic characteristic of

points which have

and

efficient

credit

that instead of

sideration

decreasing unit costs has contrib¬

few other

in favor of

management to provide adequate

and

its

capital.'?

(Continued from page 12)

under

weakness by stating
other weaknesses is not too con¬

economic,

maintain

is

1947—first, because re¬
of former employees has
completed—second, because
heavy accumulation of -de¬

of work.

24%,;B ^

a

carriers

to

tract

because

during the
completed, and
third, because with new equip¬
ment
coming along with labor
saving devices, less employees will
be required for a given amount

spectively, while the incremental

'

honest

the

confidence in the financial

assure

extent that depreciation is a factor

war

in the future....

enable

having

The Larger Aspects of JilFO

sideration,; among other factors,
to the need of revenue sufficient
to

invest¬

on

integrity of the enterprise,

interdependence of adequate
earning and the efficient render¬
ing of service to the public is
exemplified by the two decisions

ferred

,

operating ratio amounted to only

purpose

point of view it is important that
there be enough revenue not only

freight rates said, among other
things: "Our duty is plain. The
law requires us to give due con¬

returns

corresponding risks. That return,
moreover, should be sufficient to

the

the

The operating ratios were 43%
38% for 1926 and 1930 re¬

lar;

8.9% rin

with

only

been

and

to

granting

surate

ments in other enterprises

sections
of the country. That the Commis¬
sions recognized their

hiring

op¬

erating 8.48 million kw. amounted
to only $13.45, or less than half of
the 1926 average cost.

262,000 in 1947, or
of 30% due largely

in
of

increase

the

on

the stock.

on

By that standard the return to the
equity owner should be commen¬

the end of

In

The

1944 to

of

amounted to 21.8 million
1930 operating costs per
kw. 'amounted to $23.9 and the
installed capacity to 30.3 million
kw.

201,-

the ICC

year

interim

an

dividends

employees will rise substan¬
tially over the number shown for

ca¬

pacity
kw.

employees from

following the end
of the war. In that period, hourly
wages rose from $1.11 to $1.37. It
is not anticipated that the number

$27.9

installed

of

increase

an

■.:

amounted

when

it

number

1926

the

.

operating

Similarly,
kw.

of

.

capacity. In
estimated that

reserve

has been
capacity of 15% will be
adequate for the future, and for
large integrated power pools a
10% margin will be satisfactory.
As regards the matter of payroll
costs, a portion of the recent large

increment of additional kwh. gen¬

billion,

of

Last

trend

this

that

reserve

0.7% during the period. Hence the

erated, which

think

to

and

company

-

ties rose from 65.48 billion to 86.11

debt

tric

\

stated in the Natural

we

operating expenses but also
capital costs of the busi¬

for the

ness. These include service

ac¬

on

following the sentence quoted

"Thus

As
you
know,, the railroads,
telephone companies and gas com¬
panies have sought and have had
granted substantial rate increases

In

Commission
court

above:

not already

coun¬

adverse

as

feared.

shows that the courts will uphold
the utilities against unreasonable

introduced into their rates where
were

indirect

and

not likely to be

are

as

direct

for

37

were

using

forced
index

much bear¬

ing on the subject. The Bureau

of

York

securities business.

Harry Lapham

in

Partners are

and David Gold.

Mr. Lapham was
ner

Place,

City to engage in the

Lapham,

formerly a part¬
Philips

&

Co.,

with which Mr. Gold was also as^-

sociated.

38

THE/COMMERCIAL &, FINANCIAL CHRONICLE;

(2670)

Thursday^ June 17, IS148

Stocks you now have are,
Anaconda, at Z2Vz; it's now
about 40. Avco at 4V£, now
(Continued from page 17>
about 63A;, Bethlehem Steel Other assets held outside the
at 31, now about 38; Lockheed trust, such as savings accounts,
life insurance,
at 15, now about 24Vzl Cater¬ savings- bonds,
annuities,
other - securities;
as
pillar at 55, now about 62 Mr, well as. real estate holdings
Dresser at 22, now about 30. which
may
or
may
not in¬
and United Aircraft at 15, clude a home.
The age of the

Tittsl bvasfmeiii Policy Arid Its Application

Tomorrow's

theory would dictate that, in the the- Trust Investment? Committee
purchase of securities; the, fidu¬ and Trust Committees -It is essen-]
ciary exercise good judgment in tial that the members fully under¬
the* purchase of quality* issues o|
stand- the manner in* * which, It
proven income stability* and safety operates so that misunderstand¬
to principal.
ings will not arise when it be¬
Although the* Commonwealth of comes- operative in a rising or
Pennsylvania
did
not
include falling market. The latter* is par¬
= Bx WALTER WHYTEs
beneficiary and his* or her life common stocks among- its > legal ticularly important if; common
now about 30.
expectancy- the number- of de¬ investments,' the same principles stocks are to be: purchased; or re-s
*
%
*
•
Resumption o£ bull move
" /
1
pendents, the size of the trust would apply to common stocks as tained in ah account.
\v.**
* *
It would be cozy if every account, etc;, all are factors to be apply to other types of invest¬
generates new optimism. Conr
Investmenl Principles, and ^ 1
ments.
sider present holdings, suf¬ one of these stocks would given special consideration*.
Under the a b o v e* investment
7kl
Needless to say, the formula?
Standards^ . ; .;
ficient for time being. A minor continue
going up, adding to tion of an investment policy is theory it is. important to empha¬
To permit the investment policy
dip from here can develop your paper profits.
Unfor¬ also governed by the powers and size. the responsibility of fidu¬ to operate and fulfill ife. 'function
ciaries^ to
into more than just "healthy" tunately stocks have ah irri¬ restrictions placed upon the trus
obtain
a
reasonable successfully there are a;J number
tee either by law- or in- the instru¬ investment return on* the assets
of * established; investment' prin¬
reaction.
tating way of going down too. ment. - Where investments are over a period of
years without ciples to guide us in om? work., V!
*
*
*
'T':
It is this proclivity,/ which
restricted to probate legals or a exposing the. corpus of the trust
Included^ among these* are the
Writing about a market sometimes goes toe far, that special class of security; the in¬ to undue risk'of loss. Although following: *
f.( l) The bond account shall be
which went up after you've must be guarded against. So vestment policy will; of course,; be the; above* theory/is generally aclimited thereby* In all other cases cepted-as sound.* theapplicatlonQf restricted. to money rate issues of
written it was in danger of back we go to stops.
Here where the
prudent; investment the* principle: tb'5 investments is high quality.. Under such a policy
..333->y- principle applies,- oi» where* in¬ still subject *■ to'considerable d if- the risk carried in the "account
going down, isn't easy or they are;'
<

Markets
Waller

Whyte

Says—

'

4

.»

■

.

'

,

.

.

,

-

.

,

.

It is one of
Anaconda, stop at 37. AvcOj vestments are not restricted- as to
tempted to hold. There's no reasonable type or class of.. security, y the
formulation of an investment pol¬
say
"Lemme alone," when stop I can figure out. Bethle¬ icy- will be governed primarily
hem* stop at. 36. Caterpillar^ by the risk the trust can afford
somebody; asks me about the
to assume under the specific re¬
stock market.
stop at 61. Dresser, stop at
or
objectives ; pre¬
27. Lockheed, stop at 2ft, and quirements
pleasant to do.
those

times

I'm

.

.

explain that I write
this deathless prose oh Mon¬
days, but an
explanation

That's

about

for

all

for

make

invest¬

is

largely restricted id the* equity

menly In so; far*

as invest¬ holdings. The stability of the bond
restricted to issues of accounts, both as to* income and

are

sound

quality, of

income

principal, is therefore, largely se¬

can be ne serious
difference of opinion.* When se¬
curities are purchased primarily

cured. The account is also assured,

proven

stability,, there

det ermined

There are plenty of
jingling,
varying economic conditions is an
pockets or well nourished other stocks I like, and if I important factor in, determining
wallets.
I could say that on had sufficient confidence in the amount of risk to be assumed;
There
is,, also the question of
Monday last, when I took a the market, would mention
maintaining adequate flexibility
jaundiced view of the market, them. But things being what in the investment portfolio te per¬
I was right because the next they are, I think you have mit the proper handling of the
two days prices did go down. enough to handle for the time investments in keeping* with
sound i n v estm ent principles.
But on Thursday and Friday
Thus, the amount of risk to be
they went up, so there I was
assumed will vary according to
More next Thursday.
the individual circumstances 'ap-r
with a column in print, and
—Walter Whyte
plicable to a particular account
in your hands, hardly worth

doesn't

ment

for the for appreciation* or better-thanaccount.
The amount of stability average return, and income and
of both principal and income re¬ market stability are lacking, the
quired to meet the objectives of responsibilities of the trustee are
the account at all times under not only increased, but the ulti¬

viously

United Aircraft at 27Vz.

I could

ferences of opinion among*
ments

,

sufficient

of

flexibility to meet
unusual contingency at little

any
or

sacrifice to the. trust.

no

to that of

scheduled

hedge

such

rates.

policy

question

ous.

of

an

will

subject to seri¬
Thus* the adoption

are

investment program which
meet with the investment

requirements as to preservation
of principal and reasonable in¬
will have

come

the

a

distinct influence

and investmenJ
characteristics of securities best
suited for trust investment pur¬
on:

chase

quality

retention.

or

-

Aside from the legal restrictions
as: to what type or class, of secur¬

changing interest' xategi

Bond maturities should be

(2)

mate benefits to be derived from
a

The

element of risk is largely reduced

of

assured

rate

the

over

years

as

'a

against changing interest
The beneficiary is
thereby
of

least

at

return

the

average

the

over

year^

through the reinvestment o£ casli
received from, maturing' bonds., ti
also provides ready funds iyitH
which to* meet contingencies^ or
with which to. take advantage of
investment
opportunities
froiii
time to time.

In addition to, the

above, the applicatjoa of; a chi'boff" system, or its, equivalent, will
require a ready source of cash
funds, with which- t.o. purchase' se¬
curities in a declining market -Ajl

{The views expressed in this as well as the investment require¬
the paper it was written on.
article do not necessarily at any, ments necessery to properly ity; constitutes
a
proper
trust
Worse than that,, the stocks I time coincide with those of the service the account investment- investment there is the overall
advised getting out of, moved Chronicle, They are presented as wise. .V
::
3-:3 policy of determining what classes of these factors call for a
wgil
Once the above facts have been of ; securities ^ bonds,
those of the author only.}
preferred allocated
maturity schedule.
:
i
up leaving; you high and dry
ascertained, a suitable investment st^ksifrnd -common stocksr—shall
(3). Bond premiums should; bd
With nothing but memories.
policy, incorporating sound in-; be: purchased or held in accounts amortized so that the interesrire^
vestment p r i n c i pies, jriay be wherein restrictions are waived
ceived will reflect the true retufn
formulated and adopted fon the The purchase or retention of com¬
obtained on
.

Reynolds & Co. Place

Usually

who
makes such a mistake clears
out of every thing and retires
until he regains his equilibi
rium. Me,; I just retire to
sulk,; muttering
ominously
"They can't do that to me."
the

trader

account.

P

Reynolds

&

Co.

announced

June 16 that it has placed pri¬
vately with four insurance com¬
panies a new issue of $5,000,000
Brown

&

sinking
June 1,

Bigelow

fund

15-year

debentures

4%
due

In

able

interested parties- to

Proceeds from the sale of the
debentures: will be used to refund!

to the

followed,

investment

be informed

investment policy to be
as well. as to, become

acquainted with the reasons: un¬
At this writing we still have
derlying Its adoption;. It^hotipnly
short-term seasonal borrowings
affords an excellent opportunity
a few stocks
to comfort us
and to provide additional work-, to become better acquainted; with
during this advance. They
ing capital to finance the com¬ the customer's needs, but; invari¬
don't; act like world beaters,;
ably
promotes
good :. customer
pany's expanding, business.
/
but they're alright. The temp-*
relationships which facilitate the
Brown & Bigelow is engaged in
economical] and efficient handling
tation, is great to add to hold-'
the design, manufacture and sale
of the trust.
\
■ *
-

.

lugs. The danger is equally of a
wide range of articles, inOverall. Departmental Policies I
great that a whipsaw can de¬
eluding paper products, engraved
Governing Trust.
sH;velop. So rather than buy
.,*■
products,
leather
goods* metal'
'v Investments;; y: ^
anything more, I suggest sit¬ and
plastic novelties and playing?
With prudent investment prin¬
ting; tight with what you have
cards.
The company was a pio¬ ciple gaining in; popularity yearly,
and let the hollering die down
a review of this principle- would
neer in
the- field of advertising;
before you make any new
appear appropriate- at this/ time;
calendars, and believes it is the- One* of the mapy States to amend
moves,;
•> '■■■ ■
' '■?•
.

largest manufacturer of this prod¬

%¥%%, Equipment Trust
Certificates

Due each October 1, and April 1,
,

txom Octpber 1948-April 1956
To. yield

t35%-2,65%L

Schwabacher & Co,
Members

New York Stock Exchange

Nep York Curb Exchange< (Associate)
San Francisco. Stock Exchange

Chicago Board, of. Trade
14. Wall. Street

New York 5, N» Y,

pOMSmidt 7-4150
Private Wires* to,

Teletype NY 1-928

Principalt Office*

BSCS-, frsneisc*— Snnt* Barbara
Meaterey — Oakland — Sacramento
Fresno




on

securities eli¬

least

participation in

some

the

growth of our ieading industries
and companies; : Witb the amount
of risk to; be assurne^l; id* an ac¬
count

vestmenrii^licy^ the ^l^ti^h/pf
securities,

tp be held iri ia (rust is

a matter; q^v selectibh ;o|
assets, in keeping with the ovef-^
all policy governing the adminis¬

largely

tration of investments
count
In

in

an

ac¬

3

.

the

administration

investments,

of

trust

the*

adoption of a
plan
of
operation
whereby
a
proper
balance, will, be main¬
..

tained at all limes as between*
risk assets and high-grade fixed
ncome

to

<

securities is,

sound

note

a

prerequisite
Thus

administration.

the

gible for trust. funds..; in recent
years,
is the* Commonwealth of
Pennsylvania, in lieu of closely Yale. Plan, Vassar Plan,, etc. /
j
Fi A.; Peters Co. Partner^
defined limitations; bhriassets, and ;:: The: * principal
advantages
of
PATERSON, N, J.—Partners of earning's protection^ the new law such a plan* are to* avoids assume
F. A. Peters &. Co., 407 East 42nd| stresses
the
"Prudent Invest¬ ing, undue risks : during periods
I quote:
; .
Street are Carolyn ¥. W. Peters ment" test.
when prices are rising and to pro¬
limited
"In the case of both, bonds/and vide a means for increasing the
partner
and Adele
J.
Diehl, general partner.
preferred.: stocks,
the- amended equity holdings during* periods of
law refers to. issues--which any declining prices. If followed dili¬
fiduciary may purchasei im the gently, it will have a tendency to
Now Sole Proprietor
exercise of that degree of; judg¬ smooth
out
the • extreme* price
BOSTON; MASS.—Frederick M, ment and care under ther circum¬ fluctuations in an accotmt and;
Swan is now sole, proprietor of
stances
then} prevailing, ...which make for a more, aggressive policy;
Swan, Stickley- & Co., 75 Federal mens of
prudence, discretion and in, the supervision* of investments.
Street.
•
intelligence exercise in the man¬ The net. effect of such a program
».mmmeeggyg/gg/ggmrnm
\ m
agement of their- own, affairs; not is. to assist in. the sale of the least
in, regard to speculation but in desirable, holdings in- a rising
Bernon Sheldon
reeard to the permanent dispo- market.
It also* provides for tbb
Prentice Dead
sitaon; of their funds considering orderly supervision of asse,ts< over
Bernon Sheldon Prentice, part-* thg probable income tof be derived the; years, in keeping "with; the
ner
in Dominick
&
policy previously
Dominick, tberefrom as well as the probable investment
New York City,; died suddenly at safety of their capital".
adopted; for the account.
uct in

Illinois Central R. R.

its, restrictions

stocks in trust accounts is
largely a matter of policy. Ordi¬
narily, the purchase of common
stocks affords a somewhat greater
return, than, obtainable f romhigh-r
grade bonds. tn addition,dt makes
for
greater " investment; ^diversi¬
fication as welt as; pfoyides for at

the United. States.

growing popularityof the so-called chip-off system,

we

,

*

..

.

—

pyi-w

.

i

,

..

,

Hot Springs, VaM of a heart ail¬
ment.

He

was

66 years old.

From* the above, it would anpear
that

the

prudent

the investment.

mon

•

it is advis¬

policy with the creator of the
trust or with the beneficiaries of
the- trust.
This will* enable all
as

1963;. !■:.■. A

*

many instances
to. discuss the

investment

The adoption of

This

is purely a

matter of proper ac¬
counting procedure. \
*; / -f'
(4) Security; holdings sbould: be i
diversified: both as to industry and
ioihpany/ As tor quality- issues of
unusual growth prospec(s,,thepol¬
icy of diversification presents a
difficult investment problem;; id
cases of this, type», extreme care
should be exercised, iti, the. timing
of partial liquidation; so;; as to

obtain

as

reasonable

price for

a

the stock as. prudence will permit.
In rituations such as this, retention

Of a;*sonaewhat larger; holding is
jusitified vbm the basik that there
is less risk
entailed in retaining
the issue than is. the purchase of
other issues, of satisfactory qualify
but with less growth, possibilities

offer.
Speculative concentra¬
tions should be liquidated or at
to

least

diversified :af

the

earliest

opportunity tp receive a. fair price
for the stock.
In general,, a* pro¬
gram for the liquidation, of the
holding should be determined, at
an. early date..
^ v.
|
• ">;•. ■,;
(51 Security
be

restricted;

purchases
to»

should

issues

actively
tradecfpreferable.securiticslisted
and ,actively traded: on a .nationally
recognized stock exchange;
In
case
of liquidation or purchase,
the. account isi protected; against
unusual

loss,

through

execute orders, promptly

imum

of

cost

fluctuation.
die

in

ability to

at a min¬

market

price

It further minimizes

multiple trust problem with

which

all

confronted.

trust

companies

ar.e

/

(6) In; the. event of

your

invest-

meiit. policy provides/for the» pur¬
chase of preferred; stocksc it is

recommended .that; all

purchases
high, grade; issues
in * appro ved industries; wherein
little debt te likely to be outstand¬
ing ahead of the issue;
Sinking
fund provisions are to be; pre¬

be restricted to,

a plan of oper¬
ation should have the approval of1 ferred but

are

not

a

determining

Volume 167

factor in the purchase of the issue.

The decision to buy should be de¬
termined on the quality and price
of the issue and not

on

the

con¬

vertibility of the issue,, etc.
(7) Common stock purchases

should

limited

be

to

common

equities of outstanding companies
In approved industries. Only com¬

panies with proven managements
over the years and whose, earn¬
ings are supported by wide di¬
versity of products or services are
recommended for purchase. Com¬
panies with poor earnings or divi¬
dend records
stantial

modity price levels, in the future
earnings outlook for industry as
,

well

the risk

as

inherent in

the

under

capitalization of industry.
In addition, there are the mone¬
tary factors relating to interest
rates, taxation, and the U. S.
Treasury's policy with respect to
the handling of the public debt.

what

a

is not to be de¬
It would appear, therefore,
equities should not exceed

amount

the account

established

the

the

the

purchase

to

be

in

assumed

of

on

contrasted

as

about the qualifications, if a rea¬
sonable explanation can be given

look

|or the deviation from the stand¬
ard.
Most standards are fairly
well recognized in the trade by
those who are familiar with se¬
curities. The principal differences

policy

account.

the

can

afford

to

If

-

carry

risk, the sale or retention of
holding will depend largely
the market price for the issue

^There is nothing hard and fast

to

will

bring about Severe
price fluctuations in the aggregate
value of the account.

security. Retention
inferior quality re¬
quire that the stock to bond ration
adopted for an account be recon¬
sidered in the light of the addi¬

of securities of

tional risk involved.
In

In the latter

case

yve would recommend the
adoption of a modified program
of operation in the
handling of

has

ance

investment

men are

the normal account,

the

ap¬

not in
dater-

been

/ One-third
of

invested

r'■Ordinarily, if the companies are

bonds

chase of additional

little if any

differences will arise

sound

the

in

herent

program

issues, so that a
for bringing the

equities

highest quality.

leaders in their respective fields,
in the evaluation of the risks in¬

in

high grade

One-third invested in

variations in investment programs,

as

provides
unusual

a

a

reserve

reserve

for the pur¬

contingency..

One-third invested in high
fixed

readily formulated.

;

'y J >■ Investment Supervision
In addition to

the employment

of sound investment policies there

is the need for careful supervision
of investments to conserve the
corpus

curities

grade

income securities as a per¬

manent

be

followed

for

changes

affecting the issue, the company
and the industry, as well as the

the funds

of

\

,

will be used in the

purchase of equities at any one
time. A scheduling of bond ma¬

prices at-.which, the securities are turities not to exceed ten years
selling.
vi; V';
\
/I" should provide ample liquidity
to meet all cash requirements. In
To keep
abreast of changing
cbnditions within industry, infor¬
mation as to the growth trend of
the industry, profit margins, com¬

general,

a

all

bond

15

years

scheduling of the over¬
account of from one to
will

sufficient

provide

petition, plant expansion, capital liquidity to permit the successful
requirements as well as industry operation of the adopted plan of

greater confidence in the bank's
management of their funds. Fur-

have found

we

that

spread in yields as between vari¬
ous

classes of securities.

For

ex¬

ample; the spread in yield as be¬

count

invested

should

not

as

an

stock.

in

30%

fluctuate

account

as

billion additional government ex¬
penditure that was not an imme¬
diate prospect last January.

How

will the effects of this

soon

additional

expenditure be felt?
The general opinion seems to be
that substantial direct effects will
not
be felt
for some months,

has been
this

a n

good deal of talk that

a

t ic i p a t e d

government

spending will offset the slacken¬
ing in some types of private
spending that some persons have
The

projected govern¬
ment outlays, together with tax
reduction, have diminished if not
eliminated
the
prospect
of
a
Treasury cash surplus during the
balance

this

of

calendar /

will

be of more consequence to
banks and to financial institutions

than

non-financial

to

corporations.

;

business

/

Two Key Questions

In appraising the effects of these

expenditures

be

their

effects

accumulation?

on

.What

inventory
will
be

their effects

invested

stock

inventory
amounted

accumulation in
to $6.7 billion.

1947
This

figure may be compared with $7.5
billion in 194-3 and $.2 billion in

government bonds or

1945.

its equivalent need not be as large
in the former case as in the latter

have

Such little evidence
so

far

on

the

as we

behavior of

attractiveness of varying classes of
issues for purchase or retention.
There is also the spread in yield

estimate of business expenditure

as

between securities of different
-

v

The economic factors must also

be considered in the proper man¬

Another factor to be considered

they

are

less than

1948 suggests

that

increasing at something
the

to

of investments is in order. v /

•*!>

so-called

"sustained

movements" in the security mar¬

6)

page

wholesale price index
Department of Labor in"
stayed within the limits of
80-90, but this spring it has clung
persistently to 160. During 1941,
we still had
something like 8,000,000
unemployed, whereas, this
Spring, there have been little
the

Of

1941

ployment

,

in

seems

prospect

centage increase

of

one

per¬

year

as

against another has been steadily
dropping,
The figures for 1948,
for example, are only 15% ahead
of 1947.
Ever since the Depart¬
ment of Commerce began making
these preliminary estimates re¬
garding plant and equipment the
preliminary estimates, such as the
$18.7 billion just mentioned, have
had to be revised upward in the
light of subsequent events. Such
may be the c£?e again this year.
On the other hand, certain types
of foreign shipments, such as steel,
may make it difficult for par¬
ticular
companies
to
complete
their plans. Finally, should prices

If 1 may speak briefly

net

working

capital

business

tions

at

in

1941

for

corpora¬

around

$32-$33

billion, but the most recent esti¬
mate of the
SEC for working
capital is $60 billion.
Profits
after taxes in 1941 were $9.3 bil¬

lion, which

was a

sharp advance

1940 and higher than the fig¬

for 1929; but, in 1947, profits

ure

after taxes amounted to approxi¬

mately $17 billion, and during the
spring of this year profits seem
to have been running 10% ,to 20%
above the 1947 level. While these
recent

figures do not allow for
the
under-depreciation that is
taking place in view of high re¬
placement costs/they nevertheless
are impressive.
Moreover, it
seems unlikely that 1948 profits
will include
of

as

large

a

percentage

profits as was the

inventory

case

in 1947.

Conclusion
In conclusion, let me summarize

great as to be likely to
underlying pattern
during the balance of the year,
although if these expenditures
should induce a precipitate price
advance
the
postwar
economy
would clearly enter a new phase.
appear so

distort

this

'

in

short

supply will be shipped
am
doubtful if these
outlays can drive plant and equip¬
ment expenditure much more than
10% above the $16.2 billion level
of 1947 or force inventory accu¬
mulation much above $4-$5 bil¬
lion, as against a figure of $6.7
billion in 1947,1 In short, I expect
a continuance of the postwar high
abroad,

I

level

Experience of 1941
The thought may have occurred
to some of you—what about the

experience of

1941, when arma¬
expenditures were rapidly
expanding? What lessons can be
drawn from that period which
may be instructive at this time?
ment

economy,
perhaps at a
slightly higher level than at pres¬
ent,
A real joker in such "guess-^

timates"

as

of

my opinion, the situation in
1941 was so different from that

if

that

of little

far

as

our

aid

experence

in

then

understanding

offices

in

engage

the

of the firm.

.

shortages

still

—

Ackerman

Buehler

L. K. Ackerman is

ness.

wartime

O.

Building

in the securities busi¬

1942

certain

mean

Associates has been formed with

agencies

developed in 1941 and
provide help in an
acute situation.
For example, at
the present time, business activ¬
ity is at a very "high level and

I

behavior

the

prices.

WOOSTER,

conditions; except in so
to
techniques of procurement

could

r

Ackerman Associates

In

1948

these—and

"guesstimates'^ -is

present

$6.6 billion.

regarding

subject for today, working
capital and profits, I would like
to point out that the SEC has esti¬
my

my thoughts somewhat as follows:
either increase or, decrease radi¬ 1 cannot
imagine that rearmament
cally during the remainder of this expenditure or European aid will
year these dollar estimates would tend to reduce
profits or diminish
need to be revised, even if busi¬
working capital needs.
On the
ness plans were carried out.
other hand, I would not expect
The behavior both of inventory them to produce extreme or dra¬
accumulation and business expen¬ matic effects so long as radical
diture on plant and equipment price advances are not precipi¬
suggests that the immediate post¬ tated and so long as their pros¬
war business expansion is slack¬ pective magnitude is not greatly
You
will
note/ of
ening its rate of growth, although increased.
the expansion does not appear to course, that both these provisos
be completed as yet. This process leave me plenty of latitude.
of tapering off at a high level
The effects of these expendi¬
tends to support, even to augment tures will
probably be most di¬
moderately, both the prospect for rectly
foreshadowed
by
their
profits and the need for working influence on inventory accumula¬
capital. Incidentally, the ratios of tion and business expenditures on
net current assets, of inventories,
plant and equipment.
Since the
and of plant and equipment to
economy is already operating vir¬
gross business volume are still tually at capacity, and since ap¬
well below the ratios prevailing preciable amounts of some items

recent

Department of Commerce

for

this summer.

over

rising steadily since 1944, the

in

1947

for plant and equipment in 1948
is $18.7 billion,
In 1947, the cor¬
plan of operation to maintain a
responding figure was $16.2 bil¬
proper balance, of risk in the ac¬
count.
Under a plan which is lion; in 1946, $12.0 billion; in 1945,
to

principles

management and supervision

rate—perhaps
two-thirds of that rate.
The most

is the method adopted under the

sensitive

investment

sound

the

upon
profits and in the decade before the war. The
earning capital needs I believe the magnitude and impact of govern¬
two key questions are: What will ment expenditures do not, as yet,

inventories in

quality standing/

account, that a satisfactory invest¬
ment policy may be formulated.
Thus, having established an in¬
vestment policy it. is equally im¬
portant to establish an investment

(Continued from

government bonds, munici¬
pal bonds and high grade corpo¬ instance. Thus all other factors
rate bonds, preferred stocks and being
equal, the percentage of
common
stocks afford a sound funds eligible for "G" bond in¬
vestments will vary accordingly.
means of determining the relative
tween

an

Effects of Rearmament
And ERP on Business

broadly
50% in

The percentage of readily

marketable

the risk to be assumed in

non-financial

-

the general investment policies
relating to the timing of purchases
and sales as determined by the

as

mated

on business expendi¬
ture for plant and equipment?. If
research, Jiew products, etc., must operation over the years.
tie followed closely. The above / The risk assigned to an account we could get good answers to
factors provide a fair measure for as determined by the investment these questions I believe we could
appraising the overall manage¬ policy will materially affect the go an appreciable distance to¬
ment of the industry as well as plan of operation to be followed wards forming judgments regard¬
for a particular company.
In ad¬ in the servicing of investments in ing working capital needs and
As you know,
dition to the above studies, there an account. For instance, an ac¬ future profits.
are

combined

has been done, the application of

year.
ample
Since for a good many months a
buying power is reserved for the
cash surplus has been the prin¬
purchase of additional equities in
cipal instrument of credit control
the event of a market decline. All
and of debt management, I would
funds reserved for the purchase
assume
that during the coming
of equities should be restricted to
months we will see the evolution
readily marketable U. S. Govern¬
of new mechanisms of control.
ment obligations. Such funds need
Presumably,
such mechanisms

It is of im¬ not be restricted to bonds of rela¬
therefore, that all se¬ tively short maturity as not all

of the estate.

portance,

understanding of the investment
requirements of an account as well

must be determined. Once all this

equities. Also
feared.
to meet any

revolving fund. lished investment policy may be Ik Under the above plan,
account into line with the estab

for

used, that it has

.

|ty is being purchased, are funda
mental
differences making for

sound investment policy for an
account. It is only through a clear

well received by our bene¬
ficiaries.
They appear to have

been

plication of investment policy to
the supervision of investments is although indirect effects will be
the standards adopted to
observable sooner.
The prospect
paino the investment caliber of a less involved than in the previous
of these additional expenditures
If the policy calls for a
security but in the application of case.
has
of course
already brought
the information. Thus, variations ratio of 65% fixed income securi¬
some changes in the business out¬
in the evaluation of risk inherent ties and 35% equities, the over-all
in a given security in relation to investment composition of the ac¬ look. (The stock market J[ias re¬
sponded, in bullish fashion.*" There
count will be as follows: V
the purpose for which the secur
among

it did not go above
165, whereas
more than a
year it has stayed
within the range of 180-190.
The

a

philosophy as a guide to follow more than 2,000,000 persons un¬
in the handling of investments. employed—and,
surely, an un¬
the account.
Once the guiding principle has employed man in 1948 is a dif¬
We have found that in accounts been
ferent economic and social entity
adopted, a plan of operation
where a plan of operation for for
keeping the account in pronei than was an unemployed man in
1941—and a record volume of em¬
keeping the trust in proper bal¬ balance with the investment
policy

future out¬

the

the

for

ac¬

estate plan to the formulation of

afford to carry as

for

account

the

securities for trust
investment purposes is established.

risks

the

can

measured by the investment

application of
quality standards that control over

instituted,

trust account

sired.

and un¬ from its estimated fair value. The
usually burdensome tax problems sale or retention of these assets theremore,
s
should be avoided.
largely governed by the risk

-It is through the

be

sold.

complications

39

points purchases and

should

count if the usual procedure in
tile handling of managed funds is
to be followed. Any excess of this

,

(2671)

The
steel
through the use of such planning ent.
industry, for
will that we have been more success¬ example, operated in that year at
be determined largely by the in¬ ful
in
keeping the investment sometning like 80% of capacity
dividual policy you wish to follow risks in line with the investment and
only some 65 to 70 million tons
in the handling of the investments.
of steel were produced.
policy for the account.
Although
Ordinarily unusually large fluctu¬
In closing, I would like to again the Federal Reserve index of
pro¬
ations in the aggregate value of stress the
necessity of an adequate duction rose steadily during 1941/
sales

35% of the total value of the

a

proper

Application of Investment Policy

.Quality Standards

CHRONICLE

distinct bearing on- the
handling of trust invest¬
ments, particularly in the selec¬
tion of issues to be purchased or

have

issues

political

FINANCIAL

that

preferred stock
Once the investment policy for
outstanding, or are under¬
capitalized, do not afford the sta¬ an account has been determined
the sale of assets to bring the ac¬
bility of income desired in trust
accounts. Greater risk to princi¬ count into line with the adopted
pal is incurred in the price fluc¬ policy will require careful hand¬
tuations of these issues. Growth ling. This is particularly true of
industries, of a non-cyclical nature securities paying handsome divi¬
Unlisted securities almost
which meet the quality standards dends.
are preferred.
Industries subject ilways present a problem in that
to severe price competition, labor yield is high or this security is
problems,
inventory
problems, selling at a substantial discount
or

At

&

All of the above factors and others

which have sub¬

or

debts

COMMERCIAL

THE

Number 4708

'

principal

/

Joins Sweney, Cartwright
{Special to The Financial Chronicle)

*

-A number of observations may
COLUMBUS,
O. —Robert
F.:
persist, whereas, in 1941, there
agement of trust funds. Included ket, it is desirable thai the account
is
now
connected
with:
properly be made regarding these was a good deal of slack in the Kern
among these are risks inherent in not become over-activated, or ex¬
the current outlook for business, penses,, brokerage fees and other statistics.. While expenditures on economy and the surplus condi¬ Sweney, Cartwright & Co^ Hunin maintenance of present com¬ charges will prove excessive.
plant and equipment have been tions of the 1930's were still pres¬ fintfirtn Ttanlr RlllMltltf




40

*

FINANCIAL CHRONICLE

&

COMMERCIAL

THE

(2672)

standard of living for its
people and a great ac¬
of productive power
in all fields of human endeavor.
high

Fundamental Facts
sustenance

its

the

located

are

about 60% by value

of
If
the next generation succeeds in
increasing present levels of pro¬
total imports consisted
crude materials and foodstuffs.

of

our

rate as during
the problem of

duction at the same
the last 25

years,

assuring imports of raw materials
required for maintaining Ameri¬
can
employment and American
living standards will indeed be¬
come serious. These imported raw
materials now include such vitally

important items of food

and drugs

markets

all

in

without discrimination to any na¬

becomes

tion,

world around.
In the past,

materials,

raw

(Continued from page 19)

interest

to

us

well

self-

of

matter

a
as

others.

as

Consequently, too, as never be¬
fore, foreign policy, as it relates
to foreign economic policy, be¬
comes
vitally
concerned
with
compliance with this provision of

existence of such

basic industries

steel, oil and automobiles.

as

The realization of this

depend¬

What Is Free Enterprise?

Inasmuch

as

discussing

are

we

Foreign Trade in the light of the
System

American Free Enterprise

appropriate to define the
"Free Enterprise." The In¬
Conference

Business

ternational

tive

enterprise in preference to
monopolistic enterprise
This is
because
the
American
people

upon

importance to our
nation of that provision of the
Atlantic Charter which promises:
fundamental

"Equality of access to the world's
raw
materials
and
markets to
vanquished alike.";

victor and

ties

of

our

,.

of the necessi¬

dislocation

The

economic life,

not to

mention the comforts of existence,

occurred

such

as

cent

during

the re¬

war,

strated
in

our

has strikingly demon¬
fallacy of any belief
own self-sufficiency.
the

and

which have

been the funda¬

mentals of their political and eco¬
nomic system."
:'Z1

Our Resources
United

The

blessed with

a

reserve,

in

measured

other

been

nations;

terms

of

nevertheless,

some

the

at which these resources are

pace

being consumed by industry is so
great that many are becoming
alarmingly depleted. Suffice it to
mention that the steel industry
used

the war and con¬
almost 100 million
tons of iron
ore
a
year.
Such
quantity, in many foreign nations,

tinues

during
using

would be considered sufficient to

served

clearly in

are

reconcil¬

the interests of all, and

with

able

"We

not, therefore, accept
necessity of government de¬

the

voting its

resources

the

of

government are but
the resources of the citizens, and
resources

in this area its activity is in¬
herently competitive with theirs."
"We believe that controls which

adopted

are

emergency

as

meas¬

cannot be allowed to be ex¬

ures

ercised longer than the emergency

without serious damage to

itself,

economic

health."

the

wealth of

governed, or provide for the

needs of all of its citizens as well

citizens

these

as

themselves

can

We believe that govern¬
best serve by providing
a
maximum of opportunity for
the individual. We believe, more¬
provide.
ment

can

this

that

over,

wholly con¬
government provid¬

with

sistent

is

low other

mensurate

nation.

take.

as

We

courses

than the

one we

Our course, as we see

it, is
freely and trade among

to produce
our

us

various

communities

as

we

always

have, as private enter¬
prisers, and in that capacity and
in that spirit to trade with other
be,
prejudice

so

far

without handicap: of
discrimination.
To

policies

differ

eco¬

from

our

own, difficulties may arise; to
solution of these difficulties

pledge

our

the
we

earnest attention and

cooperation; but we cannot con¬
scientiously part with our birth¬
right, in so far as concerns our
own

participation in international

trade."

American

our

of living, can be pro¬
only by the individual en¬

standard

vided

terprise, energy and productivity
of the people themselves."^/;

of
is the
Free
Enterprise System. They
will stand or fall together.
1
from

Inseparable

constitutional

form

our

democracy

.

,

or

the extent that other nations'
nomic

as

with

1,

Our

Foreign Trade Development

To complement my observations
on
international
commerce
in

general, allow
minutes to

a

me to devote a few
brief review of our

commercial

our

policy.
the three-quarters of a cen¬

In

tury
preceding
the
last % war,
sweeping changes occurred in the

"We recognise" that in our own
short history, the principles: on

picture of the business relations of

which our American concepts are
based have been broadly applied

side

the

United

States

out¬

the

with

Prior to the depres¬

world.

sion of 1873, a

persistent

excess

investments
of foreigners, mostly British citi¬
zens, in the industries of a young
America fast growing to the sta¬

of

crisis

..

our
domestic market, unfor¬
tunately do not exist. The incom¬
plete facts known,, nevertheless,

lead to the conclusion that, aside
raw materials for which

Yet

measures.

the

fact

is

clear

that in America today enterprise
is more solidly in private hands,

nation

amply secured from

sumed.'.,

'

f

to

miracle

perform

of

the

American

production
'

years."

over

the

ent

on

are

even

more

depend¬

American supplies, for the

time being at least. Over the
long

private enterprise
is the right of the
citizen, as an

capital; to

own,

mechanical
The

use,

of

means

reward

of

and risk the

production.
is

profit,
penalty of failure is the
success

period, however, America must
realize, as do certainly foreign
nations, that we are indeed vul¬

and

the

loss

of

nerable in

vide

the incentive to

tive

and

productive
these

run,

Jiave

our

very

power.
same

within

strength and
In
the
long

foreign nations

thetr

what

has

been

Nothing else than

this

ventured.
can

pro¬

that initia¬

efficiency upon which
economic progress is built.
The

power, should processes of
exploration, research,
they choose to use it, the means- invention and
experiment are all
through throttling imports — to characteristic of free
private en¬
dictate our industrial index, and
terprise."
■
*
*."
hence our employment, prosperity
"And
without
such
economic
and
even
political
and
social
•.

peace.
-

Thus, the provision of the At¬

the

After

of

excess

an

freedom, without substantial free¬

dom of the individual to seek his

living where he

find

3°'s.

1873

exports

ap¬

can

-/^v;,,//•-•;/
character

The

also

trade

stuffs,

of

international

underwent

striking

Ray materials and food¬

change.

which

tribution

ally

our con¬

.international

the

replaced

tured

gradu¬
semi-manufac¬

by

were

manufactured

and

consti¬

previously

to

movement of goods,

articles.

The importance of Europe as a re¬

cipient of our products rapidly
declined,
while
the
Americas,
Asia and to

imported

lesser

extent, Africa,
more of our
On the other side of the
a

more

products.

and

balance, our imports, which in the
early days were principally com¬
posed of finished manufactures,
progressively

changed

materials and

semi-manufactures.

to

crude

Europe lost its outstanding sales
position and the Americans, Asia,
and again to a lesser extent, Africa
emerged as important suppliers of
our

needs.

These

trends

readily ex¬
plained by the history of our
country, by its miraculous flower¬

it, and to
lantic Charter guaranteeing venture
his means where profit
equality of access to the world's seems
likely, and to be obliged to- ing




nations.

of

tuted the main classes of

"The basis of

Dependent as we are as a na¬
individual, or jointly with others,
tion, upon the wealth contributed to set up in business for himself—
to us by foreign countries, these to
venture his personal efforts and
countries

cert

con¬

port during the early 20's and late

more

overlooked, I am afraid,
leading to much fallacious think¬
ing and heaping much abuse upon
America

into

a

great

are

nation, with

a

wanting to buy,

for not

only to sell and

and

rather,

sell and sell.
Let

amount of com-*

the

1938,

year

representative
of

good
85%

a

year,

prewar

imports by value were

our

for

counted

only

by

ing the acount of our receivable
foreign assets; especially when
our
national resources begin to
dwindle.
World

100

items.

Items
was nominal
accounted for 32%.
Thus, 73%
of our imports, again by value,
in a normal year are not seri¬
ously affected by duty.
then

can

be

free.

said

who

conflict

among

heart,

will

has

ceased, but
happy in his

is

us

content

Peace

and

assured

endure?

that

Would that I

could

assure you of my conviction
of "Peace in Our Time." \
,

I

have

to

come

know,

J

I

and

think

somewhat understand, for¬
eigners. There are many kinds of
people in the lands beyond our
shores. The vast

majority are just
plain folks interested principally
security and happiness and
seeking the opportunity to live?

that

and let live.

ac¬

of our total

Forty-one per cent
imports were duty
on
which the duty

could make

we

in

look at the facts.

us

Taking

nor¬

mally we buy some 70% of our
imports because they are essen¬
tials or accustomed amenities, and
the volume of such imports will
vary directly with the economic
activity or prosperity we enjoy.

We

*

$

Americans

are

fortu-

more

nate,

perhaps, in having as our
tradition, the inspirational guid¬
of

ance

Bill

Declaration of

our

pendence,

Inde¬

Constitution

our

and

of

Rights, the Emancipation
Declaration, which immortal
documents

took
where the
up
Magna Charta and Habeas Corpus
left off—and in our great men of
history; such men as Benjamin
Franklin, George Z Washington,

Thomas

Jefferson, Abraham Lin¬
Wilson, whose
social,
political
and
economic
thoughts and teachings have left

coln and Woodrow

Duty action to increase this 70% their indelible mark upon our na¬
area
of imports will have little- tional philosophy and character. effect.

.

/
in

But

30%

the

items

of

area

Oui* country

was founded, sired,
by the liberal thought
Europe, and even today, we

and tutored

bearing considerable duty, foreign of
sellers themselves through proper have
energetic merchandising and
distribution
techniques
can
do
more to increase volume of sales,
and

than

who

those

can

of

amount

the

control

duty.

great increase in the imports
of dutiable goods is thus a chal¬
lenge and an opportunity to those
something to sell to us.

who have

We, as a nation, have succeeded
willy-nilly
to
world
economic
leadership. The method by which
we
discharge this obligation will
depend in

small

no

measure upon

willingness to accept world
leadership,
especially
in
the
spheres of international finance
our

and

service. It
not

not

to

go

who

lending if we are
Unwise inter¬

world peace.

Foreign Loans No Substitute
For Imports

money

the

to

of American
at times, be
world

overall

including our

economy,
not

are

loans

abroad may,

essential

own,

and oppressed in heart
and

or

they who come,
confuse not, nor be permitted to
confuse, our great liberties with
license

may ;

to

work

openly or subthe institutions

versively against

which haven them.
Our

is

a

great nation and will

continue great

honor,

revere

tenets of

only
and

so

long

We

new

the

can

go

to

on

forefathers.

heights

degenerate and

can

the

democratic, political, and
our

we

as we

practice

economic faith of

oblivion

squarely

up

of

to

or

into
This is

pass

eternity.

us.

/

*

/

"

Planned Economy—an Empty
Promise
4

for

do¬

Enticing, indeed, are the empty
promises
of a
planned
statewhere every one gets something
for
nothing, where the homely
virtues of work, frugality, sacri¬
fice, saving, study and constancy
are

scorned and Where Even God

is Defamed and Vilified.

they

substitute

a

citizens

with at least

or

parent there born.

soul,

who

misunderstandings that endanger

Although

million

May our country continue to
keep its portals open to all the

world

accelerate

and

one

neither the

gives nor the one

receives

we

repaid.

loans enrich

national
one

on

be

is certain that

31

some

either born abroad

weary

A

was coun¬

of full manhood in the

discover—and

to

too often

terbalanced by heavy

ture

hard

is not

though perfectly obvious has been

our; mer¬

it is

modities

now

chandise

that here it is

this nation relies entirely on for¬
eign sources, our existing situation
as
regards many essential com¬

domestic sources, such as copper
and iron ore, is in
realty less
bounteous than is generally as¬

characterized
trade, which

imports

peared, limited in the beginning
but
progressively swelling into
rivers of American goods for ex¬

freer, and that here
truly competitive, than
in many other lands.
And to this,
we believe, is due the
superb vi¬
tality
which
has
enabled
our

from the

with the rhythm of our ex¬
panding economy. The reason for
pace

of

justify the installation of a steel to accommodate the expansion of
industry designed to supply the government functions and controls.
needs of its markets for several
The public attitude toward these
generations.
compromises has not been static
An organized survey of national —many divergencies from these
resources and a study of their re^
principles have been urged and
lationship
to
the
present
and accepted as clearly for the na¬
anticipated future requirements tion's
good,
or
as
emergency
...

physical volume of

The

imports of foreign goods did
not, over this same period, keep

can

foreign trade and

this

our

It

create

cannot

"Government

wealth apart from the

factor

one

sidered.

to or engag¬

enterprise;

business

in

ing

in

picture
must be recorded and wisely con¬
But

but

concepts."

basic

our

do

frankly acknowl¬
edge that other nations may fol¬
a

may

has

of natural
comparatively plentiful

resources

if

States

be

to

ends

larger

a

modifies of which

tangible use, rather than by swell¬

this

safety.'"

nor

ing some reasonable level of invidual security.
But in the last
analysis a reliable basis of se¬
curity for the individual, com¬

,

"We think this is best for

peoples in other lands in

■:;V'v

liberty

it seems
term

pure

further
ground should be yielded to state
activities or controls, unless the

foreign sources of sup¬ proudly cherish in their hearts the
traditions
of
self-reliance,
lib¬
ply for the necessities and ameni¬
ties of daily life, cannot fail to erty and equal opportunity which
are involved in those preferences
awaken a real appreciation of the
ence

delusion to imagine that
political freedom, even if it ex¬
ists, can long endure.
As Ben¬
jamin Franklin said, as long ago
as
1759, 'They that can give up
essential liberty to obtain a little
temporary safety deserve neither
is

"We hold, that for us, no

the Charter.

coffee, tea, quinine,
held at Rye, New York, in No¬
spices; of fibers, such as silk, flax,
wool, wood pulp, leather, hides vember, 1944, brought together
representatives from 52 countries.
and skins; of fats, such as vege¬
The American delegation to this
table oil; of resins, such as rubber;
Conference recorded
its under¬
of minerals, such as tin, maganese,
standing of free enterprise as fol¬
tungsten, chrome, nickel, bauxite,
diamonds, lead, petroleum, zinc, lows, and I quote:
"The
American
delegation is
mercury, cobalt and others.
This is only a partial list. But wholeheartedly committed to pri¬
vate enterprise in preference to
even casual perusal convinces one
that imported materials condition government enterprise; to free en¬
in preference to con¬
not only the comforts of our man¬ terprise
trolled enterprise; and to competi¬
ner
of life, but even the very
sugar,

as

for this—without these it

man

no

abroad

140 million

cumulation

Foreign Trade

on

Thursday, June 17, 1943

One

"famous"

mist has

stated

so-called
on

a

econo¬

visit to this

mestic imports of

services as well country, "There is no middle way.
as
goods as providers of dollars: Free enterprise and the market
often they delay the solution of
economy mean war; socialism and
problems instead of facilitating it. planned economy mean peace. All
attempts

Contrary
to
a
deeply-rooted
belief, not less erroneous
for being of wide-spread accept¬
ance, imports are more beneficial
to the economy of a nation than
exports. After all, the final pur¬
pose
of organized industry and
commerce is to place at the dis¬
posal of man the largest possible

market

amount

framework

common

of

needed

and

desired

economic

are

a

find

to

compromise/

a

satanic illusion."

Hitler thought so, too, and like-,
scorned the economy of the

wise

erable

place, maintaining it pref¬
entrust the destiny of
a few leaders of his

to

Germany to

National Socialistic State than to

political, /• social,

a

of

economic

Free

Enterprise
System.
He, and all who think
such systems are superior, ignpre
a

goods. This optimum
enjoyment of wealth
solely through the fact that Totalitarian Econo-1
imports of foreign commodities mies, managed by the selected
and services. The prosperity of a
few,
degenerate
quickly
into
nation is not measured by its ac¬
vicious, sordid struggles for per¬
cumulation of precious metals and
sonal supremacy and favor, un¬
currencies but by the essentialities
and amenities of life available to checked by an inherent elements
level
can

in the

be

attained

automatic

its people. Exports

for

tance inasmuch

rather

to

are of impor¬
they contribute
provide the means for the pro¬
as

curement of both.

wishful
expectations,
many of our foreign loans, out¬
standing and planned, may never
be refunded, because of the in¬
ability of the borrowers to honor
their obligations.
<
- ,
^
Despite

It

is

worth

would not be

considering

if

pressure

to

constant

expand

in

but

internal;
order

perpetuate.

to
/

r

In contrast to this Frankenstein

nature,

the competitive economy

eventually corrects its

own

for it contains within itself

abuse,
a

sys¬

tem of automatic checks and bal¬

it

preferable to extend
by purchasing

financial assistance

self-restraint,

under

ances

which act

puscles of its

as

own

the white

cor¬

blood stream.

Volume

THE

167 ? Number * 4708

COMMERCIAL

&

FINANCIAL

CHRONICLE

41

(2673)

—h*

The following

statistical tabulations

shown in first column

production and other figures for the latest week

cover

either for thej^eek

are

month ended

or

Latest

AMERICAN

IRON

AND

INSTITUTE:

STEEL

Indicated steel operations

!

Previous

.June 20

'

S6.0

that date,

Month

f

Week

Week

(percent of capacity).

on

in

of that date)

are as

95.8

BANK

DEBITS
THE

BOARD

—

FEDERAL

Previous

Year

Month.

Ago

95.4

:

Latest

OF

Equivalent to—
'
Steel ingots and castings produced

month available (dates

or

of quotations,

cases

Year

,

Ago

96.1

or,

Month

Ago,

GOVERNORS

OF

RESERVE

SYSTEM—

,

June 20

(net tons)—

1,732,200

1,730,400

1,719,600

Month

1,676,400

of

BUILDING
AMERICAN

PETROLEUM

Crude

oil

Crude

INSTITUTE:

LABOR

runs

.June

5

5,475,800

5,451,650

5

5.736,000

5,715,000

5,412,750
5,602,000

New

5,064,200

.June

output—daily average (bbls. of 42 gallons each).
to stills—daily average (bbls.)
^

(bbls.).

.June

5

17,787,000

17,827,000

16,963,000

15,487,000

output

(bbls.).

.June

5

2,224,000

2,144,000

2,144,000

2,273,000

and distillate fuel oil output (bbls.).
.June
Residual fuel oil output (bbls.)
.June
Stocks at refineries, at bulk terminals, in transit and in pipe lines—

5

7,249,000

7,054.000

7,126,000

5,233,000

9,354,000

9,508,000

9,242,000

8,974,000

Kerosine

,

and

(bbls.)

Gas

oil

and

distillate fuel

(bbls.)

oil

(bbls.)

at

107,278,000

107,185,000

109.313,000

94,268,000

Farm

15,783,000

15,250,000

13,572,000

Public

41,063,000

38,641,000

35,117,000

13,054,000
35,135,000

56,030,000

55,146,000

51,868,000

47,178,000

.June

■

at

AMERICAN

freight loaded

June

821,213

904,848

880,617

659,687

710,489

726,086

All

900,747

June

(number of cars)

664,465

ENGINEERING

ENGINEERING

CONSTRUCTION,

V

NEWS-

Total

U.

Private
Public

construction

..June 10
..June 10

construction
and

X' Federal

...June 10

and

OUTPUT

(U.

S.

BUREAU

and

75,329,000
98,817,000

91,229,000

81,067,000

91,981,000

43,826,000

68,169,000

66,159,000

64,962,000

37,338,000

56,640,000

40,201,000

6,488,000

11,529,000

25,958,000

Wholesale

*

BUSINESS

coke

X

(tons)...

;

5

12,985,000

June

_—..—.

DEPARTMENT

STORE

TEM^1935-3y
EDISON

5

1,011,000

June

....

5

X 12,735,000

FAILURES

.

AGE

*X Finished

1,108,000

'

'

.....June

134,600

130,300

*139,000

135,200

282

5

*297

&

;

BRAD-

INC.;

steel

'■• y'{ •£'»,'

PRICES:

(per lb.)__.
gross ton)

k\

8

June

PRICES

(E.

&

M.

J.

V91

110

^

v.;

V,

^

100

*

/

'X

3.24473c

$40.53

$40.53

$40.66

',2.85664c

$40.20

$33 15

$40,66

3.24473c

3.24473c
**

Lead

(New

(New

Lead

Zinc

tin

(St.

York)

$32.00

$40.66

at.

V:

103.000c

V

x 21.425c

•'

17.500c /

.June

94.000c

•XV'.

■';< 17.500C
17.300c

12.000c

X,

;.v

wjh*,

17.300c

TJ.

S.

BOND

PRICES

wheat

June 15

corporate.:

Aa

101.20

122.09

116.22

112.56

116.22

June 15

June 15

106.92

:X,X

116.80

.

'

321,060

S.

U.

—

2,991,540

3,721,893
321,790

2;946,198

845,484

1,067,970

24,316

25,983

187,984

June

1—

'

P

(bushel).

116.61

1,215,970

290,307

279,182

201,300

1

197,560

...

(tons)..—

68,254
27,599

82,603
35.312

187,010

173,140

.i._......

.i,

(tons)

PUBLICATIONS

PRICE

RETAIL

(COPYRIGHTED)

1:

AS

':

index

Home

103.70

XXXXX 108.16

and

3.40.5

140.9

—•

135.4

144.0

...

children's

135.8

139.7

134.6

337.0

...

144.0

139.9

.1.

aopparcl. „1

Infant's

109.06

25,977

.

1.357,210

...

apparel

112.00

296,949

315,195

...

states)

163,048

DEPT.

V

1935-39—100

Women's

120.22

3,944,155

3,869,340
i

S.

of

As

—

.

goods

Men's

v.

3,957,796

877,230

U.

(12 states)

Composite
/ Piece

106.39

'/X

.

$17,326,000

*

(3

June

XX 106.92

112,56

June 15

739,660

$15,296,000

$10,971,600
2,258,000
3,037,000

2,629,000

COMMERCE—

OF

1 to May 31.
31_i^—...

(bushel)

FAIRCHILD

104.16

'X!
112.75
X :.. 117.60
>"-X'115.82

•XX'^Xi 118.20,'

1,472,000

Aug. l to May 31

(bushel)

Cherries

14.800c

101.50

113.31
118.20

1,662,000

1,058,000

(bushel)

Pears

10.500c

113.31

101.32
'

•

June 15
June 15

378

2,476,000

(bushel)

(bushel)

OF

Govt. Bonds......

Average

33

404

$7,057,000

ibushel)

Apricots

DAILY AVERAGES
!

IN

omitted)—

INDEX

MOODY'S

Aug.

AGRICULTURE

.^Peaches

15.000c

j 12.000c

DEPT.

(tons)

spring wheat

Barley

80.0d0c

•*

17.500c

XXX

12.000C

17.300c

.June

______

at..

X

X

.

588,000

,

21.425c
C.

.June

20

50

X

$7,030,000
2,459,000

„——.

.is.i_i.li_-.

May

REPORT

(000's

All

21.425c

21.200c
X

21.450c

.

$13,814,000

—

(tons)

Winter

103.000c

:X

30

liabilities
SEED

OF

.

'V

21.200C

21.575c

.June

■;

Louis)

21.200c

.June

at—____™—

Louis)

(East St.

.June

—

110

30

2,679,000

liabilities

(tons)

Oats

at....

51

50

,

175

426

at mills

Rye

...

;

...

York)

number

service' liabilities

CROP

8

t.

31'

pliabilities

"Stocks

5, *•£>',, -Xx*

Domestic refinery at
Export refinery at

Straits

service

-

72
158

number

Crushed

66

QUOTATIONS):

X\

'I-.'' 155

135

—-r——.

liabilities

Total

1

Electrolytic copper—

99

May:

number

COTTON

T

HETAL

19

29

BRADSTREET

;

Received

8

June

;

.

YXX-X--4

*20

4,701,992

5,108,673

4,845,458

!X

—June

....

(per gross ton)..——

Scrap steel (per

•

28
1

*41

24

number—;—..

Commercial

293

330

V^XxVv
June 10

•

;.V; 5,131,811

of

number.—-

Construction

/

INDUSTRIAL)—DUN

38

47

—

T_.

Manufacturing liabilities
Retail

.June 12

40

X

development

number

Total

"

SYS-

(in, 000 kwh,>—

COMPOSITE

Pig iron

j

c AVERAGE^! 00.2..:—i_—-2——_™~

(COMMERCIAL ;AND

STREET,
LEON

INDEX—FEDERAL RESERVE

*98

,15
100

13,334,000

1,132,000

*13,670.000y,
1,198,000

ELECTRIC INSTITUTE:

Electric output

:

SALES

3

30

♦13

125
,

and

INC.—Month

Commercial
June

.

*2
*69

15

facilities-

FAILURES—DUN &

Wholesale
A>-

2

naval

Manufacturing

33,855,000

,

MINES):

(tons)
(tons)

Pennsylvania anthracite
Beehive

OF

lignite

0

42

$158,140,000

Construction

Bituminous coal

*6

*71

military

water

$149,236,000

Retail

COAL

(except

78

$135,055,000

...June 10

;

242

_„

$174,146,000

...June 10

municipal

_

*287

43

?

AH other public

construction—

State

;

S.

153

790

80

building

ether

Conservation

RECORD:.

40

190

building

Military and
Highways
Sewer

CIVIL

37

338

-

facilities)

Industrial

cars)

58

60

203

construction

Residential

RAILROADS:

(number of

Revenue freight rec'd from connections

141

*87

50

(nonfarm)—

utilities

naval

Revenue

242

*116

.

575

;

Nonresidential

ASSOCIATION OF

263

$1,449

t

(nonfarm).

construction

Public

355

283

:

1,111

building

other

June

at__

at.

Residual fuel oil

All

June

(bbls.)

gasoline

$1,632

"525

millions):

(in
—

Nonresidential building

June,

unfinished

*$1,302
*1,015

70

May

Commercial

Finished

$87,840,600

99

of

■,

Industrial

5

Gas oil

$102,354,000

JL14

Residential

output

Kerosine

1

$97,593,000

construction

Gasoline

:

thousands)

Month

—

construction

Private

5,150,000

(in

May

CONSTRUCTION—U. S. DEPT. OF

X. X 136.6

129.7

—

130.6
125.7

129.2

147.0

wear......

furnishings

147.1

•'

142.2

'

Railroad
Public

111.25

June 15

Group

.....

113.89

z'X^'X 114.27

•X5V;X 114.08 'j,;

June 15

Group......

108 88

June 15

Group

Utilities

Industrials

117.20

XXX 117.20

; XX;;:' 116.61

-

"

.

U.

S.

Govt.

Average

Bonds...

2.41
:

.June 15

■

''- x;2.39

2.99

-June 15

2.99

2.42'

..June 15

2.84

.June 15

.June 15

Public

Utilities

Group......
Group

Industrials

•

.June 15
...

,3.23

.June 15

Group—

<'>- 2M H: 7fv1%v.
'X\
2.79

.June 15

X

XXX.

•v

3.34

3.34

XXX".

3.24
2.94

-XXKXXX 3.27
Xvv:X:.;;.;vX2.95'

V:

•

2.G4

COMMODITY

NATIONAL
ITY

INDEX...

FERTILIZER

INDEX

BY

......

ASSOCIATION—WHOLESALE

and

Corsets

•"

•

Fats

Farm

X

/.

and

June 12

__—

.

J.

>

267.6

258.5

354.5

June 12

261.3

—June 12

263.6

......

......

apparel—

.

.

-h--

J—

V':h

Clothing,

June 12

209.1

June 12

165.9

—.—June 12

229.9

Textiles........—

■X

154.4
132.4
:
,

172.2

children's

158.9
217.8

Floor

215.0
164.2

130.9

127.0

X 168.2

156.5

127.4

wear—t

z -

'Socks

131.1

129.9

121.0

121.1

144.7

144.7

138.9

150.2

145.8

X

154.1

154.1

148.2

123.5

—.,..^.-—.^...2^-—.-*.

'185.7

155.6

Underwear

154.7

——.2—
.........

coverings

117.8

'123.5

124.9

131.0

131.1

126.1

136.9

137.4

13222

132.8

148.2

232.2

X XX-'X-V; 165.2

129.9

130.9

——

Furniture

r
.

142.7'

127.8

'

150.2

V -Shoes-

:

120.8

138 1

XX"

252.8

232.3

176.6

'213.7

1

140.1

■

;■175.5

•

129.6

140.2

126.8

—

including overalls—.—

and

228.6

'

231.4

176.1

Infants'

269.8

259.2

129.7

132.5

......

caps—_—

145.0

138.3
140.9

;

154.8

,•

—

neckwear......

and

140.9

—

V-

,.v

....

and

155.7

158.2

|

138.9

H _

242.7

i, 266.1

X; XX.'\

:

231.4 X

June 12

..June 12

..

133.4

248.1

360.2

109.4

143.8

133.0

"

,

169.5

/.

204.3

299.4

285.4

/

X/XXX 357.5

———

commodities

X

297.9
263.8

—

Miscellaneous

Men's

./

216.2

2.38.2

Xj

353.0

—

—

238.8

June 12
...

Livestock

X

—.June 12

....

Cotton

■Grains

X-Y'

oils...

products

400^8

107.5
147.0

133.0'

...»

—

Underwear

2.61

Hats
,

169.3

138.3
"

2.72

X

2.82

;
239.5

V

146,5

housedrcsses—

Underwear

.June 12

.

:>■

and brassieres.;

Shirts

GROUPS—1035-39=100:

382.6
140.3

107.5

3.10

v

418.0

426.8

v4"<-

Aprons

;v

COMMOD-

4 / Foods—
•

427.4

June 15

182.5

140.3

comfortables

•:/ Women's apparel—

3.22

Shoes

MOODY'S

and

133.7

155.4

''4y-'■ ::\-

......___

,2.82

3.37

2.79

123.5

138.7

168.7

2.55

••vX""..;< 3.06

3.03

•

..June 15
Railroad

Blankets

2.86

2.84

•VxX

3-03 V

=-

Sheets

2.81

X-XXX;:'. :"X '2.77 ;X

2.74

2.74

2.22

3.02
:

129.3

129.6

168.2

::X

goods..^/^,.;—

-.v"*:; '"''v

Domestics—-

w

—

....

corporate...

•

1389
wash

Cotton

MOODY'S BOND YIELD DAILY AVERAGES:

//.

Piece-goods—<>■

118.60

120.84

133.0

128.1

$27,780,951

$28,114,265

/

'
-

~.\t Building materials J

Chemicals and drugs......

;
*

Fertilizer
-

'Farm

J,

X*

materials.......—^

.—.—....

—June 12

PApERBOARD

j

.June 12

139.4
224.3

•

:

XX,

136.1
138.9

125.3

V 221.4

197.2

139.4

.t,

*■

224.0

v

5

5'

168,802

Midland

213,822

r

—June

aJJ

OIL,
PAINY AND
i'V AVERAGE=rl09

DRUG

REPORTER

:

5

June

: Percentage of activity_i_j__^^Unfilled orders (tons) At———--

5

191/787

171-855

-

87-

x-iGV.yw'.

v

--

-101

ioo;

■'402,625 X XX X.. 352,013;

98

_

RYS.
1

Net

:i

INDEX-*—1926-36

PRICE

June 11

X; 147.8 x';7x *147;t'-''

"

-

(

PRICES—U. 8, DEPT. OF LABOR—lO 'O^ lOO:
..June

f All 'Commodii/ids.^ci
Farm prf-1"-*-

Metal and metal products—.—

-

i

Biiilding materials—.:

J Chemicals

-

.

—

—

5

—

5

—June

—

;i——

:
—...

5

i_.June

-

--

5

-June

...—i__"„

>'1 '-Textile pro<iucts______:____..___iJ_—1
J Fuel and lighting materials...—.......

X,Xx-/

X.V..

5

—.June

y-Ttrer-

Foods___i—

-f Hides and leather -product.-—

-

5

...June

i..June

...

••*•

*

192,4

r

149.2

;

HoUsefurnishlngs

.^Miscellaneous

goods

.

5

—June

193.0

.'. v-

187.6-..

XV

X,

-133.8

X

156.8

'

149.5

•

-133.8

,

.'.

XX; 161.9 ;
X;Y"-184.0,'7;,Y» ,;V .179.5
163.1
X 174.8
*ir> 188.3 H YX ■a 166.6

•'

r

,

148.2"

-

-

"

XV

JRaw

j

„

*.,

- -

materials

124.7

133.4.

-145.1

X. -144.7

144.6

5

121.0

121-°

121.3

115.9

5

180.9

180.8

175.1

161.8

On

On

Semi-manufactured

.
*

Manufactured

5

June

articles..

products—

5

,

:

,

-

129.5

Ratio of

•Revised figure.




;

'

i——

June

—June

5

X

149.3

:.

.

stock.Xl

35,446,560

3,241,415

OF

U.

156.9

141.0

ERP

149.3 •

148.9

132.2

Imports

S.

3,310,744
:

17 797,632

-

29,368,501

1,685,277

22,323,963

1,351,572
30,265,133

26.081,447

12,152,566

4,268,196

2,572,589

1.61

2J33

.

—

IMPORTS—

CENSUS—Month

——

of

"

April:
$1,121,700

——

—

—

•*

947,300

174,400
9,900
;—X.—.—527,200

foreign aid At relief shipments
shipments

..

$1,141,200
943,500
197,700.

—

—x..—2....X
figure.

-

2,708,989
46,638,112

11,372,449
2.09

-

,

:
^

Govt,

"Revised

-

30,178,996

30,471,4.53
-1,369,805
26,104,975

omitted)

Commercial

49,347,101

9,725,988

:

....

EXPORTS AND

Exports—

158.1

158.0

5

foods.

,

86,338.832

.

21,108,376

3,147,705

taxes..

UNITED STATES

"

All commodities other than farm products.
AH commodities other than farm products and

:

3,441,77955,722,516

.

.38,594,265

—

income to fixed charges

142.9

,

74,094;036

15,656,164

89,580,247

59,164,295

3,915,897

•

charges

charges.—.

appropriations:

142.5

159.1

fixed

income..—2^

$73/924,143

$39,425,294
19,739,001
"

from

—L.'X2_r™_:_.——
structures & equip.)

common

157.6

152.6

158.6

.

-78,009,933

(way &

income

153.3

153.0

...i

preferred stock

(000's

X

17,285,802

:

for

•"*

■

$60,724,331

..X—....

fixed

income

Dividend

177.5

.

i.....

-

\

.-

-

deductions

Federal

142.5

.

Net

BUREAU

Bpecial groups—

v»

Amortization of defense projects.....—

104.4

133.0
156.8
195.9

«-

—

....

available

after

Depreciation

138.5

-

June

commodities.

;

;

—June

——

Other

.,

196.9
134.8

Commission)

Commerce
V ■.

deductions

£9,338,060;

£2,544,000

£13,480,000

U. S. CLASS I

"

.

'

135.2
<

Income

Income

147.9

156.6

196.6

5

June

■"

187.0
,

5

June

allied sproductsc...

r

178.0 ■'*:

•

and

'164:4 " "*■

*j",

'■<*'

178.0

5

June

.

-

income

Miscellaneous
V

•;* .:<•/n->
%'»

164.2

March:

income

Total

:: <t
>Ti DHOLESALE

$27,716,475

omitted)__

(000's

railway operating income

Other

144.(

"146.6

(Interstate

Month of

i

,

J

30

IN GREAT BRITAIN—

SELECTED INCOME ITEMS OF

552,280

418,994

.

April

TREASURY

—

Bank, Ltd.—Month bf May™..

217,658

191,650

^

of

CAPITAL ISSUES

—•—

——

CIRCULATION

•

180,297

222,226

...June

r

IN

DEPT.—As

•

»

China

,

MONEY

"

V'.;,
...June

'

X.

appliances—

134.6

i

143.8 "

—

household

Electrical

125.3

143.8

134.2

-

X

'

Luggage

NEW

_I—.X-—
.i-ic.-t_._i_.—"

Productionv{tonsf__—

X

;

,

-

*.l;Vx

'ASSOCIAliON:; X^

Orders received ,.ftons)—

.

158.6

„

143.8

.June 12

machinery——'————a

All groups combined..———:

NATIONAL

134.2

..-June 15

—

X——1Y———IT.——————

Fertilizers

■

229.9

•

;

158.6 X

June 12

.

.

•

•

.

666,200

42

COMMERCIAL

THE

(2674)

&

Thursday, June 17, 1948

FINANCIAL CHRONICLE
to testify on the bill, a
protests from all over
the country were directed toward
persons

Peacetime Draft Is Threat to Individual Liberty
(Continued from first page)
ratio

of

officer

one

enlisted
civil life.

for

eight

returned

personnel

the

was

to

Following World War
officer was discharged

tions

best prepared

conduct

to

fully to

a

tion

as

nor

an

turned to civilian status.

general

herself

their Congress in July, 1947.
training and weapons must be Backing of Newspapers and Radio
constantly improved and replaced
civilian

na¬

success¬

military victory.

We shall

II only one
for each 16 enlisted personnel re¬

of all

see a

never

large

congrega¬

time

numerous

as

wishes.

as

through

a

present

The

start to clean house

nection with the inordinate influ¬
the

of

ence

Congress

over

which is

regiment a large proportion of the conscription upon the American no longer perform the function
of a "free" press with respect to
of
unselfish
devotion
to
their productive element of a nation's people.
;?.? ??;?' '?//■ V
'• i/ Vj
equal treatment in the news and
country and above the suspicion population and turn it over to the
editorials of pro and con views
Inequities of Military Law
"training" by professional mili-;
of helping their military clique
Thousands of protests to Con-: of the public relative to the legis¬
tary officers.
J
■'
|
by keeping the international situ¬
When we stop to consider that gressmen from veterans and lation desired by these advertisers.
ation boiling, their lifelong train¬
servicemen
caused
the appoint¬
The importance of highly favor¬
ing in the settlement of all mat¬ there is nothing in America so
ters by resort to military force is backward in its thinking nor so ment of an army committee to able newspaper treatment of mili¬
not conducive to satisfactory deadening in its influence upom study officer-enlisted man rela¬ tary programs, such as the peace-'
and
military justice.^ time conscription plans (UMT and
relationships with any foreign na¬ individual initiative as the Amer¬ tionships
ican military system with its in¬ The able chairman of this com¬ the1; draft),
tion.
in impressing Con¬
Even if these

were

men

capable

i

/"'-v"'..;

:•

'<

,

The Russian expansion was en¬
couraged by treaties made with
that nation at the very time when

sistence

authority,

mittee, General Doolittle, in May,; gressmen' and

blind obedience to

upon

,

we may

understand the? 1946, made available the findings

supporting
the
facts > of
gross
a military view¬
point of keeping our youth en-| abuse of privilege and the ex¬
istence' of
many
inequities of
at its peak of mobilization.
After gaged in productive channels of
Russia
communized
Czechoslo¬ civilian science, industry and spe¬ military law.2;?v?? ;??? ?/*V|
In 1947, the plan by which ex¬
vakia our President placed the cialized education and away from
cess complement military officers,
stamp of American endorsement the autocratic military control.
It is not recognized generally retained in precarious status om
upon the Soviet move by negoti¬
ating a trade treaty with new that soldiers and generals consti¬ military payrolls, would obtain
tute a minor factor in the winning permanent
peacetime jobs was^
Soviet satellites. ? ??•??,. ???'
:
Can any Americans who recall of a modern war, which is decided presented by President Truman
a
committee of
the continued shipments of war by the nation possessing the most who. appointed
importance from

American military manpower was

•

materiel and products

nation

at

States

to

believe

from

war

Russia

that

useful to a
United

the

be

expected to
Administration

an

greatest civilians to provide the necessary
quantity. ■???; •?.;•'! ■ .?■?'';" ???.••;;• window-dressing that would make
By tying up a considerable seg¬ the1 plan receive sanction from
effective weapons in the

ment of the

supporting Russian expan¬
really desires to halt this
expansion by enactment of a draft

of

in the United States?

is

thus
sion

It is likely that President Tru¬

nation in

a

drill

outmoded military

indoctrination

and

the

to

nation

the

plan was hidden, under
guise that. Americanyouth

without adequate civilian

left

industrial

the,
re¬

quired a rebirth of spiritual guid¬
ance, general education and mili¬

Science

development.

the
military
military
officers are praying for new Rus¬ training, for research is dependent tary
instruction; all of which
sian aggressive moves as an ex¬ upon the development (not the could be provided more effec¬
cuse
for their enactment of an discouragement) of the habit of tively by military officers than
American draft, civilian controls, inquiry. ■
;?" ? ?/???.? :>'-. =.• i by local schools, churches and in¬
and
allocations for industry
:
Our "unpreparedness" for World dustry.
This Universal Military
of
War II consisted not in lack of Training plan Was designed to sell
vital raw materials., 1
A firm refusal to trade with military
conscription
to
the
indoctrination of ouit peacetime
Russia made by the State Depart¬ youth, but in the failure of our American public under the labels
of education, health and religious
ment, in the event of disapproval military officers to adopt the best
J - ,
;
by this nation of Soviet policies, and latest weapons as our alert instruction.
Aside from its real purpose in
would bring about an immediate civilian science and industry pro¬
change in those polices.: Does our duced them. The best example o* providing job security for war-;

man

is

and his professional

destroyed

by

-

Administration
Communism?
Americans

to stop Sothe growth of
Regimentation of
wish

vient expansion

or

stimulate

will

the

growth of Communism in America
by creating discontent and bitter¬
ness
against our American Gov¬
ernment on the part of citizens
do

who

not

take

kindly

to

the

practices of the decadent nations
of the Old World, the worst of
which practice is peacetime mili¬
tary conscriotion.
;i
The beneficial results to Amer¬

icans of the demobilization of offi¬

well

cer, as

as

enlisted personnel,

following
World
War
I
were
measurable in the impetus given
American free enterprise indus¬

backward ? mindedness

For

war

generation America was
in a major
and a spirit of tolerance and
a

of

respect

nated

involvement

for

the

individual

the American

way

domi¬

of life.

men

in

of the military de-r

each

partments.and

naval

changes

These

men,

sist

This

army,

conscript

systems

procurement,

of

man¬

second
World War commenced, America




a

the

all

the

resist

natural
age

entire

of oast decades.1

world

power

our armv

re¬

and in¬

personnels

in rank,

re¬

flecting the practices of warfare

of huge standing armies and

the

with

upon

trained

academies,

which is subordinate

When, through the clashes engen¬
dered by the maintenance in Eu¬
rope

' well

of

effect

of;1 the

aware

peacetime conscription in destroy¬
ing? liberty in a country, have
found- that when they expressed
themselves frankly and - exposed
the

totalitarian

planning of our
officers,' their speeches

military
were

not carried in

The

by

effect

the

the press.

this development

of

the individual

of

each

toward

merits

bill,

to

react

draft

a

in

demerits

or

favorably

the

mistaken

impression that the constant news¬
paper.
propaganda favorable to
conscription is indicative of a pub¬
lic demand for this legislation. ?t?
?

This attitude grows out of their

mili¬
contributed to
the press for advertising of con¬
scription programs, and the failure
ignorance of the
tary funds being

of

some

of

their

enormous

constituents

to

opposition to con¬
scription! by letter or telegram.
Unquestionably,
this
opposition
will be expressed by the vote dur¬
ing the coming election, especially
their

express

System

Recruitment

0

.

By tactful handling of the mem-/
bers of the Armed Services Com¬

the

and

Senate

the

of

mittees

Representatives, the mil¬

House of

itary officers have succeeded in
making some of these Congress-'
men the salesmen of military pol- \
icies to their fellow Congressmen./
Naturally, in the press of business1
before each Member of Congress,
it

possible for

not

is

Member

a

study the details of those bills
not handled by the Committee of
which he is a member.
to

seg¬

accept

Houses to

both

Commit¬

Services

Armed

of

tees

large

a

present membership

the

of

the

of

of

tendency

The
ment

as

statements of the military

true all

department heads without inde¬
pendent research is the most dan¬

aspect of our present Con¬
for the military heads have'

gerous
gress,

told

the

members"

Committee

these

that

procurement

voluntary

cannot supply adequate
for the Army.
"'

system

manpower

Through

?

minority
(House
that

.

five
the;

own

military

shows?

depart-^

put into effect policies de¬

signed

create
a
under
the

to

shortage

manpower
■

voluntary

procurement system as
for the demand for the,;

manpower
an

of

which

obtained

our

ments

members

views
of
H.R.
6401,
draft bill) the evidence?

been

has

of

effort

the

Services

Armed

excuse

practice of peacetime conscription
as a permanent policy.
?
???n?
Iii July, 1947, the Army stopped
permitting qualified volunteers to?
enter' the Army for
18 months' :

enlistments, although claiming a?
shortage of manpower and in spite
of a law enacted by Congress pro¬

enlistments ?of 18
years' duration;

viding" for

months' and two

There has not been one volunteer "?

the

by

accepted

Army

for

18

July, "

enlistment? since

months'

»

press

time

peace,

1947, 'to the date: of April/,1948*.
the
latest, figures
were

when

"

available.

Approximately half of all the
men
refused by the Army who,,
have

tried

to

volunteer were re-,

jeeted for failure to pass the "RTests."
These tests, also known
as

the

have

classification tests,?

Army

been made

so

difficult that

Congress? who had
served in the military have found
of

members

impossible to pass them, and
is good evidence to the ef¬
fect that the average college grad¬
uate would experience the great-?

it

there

the very?
grade now required as the
minimum passing grade on these
tests.
It is significant that before;
voluntary enlistment started the
grade for passing these tests was
59. It is now a grade of 80. i
;
In arriving at these figures (59
and 80) it is to be understood that
they are not based on a perfect
rating of 100. The Chairman of

est difficulty in making

high

the

writer

■

does

nonexistence

,

not

of

a

•

:

j

House

to

UMT

be provided. . The
bill also proved

over all age groups of the
population, including
labor draft, by a three-man com*
mission2
This
in
peacetime

controls

America!

;?-:.

When t'/e Army
UMT bill
to the
Services

submitted this
House

Committee,

Truman appeared

standing

requesting

These forces in

the interest of preparedness must
be kept small in relation to the

before Congress

interim funds to put
the program into effect before its
enactment by Congress into law
Since only one day of public hear¬
ings were provided by the House
Armed

Services

Committee; for

it

would

enter

sufficient

having

draft and UMT.
:

"We

that

we

is

a

I

know

:

•

and

made

Army

the

serious

thing

tive of the lack of interest of Army

when

recruiting

a

is

most

so.

point that we must
reach out and take a man's lib¬
"An

according to
tests. ?

classification

democracy is

the

in

it

it reaches the

erty.:'

it

hs

I have found it to be.

(newspapers) boys

I think
dangerous presumption
say

sometimes.
"About

-

headlines,

now

intelligence- to

insignificant numbers of
volunteers accepted
voluntary
enlistment
started in April, 1947, is indica¬

whatever these

write,

-;

the

read

regarded

be

not

spent $10 propagandizing for the

Armed

President

advertising for recruits,

spent

civilian

advocate

navy
and airforce in a
where other nations main¬

tain such forces.

is

dictator

.....

,

„

sistance of advanced

free

Cour¬

,

ian science.

living standard, and

of

military officers was their court-

in the tactics of 1898 at

our

overemphasized.

members of Congress, who

ageous

Voluntary

The Destruction of the

professional officers during
it was intended as ,a means
if the House of Representatives
martialing of General Billy Mitch? of controlling through the military
ell for
insisting that the milii departments the most vigorous makes the mistake of misjudging
tary develop air power in the early and adaptable of the 'American public sentiment that was made
the House Armed Services Com¬
30's.
population, providing!* compusory by the Senate when it passed Sen¬
Although declared obsolete ii? instruction for all youths by mili-; ate 2655 on Thursday, June 10, mittee, one of the most ardent of
all the Congressional supporters
1918, the military continued to tary
officers after
these men 1948. This bilb provides for the
detail huge sums of money to out¬ reached the age of 18 years.
This first peacetime conscription pro¬ of programs desired by the mili¬
moded methods of defense, suHi instruction could have little value gram i in .^American history,; and tary * failed to answer , correctly
as the cavalry, which was not fi¬
in the event of future war owing would prove, if enacted into law, five out? of six questions taken
to the rapid obsolescence of mili¬ the end of the American tradition from the Army classification test
nally abolished until 1946.,
i
The underlying reason for the tary tactics, but would exert pro¬ of liberty and individual freedom and asked him when: he was a
'?:?? witness before the House Commit¬
retrogression of the professional found influence upon the develop-1 for its citizens. •;?-•/??.
According to Cong. Graham A* tee on Rules for the draft bijl.
military officer is the fact that a ment of the habit of blind
This man, Rep J Walter
G. An¬
system of chain of command vests obedience to authority so neces¬ Barden: :
"For
final authority in two or three sary in a population for which a
every
dollar the Army drews, served in the Army but
this

the raising of
the un¬
paralleled achievements of civil¬

trial development,

among

cannot be

are

in-; creating confu¬
the general public

of the arguments
favorable to legislation desired by
the military has resulted in caus¬
influential
citizens
in
various
ing many Congressmen, most of
fields of activity.
* ;; *
J
whom do not have time to go into
Of course, the real purpose of

productive population

habit of blind obedience, a

sion

the rug."5

11

•

^

men.
Let us
and see what

is under the corner of

The most potent factor in con¬

military departments
is
the
backing
given any policy desired
Twice the proportion of officers military drive for more manpower
by these departments by the news¬
is based upon the establishment
In 1944, a plan for the retention
were
retained following the last
papers and by radio.
Rarely will
of an excuse for retention of the of the greatly expanded officer
war as had remained on the mili¬
a
newspaper print any comment
excess of officer complement.
It corps even after the conclusion of unfavorable toward a
policy de¬
tary payrolls in ratio to enlisted
A Vir¬
is difficult to explain the reason the war was worked out.
sired by the military departments.
personnel during the period after
for maintaining an officer at great ginia Congressman, with no mili¬
World War I demobilization.
The public is at fault in this con¬
expense on active payroll when tary experience himself, worked
«'
nection, for a Sub-Committee of
Since early 1946 military offi¬
he has no men to order about. with the military to develop a
the Committee on Expenditures of
cers
with little to do but cash
There are so many more officers system of universal compulsory
the
Executive
Departments has
their pay checks have constituted
than are required in peacetime peacetime
conscription
at
this established the fact that millions
a threat to the establishment of a
active duty status that the mili¬ time.
Acting on his advice, the
of dollars of defense funds have
lasting peace in American foreign
tary department heads are now military decided not to campaign been diverted
by the military de¬
and domestic relationships.
When
prepared to plunge this nation for this UMT plan in 1945 nor
these men's income depends upon
partments from defense purposes
into an orgy of inflation to pro¬ again in 1946.
■;.?"?'?
to the propagandizing of policies
the existence of strained relation¬
vide an excuse for the rearma¬
Resentment by servicemen, vet¬
which the
military departments
ships between this and other na¬ ment and remobilization attendant
erans and decent people through¬
desired enacted into law.4
tions of the world, it seems the
)
upon
retaining these expensive out the nation over the inequity
height of folly for a President,
In 1947, the second and third
individuals. \????".'<?????:.??• ?'■ of military law and the injustices
if interested in the general wel¬
of the officer-enlisted man rela¬ largest advertisers in the news¬
A Sure Way to Produce War •?
fare, to appoint professional mili¬
papers in dollar volume were the
tionships (abuses of the military
tary officers to c o n d u c t the
War Assets
Administration
and
It is a curious paradox, but one caste
system) was the greatest
diplomacy of our State Depart- demonstrated
by the history of single element in persuading the the War Department. When news¬
ment.
•••'
:
:
nations, that the surest way in military officers -that 1945 and papers receive the bulk of their
revenue from certain advertisers,
which to bring about and lose a
1946 were not the years in which
Not Conductive to Good y
it is understandable tnat they will
modern war is to mobilize and
to : attempt
International Relations
to clamp universal
army

sufficient

getting

and

population

produces
obsolescence
the invention of newer
and better weapons.
Such a prac¬
tice is not being followed today
in American military training.
as

minister desires

as a

bf

storm

.

Si*.

■'

'

Army

or

attractive

Navy
if

we

--/J.;

be
expect to
must

get men to enter it. The services
are
not attractive, * therefore not

v

The

:

two-year
the

since

known

enter

for

fact

less

that

than

voluntary term.
sible

in

services

the

that quotas

a

making

men

may

three-year

It is quite pos¬
are being arbi¬

trarily set on the number of twoyear volunteers that will be ac¬
cepted.

When we reflect that the

Volume

167 * Number 4708

THE

draft bill

provides for forcing men
service for just two
years, there isno excuse for the-}
Army refusing to accept as volun¬
the

enter

to

teers the

,

enter

who want to

me a

the service for that

period of time.

These and other facts show

un¬

mistakably that the Army believes
that, all they need dp; in order to
obtain the controls
citizens

draft Would

a

American

over

give them,

hope for the

tary departments im tne interests
of 'American

liberty and individ¬

ual

and

leaders of Congress may be staip-

into

peded

by a Presi¬
The real power behind the

dent.

voluntary basis under the ridicu¬
lous handicaps they impose
of

desirous

men

service.

military official
executive.:and

the

The

who

enactment

'■

'

"Both- i Air.

Corps
and
Navy
have
admitted.- that

spokesmen

remain

to

and

im¬

measure

in

testimony
of

before

returned

to

is

act

passed, we
immediate increase

draft

a

-<-•

■

*

•

this Session-of
of

ure

Congress by fail¬
in the House oi

passage

.V'" ,>;r''

'

strated

a

who

have

faith in the

of

courage

demon¬

loyalty and'

American

citizens

tc

their country by military
duty ifrtime of need but who wil
fight against usurpation of liberty
irrespective of the fact that the
serve

is

usurper

American in

an

has

iThe peacetime professional of¬
of our general staffs ob¬
tained
their 1 military
academy

ficers

-

instruction about

1914-1918.

The

texts in use at West Point at thattime

were

those

Thus, many of

people acting through" Congress to
ment which

methods.?

voluntary'recruitment
'

"The

provision
of., »adequate
housing for married enlisted per¬
sonnel
shorter-term
enlistments,
and more realistic general classi¬

published in 1898.
high

our supreme

command are officers schooled

branch

of

the .tactics

the

from,

in

ican. War.,., an

be dominated by

can

military

the

of

age

mass

Thus,

man¬

'

i ^^enate Document No.

military professional officers

departments.

of,, the Spanish-Amer¬

power maneuvering.

govern¬

the

Session, 79th Congress.

wise

strictures,

which we have cited above, against following
individual issues.

Uncritically Mr. Mindelf can embrace the following concept of
a broad movement, almost glacier-like in its imperturb¬

ability and slowness"-; and "What the trader must do

primarily is to

follow the

underlying major trend. If he knows the direction of the
major trend and follows it, he may buy the wrong stock, he may
buy it before a minor decline—and yet the ultimate influence of the
major trend usually produces profits for him."
Speculative Investment Confusion

2d

19-3,

concern

prevalent throughout the community,
It unfortunately seems impossible
to keep observations of an investment and speculative nature dif¬
ferentiated.
For example, despite the book's self-ascribed design
for "the businessman who is interested in the stock market, but who

of

with investment.

speculation

khowledge inadequate," such lay leaders are firmly told: is

feels his

selection will improve results within the jramework of
trend, but it must always be remembered that most indi¬

"Security
the major

vidual security price movements are more

closely correlated with the

major trend than with the trend of their own earnings, dividends, etc.,
as we have shown.
Market appreciation is our primary goal. Putting

capital to work at

;:v::;

able than regular

? House * Resolution 4278, 80th
Congress' (page 4).',

a good buying level will prove much more profit¬
dividends from a poorly timed purchase."

'W*r»",

;;

.;;;

with "trend" seems to highlight general con¬

fusion by Mr. Mindell, as is so

.

would

determine, through the ,al-.

lotment of allocations for industry,
business

what

Through

would

determine

the

draft

control

members

of

the

"The

the

use

of Federal funds for

of influencing

Scorekeeping Called For

internalize!-"

This emphasis by the "market

value,

on

timing, on market

the stock market's liquidity elements

legis¬
lation before Congress is unlaw¬

how

price rather than

ful

they

where and

4

-

to

youth would live and would

our

recruiting."

continue

would

exist."

fication test requirements, are all
feasible measures; which we be¬

substantially improve

control'

Executive

own

name.

,

the

market'^

Interestingly, Mr. Mindell's reliance on the "they" making
the trend of the market as a whole is directly inconsistent with his

future.

Now this

-

The purpose behind the desire
for., conscription basicallyas the

deliberately refrained from
all-out efforts to utilize

Detect

trend: "It is

the

of

„

making

the

place whose past market policy is a guide to the

Congressmen

readily

can

Executive *, branch

government.

of

5)

inconsistent error apparent in this reliance on
implied confidence that there is a "they" of the

basically
lies in

the "they" regarding

the establishment- of controls
over industry
by the military or

transfer

A

trend

Representatives, Americans must
be diHgent Iri the election of those

.

..

page

Market," "How to Detect Major Tops" and "How to
Major Bottoms."
: •.
•
•
»
•

market

Should tfife-'draft be defeated in

by

the

Continued from
Stock

that

voluntary methods will be suffi¬
cient to their needs.
The Com¬
mittee records show that the Army

lieve would

draft

America.

the

Committees

Services

be followed, and will be followed,

draft

regarding the testi¬

mony's follows:

bg

posed upon this nation, have indi¬

designed to influence the Armed
spcken

*

Forrestal

conscription

every

Armed

have

Govern¬
must

is

Secretary

tary leaders presented secret data
a

the

may expect an

func¬

heritage'of American citizens.

cated

for

American
influence

freedom

if

all the hearings at which the mili¬

Services; Committee

legislative

the

Representative Wadsworth from
Geneseo,
N. Y., the author of

and
three
present at

were

to influence

Coming Controls Over Industry,

the

Hearings

Republicans

Democrats

This

Both

Data"

"Secret

the

.of

ment.

-

.Two

be

to continue the battle.

If

—

Administration, the Secretary of in the tempo of the military deDefense, is the first American jpartmentJ&.^program to regiment

upon

entering

freedom

Socialistic

highly

advocated

measures

broken

on -a

men

millions of;;Amer^ ^ovepwt^ning power of the mili¬

with which the so-called

ease

impossible

procure

43

(2675)

CHRONICLE

the

tions

to

FINANCIAL

icans who have viewed withralarm

to sabotage the- voluntary en¬
listment program so as to make it

is

COMMERCIAIr &

ownership certificates in going concerns, composes speculative
than investment behavior—under any reasonable definition.

purpose

under

section

201, title

the United States Code.

medical

of

18

...

Your

rather

than

on

on

businesslike

hard-boiled

on

appraisal

securities

of

as

rather
There

"pure" investment
concept, nor is there per se any practical harm attached to trying
years.
;y.
•': :v"
for capital gains.
partment, its personnel, and civil¬
It happens that I am convinced that it is, impos¬
Secy. Forrestal has asserted that
ian employees have gone beyond sible to heat the speculative game; while, on the other hand, Mr.
should universal conscription not
the limits of their proper duty and
Mindell (the subtitle of whose book is "Basic Guide for Investors")
be? enacted before the period of
have engaged in propaganda sup¬
believes that it is quite possible to catch trends and consistently
time at which the draft expires, it
ported by taxpayers' money to in¬ make capital profits. Assuredly, the controversy cannot be settled
will never be permitted to end.
fluence legislation now
pending by theoretical dialectical argument.
Hence let Mr. Mindell in his
In this statement he r is speaking
before the Congress."—House Re¬ next edition, or some author perhaps including myself, produce a
with
the
authority * of ,"v history.
port
1072, 80th Congress,, first statistical record of actual proven results under each of the two
Once a draft act is imposed upon
session. ' ' •.,,v • ?•';
^. ' •,
techniques—that is from, on the one hand, following the technical
a nation in peacetime that nation
market approach, and alternatively from following the going-busi¬
has never been able to rid itself v'"-;5 Testimony of Cong. Graham A
ness-value-appraisal method.
Representative from
of the curse of conscription and Barden,
Committee

profession by draft up to age 45

therefore

its

reports

is

of

about

sacrosanct

nothing

course

my

own

firm conclusion that the War De¬

'

"A final keystone

system

is

in

our

defense

Active'| Reserve

the

of the

the record

Force.

To

date

Army

in

refusing to build
Organized Reserves

either the

Guard borders

the National

before

or
a

.testimony

Committee established

our

clearly
lowed

The

scandal.

national

up

on

that

Army

the

has

fol¬

policy of deliberately ig¬
noring the Reserves as a means of
exerting pressure to get universal
a

North

the

"General Evans agreed that: -

the Army

'If

servitude

supported the Guard and the Re¬

having

serves,

made

a

them

.

job

of forcing
into ^military
relinquish the

citizens

will .not

,

'

^Report No,

1881, 80th Con¬
Session, pages 27, 28

of profit.. gress, 2nd
Moreover, if a nation is tricked or of Minority Views.
betrayed into peacetime conscrip¬
tion It will, be argued later, that
conditions are / more threatening
posts which

sincere,

earnest, and determined effort to
build

contemptible

American

had done its duty and

Committee

delivered before
on Rules, May
25, 1947, in opposition to H.R. 6401
(the House Draft Bill).
'

The vested interests created for
*

Carolina,

House

military rule.f

military training."

there would ; be
ifO need for a draft, UMT, or any¬
thing else!'u" '
up,

are a source

*

,

than

those

existed .at

which

draff,

that perusal of the Mindell book is valu¬
manifestations of commonly-embraced con¬
Earning-power

me

to the security-holder during a
concept surely entirely inconsistent with busi¬
on
earning-power and dividends.
Short-

is importantly conceived of as a solace

declining market,

is encouraged, is frowned on during bull markets,
our principle of following the major trend .

"it violates

because

short

a

concentration

ness-like

selling is therefore advisable only during bear markets."

V

Speculative Use of the Interest Rate

the

Own Firm in Cleveland

imposed;

was

to

seems

fusion between investment and speculative processes.

selling, which

Wm. T. Bobbins Forms

-time the

Besides it

able in illustrating other

.

speculative ap¬
r'$ "In fact, the present measure
Our most serious threat is from
/^(Special,. to ;Thk Financial Chronicle)
proach unwittingly over-stressed. Instead of basing the appraisal of
may
mean that
our entire Na-;
the enemies of liberty occupying
: CLEVELAND,
O.—William T. particular issues on the long-term rental value of capital (and amor¬
tional Guard program may be se¬
positions through which a military, Robbins has formed William Rob¬ tizing risk and calculating profit therefrom), forescasting changes in
riously impaired. MajGeri. E. A.
Again in the matter of- the interest rate is the

'

.

dictatorship

Walsh advised: The enactment of

US.

H.

drafted will
mean the complete dissolution of
tbe National Guard of the United
States by June, 1950. The security
R,

6401

as

of. the nation cannot be assured
;its

by " destroying
there is

the

*;

If

war,

there

the measures proposed
utterly inadequate!'"
war,

"The

If
then

proposed are exces¬
is a possibility of

measures

sive.

reserves.

possibility of

no

are
*

Army

Reserves.

itself

stamp of

has acted

Congress

-

to

wilfull

a

to

nation, and who
sabotage

our

as

cannot

become

who want

ers

*

•

be imposed upon

■'^'-v'V.

the

group

of offic¬

Prussianize
are

per¬

rubber-

this

prepared to

defenses

in

the

bins .&

Co,,, with

Building,

Citizens

offices in the
to engage in

The

Congressmen

to

them

assert

challenge' the

and

American citizens.

a

the

fusion

men

investment approach would concentrate on the estimated
dividend to be expected over the long-term—not the market's
again

'

to

seems

;

,

r

,

seeming keynote of speculation-investment con¬
be set by the writer of the book's introduction, after
a

the absence of a clear definition of the difference between

speculators'

of

importance

the

of

glossing-over

by

psychological
treatment

foibles which are vital to market behavior; by inadequate

incidence of

the

of

of all

taxes

kinds; by neglect of stockholder-

management-relation problems; and by the important omission of
impact of SEC laws and administration on the investor and^

re¬

the

like Represen¬

on

the market

structure.

tative
a

Dewey Short, of Missouri,
Republican Congressman of out¬

standing
ability
and
courage,
candidacy has been chal¬
lenged by an opponent in the pri¬
whose

mary

because of his refusal to be¬

tray the freedom of his country¬

by working or voting for the
process."6
V'' draft bill. As the
ranking member
The group of men who wrote of
the
House
Armed A Services
the above includes no Congress¬ Committee and its new chairman
man
whose loyalty to this coun¬ on
reelection, the importance of
try nor his confidence in the free supporting this candidate and his
enterprise capitalist system has Democratic colleague in the fight
ever been questioned.
These men against the draft, Rep. Heffernan,
men

Investing Form and Developing a Golf Swing

Wm. T. Robbins

the

securities

formerly
bins

a

business.

He

partner of Cayne, Rob¬

Co,,- and prior thereto was
of the trading depart¬

manager

ment, for

Bell, Burge & Kraus.

contains

book

The

was

factual

much

data,

including

a

detailed

glossary of stock market terms, as well as conclusions about specific
investment techniques and theories.
In fact the amount of ground
covered together

with the absence of

leader to remark that the
feel

like

a

consistent thesis, has led one

lay investor for whom it is intended must

that
America's
greatest
strength lies in the preservation
of liberty and the safeguards ,of
the basic
rights of independent

citizens.
It
of

is

such

the

presence

men

as

Representatives

these

in Congress
courageous

which

provides




of

Brooklyn,

N.

Y.,

cannot

be

overestimated.

contests

military
that

of

opposing parties, whose pri¬

mary

a

rule,

tuting

are

on

will

Representative

the issue of

demonstrate
can

defy the

a

tribute to Mr. Mindell's open-mindedness, only

great difficulty of the basic
'■

■

(Special

to

The

Financial

R.

Staats

Co.,

640

South Spring Street, members of
the Los Angeles Stock Exchange.
Mr.

Dunbar

Reagan
thereto

&
was

america Co.

was

formerly

Co.,

Inc.,

and

an

officer

of

with

prior
Bank-

It

seems

in showing

©

*

't

to this writer that Mr. Mindell's book is valuable

(1)

(2)

managers
on

to

what

of capital

and,

extent,

rely

on

guise of investment, be¬

without realizing

it, successful

their qualities of intuition rather than

the tools of which they are

and generally

chiefly

how even the most intelligent market followers un¬

wittingly engage in speculative, under the
havior;

reflects the

investment problem!

*

Chronicle)

LOS ANGELES, CAL.—Kirk C.
Dunbar
has
become
associated

William

Buy maybe this, in addition to

of 57 different professionals.

William R. Staats Co.

with

The reelection of these men,

two

Kirk G. Dunbar With

ideas
consti¬

golf novice trying to incorporate in his swing the

a

•

realize

And

speculative rather than investment behavior is corroborated by
the two;

on

double their efforts to support the
reelection of

tool for beating the market.

saying that "the handling of investment funds is a serious business,''
in the second paragraph following unabashedly reports "my emotions
have vibrated with the stock ticker."
The weighting of the emphasis

truth

should

on as a

the differential between bond yields and stock

an

Then

right of the
draft law for

The American people

looked

ratio of the moment.

>

•

are

in taking into account

average

whose courage has

caused

the interest rate

yields,

employment of money »by
parties representing the mili¬
tary to bring about .the election to
Congress of those men known to
be partial toward the wishes of
the military departments is. al¬
ready evident in campaigns waged
to defeat in the primaries those
the

military to dictate

if it
is the policy-making body of the
nation.
In effect, it has said that
Congress must accept a conscrip¬
tion
program
before the Army
will organize, train and equip the
mit

may

* t>

now

conscious; and (3) how very complex

difficult is the problem of investment today!

44

THE

(2676)

CHRONICLE

FINANCIAL

COMMERCIAL .&

•

Thursday,-June 17, 1948

in
1

•

•

Admiral- Loar Co.,

^

Cleveland, O.'

INDICATES

June 9 filed 75,000

(letter of notification) 750 shares of 5Vz% cumu¬
lative preferred stock (par $100); $60,000 31/2%-41/2%
©ne-40-three-year promissory notes. Prices par for-each
class. No underwrite!*. To make small loans.
June 9

s-

ment of

—-

10

filed

10,000 shares "of common. Price-M?ref&rred,
share and common 1 cent." For plant ahd equip¬
ment costs and working capital. Underwriter—Frederick
C. Adams & Co., Boston. ;
; —

American

Discount

Central Maine

North Carolina

of

iVz% demand and 2^2% 6 months cumulative loan cer-;
tificates.
No underwriting.
Offering—Offered only to" f
stockholders arid patrons* and'members; Piice^-At face ;
amount.
Proceeds—For acquisition'of additional office J
and plant facilities.
*
y
••

V, 77.

Dec. 8,

ferred stock.

competitive bidding.
Probable, bidders: Harriman Rip- {
ley & Co. and The First Boston Corp. (jointly) ; Morgan Stanley & Co.; White, Weld & -Co. and Shields & Co.;

'

for each pre-

-

the basis of one-half share of
ferred share and one-tenth

each

share held.

common

'eeeds—For construction
Central
Nov. 21

Power &

new common

share of
Price by

common

new

amendment.

and" repayment of bank

•

(jointly).

for;

Pine

.

Proloans.

#

of common
publicly at
To increase working

*

June 7

Vermont

Public

stock.

.

For

Bankers Fire & Marine Insurance

"+v '• Birmingham, Ala.:*■;v
yv77//^'•
April'27 (letter "bf notification) 25,845 shares of common
stock.
Price—$8. Offered—Offered for subscription to'
stockholders of record March 31 on basis of one new
share for' each two shares held.
Rights expire 5 p.m.,
■;

writing./

-

77;

k

number

of

shares

common

; fund
mon

amendment.

Main

—Bids for purchase of
noon

by

^

Berry (D. N.) Co., Denver, Colo.
May 27 (letter of notification) 133,000 shares of common
stock. Underwriter—John G. Perry & Co., Denver. For
working capital.
\ /
-

the bonds will be received up to
(EDT) June 21 at office of the company, 4th arid

Streets, Cincinnati, Ohio.

"

rent obligations, working

Black Warrior Mining Co.,
Spokane, Wash.
June 8 (letter of notification) 100,000 shares of
capital

No .underwriter.

Co.

Ltd.,

capital, etc. Being placed pri¬

(Mich.) Machine* Co.
v
April 15 (letter of notification) 10,000 shares of stock
to be sold at $5% each (market price), for selling stock¬
holder.

Ottawa,

Canada

shares of common stock .(par 20c)v;
(about $4.39).
Proceeds—For invests
Company is* an open-end management invest-*

Price, at market
ment.

ment company.; :,r\{/•; >/'

T

[
■

•

Exchange Buffet Corp., New-

Underwriter—Charles E. Bailey & Co., Detroit.

■'Vp»^

(letter of notification) 250 shares of commori
stock (par $2.50). Price, market (about $6^ per share)*s
Underwriter—Delafield Si Delafield, New York. Pro*
ceeds to selling stockholder.
;

June

14

First Guardian Securities

Corp.; New York City

June 4 filed

36,000 shares of 5 % cumulative convertible
preferred stock ($25 par) and 172,000 shares ($1 par>
commori stock.
(72,000 shares of common to be reserved
for conversion of the preferred.)
Underwriter—^None/
Price—$25 a share for the preferred and $10 for the com-*

V"-*.•'y;V1*-;--'"'**>;

mon.

Clinton

•

Exploration

1,000 common shares. Underwriter
& Co., Pittsburgh. To receive cur¬

/Equity; Fund/ I_ijk5-V-S

unspecified number of shares of ($10
common stock with scrip certificates to cover the
conversion by July 1, 1958.
Underwriter — Eastman,
Dillon Si Co., New York.
Price arid dividend rate
an

par)

filed

bonds due 1953 and 300,000 com¬
conversion of bonds. Price—

June 9 filed 400,000

Fenner & Beane; Glore, Forgan & Co. and White, Weld
Si Co. (jointly). Proceeds—Construction program. Bids

June 2

convertible 5%

shares reserved for

$1,000 per bond with
—S. K. Cunningham

Underwriter—Edward D. Jones Si Co.

—

Borderminster.

'

May 14 (letter of notification) $100,000 first lien sinking

,

stock (par 50). Price—250 per share.
For development work.

Virginia City,

$3.50 per share, and for preferred. $30: per share.

mon
.

,

:

'

-

'

/

l''v':r'

Nevada

7,77//"f77 ,:''7y./;i.;y;//7;7yy

Proceeds—General funds.

"7',/1

•vV:';"1'*.:'
'"".'7'' • 'y-7r*;":,;r::
Century Steel Corp., Hollydale, Calif.
' ■
Nov. 10 filed 4,000 shares ($100 par) common. Under¬
Equitable Gas Co., Pittsburgh, Pa.
:
writing—None. Shares will be sold at par by directors. *
Proceeds-s-To purchase rolling mill, equipment arid for ' May 8, filed $14,000,000 first mortgage, bonds, due 1973.-:
Underwriters—Names to be determined by competitive,
working capital.
"•
bidding. Probable bidders: Halsey,, Stuart & Co., Inc.;^
The First Boston Corp.;. Kuhn, Loeh & Co., and SmiHvy
Challenger Airlines Co., Salt, Lake City, Utah
Barney & Co;(jointly); W. C. Langley. & Co. and Glore,;
Marcn 1 fiieu 800,000 snares ($1 par) common stock, of
whicfr 400,000 are being sold for the company and 200,- - Forgan & Co,; (jointly) ; Harriman Ripley Si Ca; White,;/
OOO^for the account of Claude'Neon, Inc. Underwriting ; Weld & Co. ' Proceeds-^$14,000,000^ of' proceeds'; plus/
—None.
Price^-$2 a share. Proceeds—For equipment ' 563,000 shares of new common stocks will * be delivered
to the Philadelphia Co. in exchange for natural gaspurchase-and general frinds.v-"'v..
properties now under lease, outstanding- capital stockv oF
x
Equitable, notes and other clairns owed to the Phila/
/Champion Shoe Machinery JCo*r St. Lonjis, Mo*
May 26 (letter of notification) 10,000 shares of; common
delphia Col arid to the Pittsburgh' arid 'West Virginia
*' '/"".-"v.y 7: ;
stock and 200 shares of preferred stock. Price for com- w 'Gas Co.

•.-J*';.- Chemical Fund, lnc., New York
•
Bareco Oil Co., Tulsa, Dkfa.
June 4 filed 669,975 shares of common* capital stock, ($1
. y:
June 7 (Tetter of notification)-2,000 shares of common : par). Underwriter—F, Eberstadt & Co. Inc. Proceeds—
Stock (pdr $1). Price-i-$8 per share. Underwriter—Ke^
Forinvestment. Price—Market. ■
.fop
MV;.
}' j'"
'■>*■ •> i
boiUMc'Cormick*i& Co. ;i
"v
~
t-*.;,
Cincinnati Gas A Electric Co.,. (6/21),>
Barlow & Seelig Manufacturing Co., Ripon* Wis.
May 21 filed $15,000,000 first mortgage bonds, due 1978.
May 24 (letter of notification) 8,820 shares ($1 par)
Underwriters
To be determined by competitive bid¬
common
stock.
Price—$8 per share.
Underwriters—
ding. Probable bidders: Halsey, Stuart & Co. Inc.; Mor¬
McMaster Hutchinson & Co. and Charles W. Brew & Co.
gan Stanley & Co.; W. C. Langley & Co.; Blyth Si Co.,
Beneficial Industrial Loan Corp.
Inc. and The First Boston Corp. (jointly); Union Secur¬
(6/21-25) /
ities Corp.; Lehman Brothers; Merrill Lynch, Pierce,
May 27 filed 100,000 shares (no par) cumulative pre¬
ferred stock and

(letter of notification) 80,00,0 shares of common j
Price—$1 per share.
No underwriter. ; To drill

Dayton Consolidated Mines Co.,

(no

J

Fission Mines

Ltd., Toronto, Canada

,

April 16 filed 200,000 shares of treasury stock. Under*
writer—Mark Daniels & Co., Toronto. Price—$1 a share;
Proceeds—For mining and business costs.
;
J
'*!\i

Commonwealth

Lead Mining Co., Salt Lake
Fitzsimmons Stores, Ltd., Los Angeles, Calif. *
City, Utah
'
May 27 filed 2,000,000 shares of non-assessable common " :Feb. 2 filed 10,000 shares of 6%""; cumulative first pre*
stock (100 par).
Offering—1,303,733 shares are to be - ferred stock ($100 par); /Underwriting—Officers, direc¬
offered in exchange for a like number of shares of Utah
tors and employees of the ©ompany will offer the stock
to friends and associates.
Price—$100 per share. Pro¬
Qphir Mines Co. on a share-for-share basis plus. 6ne cent
ceeds—To retire t% preferred stock. Business: "Supey
per share to be paid Coriimonwealth by Utah Ophir
stockholders accepting the offer.
Markets" in Los Angeles, Riverside, Colton and San Ber-r
Underwriting—None^
-

500,000

shares ($1 par). Under¬
Price—40c per share Cana¬

common

writer—Mark Daniels & Co.
dian funds. Proceeds—For
exploration of properties.

Proceeds

—

For

exploration

and

development

work.

PACIFIC COAST
,

llilpililtllKlSl

r

AND

...

nardino County.

HAWAIIAN SECURITIES
Direct

Private

Wires

Dean Witter
:

'

New York

Boston

Pittsburgh

Chicago

&

Go.

MEMBERS "

New York Stock Exchange
Honolulu Stock Exchange

y

14 WALL

San Francisco Stock Exchange
Los Angeles Stock Exchange

STREET, NEW YORK

;
v.

'''

[Private Wires t6 Officles in other Principal Cities




j

■'

Reno, Nev.

.

v.///'$'■

No under*

undetermined

Corp.,

.

•

To increase' capital and surplus.

¬

vately.

+/. Aqua flight, Inc., Wilmington, Dei.;^v„-;:.'^^'^v..rtIvt'
June 8 (letter of notification) 2,200sharescomm6n stock/

June 30."

an

Underwriters of common—Coffin & Burr. Bonds
to be placed privately. Common stock will be offered to
common stockholders through subscription rights and to
common and preferred stockholders through subscrip¬
tion privileges. Proceeds—For a construction program
and repair of flood damages. Expected by mid-July.

Ampal-Amerfcan Palestine Trading Corp.* N. Y.
April 7 filed $10,000,000 I0**year 3% sinking fund deben¬
tures.
Underwriter—Name to be filed by' amendment,
If any is used.
Proceeds — $5,000,000 in mortgage loans
tor construction of housing in' Palestine/ $2,500,000 in »
loans to transportation and industrial cooperatives, and
$2,200,000 in loan to Solel Boneh, Ltd.; for public works.

.

Radiant Glass Heating Corp., N. Y.

testrwell.

Service

par).

(par 500) and $55,000 five-year 4% convertible
notes due July 1, 1953. Underwriter—None. Price-«-$200
per unit of $100 of notes and 200 shares of stock. Pro¬
ceeds for payment of outstanding obligations and for
general working capital.
;;

V;.7>/ /;<

Davis Oil

a

stock

-

■

;

„

•

Corp.
March 30 filed $1,500,000 Series E first mortgage bonds
and

share. -No underwriting.

Continental

(N; .Y.),>20

k;-:

notification) 149,900 shares of common 1
Price—$2 per share;
Underwriter—.
Mercer, Hicks & Co. Corporate purposes."
;
>■". i

Light Co.

filed 40,000 shares

Central

American Motors, Inc. (Del.), New York, N. Y.
June 8 (letter of notification) 110,000 shares of capital

v ;■7 /

Street, New York.

June 11 (letter of
stock
(no par).

($100 par) cumulative preUnderwriters—Lehman Brothers; Glore, Forgan
Si Co., Dewar, Robertson Si Pancoast.
Proceeds—For
property additions arid expenses. On April 15, SEC de¬
nied effectiveness of registration statement.
•
'

•

per

Proceeds—To acquire-property, construct and
Bids—Bids for .lhe. purchase of the ?
June 22 at |

expand facilities.

stock will be received up to it a.m; (EDT)
office of. Commonwealth & Southern Corp. -

ferred.

:

i;."j;

(no pa.r).. .Price—$100
working capital.

if

i.

•

Power^Co^-^cks^i'Miciwov^B/J^li

May 18 filed 200,000 shares .of cumulative>(no par)- pre*|
Underwriters — To be determined under >

Under-

called

4.7

i •*.' f

*•

mi

iConsumers

I

Power Co.

1947 and only one bid, that of Blyth Si Co.; Inc. and
Kidder, Peabody Si Co. was submitted and was rejected
by* the company; • They bid $13.75, less $1.75 underwriting commission. Now expected on negotiated basis
through Blyth & Co.; Inc. Offering—To be offered to 6%
preferred and common stockholders for subscription On

Georgia, Charlotte,

No underwriter.

;

for competitive bids

writing—Company

June 14 (letter of notification) 22,738 shares
stock (no par), 2,677 of which will be sold

$23 per share.
capital.

*'7f'

Nov. 10 filed 160,000 shares ($10 par) common.
,

,

Co.

;77'y7

|

cumulative certificates of indebtedness; arid $2,000,000 of

company's facilities and for acquisition of prop-'

/ /

$3,000,000 non-dividend common stock ($25 i
$6,000,000 of ZVz%' five-year and 4y2% 10-year j

par);

notification) 43,200 shares of common
be issued to J. S. Ivins Son, Inc., of
Philadelphia, for purchase of goodwill, trademarks, etc.

June 2 filed 535,882 shares of class

•

j

Oct. 16 filed

stock1 (par $1). *To

(7/19).
i. t,,
B ($1, par) common
stock. Underwriters—Names to be determined by com¬
petitive bidding. Probable, bidders: Glore', Forgan Si, Co.
and Lehman Brothers (jointly); Blyth
Co., Inc., and
Merrill Lynch, Pierce, Fehner & Beane-(jointly). Bids—
Bids for the purchase of the stoeklwill be received up to
3:30 p.m. (EDT) July 19 at office of Department of Jus¬
tice, Office of Alien Property, 120 Broadway, New York.
American Bosch Corp.

Consumers Cooperative Assoc.; Kansas City, >.
Missouri
■
i

Riverside, Calif.

June 14 (letter of

■tock and
per

*

Carr-Consolidated Biscut Co., Wilkes-Barre, Pa.

/

Air Lines, Inc.,' Portland,'Add.
^
April 26 fletter of notification) lO,000 shafes of preferred

#10

ISSUE

shares of convertible preference stock

■

5,332,673 shares of common-stock . (par
$1.25), Underwriter—Lord, Abbett. &> Co., Inc^ New
York, Price, at market. Proceeds—For investment,
J v
June

PREVIOUS

($20 par). Underwriter — William R. Staats Co., San
'Franciscof-^Proceeds — For construction and improve-;
erty.

Affiliated Fund,Inc.

SINCE

California Electric Power Co.,

t*"

!

ADDITIONS

'

8AN FRANCISCO

'.i'

u.} -r

Telephone BArclay T-4300
LOS ANGELAS"

*

,

v c

i

L'-

:

V
•

* ,i>»t : :<i

;

-

i;

HONOLULU1"

.»vr;"
■x

|

,'fo

'

3

Volume 167

COMMERCIAL

THE

Number 4708'.

"

Illinois Bell

NEW ISSUE CALENDAR

Underwriter,

1948
Sound Recorder & Reproducer Corp.___Stock Units
June 21,

1348

____Preferred,

Cincinnati Gas & Electric Co.

.'

(EDT)

Ohio

&

June

each.

•

•

24, 1948

(EDT)„__L_Bonds

1•

•V'>

•.

June 28,

Preferred

June 29,

*

Chicago & North Western Ry.,
Noon (CDT)
J------New York Telephone

:

■.

'

: '* "

~

-

'

/

Equip. Trust Ctfs.

General

Telephone

Louisville

Corp.-

& Nashville RR.,

Common
11:30 a.m.(EDT)-Bonds ?

51,500

Kennedy

/;v/;/y

Inc.,

\

(6/21)

*

,«

.

shares of

v. -:-

Inc., Stockton, Calif.

I

;

^

75,000 common shares. Company's proceeds will be
tised for general corporate purposes. Effective May 5.
and

stock

(par $1),

Fraser Products Co., Detroit, Mich.

Co.

and
.

R. W. Pressprich

/./

'

.'

;
-

capital and other

\

1 //

Corp.

,

Nuera

two

<

Products

&

Lewis

Lac, Wis.

Machine Tool

of

will

common

per

shares will be sold to officers
To start industrial loan business.

.

Ill),

(M.

Inc.,

New

date upon which such shares are offered,
No underwriter.
'
»
,,
.

Proceeds—To

Thorndike, Inc., Aetna Securities Corp. and

Statement

may

be withdrawn.

4

Gas and

Electric Co., San

/

Francisco

filed

ment, probably will include Blyth & Co., Inc,/

•

Proceeds

Pacific

Telecoin

Corp., San Francisco, Cal.
/
notification) $300,000 4lk°Jo equipment
trust certificates, series A, dated:July.. 1, .1948, and due
July 1, 1951. Underwriters—Gearhart & Co., Inc., and
Paul D. Sheeline & Co.
For equipment.

June 10 (letter.of

Pacific Telegraph

& Telephone Co.,

San Fran.

May 28 filed 601,262 shares ($100 par) common stock.
Underwriting, none. Offering—Holders of preferred and,
common stockholders of-record June 15 are given rights

Syle &

;;yyy.i,:

to

subscribe

on

or

before July-7

at $100 per share-to
preferred
Proceeds—To. reimburse company's

-the extent of one share for each six shares of
or

held.

common

,

treasury for additions, etc.....
Pacific

Western

Oil

»

Los Angeles
May-21 filed 450,227 shares ($10 par) capital stock. .{Un¬
derwriting—None. Offering—To be offered by the own¬
er,

Corp.,

.

J. Paul Getty, President of the Company, from £ime
on the floor of the New York Stock Exchange,
specific persons, firms or corporations," in sales

to time
or

"to

outside the Exchange.

.

1

;

.

Engineering Co., Columbus, O.

June 7 (letter of notification) 500 shares of 6%

;

1973.

/

1

,

,

•

Ideas, Inc., Washington, D. C.
June 9 (letter of notification) 4,500 shares of common
stock. T Price—$10 per share. No underwriter. Working
...

/.y




'.-.'ill

May 11
common

•

•

New

'

11

shares

Jersey Bell Telephone Co., Newark, N. J.
40-year debentures, due July

filed $55,000,000

15, 1988.
Underwriters — Name to be determined
through competitive bidding.
Probable bidders: Halsey,
Stuart & Co. Inc.; Morgan Stanley & Co.
Proceeds—To
pay off advances made by American Telephone & Tele¬
graph Co. (parent) for construction and general corpor¬
ate purposes.

•'»

-

-•

New Jersey Power

& Light Co.
/June 8 filed $6,000,000 first mortgage bonds, due 1978.
Underwriting—Names to be determined through com¬
petitive bidding. Probable bidders: Halsey, Stuart &

Co.

Inc.; The First Boston Corp. and Kidder, Peabody & Co.
(jointly); Lehman Brothers; Harriman Ripley & Co.;

,\-

:

(letter of notification) 400,000 shares (100 par)
stock.
Price—25 cents.
Underwriter — R. L.

For working capital.

Public Service Electric & Gas

June

11 filed

ferred stock.

Underwriters—Names to be determined by com¬

Proceeds—For general cor¬

Co., Denver, Colo.

Hughes and Co., Denver.

Co.,

Probable bidders: Halsey, Stuart & Co.
Inc.; The First Boston Corp.; Harriman Ripley & Co. and
Glore, Forgan & Co.; Goldman, Sachs & Co. and Leh¬
man Brothers (jointly).
Proceeds—To purchase 320,000
additional shares of United Natural Gas Co. common

June

.

.

Gas

Corp., Oakland, Calif.
($1 par) capital stock.
Un¬
&

.

Powder River Oil

.

Co., Newark, N. J.

200,000 shares ($100 par) cumulative pre¬
Underwriters — Names to be determined

through competitive bidding.
Probable bidders: Morgan
Stanley & Co.; The First Boston Corp.; White, Weld &
Co. and Union Securities Corp. (jointly).
Proceeds—For

petitive bidding.

preferred stock ($100 par). No underwriter. Work¬
capital.
"■//. /"■•

—

porate purposes. /

New York (7/13) ,
June 4 filed $13,500,000 sinking fund debentures, due
Fuel

600,000 shares

Price by amendment.

Co..

National

Metals

Permanente

derwriters—The First Boston Corp. and Dean Witter

Mortgage

;'f stock ($25 par), and to purchase 48,500 additional
of Iroquois Gas Corp.
Expected about July 13.
cumula¬

Idaho-Montana Pulp & Paper Co., Poison, Mont.
-May 17 filed 100,000 shares of 4% cumulative preferred
stock ($100 par) and 500,000 shares ($10 par) common
stock.
Underwriter
Tom G. Taylor & Co., Missoula,
Mont.
Price—$300 per unit, consisting of two shares of
^preferred and 10 shares of common stock. Proceeds—To
erect and operate a bleached sulphate pulp mill with a
200-ton per day capacity.
•-

•

June 9 filed

Associates, Inc., Philadelphia
June 9 (letter of notification) 25,000 shares of common
stock (par 10^) and 2,500 shares of prior preferred stock
(par $10). Underwriter—None. Price—Common, $1 per
share and prior preferred, $10.
Proceeds to increase
working capital.
' V""

H.)

Corp., Cleveland, Ohio
\June 4 (letter of notification) 29,723 shares ($1 par)
common stock. ' Price—$3.25 per share.
Offering—26,000
shares offered for subscription by stockholders of record
; June 10 on a one-for-five basis.
Rights expire June 24.
i*The other 3,723 shares are reserved for sale to key
employees. Underwriter—Cunningham & Co. For con¬
struction and new machinery. •
y;
<
Hoosier

,

Airlines, Inc., Kansas City, Mo.
May 19 (letter of notification) 6,000 shares of common
stock ($1 par).
Price—Market ($8 to $9). Underwriters
—Kitchen & Murphy, Chicago.
For working capital.
Mid-Continent

•

(J.

Pepsi-Cola Bottling Co. of Memphis, Tenn.. w
June 1 (letter of notification) 58,000 shares ($1 par)
common stock.
Price — $5 per share.
Underwriters—
Leftwich and Ross and Bullington Schas & Co., Memphis.
Proceeds—To retire notes, to purchase stock of whollyowned subsidiary (Bottling Co. of Greenwood, Miss.),
and to purchase equipment and supplies.

Finance Co.,

r

f

Inc., New York ;i: *-yy
June 8 (letter of notification) 14,530 shares of 6% cumu¬
lative preferred stock (par $20). - Underwriter—None^
Price, par plus dividends from April 1, 1948. Working
.capital.'■//'/
!f
v/':-/
Holan

A Mechanics

.

Grolier Society,

capital...

$100.

—To retire bank loans and finance further construction,

Jersey City, N. J.
June 10 (letter of notification) 9,228 shares of common
stock/class A (no par value) and 18,465 shares of 8%
cumulative preferred stock (par $10).
Underwriter—
None. Price—Common, $12.50 a share, and preferred,
par.
Working capital.
r/
:
l
*

Co., Norwood, O.
-June 11 (letter of notification) 42,410 shares of common
-stock (par $3.50); No underwriter. To redeem part of
preferred stock,
y/.. /*"/;■: •";//.Vv15:

tive

for

sold

1,000,000 shares of redeemable first pre¬
ferred stock ($25 par)i Underwriter—Names by amend-*

/

York

Pacific

:

June

Bottling Co., Inc. of Calif., Sheboygan,

Longchamps, Inc., New York
June 14 (letter *of notification) 250 shares of common
'stock (par $1); Price, market
(about $6 per share).
Underwriter—Delafield & Delafield. Proceeds to selling

Globe-Wernicke

ing

be

.

•

Fond du
V

Co.,

'-;"V

Giddings

•

:

stock equities of its subsidiaries.

ing price on the
exceed $75,000.

•

'

;

common

Co., New York.

June 10 (letter of notification) such a number of shares
of common stock of the company as will not, at the offer¬

•

/

Co./Greenville, N. C«
March 15 filed 100,000 shares of capital stock ($5 par).
Price—$15 each/
Underwriter—First Securities Corp.,
Durham, N. C. • Proceeds—General business purposes.

preferred stock (par $25) and 7,060 common stock
purchase warrants. Price—$25 per unit of one preferred
share and one warrant. • Underwriters—Childs, Jeffries

•

/.//

Co., Denver, Colo.

Old North State Insurance

-

•

•

build, furnish and tool a factory and apply close to $500,000 to working capital.
' •.; ■>
?
S/ ; V

of Tennessee,

General Telephone Corp., New York (8/30) > June 4 filed 208,260 shares of common (par $20).. Under-? *
Avriters — Paine, Webber, Jackson & Curtis, Stone &
Webster Securities Corp. and Mitchum, Tully & Co.
/
'
Of¬ -stockholder.
fering—Holders of common stock and 4.40% /preferred
Masco Screw Products Co., Detroit, Mich.
stock of record June 16 will receive rights to subscribe
'June 4 (letter of notification) 141,600 shares ($1 par)
on or before June 29 to the new shares at the- fate of
common stock-.
Price—$1.75 per share. Offered to stock¬
one new share for each
six common shares held and
holders of record May 22 in ration of one new share for
at the rate of one new share for each 414 preferred shares
each 2V2 shares held.
Rights expire July 10. No underfield.
Proceeds—To make additional investments in the
; writer.
To repay a loan and for working capital.

,common

(of Minm).

May 10 filed 100,000 shares <$10 par) 6% preferred stock,
and 20,000 shares (1 mill par) common stock.
Under¬
writing—None named. Price—10 shares of preferred and

•

lative

i

,/

*

Ltd.

States Power Co.

"

»

Mines,

,

».

-

9

Lamston

&

Gold

„

May 17 (letter of notification) 7,060 shares of 6% cumu¬

.Oct. 21 filed 100,000 shares ($1 par) common. Under¬
writers — Campbell, McCarty & CoM and Keane & Co.,
fcpth Detroit, Price—$5.25 per share.
Proceeds—The
shares are being sold by 14 stockholders who will re¬
ceive proceeds. Registration statement.effective Jan. 16.

stock.

July 1/
1978, and 200,000 shares of cumulative preferred stock
(no par).
Underwriting—Names to be determined by
competitive bidding.
Probable bidders: Halsey,. Stuart
& Co. Inc. (bonds only); Smith/Barney & Co. .(stock
only); Lehman Brothers and Riter & Co.:t(jointly both,
issues); Merrill Lynch, Pierce/Fenner&^Beane; Kidder,
Peabody & Co. and White, Weld & Co.- (jointly on bonds).
Proceeds—For construction and to pay off bank loans./

1,500,000 shares ($1 par) common stock.
Underwriter—Heronymus & Co., Sheboygan, Wis. Proceeds—To open ^and equip bottling plants in California
cities.
Price—$1 per share.
; .
:
;
; y
/

common

June 3 filed $10,000,000 first mortgage bonds, due
■

March 22 filed

*

Limited, Calgary, Alberto

Underwriter—F. H. Winter & Co.,

...

Wisconsin

(par $1).
Underwriter — Floyd D. Cerf Co., Chicago.
Price—preferred $10; common $6. s Proceeds — Stock¬
holders will sell 260,000 preferred shares and 250,000
common shares
and company 125,000 preferred shares

Inca

Northern

■

Kool-Aid

Oils

903,572 shares: (no par)

shares of common stock (par $1).
Mining Co., Ltd,, Toronto.
Proceeds for exploration and development.
\

•'

common

For working

Systems

and directors.

March 6 filed 385,000 shares of 60 cent convertible pre¬
ferred stock (par $5) and 325,000 shares of common stock

|

td

; :

March 10 filed 666,667

are

Corp.

unit and 60,000

f

and

Proceeds—875,000 shares being sold by
and 28,572 by stockholders. Proceeds for pur¬

North

Jamestown,

will be sold in units of one share of each at $10.01

Flotill Products,

plant expansion
Expected June 29.

chase of property and drilling.

Memphis, Tenn.
/;/.
1
(letter of notification) 29,500 shares ($10 par)
-preferred stock and 89,500 shares (lc par) common stock.
No underwriter.
Preferred and common (29,500 shares)

p.m.(EDT)-CI. B Com. ;

Canadian
filed

11

company

being sold by Adams Express
15,300 shares by American International Corp.

-corporate purposes.

June

19481

in

New/York.

N. Y.
4,000 shares of capital
Underwriter—None. Price, par. To start

36,200 shares

Stock & Bond

,

'•

Debentures

f-'-v'rJu,y

North
March

and

9,300 shares of cumulaparticipating preferred stock and $200,000 of 205V2% debentures, due 1968. Underwriter—General

year

National Fuel Gas Co

Sun,

Keller & Co., Inc., Boston, Mass,

.tive

1948

^ July 13, 1948

American Bosch Corp., 3:30

plant

May 28 (letter of notification)

Bonds

Co._i

incurred

Underwriter-^Transamerica

Underwriters—Hallgarten &
-& Co.. •' ' ' ''
1

:

June 30,

filed

1

and

Co.

''/'v ;

1948

loans

Price—70 cents each.

Joy Manufacturing Co.

___„_-^-.™_Equip. Trust Ctff

(CDT)

Noon

milling

(letter of notification)

of which

Chicago Milwaukee St. Paul & Pacific RR.,.. " J
\

14

June

1948

'

-

construct

stock (par $50).
".a community newspaper.

1948

Southern Union Gas Co._

■-

Proceeds—To

Jamestown

June

'

June 25,

bank

finance future construction.

sell the issue.

(EDT) „Eq. Tr. Ctfs.

-Gulf Mobile & Ohio RR., Noon

stock.

Frechette, Hartford, Conn., is the
authorized agent and principal underwriter. Price

Irwin-Phillips Co., Keokuk, Iowa
(letter of notification) 10,000 shares of 5% cumu¬
lative participating preferred stock ($10 par) to be sold
on behalf of three stockholders.
Price, par. Underwrit¬
ers—Slayton & Co. have been employed as agents to

1948

RR., Noon

Sherbrooke,

common

•

Equip. Tr. Ctfs.
June 23,

Baltimore

($1 par)

June 1

Richmond Fredericksburg & Potomac RR.,

(EST)

New York Telephone Co.
(6/29)
May 28 filed $90,000,000 refunding bonds series F, dca
July 1, 1981.
Underwriters—To be sold through com¬
petitive bidding.
Probable bidders: Morgan Stanley &
Co.; Halsey/Start & Co. Inc.
Proceeds—To reimburse'
the treasury for capital expenditures already made, to

purchase equipment.

.Bonds

—

C.-Langley & Co.-and Glore, Forgan & Co. (jointly);
Proceeds—For ^construction and
improvement of property.V%rv,.V;*

Union Securities Corp.

retire

shares

U. S.

11 a.m. (EDT)
Preferred
Philadelphia Baltimore & Washington RR.,

Noon

Ltd.,

W.

«

—$1

22, 1948

—

Co.,

(2677) "45

Underwriter—Paul E.

Consumers Power Co.,
Noon (EDT)

Asbestos

Quebec
Jan, 30 filed 1,500,000

________

June

none.

International

Bonds
Joy Manufacturing Co
l_____Common
Southern Natural Gas Co., 11:30 a.m.(EDT)-Bonds
Super Electric Products Corp.____-Notes and Com.
Noon

I

shares of capital stock (par $100).
Offering—To be offered pro rata for

subscription by shareholders of record June 2.
Ameri¬
can Telephone and/Telegraph Co.
(parent) will purchase
387,295 shares. Proceeds—To pay advances from Ameri¬
can Telephone and Telegraph, its
parent; any remainder'
of proceeds will be used in improving telephone plant.

June 18,

Beneficial Industrial Loan Corp

CHRONICLE

Telephone Co., Chicago, III.

June 4 filed 389,995

//

FINANCIAL

&

property additions and improvements.
.

•

Rare Earths

Development, Inc., McCall, Idaho

/

(letter of notification) $300,000 of common stock
certificates. No underwriter. For dividend payments and

June 7

expansion.

^

Realty Co., Denver, Colo.
June 3 (letter of notification), 400 shares capital stock
($1 par). Price—$27 per share. Underwriters—Ralph S.
Young, Colorado Springs, Colo., and J. A. Hogle & Co.,
Salt Lake City, Utah. For working capital.

Republic Aviation Corp., Long Island, N. Y.
shares ($1 par) common stock, issu¬
the exercise of stock options.
Options for this
stock, exercisable at $7.25 per share, are held by eight
-individuals and the estate of another, now deceased. For
June 4 filed 42,000
able upon

general funds*

>-

'

•

••

•

-

' VlV. *

(Continued on page 46)

-

■

/

:

i

46

THE COMMERCIAL &

<2678)

FINANCIAL CHRONICLE

Thursday, June 17, .1948

'•■I*

Richmond

Steak fn Shake, Inc., Bloomington, RL

(Continued from page 45)

Feb. 2 filed 40,000-'shares of 50c cumulative convertible

Riley Stoker Corp., Worcester, Mass.
notification) 7,000 shares ($3 par) com¬
mon stock. Price—$ 11 % per share.
Underwriter—Han-

participating

June 3 (letter of

Corp., Burlington, Vt.

Rock of Ages

stock,

($1

and. 160,000

par)

writer—White & Co., St. Louis, Mo, Price—$8 for the
preferred stock and $2.50 for the common. This stock »
is being offered by stockholders who are- members of

,

(letter of notification) 2,000 shares of common
Price—$13.50 per share. UnderwriterLee Higginson Corp.
To reimburse the corporation for
cost of shares purchased from an existing stockholder.

June 8

the Belt

stock (no par).

family,,.■

.

1

...

'f\

Fredericksburg & Potomac RR;
■

:

,

■

*
f

,

(Bids for the purchase of $2,400,000 equipment trust cer¬
tificates will be received at office* of H. S. Wood,. Trpas,,
'Room 501, Transportation Building; 201 W. Broad Street,

shares (50c par) common stock, of which 40,000 will be
sold and the remainder reserved for conversion; Under¬

rahan & Co.
•

preferred

•'/■ (6/22)

v/

iRichmond,. Va.,
; ders:

Halsey,*

to noon (EST) June 22. probable bidStuart & Co. Inc.; Salomon Bros. &

up

Hutzler; Harriman Ripley & Co: and Lehman.Brother

(jointly)Harris, Hall & Co. (Inc.).

,

;

.

i

1

"

Texas Gas Transmission Corp.;"

.

(

June 28 stockholders will vote upon an increase in the
I authorized stock to5100,000 -shares. ($100 par)„preferred

e

Sandy Hill Iron & Brass Works, Hudson Falls,
Mow York-'

and 3,000,000

■■

shares ($5 par) common.

Existing capital

.

•

April 12 (letter of notification) 59,000 shares class A
participating preferred stock (par $4). Price—$5 per
share. Underwriter—John L. Nolan, Inc., Glens Falls,
N. Y. Working capital.

Baltimore

A Ohio

RR.

(6/23)

Company will receive bids up to noon (EDT) June 23
for the purchase of $5,060,000 equipment trust certifi¬
cates series Z, due $506,000 annually July 1, 1949-1958.
Probable bidders: Harris, Hall & Co; (Inc.); Salomon Bros. & Hutzler; Harriman Ripley & CO:; Inc., and Leh¬
man Brothers (jointly); Halsey, Stuart & Co. Inc.

Savoy Oil Co., Inc., Tulsa, Okla.
June 8 filed 150,000 common shares (25^ par).

Under¬
Offering—Stockholders are to be given
rights to subscribe to 100,000 new shares at the rate of
two-thirds of a share for each share* held.
The other
writing—None.

Central Maine Power Co.

•

-

■

1

'

•

.

proposes.to sell through
competitive bidding $5,000,000 first and general mort¬
gage bonds. Probable bidders: Halsey, Stuart & Co. Inc:;
Blyth & Co., Inc.; Kidder, Peabody & Co. and W. E. Hutton & Co. (jointly); Merrill Lynch, Pierce, Fenner &
Beane, and White, Weld & Co. (jointly); Salomon Bros.
& Hutzler; Harriman Ripley & Co., Inc.
J
; /•.

50,000 shares will be issued to officers arid others at $2.50
share upon the exercise of warrants, An unspecified
number of shares may or may not be offered for sale to
the public.
Price by amendment.
Proceeds—To be
added to the general funds of the company.

e

(letter of notification) 10,000 shares ($10 par)
stock.
To be offered first to stockholders and

per

capital..-,

.

Sierra

..;

•,

Pacific

■-

Power Co.

W

-

>

;

&

a

amount of bonds to be issued.

,4

,,

,

;

\

•

Southeastern Public Service Co.

/

;

or

former holders of

common

Bids

.

24 at office of Beekman &

•

,

Nashville

Co.

Leh(jointly);

(par $1)

stock.

preferred

& Co., .Toronto, ^ Canadf.
Proceeds—For mine develop¬

/v;/.';;■;■//,)

^

-

'

RR2/-T6/30):v//,:/';^^//.

vr."

:

•;

v.

excess

Union-Standard- Oil Co.,

Inc.# Salina,

Kan.

Jime II (letter of notification) $250,000 of common

stock.

;;^Nd;:underwrite^To:drill,fek; weiL:sjV'^-^
United 'Air:

:Lines^'lhc.,:DhicagOf r:^ f'; /~'V::^^

/June 7 filed fiied 369,618 shares ($10 par)- common -stock.
1

;

Underwriter—Harriman'Ripley & Co4 Inc., -New1' York.j

; Price—By amendment. 'Offering^-To be made to coni^ mOn stockholders of record June 28 oh the basis of one

of 3% %.

Proceeds of the issue will

replace treasury funds used
capitalizable expenditures, provide funds for future
similar expenditures and increase working capital. Prob¬
able bidders: Halsey, Stuart & Co. Inc.; Morgan Stanley

•

share for each five now* held;
Rights expire July 12.
Proceeds—Expenditures for equipment and facilities; re¬
tiring b^ink loans and debentures.
r; -*

:.;

r

/:

United

March -29

Rayon Corp., New York City:

9,050 shares (no par)/commdn stock.
Price—$1,000 each: Each share is to be accompanied by
!a- "production -warrant" permitting the holder. to buy a
June 4 company asked SEC authority, to sell'at competi¬
proportionate share of the company's output.
Undeftive bidding $11,000,000: first mortgage
bonds, series B,
wrlting—Norte.
Proceeds^-To. provide capital for the
due 1978, the proceeds to be used to purchase the
utility, purchase and operation; of a plant -with -an annual proassets of Bellows Falls Hydro-Electric. -Corp.^. Probable: / ductive capacity of .;4,000,000 pounds of viscose filament
.'A
bidders: Halsey, Stuart. & Co;. Jne^: The First Boston
rayon and 8,000,000 pounds of viscose staple fiber,
Corp.; Kidder, Peabody & Co.; Lehman Brothers; Mer¬
:
U. S. Rubber Reclaiming Co., itic^ New York.
rill Lynch, Pierce, Fenner & Beane; Kuhn; Loeb & Co.;Salomon Bros. & Hutzler and Uniou Securities
Corp. ) May 25 (letter of notification) $300,000 4Vz% subordinate
convertible debentures, due June 1, 1962.
Price, par.
(jointly); Kidder, Peabody & Co. and White, Weld & Co.
Underwriter—Ladenburg, Thalmann *
Co, Offering-^
(jointly).
'
'•; /. •
"Offered for subscription by stockholders at"par; Rights
/New Jersey Power & :;Ligh^-Cii^i/i'k-S'
expire June 22. .Complete new plant facilities.;
"
'
May 19 company asked SEC permission, to issue and
>
sell $6,000,000 of first mortgage bonds' due 1978/
Virginia Iron, Coal & Coke Co., Roanoke, Va.
Pro¬
June 7 filed 3,750 shares of 4% preferred stock ($25 par)
ceeds will be used to finance company's construction
program.
Probable bidders: Halsey; Stuart & Co;, Inc.; / and 15,000 shares ($10 par) common stock, to be sold by
The First Boston Corp. and Kidder, Peabody d? Co. ; Mrs. Esther Buchman • of New York. City.
Price-r-*Pr?^
ferred $20; common $8.25f Underwriter^—None
(jointly); Lehman Brothers; Harriman Ripley & Co.;
3
' [

•'& Co.

;y'i

4-7''

vp-"'1 / v"'-/

filed

"i: New England Power Co.,

-

-

.

(6/25)

•

.

,,

,

,

.

.

W. C. Langley & Co. and Glore, Forgan 8? Co. (jointly).

ceived up to noon (EDT) June! 22 at bffice of Geo.

Co., Ltd., at the

rate of three Standard shares for 20 International shares.

Underwriting—None. Purpose—To gain control of Inter¬

Canadian corporation.

Standard Tube Co.,

Detroit
May 14r filed 136,667 shares of Class B common stock
(par $1). Underwriting—None. Offering—Offered to

•

Philadelphia Transportation Co.

H.

.

.j

of the assets of Transit Investment Corp., which

'

at

'

11

West

Water Service Co., Charleston,
~
/:
preferred stock (no -par),
amendment * Pricer~$lQO
each.
Proceeds—Retire $400,000 of bank loans,. and for
construction purposes.v
,-V;'
-

-

Virginia

Wost Virginia

June 7 filed 8,000 shares of $5
i Underwriters^-To be filed by
■

^

Pursuant to the provision nt a, plan for Jhe distribution

Class B common shareholders of record June 10, in the
ratio of one share of new stock for each three shares held

Vitarama Corp^

June

Pabst, Jr.,

Vice-President, 181.1; Broad Street Station
Building, Philadelphia, for $17,570,000.in general mort¬
gage bonds, series F, maturing May: 1, 1979. Probable
bidders: Kuhn, Loeb & Co.; Halsey, Stuart'<8? Co. Inc.;
•Die First Boston Corp.; Kidder, Peabody & Co. and Mer¬
rill Lynch, Pierce, Fenner & Beane
(jointly); Harriman
Ripley & Co.
;/
/■ t;

Huntington Station, N^.-Yi •/•,•.' J
(letter of notification) 3,000 shares preferred
stock (no par) and 3,000 shares: common stock (par $1).
Price—Preferred, $95;-common, $3; Ufflderwriting^-None,
Working capital. *:
;;;: ■
^j
*' >■' >■

: ••

Philadelphia Baltimore & Wash. RR. (6/22) i
The company has issued invitations for bids to be re¬

Standard Oil Co. (New Jersey)
May 11 filed 1,265,255 shares" ($25 par) capital stock.
Offering—To be offered holders of no par value com¬




&

share.

;-4-7':hr ---/' •'
notification) 500 shares of, $4, cumula¬
tive; dividend, 50% participating preferred,stock, series
;A. Price-^-$100. Repay costs and expfn$e of prpmotio/i
and incorporation. of company.
; 4 / <t
1. / /
t
:

Bogue, 15 Broad St., New

Brothers- and

Louisville

Mines# Ltd., Tor onto, rCanai^a

June ,11 (letter of

for

Squankum. Feed & Supply Co.y Inc.
FarmingcFafe, N. J.
May 24 (letter of notification) 1,000 shares $5.50 cumula¬
tive preferred stock (par $100). Price, par. Underwriter
—Fidelity Securities & Investment Co., Inc.,- Asbury
Park, N. J. Working capital.
'
:

-

•'

a

ments.

(6/24)

than 98 and the rate of interest not in

■

$250,000.

Price—60 cents

invitatioi^for^bids:for.thh^>ur-!
$30,000,000 first and refunding- mortgage bonds,
Series H, dated April 1, 1948, and maturing Aprillv/2003.
Bids must be received by the company-not later than
11.30 a.m4 (EDT) June 30.
The price is not to be less

,

$3 per share;
Rights expire 3 pm., June 25; Fort
Industry Co., owner of 122,757 shares of Standard Tube
stock: has agreed, to purchase such portion of the above
shares as shall not exceed in cost the aggregate sum of

Tabor Lake Gold

chase of

Inc.; New Yotk. - Price—By amendment. Proceeds—To
repay bank loans and finance additional construction.

a

•

-

10

April 2 filed 300,000 shares
Underwriter—Mark; Daniels

The company has issued

i

June 4 filed 25,000 shares of 5% cumulative preferred
stock ($100 par).
Underwriter—E. H. Rollins &; Sons,

national,

:

:•../ Theatre Showcase

Harriman Ripley, &
Shields & Co.; Glore, Forgan & Co.

; man

Natural Gas Co.

stock of International Petroleum

/ -;

(letter of notification) $148,000 series A con^participation 5% notes and 14,800 warrants Oo
purchase common stock ($2 par), to be issued in units
of 10 warrants with each $100 of notes, and 49,900 shares
of common stock. Price—Units, $100; common, $3 per
share.
Underwriter—Kaye; Real & Co.; New ^ York.
Payment of existing obligations to State and Federal
Governments. Additional working capital, etc;
|

-

Probable bidders: Halsey, Stuart .& Co. Inc.;

York.

(6/21)
May 10 filed $28,000,000 first mortgage pipe line sinking
fund bonds., Due 1968. Underwriting—Names to be de¬
termined by competitive bidding. Probable bidders in¬
clude: Blyth & Co., Inc. and Kidder, Peabody & Co.
(jointly); Halsey, Stuart & Co. Inc.; The First Boston
'Corp.' Proceeds—$14,000,000 will be applied to the
payment fexclusive of accrued interest) of 1%% notes
"due 1956; balance for construction purposes.
Bids—Bids
will be received by the company at Room 1130, 90 Broad
Street, New. York, up to 11:30 tt.m. (EDT) on June 21.

mon

■

,

the

for

-

stock of the Southeastern

.'<h Southern Union Gas Co., Dallas

:

vertible

purchase of $7,000,000 collateral trust
bonds, due 1968, will be received up to noon (EDT) June

Corp. dissolved June 27, 1947. Warrants are exercisable
between July 1, 1948-June 30, 1953, and holders may
purchase one share of stock for each warrant held at
$3.50.per share.
:
Southern

Gulf Mobile & Ohio RR.

•

June 10

(letter of notification) 76,032 shares of capital
stock (par. 10C), reserved for issuance - against 76,032
stock; purchase warrants, issued or issuable to holders

;

Super Electric Products Corp., Jersey City '4

June

Commonwealth EdisonCo., Chicago
f
2 company announced that it expects to file a
registration statement before the' end of June covering
$50,000,000 of bonds, to be sold competitively. Probable
.bidders include: Halsey, Stuart & Co. Inc.; Glore, Forgan
& Co.; The First Boston Corp.vv
7.07,

Sound Recorder & Reproducer Corp.: (6/18)

July 7 (letter of notification) 2,710 shares of 6% cumu¬
lative preferred stock ($100 par); 5,710 shares of Com¬
mon ($1 par).
Offering-*—2,710 Glares of preferred and
2,710 shares of common will be offered in units at $101
per unit.
Company will sell 1,050 additional shares and
S.. Stanley Scharv will sell 1,950 shares of common' to
James D. Cleland & Co., underwriter.
For repayment
of loan and general-corporate purposes.
;

•

6/2S-2S>'''.

June

possible revision of the
...

•

-

• "

On May 15 company asked California P. U.
Commission for a 60-day extension of time in which to
to

Co., and Lehman Brothers (jointly); Kidder, Peabody
Co., and Dick & Merle-Smith (jointly)*
; '

&

000 to National Shawmut Bank of Boston for Construc¬

due

iwriter, Kuhn, Loeb & Co.

tificates, to be dated Aug. 1,1948 and to be due in annual;
instalments either in 10 or 15 years, will be received at
office of R. L. Williams, President, Room 1400, 400 W.
Madison St., Chicago, up to noon (CDT) June 29. Prob¬
able bidders: Halsey, Stuart & Co. Inc.; Harris, Hall &
Co. (Inc.); Salomon Bros. & Hutzler; Harriman Ripley

tion notes.

securities

| in 1951, These obligations consist of $20,000,000 of debeni tures* and $80,000,000 of bank loans. Traditional under^

Chicago & North Western- Ry.-.„(6/29):/-" 7: f 77*7

•

ding. Probable bidders include: Halsey, Stuart & Co
Inc.; Blyth & Co., Inc.; Stone & Webster Securities Corp.
Proceeds—Construction costs and the payment of $650,-

the

.

,T

Bids for the purchase of $5,340,000 equipment trust cer- *

March 26 filed $3,500,000 first mortgage bonds, due 1978.
Underwriters—To be determined by competitive bid¬

issue

j

July 12 stockholders will vote on increasing authorized
debt frOm $50,000,000 to $150,000,000.
It is'planned to
; issue ^$70,000,000 to $8O,eO0,OOO of .debentures te refund
or retire a portion of $100,000,000 obligations maturing

:
Stuart Aerial Insect Control, Inc.* New York j
equipment trust certificates, series "EE." Certificates
will mature $191,000 semi-annually Jan. 1, 1949-July T, -J June 11 (letter of notification) 200,000 shares of common
? stock
(par lOf). Price—$1 par share. Underwriter-41958.
Probable bidders: Halsey, Stuart &- Co. Inc.; Salo¬
mon Bros. & Hutzler; Harriman Ripley & Co; and Leh¬
| James T. Dewitt Co., Canton, Ohio. Acquisition of busf•
man Brothers (jointly); Harris, Hall & Co. (Inc.)
■■■.f-',;
Iv4'-'
^ (ness of P. J. Murray.

:

;

J
•

000

unsubscribed shares later to the public. Price—$10
share. No underwriting. For additional working

any

O'Connor & Co., of Chicago.

Westinghouse Electric Corp.

Company will receive bids up to noon (CDT) June: 28,
office of J. W. Severs, Vice-President, Room 744,
Union Station Bldg., Chicago, for the purchase of $3,820,-

Shackleton Piano Co., Louisville, Ky.
common

j

Service Corp. v

ice Corp. to Doyle/

at

Francisco, will act as selling agents, Each purchaser of
one preferred share entitled to buy six common shares
at $1 per share. For working capital and expansion.
June 2

V-1-'.-.

Public

Corp.j has asked the SEC to permit the
sale of its common stock holdings in United Public Serv).

f

St.: Paul & Pacific RR.

Chicago Milwaukee
(6/28)

United

I The Middle West

,

Schuyler-Wilson Co., San Francisco
May 26 (letter of notification) 15,000 shares of ($10 par)
preferred A stock (with warrants) and 90,000 common
shares (par $1), reserved for warrants. Price,, par for
each class.
Underwriter—Hannaford & Talbot," San

stock, of which

sl;265,383 shares are outstanding., it is proposed fo~use
of new common for exchange for exist¬
ing capital* stock Outstanding and to sell privately at $8
a
share 625,000 shares under-an arrangement already
'made subject to* shareholder approval.
The preferred
shares would be issued in series when necessary.

i 1,265,383" shares

June 9 company advised that it

per

authorized ig~ 2,000,000 shares of capital

?

•

is being

Yeakley Oil Co., Alan»osa, Colo. 7
1 ^■
r* •, ■
April 30 filed 10.000 shares of common stock (par $10).

Underwriting—None. Price—$10 per share. - Proceeds—
dissolved, sealed bids will be received on behalf of the
Mainly for development.- ^
>
corporation by Lybrand, Ross Bros. &. Montgomery, -2101
Packard ' Building, /Philadelphia 2; on June 24,
Zonoffite Co., Chicago, Iff,
.//
/
' ■
1948, at
noon (EDT) for the purchase on an tlall or none"
basiS, vMay - 24 (letter of notificatkm) 22JD00 shares common
of voting trust certificates for 9,238 shares of the; com¬
stock (par $1).; Undemriter—Wm; C. Roney & Go;. Prite
mon stock of Philadelphia
,,
j
Transportation-Co.: i :
^^ .by.amendment.,
,

:

,

(2679)

& FINANCIAL CHRONICLE

THE .COMMERCIAL

167^ Number 4708

Volume

monetary -relationship
between
the five European countries who
have committed themselves freely
healthy

(Continued from page 4)

i

acted
was

the

automatism,

necessary

element in the "gold ex-

an

Cchange standard," applied by the
"European countries since the last
This built up the money cir¬

.war.

culation in
gold

basis,

country on the

one

another

of

reserve

where this

that the

so

country

also the currency

was

automatism of

the gold

standard, which appeared
retained, disappeared for
Ithe greater part. The equilization
ito

be

ifund policy of the 30's went even
further: the purchase of foreign
currency by the circulation bank
against the issue of treasury paper
was
intended to counteract the
automatism of international mone¬

tary

traffic;
it
created
"bad
money" in the foreign center and
had
the
tendency at home to
tighten the money market, al¬
though
the • influx
of
foreign
means

it.

ought to have broadened
this way natural adapta¬

In

tion

was made difficult, if not
impossible. But that was just the
;idea.
Currency, credit, had to
serve
a
certain economic policy

of

to

made

are

the foundation

recovery,

prosperity),

efforts

and

the

conse¬

tries of

avoid

by an evermore compli¬
cated system of measures.
Such

quences

the

is

has

that

measure

been

immediately punished
was

too much of

It

•

be

cannot

every error

this

that

denied

Europe.

basis of

countries

which

fed

part of the

from

national

if

have

to

receipts

in

change

They have to resort continually
to

cially, the trade policy of the three
debit countries
(Britain, France
and The Netherlands), the picture
remains the same: Belgium, there¬

the tensions created by deviation
from natural equilibrium.
It is a

small

allotted

is

Belgium

because

grant-in-aid
dollars) would soon be used up.
It would be a very inefficient use
only

few

a

that

ERP—assuming that the U. S.
agreed with that use of the equiv¬
alent
in
national
currency
of

of

'

regard to the

monies

use

national

in

"•!.-s '''

gium.

put

solution which

evil of

to the

end

an

For this would have

com-

European

their

whole

seek

selves.

The

talks

Brussels

only

temporary solution in view
jand sought a way out in the di¬
rection of a multilateral clearing.
a

It- is

clear

this

of

stabilization

stabilization
not

and
as

is

of

currencies

a

stabilization,

is

It

European

population is
only remain
high level of

through

a

prosperity.

a

increase

exchange regime—is, as has been
set : out above, an indispensable

century was possible only through
increasing capital wealth.
This
has shrunk considerably in the

Constructive co¬
not ' achieved.

was

Britain, which has
with

so many

bonds

obligations towards the

and

countries

other

the

in

sterling

account of this
than of West European financial
Cooperation.., takes

.area,

more

greater need of ex¬
the other partners,

a

than

ports

Netherlands,

The

France ' and
which have

condition

tion
As

for

a

healthy

of : international

it

such

must

be

regarded

afford

;

continue

to

an

that

equal
ERP

degree is it necessary
helps to free Western

Europe of bilateralism and further
obstacles and restrictions in the

Unfortunately,
this

have

tb

free

and

•

Brussels talks have shown.
Arrangement

European monetary policy is still
dominated

tions

as

the same concep¬

those of the Thirties. The

the

more

by

effects

pronounced

of

this

become

(impossibility of

world

and

of

Europe

itself

has

Adaptation will there¬
doubly difficult.
we see how many diffi¬

changed.
fore be
When

culties there
on

a

matter

is vital

are
on

to

231

Chicago 4,

Appliance

Parker

circular

Company

Also available is

analysis of

an

Southeastern Public Service Co.

r—Circular—Marx &

Co., 44 Wall
Street, New York 5, N. Y.
Standard

Oil

of

New

Jersey—

Analysis and outlook—Ira Haupt
& Co., Ill Broadway, New York 6,
n. y.
/,

Wisconsin Power & Light Co.—

Analysis—Ira

be

which

(the creation of

Pittsburgh

Zonolite

Salle

Co.

—

Memorandum

—

Street, Chicago 3, 111.

TABLET

WESTERN

As

?

STATIONERY

CORPORATION

is

Notice

DIVIDEND NOTICES

the

of

rate

outstanding

COMPANY

AMERICAN MANUFACTURING
Noble

West

and

Streets

The

Board

of

Directors

of

close

the

at

of
E.

American

the

Company has declared a divi¬
share on the Common Stock,
payable July 1, 1948 to Stockholders of Record
at the close of business June 18, 1948. Transfer
books will remain open.
ROBERT B. BROWN, Treasurer.

Tablet

Western

&

Stationery

Corporation has been declared payable on July
10,
1948,
to the holders of record of
such
shares

Brooklyn 22, New York

hereby given that a dividend at
$,b0 per share on the issued and
shares without par value of the

Stock-of

Common

business on -June 24.
H. BACH, Treasurer

Manufacturing

dend

of

28c

per

United Shoe
The

clared

Directors

Preferred
clared

The Garlock
Packing Company

healthy

Machinery Corporation

capital

of

capital
and

of

1948,

of

business

June

the

de¬

on

the

share

per

de¬

on

also

have

The dividends on both
stock are payable July

of record

at

the close

1948.

16,

WALLACE

June 9, 194$

have

share

per

They

62^c

stock.

Common

to stockholders

6,

Corporation

ZVfac

stock.

dividend

a

Common
Preferred

this

of

dividend

a

M.

KEMP,
Treasurer. '

COMMON DIVIDEND No. 288

meeting of the Board of Directors,

a

this day, a

quarterly dividend of
declared on the com¬
mon
stock of the Company, payable
fune 30, 1948, to stockholders or record
it

share

per

was

the close of business

June 19, 1948.

H. B, Pierce, Secretary

IIMIED FRUIT COMPANY

lVt% Funding and Real Estate Mortgage Bonds,

DIVIDEND NO.

May 1,1950

The Weatherhead Company

,5% Twenty-five Year Bonds, due December 1,1931

A

Notice is hereby given that The Western Union Telegraph
Company invites tenders of Bonds of the above issues, for purchase
by it, and that tenders will he received by the Company, at
60 Hudson Street, New York 13, N. Y., until 12 o'clock noon,
Eastern Daylight Saving Time, on June 30, 1948.
it
1

Copies of the Invitation for Tenders, which.sets forth the terms
and conditions relating to such tenders, and copies of the Form for
Tender, on which all tenders must be-made, will be supplied by
the Company upon request addressed to the attention of its
,

Ill

DIVIDEND NOTICES

Chemical

and

Coke

Company—Study—Eisele & King,

regulation

Telegraph Company

„

Co.,

&

Ames, Emerich & Co., 105 South

Street, Boston 9, Mass.

overcome

a

Haupt

Broadway, New York 6, N. Y.

La
31 Milk

,

quarterly dividend of $1.25
per share has been declared by
the Board of Directors

on

the

outstanding Preferred Stock of
the Company,

15,

1948,

record
on

at

to

payable July
stockholders of

A

dividend

per

share

stock of

of
on

196

fifty

the

cents

capital

this Company has

been declared

payable July

15, 1948^ to stockholders of
record Uune 24, 1948.
EMERY N. LEONARD

f

Treasurer

the close of business

July 2, 1948.
MORRIS H. WRIGHT
Treasurer

May 12, 1948
Cleveland, Ohio

; ■;■■■■

price ceiling has been fixed by the Company, and accord¬
ingly tenders may be made at any price.

SITUATIONS WANTED

N. Y.

—

du Pont, Homsey Co..

—

No

!

Trust

&

Illinois.

V",; r; Notice of Invitations for Tenders of

the above address.

Bank

Central Railroad.

Co.,

&

South La Salle Street,

21

at

.

Public National

Corporation—Il¬
brochure giving 13-year

analysis—Comstock

At

Treasurer

Los Angeles 13,
C
•/■v';---

California.

Coal

Ben

lustrated

held

due

Inc.—Memo¬

Co., 453 South

Verney Corp.—-Description an¬
alysis—A. G. Woglom & Co., Inc.,
49 Federal Street, Boston 10, Mass.
Also available are analyses of
United States Finishing and Maine

(Continued from page 8)
Old

FOR TENDERS

/ The Western Union

of goods and

free exchange

a

a

wars.

currency.

we have not come
insight yet, as the

Unsound Brussels

CALL

two

half

as

ijioney-lenders without endanger¬
ing their own monetary equilib¬
rium. i These apparently conflict¬
ing
interests
can
only be
reconciled by a thorough review
of economic policy in such a way
that it is brought into line with
participation in world trade: free
commerce

To

stabilization must be created.

of

course

as

integral to the success of ERP.
then, guarantees-for genuine

within

100%

of

Moreover,
the economic structure of the

commerce.

But

owing to the German occupation,
applaud a measure which gives
them greater purchasing power
abroad.
Belgium and Luxemburg
cannot

restora¬

of

obstacle in the way

an

services.

A population

the aid of the destructive foreign

exist.'

Street,

Spring

reasonable

useless if

to

constitutes

can

industrialization and
level of

doubtful

even

of the dis¬

operation

Aids,

war,

complete
recovery
is
One should remember

the

big

re¬

isolation.

turbed balances of payment con¬

■

provided
it creates
such conditions that
this division into states no longer
this,

for

Dealer-Broker

is

tinue

individualism and
ERP can serve as

that

energy afresh.
an
instrument

'*■

causes

that

Hhe fundamental

Production

randum— Fewel &

important thing now is to

The

develop

monstrous pro¬

assumed

dense that it

so

being maintained with

now

that
so

currency

free

nominal

a

advantage,

Now, after the second world

the

course,

&

Miles Shoes, Inc.

Recommendations

economy of

an

whether

—by this is meant, of

El

on

individualism and energy.

system.
It did not re¬
the first world war

immediate

of

sorted to

possible.

The

had

'

be

this has

„

'■ .'

after only what appeared to

Essential

them¬

among

data

are

Co., Seminole Oil

Gas and Gruen Watch Co.

remember,

Must

because the national states, which

Stabilization of Currencies

economic policy and

adaptation

a

after

portions.

-pelled the five countries to revise

available

Also

Paso Electric

Co.—Analysis—C. E. Unterberg &
Co., 61 Broadway, New York 6,

Before 1914 Europe could boast

including to Belgium.

would

a

for

Portsmouth Steel Corporation-

Data—Buckley Securities Corp.,
1420 Walnut Street, Philadelphia
2, Pa.
v:';,:".v ■;

these

in

should*

He

times.

New York 4, N. Y.,;,

way,

however, that both that division
and
the; European
creation of
world trade in the past four cen¬
turies is the result of a certain

Disappear

of

cur¬

rency. v

'

.

..

Economic Isolation

not be in accordance with the aim

those

especially

continents,

prosperity-economy.

a
"■

would

use

areas

one-sided obligations toward Bel¬

made to find

was

financial
attempt

No

conflicting interests of. the
16
countries, plus the c h a o s ' in
Western
Germany
into
one

Stout & Co., 50 Broad¬

Libaire,

badly needed—the only principle
■

dollars—and this

and services flow to
where they are most

goods

those

of

ERP

artificial methods of easing

hopeless task to try to plan such a
variegated continent as that of the
16 European states plus an eco¬
nomic chaos like Germany.
The
best and only reliable control is a
return to a free, balanced eco¬
nomic system which guarantees

fore, continues to be creditor, and
these
means
(which would be
very

new

were

Brussels.

con¬

about in the economic and, espe¬

currencies in the
same
way
that, after the first
world war, various international
stabilization loans were granted,

the

during

in

the

see

trol of the situation.

brought

is

■

cannot

wood for trees and have lost

ERP—

It should be clear

no

themselves

ments

turn

talks

understand how difficult

can

it will be to coordinate the narrow

be

from

currency

grants in aid.

that,

will

of such

prevailed

one

For the matter

that the talks
fruitless, then

ing its own /equilibrium.
The
Western Union, for debts to Bel¬ existing economic System of the healthy economic whole.
The division of Europe into so
European countries, which is
gium.
'
■
- ■.
founded on directed or many sovereign states must make
The idea is to create a fund in chiefly
a strange impression on an Amer¬
the national currencies of the five planned economy, has already be¬
ican, used to thinking in terms of
come so complicated that govern¬

It would be more accep¬
a part of the ERP dol¬
lars be used as a stabilization fund

neces-

natural adaptation also

a

coun¬

economic system seek¬

an

table that

disinclination to bow to the

'sity of

the

evolved, within the framework of

of ERP with

nuisance.

a

between

services

of that, it is impossible to organ¬
ize ERP otherwise than on this

•

and therefore the automatism that

to cooperation) and
have so far proved

free exchange of goods

way of a

more

the

47

wmmm
COMPANY

FINRNCE

By the terms of the Invitation for Tenders, Bonds, the tender of

Trader Available

\
t

' wv

'•

•'•'

:

■

•

years' experience doing order work
■and trading listed and unlisted secur¬
ities.
Desires
position
with
Stock

■20

House. Box B 610, Com.mercial
&
Financial Chronicle, 25
Park Place, New York 8.

^Exchange

TRADER
Twenty-five

paid

as

part

desires

securities,

connection.

situations.

Commercial
25

Park

Originates

References.
&

Place,

Financial
New

Box

own

\

.

The Western Union Telegraph

M

Company,

Chronicle,

York

8.




By W. P. MARSHALL Treasurer.

63,

y

of the Seaboard
declared a quarterly divi¬
dend of 40 cents a share on Common

Finance Co.

Stock

:

^>

payable July 10, 1948 to stockJune 24, 1948.

holders of record

Board

The

of

Directors

of

The

Arundel

Corporation has this day
declared 25 cents per share as the

regular quarterly dividend, on the
no
par
value stock of the cor¬
poration issued and outstanding,
payable on and after July 1, 1948,
the

the

stockholders

corporation's

close

New York. N. Y., June 10. 1948.

Quarterly Payment

The Board of Directors

•Where the person

making a tender is not a hank, trust company,
insurance company or member of a national securities exchange
or association, arrangements must
be made for the delivery of the
Bonds, in the event of acceptance in whole or in part of the tender,
by a bank, trust company., securities exchange or association
member, unless the Company waives such requirement. The bank,
trust company or securities exchange or association member making
such a delivery upon the acceptance in whole or in part of the
fmd"r of mother person will be paid by the Company $2.50 per
$1,000 principal amount of Bond? delivered.
•

STOCK DIVIDEND

53rd Consecutive

to
new

COMMON

Dividend Notice

of the purchase price.

years' experience trad¬

corporation

ing

which is accepted, must he delivered on or prior to July 20, 1948,
against payment. Interest upon such Bonds to said date will be

of

business

MARSHALL G.
June 15,

1948

of

record

on

at
the
22, 1948.

books
June

NORRIS,
Secretary

STOCK DIVIDEND

PREFERRED

4th Consecutive

The directors

Quarterly Payment

also declared a

regular

quarterly dividend of 65 cents a share
on Convertible Preferred Stock, payable
July 10,1948 to
June 24, 1948.
J

stockholders of record
A. E.

May 27, 1948

WEIDMAN

Treasurer

48

(2680)

THE

COMMERCIAL

&

FINANCIAL CHRONICLE

...Thursday, June 17, 1948

--

salesmen,

BUSINESS BUZZ

classed

and

other people not
"employees." '
'

as

So

Congress to get this restriction
despite the President's
objection, sweetened the proposi¬
tion by adding $5 more per
person
for old age assistance, the chari¬
table, non-contributory phase of
social security...This will cost be¬

on.

adopted

A

Behind-the-Scene Interpretation*

\^JrkW§

-/JLI III

from the Nation'* Capital

AJfix

JL UU/

RUBBER

tween
the

In

■-

of

rt STAMP

whenever a window
politics, - to use a figure
washer falls off the side of the building there are always two or
three watchers hanging around who will apply immediately for
the newly deceased's job.
k

speech,

be

Committee

is

to

as

use

traditionally has operated

on

of

he

has sole

Iowa

probably

would

yard

while

garages

tobacco

farmers

liogs

and

made

in

have

to

cigarettes

effect

the

prime

cannot

be

Virginia-Carolina but

after the

season

etc., etc.

At least,

the

things which

Then

nounced

that

amended.

One well-written set of alarms
comes from a source which would
like to amend the anti-trust laws
in its own way.
That way is to

have the Federal Trade Commis¬
sion
be
empowered
with
1950

conferences.

At

for

in

Congress,

of

giving
such

agency

They

any

also

of

fconspire"

;

to

fix

under

practices

a

benign

and
gov¬

ernment eye, labor would force

Its

into

way

there
over

the

cut

and

be

the

NBA

would

then
all

will

takes the

with

part

*

is

highly

business

election¬

it

is

it's the Russian

(1)

If

it

assumed

were

language

of

decision

lawed

the

to

basing

tems

any

dire

results

cannot

the

Trade

*

A

cases.

second

the

-

set

of

alarms

comes

politically-professional

Long before

could

be

such

suits

back overtime suits. Then it

fear

of

on

broad

a

jeopardizing

scale

the

for

"third

round" of wage rises. There is also

belief that

some

if suits

even

even

if denied

by others in Con¬

gress, that the law

estopping back

an

pay suits provides
adequate defense to old war¬

claims

for

"overtime

would

friends of small business in Con¬
Senator Capehart, Indiana

and

Bepublican, hastened

to

send

the

to

get

put

through the Senate a broad inves¬
tigation of the anti-trust laws by
the Interstate Commerce Commit¬

was

pass

a

law

"overtime

on

over¬

tee. His

broad

investigation

would be

to all but recreate

as

publican

version

of

the

a

so

Re¬

Herbert H. Blizzard & Co.

:

If you have

to

buy,

or

have

we

sell,

or

a

vice

a

a

term

anti-

few days ago the

vice

versa,

seller

and

willing to

fire

so

as

*

to

cure

many

U.S.

of

same

to

the

versa

found to

point

basing

be

systems

if.

Philadelphia 9, Pa.

Qmt thru

Montgomery, Scott A Co.
Now York A Philadelphia

o

the

a special
application of

that per¬

so

M.S.W1EN&G0.

law, did not intend originally

Congress sought to
coverage

news

>

it




ESTABLISHED .1919

;

Members N.
40

exclude

Y. Security Dealers Ass'n

Exchange PL, N. Y. 5

vendors,

HA. 2-8780

Teletype N. Y. 1-1397

.

Trading Markets:-

Trading Markets

Ralston Steel Car
;

I

Oregon Portland Cement
Riverside Cement A & B

C.ARL MARKS & (70. Inc./
FOREIGN SECURITIES

LERNER & CO.

SPECIALISTS

.

capital it

New York 4, N. Y.

AFFILIATE: CARL MARKS & CO. Inc. CHICAGO

f

10 Post Office

Telephone

Square, Boston 9, Mass.

Hubbard

1990

Teletype BS 09

of
the

industry to which it

is

Kobbe &

Common

Susquehanna Mills

Company

INCORPORATED

a

stevedoring,
was

—

BOUGHT—SOLD—QUOTED

55

course,

»

Members National Association
of Securities Dealers, Inc.

$900 million to several billions.

decision,

Preferred

opens

industries to vague lia-

problem to

Cumulative

$4.00 Convertible Preferred

Supreme Court up¬
"overtime on overtime."

numerous

/4 %

UNITED STATES FINISHING
COMPANY

the

Theoretically this decision

Empire Steel Corp.

UNITED PIECE DYE WORKS
6

directly

Telephone
BArclay 7-2663

1

Investment Securities

50 Broad Stroel

Common

has elsewhere is the recent deci¬

This

Seatex Oil

Congress passed

restrict

All Issues

v

aroused the fear in this

real

Finishing

ij.

FOREIGN SECURITIES

lilities estimated any where from

123 South Broad St.,

'i.

EMPIRE STATE OIL CO.
*

s

A MARKET IS
ESTABLISHED

.

Lonsdale Co.
v

whom Congress, which wrote

from

jti

time boosting

the old insurance law
sons

'

Corp.

Dorset Fabrics

minimum wages.

When

fresh

a

'

interpretations of the
Wage -Hour Administration

act

take

values, the Ad¬

Belle Isle

Teletype—NY 1-971
Firm

laws.

holding

•

the broad

while at the

to

1

ter to revamp the whole
Wage-

HAnover 2-0050

playing

when

of

time

incentive to Congress next win-r
Hour Act

they are a device
used as a "conspiracy" within
the meaning of the anti-trust

sion

be

Texas Gas Transmission

However, this Supreme Court
does provide another

bill.

labor. Until

could

Another decision which has not

Buyer willing

-

things Europe cannot

Spokane Portland Cement

interpretation, will
only

:

better politics to

ministration

(2) It is probable, in the opin¬
ion of some trade association
experts, that the language of the
Court, upon further study and

#

VICE VERSA

to

pro-

materials and the

raw

ministration feels.

to be covered, the Congress knew
that the President would veto the

•

outlaw

mouthy

firemen

Europe

ECA

was

is that Congress did not want to
another law which the Ad¬

pass

will

decision

Con¬

reasons

decided not to

engines back to their red barns
the

in

when

up

look at currency

cards.

gress.

incentive

pick

was

shove

hasty bill outlawing

sit

Partly for these

to

off until January.

overtime."

gress

plans

cases

adjudicated, Congress

return

on

a

decided it
hold

leadership

with

through

are

launched, Congress will be back in
time next January to stop them.
Finally, it is insisted by some,

set

Commis¬

such

cur¬

promote-

be

| feared until the Justice Depart¬

again.

it

Congressional
all

time" situation before adjourn¬
ing. The more practical reason

completely revolutionize
its pricing practices, decentral¬
ize, reorganize, and do all the
j things
the
alarmists
predict.

and

to

buy. After ECA has encouraged

Nevertheless, there is
feeling that organized labor may
desist, generally from instituting

sys¬

must

Such

high

exports available.

Labor

consumer

a

curing the

other concerted action, then it is
still a far cry before
industry

ment

hand,

gross

applicable.

out¬

point price
such, regardless of

as

that

Supreme

explicitly

Ad¬

other

expanded European production,

time

the

too

maximum

Pm>

Delegation again—they want another
of 'No* stamps!"

portal-to-portal

Court

the

on

if the value of the

vides the

sion have launched innumerable

from

ejsww

•

••

the

observers

job

dis¬

The

an

here among

whose

thus

strictly foreign exchange

is

rency

ce¬

relatively

trained

and

production.

necessary

*

there

on

viewpoint that devaluation is only

Com¬

roam

labor

of

ministration.

outstanding
source
said
that
possibilities fell into two parts;

the

prices

most

j

devaluation

theory that the over-pricing of
was
discouraging the

couraging

spread the alarm if there is
something to be scared of.
One

power.

minute Congress granted indus¬
try any broad legal power to

Special

little apprehension
those

trade

that

the

few months.

a

currency

incentive

deci¬

Probably the members
occupied

Actually

government

broad

a

it

*

however,

recognize

light of the

the special committee will be
making studies.

inclined toward any notion

are

the

let

of

practice conferences, already car¬
ried on in a limited way by
FTC,
business could do almost anything
in the way of price
fixing so long
as it was
socially nice price fixing
approved by the FTC.
Few

to

eering, but the professional staff

prac¬

these

be

of the committee will be

model statute to supervise all the
practices and ethics of business
tice

ropean

Committee
need for changes

country this fall with a view to
finding just the ideal way in
which the anti-trust laws can be

Washington falls for these
it hardly can be blamed.

scares,

through the device of trade

would

House

develop in

the

currencies

Small Business has

on

in

*

Congress has leaned toward Eu¬

anti¬

over

and other recent

the

mittee

happen, and if business outside
of

develop for

will

to

going

are

over

sions.

of

are some

them

Judiciary

in the law in the

judging by

the alarmists, these

which

of

Senate

ment case

deer closes,

on

jurisdiction

future

near

;

way of
bringing about a devaluation of
foreign
currencies.
Something
along this line probably won't

all

Judiciary Commit¬

investigate the

be rolled by Maine farmers

ean

has

se¬

President

Don't expect much to

the

since any one can remember, also
came forth with a resolution the

'

Maryland

raise

if

Then
Senator
Ferguson
of
Michigan, who has been investi¬
gating something or other ever

in back¬

cars

he

the

program

has
been
demanding,
would
have been tens of billions.
V

trust law changes.-

nation's chief automotive center,
whereas * the. hog
farmers of
make home made

laws,

a

contingent lia¬

Congress enacted the social
curity

tee and cheer for their adoption.
It Is the latter committee which

the

as

when

do

can

to the Senate

Pittsburgh would have to stop
being the nation's steel center;
Detroit would close down

anti-trust

over

years.

However, the

en

when,

the Presi¬

billions

bilities of all taxpayers, had the

of proposals to

wrapped up is to take them

,

v

the

amend

basing point system, is about to be
taken apart.

up
way

wishes—of

period of

.

come

In the

million for

mate cost—to override

Capehart

with

may

the

another

or

Senator

ever,

one

modification

Whatever

$184

This works out to

per

dent's

gage in a full-blown study of re
vision of the anti-trust laws.

part of a "combination or con¬
spiracy" to restrain prices, the
of a basing point pricing sys¬
tem was; illegal;,
Now from cer¬
tain quasi-judicial quarters and
from various points in Congress
come
interpretations that Ameri¬
can
business, so much of which

now

a

capita cost of $3 per year
for
every
gainfully' employed
person in the U. S., with the ulti¬

Something of this philosophy is1
National
Economic
suggested to explain the current Temporary
excitement, albeit belated, over Committee of the early New Deal.
the
Supreme
Court's April
26 Capehart got the Senate to ap
decision in the cement case, in prove this proposal, so theoreti
which the highest court ruled that cally the Senate Interstate Com
merce

$178 and

first year.

Liberty Street, New York 5, N. Y.

Hill, Thompson & Co., Inc.
Markets and Situations for Dealers

Teletype
NY 1-277

120

Broadway, New York 5

Tel. REctor 2-2020

Tele. NY 1-2660

|

Volume

Number 4708

167

COMMERCIAL

THE

&

Pictorial Insert I

CHRONICLE

FINANCIAL

*

Bond Club oi New Jersey

Preim, R. W. Pressprich & Co., New York; R. D. Nelson, Equitable Securities
'Corp., New York; C. Wallace Smith, Smith, Barney & Co., New York; Arthur

C. A.

Smith, Barney & Co., New York, Chairman of the Field Day
Daniel Fitzpatrick, Phelps, Fenn & Co., New York (Field Day
Committee); Alexander Seidler, Jr., National State Bank of Newark, .'.l>
President of the Bond Club of New Jersey; Kenneth Spear,

C. Wallace Smith,

Committee;
;

^

Julius A.

Rippel, Inc., Newark, former President of the Bond

Walter Schumann,

Dolphin & Co., Philadelphia; Walter D.
; James F. Musson, B. J. Van Ingen &
R. Cole, F. R. Cole & Co., Newark

Upper Montclair, N. J.; John Agnew,
Co., New York; Walter Cameron,
Corp., Paterson, N. J.; Albert Currie,
Paterson National Bank & Trust Co%

Eastman, Dillon &
First

:

i

Romeyn B. Quintard, Suplee, Yeatman & Co., Inc., Philadelphia; Albert
Laurence M. Marks & Co., New York; Richard H. Marshall, Laurence

Fixter, Buckley
Co., New York;

Marks & Co.,

Courtlandt Parker, R. W.

George W. Philo,
Barco

Club

,

Robinson, Fidelity Union Trust Co., Newark;
Harry Miller, Nugent & Igoe, Newark

t

Pressprich & Co., New York;

Herbert A. Hoehn, Gregory & Son,
New York

■

New York; W. M. Reekie, Graham, Parsons &

Incorporated,

<

^

Van

F. Rice*

M.
Co., New York

MacBride, Miller & Co., Newark;
Boland, Saffin & Co., New York;
William Roos, MacBride, Miller & Co., Newark;
F. V. Reilly, Financial Chronicle
Dyk MacBride,

William H. Boland,

J.

Paterson, N. J.

Fred

Sautter, Richard F. Saffin, William Boland and Floyd
all of Boland, Saffin & Co., New York




H. Johnson,

J. W. Roos,
New

MacBride, Miller & Co., Newark; W.

F. Coss, B. J. Van Ingen & Co.,
Newark, Harold B. Smith,

York; D. K. Sias, National State Bank of
Collin, Norton & Co., New

York

Pictorial

THE

Insert II

COMMERCIAL

&

FINANCIAL

Thursday, June 17, 1948 "

CHRONICLE

Holds Annual Field Day June

Richard Rand, Rand & Co., New York; Richard E. Whitcomb, Phelps, Fenn & Co.,
New York; Robert Burns, H. M. Byllesby & Co., New York; Russell M. Dotts,
Hess &

J.

W.

New

Glenn

Roald

Co., Philadelphia; Daniel E. Fitzpatrick, Phelps, Fenn & Co., New York

Kress, Howard Savings Institution, Newark; E. W. Tallau, Howard Savings
Institution, Newark; Fred A. Von Hoffman, L. F. Rothschild & Co.,

York; W. L. Maude, Howard Savings Institution, Newark

D:

Thompson, National State Bank of Newark;
Depue, National State
Bank
of Newark;
William J. O'Connor, Fidelity Union Trust Co., Newark

Sherrerd

Underwood, Irvington Trust Co., Irvington,
J.; Harold B. Smith, Collin, Norton & Co.,
New York; H. P. Schaub, Harry P. Schaub, Inc.,

George B.
N.




Newark

.

/A. Morton, Blue List Publishing Co., New York; Charles Waldmann,
Ke'an, Taylor & Co., New York; E. A. M. Cobden, Kean, Taylor & Co.,
:
New York; Taber J. Chadwick, Chadwick & Slaight, New York

Chet Bardsley, Salomon Bros. & Hutzler, New York; Jim
Duffy, First Boston
New York; Ted Von Glahn, Salomon Bros. & Hutzler, New York;,
Pat Mahoney, Paul J. Mahoney, Inc., New York

Carroll, Lee W. Carroll & Co., Newark; E. J. Turner,
guest; Frank B. Allen, Maplewood Bank & Trust Co.,

Maplewood, N. J.; Carl A. Preim, R. W. Pressprich &
■''

•

Corp.

'

Lee

•'

11th

Co., New York ■ ■.' ■■■;.v:.v'

S. R. Terrill, J. D. Topping & Co., New York; R. M.
Hinchman, Ira Haupt & Co., New York; 0< D. Griffin,
Lord, Abbett & Co., New York

Walter

F. Coss, B. J. Van Ingen & Co., New York;
Rogers S. Phelps, Campbell, Phelps & Co., New York;
F. J. Sautter, Boland, Saffin & Co., New York;

John J. Ryan, Ryan, Moss & Co.,

Robert

W.

Newark

i;

Lane, MacBride, Miller & Co., Newark;
B, J. Van Ingen & Co., New York;
J. Albert Leek, Coffin* & Burr, Inc., New York

Walter F. Coss,

Volume

167

Number 4708

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Pictorial Insert IIP

At The Montclair Golf Club

Davis Kales,

Commerce Union Bank, New York; Edward McLaughlin,
Paine, Webber, Jackson & Curtis. New York: Harry W. Faath,
Tripp & Co., Inc., New York; Harold J. Kennedy,
♦
Graham, Parsons & Co., New York

R. H. Deetjen,

Emanuel, Deetjen & Co., New York; C. B. Schubert, Emanuel,
Deetjen & Co., New York; Thomas Benton, Benton & Nicholas, New York;
Martin Issler, Benton &
Nicholas, New York

,

Henry Hegel, Federal Trust Co., Newark; Austin H. Patterson, Julius A. Rippel, Inc.
Newark; Charles S. Bishop, Central Hanover Bank & Trust Co., New York;
Addison K. Barry, National Newark & Essex Banking Co., Newark

Fred
;:

D.

Stone, Jr., Marine

Trust Co. of Buffalo, New York;

Ray

Securities Co., New York; Jack Cullen, R. W. Pressprich & Co.;
Paris Scott Russell, Glore, Forgan & Co., New York

Norton
W. C.

P.

Rogers, Rogers, Gordon & Co., New York;
Rommel, J. S. Rippel & Co., Newark; Gordon

Miller,

National State

Bank;'Newark;

R.

F.

Vanderhoff, Fidelity Union Trust Co., Newark




Wilson,

Union:

E. F.

Charles

Kezer, B. J. Van Ingen & Co., New York; R. F. Vanderhoff, Fidelity Union
Trust Co., Newark; Donald Mackenzie, Bank
of America, New York;
Jacob Kraus, Jr., Colonial Life Insurance
Co., Jersey City

Hamburger, guest; R. H. Monaghan, Newark; E. J. Turner, Newark, guest

New York;

Rodney S. Smith, Jr., Graham, Parsons & Co., New York;
Clifford Hemphill, Jr., Hemphill, Noyes & Co., New
York; Joseph F. Rush, Reynolds & Co., New York
<-

-

John Hoffmann, Shields & Co., New York; Thomas
Kenyon, Carteret Bank & Trust Co., Carteret,% N. J.;
W. H. Campbell, Campbell & Co., Newark' H. L.
Rost, Peoples Bank & Trust Co., Westfield, N. J.

THE

Pictorial Insert IV

COMMERCIAL

&

FINANCIAL

San Francisco Stock Exchange

Members of the Committee

heading the Stock Exchange tour of the Pacific

Northwest with

a repre¬

Sound Pulp & Timber Co. at the Bellingham airport. Reading from left to right:
Smith, Chairman, Public Relations Committee; Richard P. Gross, Member, Board of
Governors: Ronald E. Kaehler, President:
Lawson P. Turcotte, Executive^ Vice-President of Puget
Sound Pulp & Timber Co., and Hubert J. Soher, Chairman, Listing Committee
sentative of Puget

Ferdinand

E.

Kaehler (center), President of the San Francisco Stock Exchange; Douglas G.
Witter & Co., and Norman Allen, Assistant to Boeing President William
inspect the double-deck Boeing Stratocruiser

Dean

C.




Members

of

the

group,

Thursday, June 17, 1948

Tour of Pacific Northwest

Ronald

(left),

CHRONICLE

industrialists and airline attendants partaking

of luncheon during the itinerary.

Group at San Francisco airport about to board plane for

Northwest trip.

Atkinson
M. Allen,